APAC Customer Services, Inc. Reports Continued Progress on Business Turnaround; Quarterly Growth in Customer Care Revenues; Quarterly Improving Gross Profit Margins.DEERFIELD Deerfield, towns, United States Deerfield. 1 Village (1990 pop. 17,327), Cook and Lake counties, NE Ill., a residential suburb of Chicago; inc. 1903. The huge Sara Lee Bakery is its major industry, and there is other light manufacturing. , Ill. -- APAC Customer Services
APAC Customer Services, Inc. is a provider of customer interaction solutions to large corporations in the communications, financial services, insurance, healthcare, logistics, publishing, and hospitality , Inc. (Nasdaq:APAC APAC Australian Partnership for Advanced Computing APAC Agricultural Policy Analysis Center APAC Asia and Pacific APAC Asian Pacific American Coalition APAC Adapted Physical Activity Council (American Alliance for Health) ), a leading customer care service and solutions provider to market leaders in the healthcare, publishing, logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. , communication, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and travel and entertainment industries, today reported financial results for its fourth quarter and fiscal year ended January January: see month. 1, 2006. The Company reported a 2005 fourth quarter net loss of $1.5 million, or $0.03 per share, on revenue of $59.7 million compared to a net loss of $1.8 million, or $0.04 per share, on revenue of $69.2 million in the prior year quarter. The 2005 fourth quarter results include $5.0 million in restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other charges associated with the Company's previously announced strategic realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. and a $2.0 million incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. tax benefit to record now realizable prior year tax credits. The operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $4.5 million, after adjusting for restructuring and other charges, would have been a positive $0.5 million, which compares to a similarly adjusted operating loss of $3.1 million in the prior year quarter. The decline in revenue from the 2004 fourth quarter is primarily due to the planned exit from the campaign-driven outbound out·bound adj. Outward bound; headed away: outbound trains. Adj. 1. outbound - that is going out or leaving; "the departing train"; "an outward journey"; "outward-bound ships" customer acquisition business and the absence of $4.1 million in revenue from the 53rd week of fiscal 2004, compared to a 52-week period in 2005. Fourth quarter 2005 revenue increased $3.4 million, or 6%, from $56.3 million in the 2005 third quarter. This improvement was due to a significant increase in revenue from the Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. Part D enrollment and customer care program for one of our health care clients as well as other core client growth which more than offset a $7 million reduction in revenue from exited businesses. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the fourth quarter of 2005 of 13.1% was up from the prior year's fourth quarter margin of 8.8% and the 2005 third quarter's margin of 9.5%, reflecting the benefits of a more profitable client base, efficiencies gained in operations and a reduction in call center overhead. For the 2005 fiscal year, the Company reported a net loss of $22.4 million, or $0.45 per share, on revenue of $239.8 million compared to a net loss of $6.5 million, or $0.13 per share, on revenue of $273.2 million in the prior year. The 2005 results include $8.2 million in restructuring and other charges primarily associated with the Company's strategic realignment and $10.9 million in asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges, $10.5 million of which represents a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. associated with the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of goodwill. The year over year revenue decline resulted primarily from reductions in campaign-driven outbound customer acquisition business and the absence of the previously mentioned 53rd week. Gross profit margins fell from 12.2% in fiscal 2004 to 9.5% in fiscal 2005 as the revenue decline resulted in significant underutilized capacity and excess overhead expenses. "Clearly 2005 has been a transitional year for us. We announced a strategic realignment on July July: see month. 27, 2005 to exit the telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. business and focus primarily on customer care applications. Our fourth quarter results are strong evidence that our strategy is gaining traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. . We clearly benefited, and will continue to benefit, from some of the complexities of the start-up Start-up The earliest stage of a new business venture. of the Medicare Part D program, but the continued growth in our core client base and improvements in operational efficiencies also contributed to our success," commented Bob Keller, APAC Customer Services' CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "During the fourth quarter, we generated over $0.8 million in adjusted free cash flow while spending $2.7 million in capital expenditures to support our growth, and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , after adjusting for restructuring and other charges, has improved by $2.5 million since the third quarter from $1.0 million to $3.5 million." "As a result of this progress, I remain confident that our strategy and business turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. is on track, our previous 2006 estimate of $220 million in revenue is achievable and expect the Company to be profitable for the year," Mr. Keller continued. In conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the strategic realignment, the Company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1 - 4 million in the first half of 2006 relative to the closure of additional call centers. Consistent with last quarter's announcement, the total charges for the realignment are expected to be $8 -11 million. The $4.9 million of the $5 million restructuring charge taken in the 2005 fourth quarter reflects the reduction of the Company's corporate office space. The remaining quarterly revenue decline from the exited businesses is now estimated to be approximately $2 million which will occur over the course of the first quarter of 2006. Senior management of the Company will hold a conference call to discuss financial results at 10:00 a.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. Thursday Thursday: see week. February February: see month. 9th. About the Conference Call The conference call will be available live at the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of APAC Customer Services' website, www.apaccustomerservices.com. Please access the site at least 15 minutes prior to the scheduled start time in order to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. the required audio software (RealPlayer A multimedia player from RealNetworks that plays RealAudio and RealVideo transmissions. Included is the technology (see RealJukebox) for organizing music files and creating MP3 files from audio CDs. or Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. ). A replay of the webcast will be accessible through the Company's website for 7 days following the live event. For those unable to listen to the call via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , a replay of the call will be available until 11:00 p.m. CST on Thursday, February 16, 2006, by dialing (888) 203-1112 or (719) 457-0820 for international participants. The confirmation number for the replay is 4442520. About APAC Customer Services, Inc. APAC Customer Services, Inc. (Nasdaq:APAC) is a leading provider of customer care service and solutions for market leaders in healthcare, publishing, logistics, communications, financial services, travel and entertainment industries. APAC partners with its clients to deliver custom solutions that enhance bottom line performance. For more information, call 1-800-OUTSOURCE. APAC's comprehensive web site is at http://www.apaccustomerservices.com. Forward Looking Statements This document contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Generally, forward-looking statements include expressed expectations, estimates and projections of future events and financial performance and the assumptions on which these expressed expectations, estimates and projections are based. Statements that are not historical facts, including statements about the beliefs and expectations of the Company and its management are forward-looking statements. Sometimes these statements will contain words such as "believes," "expects," "anticipates," "intends," "estimates," "goals," "would," "could," "should," "plans" and other similar words. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions about future events, and they are subject to known and unknown risks and uncertainties that can cause actual events and results to differ materially from historical results and those projected. Such statements are based upon the current beliefs and expectations of the Company's management. The Company intends its forward-looking statements to speak only as of the date on which they were made. The Company expressly undertakes no obligation to update or revise any forward-looking statements as a result of changed assumptions, new information, future events or otherwise. The following factors, among others, could cause actual results to differ from historical results or those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements: reliance by the Company on a small number of principal clients for a substantial portion of its total revenue; changes in or events affecting the business of the Company's clients; fluctuations in revenue associated with the Company's new Medicare Part D enrollment and customer care program; fluctuations in quarterly results of operations due to the timing of clients' initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. and termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of large programs; the ability of the Company's clients to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. contracts on relatively short notice; the reaction of the Company's clients and employees to the announcement of its exit of non-strategic and unprofitable client relationships, the closing of Customer Interaction Centers and the reduction in the number of employees; and the Company's ability to successfully manage the costs and expenses associated with these activities and generate sufficient cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses during the transition. Other reasons that may cause actual results to differ from historical results or those expressed or implied in the forward-looking statements can be found in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended January 2, 2005, and the Company's Third Quarter Report on Form 10-Q Form 10-Q See 10-Q. for the period ended October October: see month. 2, 2005. These filings are available on a web site maintained by the SEC at http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . About Non-GAAP Financial Measures To supplement the Company's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , the Company uses the following measures defined as non-GAAP financial measures by the SEC: operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , EBITDA, and free cash flow, in each case, before and after restructuring and other charges. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Notes to Press Release Tables" included at the end of this release. The Company's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative indicative: see mood. of our core business operating results. The Company believes management, investors and lenders benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. with respect to supplemental information used by management in its financial and operational decision making. The Company expects to use consistent methods for computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of non-GAAP financial measures. The accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
APAC Customer Services, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except for per share data)
Unaudited
Thirteen / Fourteen Weeks Ended (a)
---------------------------------------
Increase
January 1, January 2, (Decrease)
2006 2005 %
------------- ------------ ------------
Net revenue $59,669 $69,203 -14%
Cost of services $51,849 $63,097 -18%
------------- ------------ ------------
Gross profit 7,820 6,106 28%
Operating expenses:
Selling, general and
administrative expenses $7,315 $9,244 -21%
Restructuring and other
charges $5,005 $(136) -
Asset impairment charges $- $- -
------------- ------------ ------------
Total operating expenses 12,320 9,108 35%
------------- ------------ ------------
Operating Loss (4,500) (3,002) 50%
Other (income) and expense $44 $(142) -131%
Interest expense $402 $189 113%
------------- ------------ ------------
Loss before income taxes (4,946) (3,049) 62%
Income tax benefit $(3,450) $(1,245) 177%
------------- ------------ ------------
Net loss $(1,496) $(1,804) -17%
============= ============ ------------
Net Loss per share:
Basic $(0.03) $(0.04) -25%
============= ============ ============
Diluted $(0.03) $(0.04) -25%
============= ============ ============
Weighted average number of
shares outstanding:
Basic 49,455 49,455
============= ============
Diluted 49,455 49,455
============= ============
Fifty-Two / Fifty-Three Weeks Ended (a)
---------------------------------------
Increase
January 1, January 2, (Decrease)
2006 2005 %
------------- ------------ ------------
Net revenue $239,845 $273,239 -12%
Cost of services 217,124 239,783 -9%
------------- ------------ ------------
Gross profit 22,721 33,456 -32%
Operating expenses:
Selling, general and
administrative expenses 34,369 39,712 -13%
Restructuring and other
charges 8,216 1,873 339%
Asset impairment charges 10,886 2,234 387%
------------- ------------ ------------
Total operating expenses 53,471 43,819 22%
------------- ------------ ------------
Operating Loss (30,750) (10,363) 197%
Other (income) and expense (600) (361) 66%
Interest expense 1,408 620 127%
------------- ------------ ------------
Loss before income taxes (31,558) (10,622) 197%
Income tax benefit (9,160) (4,123) 122%
------------- ------------ ------------
Net loss $(22,398) $(6,499) 245%
============= ============ ------------
Net Loss per share:
Basic $(0.45) $(0.13) 246%
============= ============ ============
Diluted $(0.45) $(0.13) 246%
============= ============ ============
Weighted average number of
shares outstanding:
Basic 49,455 49,453
============= ============
Diluted 49,455 49,453
============= ============
(a) The Company operates on a 52/53 week fiscal year that ends on the
Sunday closest to December 31st. The fiscal year and quarter ended
January 1, 2006 and January 2, 2005 include 52/13 and 53/14 weeks,
respectively.
APAC Customer Services, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(In thousands)
Unaudited
January 1, January 2,
Assets 2006 2005
------ ------------------- -------------------
Current Assets:
Cash and cash equivalents $960 $271
Accounts receivable, less
allowances of $1,919 and
$2,193, respectively 37,592 41,002
Other current assets 9,248 11,253
------------------- -------------------
Total current assets 47,800 52,526
Property and Equipment, net 22,233 24,214
Goodwill and Intangibles, net
and Other Assets 41,017 42,793
------------------- -------------------
Total assets $111,050 $119,533
=================== ===================
Liabilities and Shareholders'
Equity
-----------------------------
Current Liabilities:
Current maturities of long-
term debt $11,971 $313
Accounts payable and other
accrued liabilities 44,211 43,702
------------------- -------------------
Total current liabilities 56,182 44,015
------------------- -------------------
Other Liabilities 2,994 1,355
Commitments and contingencies - -
Total shareholders' equity 51,874 74,163
------------------- -------------------
Total liabilities and
shareholders' equity $111,050 $119,533
=================== ===================
(a) The Company operates on a 52/53 week fiscal year that ends on the
Sunday closest to December 31st. The fiscal year ended January 1,
2006 and January 2, 2005 include 52 and 53 weeks, respectively.
APAC Customer Services, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(In thousands)
Unaudited
Fifty-two / Fifty-Three Weeks Ended (a)
---------------------------------------
January 1, January 2
2006 2005
------------------- -------------------
Operating activities:
Net loss $(22,398) $(6,499)
Depreciation and
amortization 12,118 11,055
Non-cash restructuring 904 75
Asset impairment charges 10,886 2,200
Deferred income taxes (9,007) (3,394)
Gain on sales of property
and equipment (339) -
Changes in operating assets
and liabilities 5,431 (2,947)
------------------- -------------------
Net cash provided (used)
by operating activities (2,405) 490
Investing activities:
Purchases of property and
equipment (8,699) (11,206)
Net proceeds from sale of
property and equipment 1,071 -
------------------- -------------------
Net cash (used) by
investing activities (7,628) (11,206)
Financing activities:
Borrowings under revolving
credit facility, net 11,971 -
Payments on long-term debt (313) (389)
Financing fees (822) (75)
Stock option and warrant
transactions including
related income tax benefit - 23
------------------- -------------------
Net cash provided (used)
by financing activities 10,836 (441)
------------------- -------------------
Effect of exchange rate
changes in cash (114) -
Net change in cash and cash
equivalents 689 (11,157)
Cash and Cash Equivalents:
Beginning of year 271 11,428
------------------- -------------------
End of year $960 $271
=================== ===================
(a) The Company operates on a 52/53 week fiscal year that ends on the
Sunday closest to December 31st. The fiscal year and quarter ended
January 1, 2006 and January 2, 2005 include 52/13 and 53/14 weeks,
respectively.
APAC Customer Services, Inc. and Subsidiaries
Selected Financial and Statistical Information
(In thousands, except for per share data)
Unaudited
Thirteen / Fourteen Weeks Ended (a)
---------------------------------------
Increase
January 1, January 2, (Decrease)
2006 2005 %
------------- ------------ ------------
Selected Financial
Information:
Net revenue $59,669 $69,203 -14%
Net loss $(1,496) $(1,804) -17%
EBITDA (1) (1,480) 68 -2276%
Adjusted EBITDA(1) 3,525 (68) -5284%
Adjusted Operating Income
(Loss) (2) 505 (3,138) -116%
Free Cash Flow (3) (4,156) (4,492) -7%
Adjusted Free Cash Flow (3) 849 (4,628) -118%
Statistical Information:
Number of Customer Interaction
Centers 13 24 -46%
Weighted Average No. of Seats 6,463 6,681 -3%
Revenue per Weighted Average
No. of Seats $9,232 $10,358 -11%
Fifty-Two / Fifty-Three Weeks Ended (a)
---------------------------------------
Increase
January 1, January 2, (Decrease)
2006 2005 %
------------- ------------ ------------
Selected Financial
Information:
Net revenue $239,845 $273,239 -12%
Net loss $(22,398) $(6,499) 245%
EBITDA (1) (18,032) 1,053 -1812%
Adjusted EBITDA(1) 1,070 5,160 -79%
Adjusted Operating Income
(Loss) (2) (11,648) (6,256) 86%
Free Cash Flow (3) (26,731) (10,153) 163%
Adjusted Free Cash Flow (3) (7,629) (6,046) 26%
Statistical Information:
Number of Customer Interaction
Centers 13 24 -46%
Weighted Average No. of Seats 6,890 6,749 2%
Revenue per Weighted Average
No. of Seats $34,811 $40,486 -14%
(a) The Company operates on a 52/53 week fiscal year that ends on the
Sunday closest to December 31st. The fiscal year and quarter ended
January 1, 2006 and January 2, 2005 include 52/13 and 53/14 weeks,
respectively.
See attached Notes to Press Release Tables
APAC Customer Services, Inc.
Notes to Press Release Tables
January 1, 2006
(1) The non-GAAP measure of EBITDA and Adjusted EBITDA is presented to
supplement the consolidated financial statements in accordance with
GAAP. We define EBITDA as Net Income plus the provision (benefit) for
income taxes, depreciation and amortization, and interest expense.
Adjusted EBITDA also adds back restructuring and asset impairment
charges. We use EBITDA and Adjusted EBITDA, in addition to operating
income and cash flows from operating activities to assess our
liquidity and performance and believe that it is important and of
interest to our investors to be able to evaluate our financial results
using the same measures used by our management.
EBITDA and Adjusted EBITDA can be reconciled to net income, which we
believe to be the most directly comparable financial measure
calculated and presented in accordance with GAAP, as follows:
EBITDA Reconciliation
---------------------
3rd
Quarter 4th Quarter YTD
2005 2005 2004 2005 2004 2003
--------- ------------------ ---------------------------
Net (loss)
income ($13,507) ($1,496) ($1,804) ($22,398) ($6,499) $4,339
========= ================== ===========================
Provision
(benefit)
for income
taxes (1,757) (3,450) (1,245) (9,160) (4,123) 2,038
Interest
expense 305 402 189 1,408 620 1,131
Depreciation
and
amortization 3,104 3,064 2,928 12,118 11,055 12,015
--------- ------------------ ---------------------------
EBITDA ($11,855) ($1,480) $68 ($18,032) $1,053 $19,523
========= ================== ===========================
Restructuring
and other
charges
(benefits) 2,074 5,005 (136) 8,216 1,873 3,238
Asset
impairment
charges 10,762 - - 10,886 2,234 420
--------- ------------------ ---------------------------
Adjusted
EBITDA $981 $3,525 ($68) $1,070 $5,160 $23,181
========= ================== ===========================
EBITDA and Adjusted EBITDA do not represent funds available for our
discretionary use and are not intended to represent or to be used as a
substitute for net income or cash flow from operations data as
measured under GAAP. The items excluded from EBITDA and Adjusted
EBITDA are significant components of our statement of income and must
be considered in performing a comprehensive assessment of our overall
financial results. EBITDA and Adjusted EBITDA and the associated
sequential trends should not be considered in isolation. Our
calculation of EBITDA and Adjusted EBITDA may not be consistent with
calculations of EBITDA and Adjusted EBITDA used by other companies.
(2) We use the non-GAAP measure of Adjusted Operating Income (Loss) to
supplement the consolidated financial statements. We use this measure,
in addition to operating income to assess our financial performance
and believe that this measurement is of interest to our investors in
relation to our ongoing operating results.
Adjusted Operating Income (Loss) can be reconciled to the net income
or loss, which we believe to be the most directly comparable financial
measure calculated and presented in accordance with GAAP, as follows:
Adjusted Operating Income (Loss)
Reconciliation
--------------
3rd
Quarter 4th Quarter YTD
2005 2005 2004 2005 2004 2003
--------- ------------------ ---------------------------
Net (loss)
income ($13,507) ($1,496) ($1,804) ($22,398) ($6,499) $4,339
========= ================== ===========================
Provision
(benefit)
for income
taxes (1,757) (3,450) (1,245) (9,160) (4,123) 2,038
Other
(income)
expense (582) 44 (142) (600) (361) (100)
Interest
expense 305 402 189 1,408 620 1,131
--------- ------------------ ---------------------------
Operating
(loss)
income ($15,541) ($4,500) ($3,002) ($30,750)($10,363) $7,408
========= ================== ===========================
Restructuring
and other
charges
(benefits) 2,074 5,005 (136) 8,216 1,873 3,238
Asset
impairment
charges 10,762 - - 10,886 2,234 420
--------- ------------------ ---------------------------
Adjusted
Operating
(loss)
income ($2,705) $505 ($3,138) ($11,648) ($6,256) $11,066
========= ================== ===========================
Adjusted Operating Income (Loss) does not represent net income and is
not intended to represent or to be used as a substitute for operating
income as measured under GAAP. The items excluded from Adjusted
Operating Income (Loss) include Restructuring and Other Charges
(Benefits) and Asset Impairment Charges and are significant components
of our Statements of Operations and must be considered in performing a
comprehensive assessment of our overall financial results. Adjusted
Operating Income (Loss) and the associated sequential trends should
not be considered in isolation. Our calculation of Adjusted Operating
Income (Loss) may not be consistent with calculations of Adjusted
Operating Income (Loss) used by other companies.
(3) We use the non-GAAP measure of Free Cash Flow and Adjusted Free
Cash Flow to supplement the consolidated financial statements in
accordance with GAAP. We define Free Cash Flow as EBITDA less capital
expenditures and Adjusted Free Cash Flow as Free Cash Flow less
restructuring and other charges (benefits) and asset impairment
charges. We use Free Cash Flow and Adjusted Free Cash Flow in addition
to net cash provided (used) by operating activities to assess our
liquidity and performance and believe that Free Cash Flow and Adjusted
Free Cash Flow are of interest to our investors in relation to our
debt covenants as capital expenditures are a significant use of our
cash. Free Cash Flow and Adjusted Free Cash Flow do not represent the
residual cash flow available for discretionary expenditures.
Free Cash Flow and Adjusted Free Cash Flow can be reconciled to the
net cash provided (used) by operating activities, which we believe to
be the most directly comparable financial measure calculated and
presented in accordance with GAAP, as follows:
Free Cash Flow Calculation
--------------------------
3rd
Quarter 4th Quarter YTD
2005 2005 2004 2005 2004 2003
--------- ------------------ ---------------------------
EBITDA ($11,855) ($1,480) $68 ($18,032) $1,053 $19,523
CAPEX (716) (2,676) (4,560) (8,699) (11,206) (8,348)
--------- ------------------ ---------------------------
Free Cash
Flow ($12,571) ($4,156) ($4,492) ($26,731)($10,153) $11,175
========= ================== ===========================
Restructuring
and other
charges
(benefits) 2,074 5,005 (136) 8,216 1,873 3,238
Asset
impairment
charges 10,762 - - 10,886 2,234 420
--------- ------------------ ---------------------------
Adjusted Free
Cash Flow $265 $849 ($4,628) ($7,629) ($6,046) $14,833
========= ================== ===========================
Free Cash Flow Reconciliation
-----------------------------
3rd
Quarter 4th Quarter YTD
2005 2005 2004 2005 2004 2003
--------- ------------------ ---------------------------
Net cash
provided by
(used in)
operating
activities 2 ($4,110) ($5,614) ($2,405) $490 $34,026
========= ================== ===========================
Purchase of
property and
equipment,
net (716) (2,676) (4,560) (8,699) (11,206) (8,348)
Provision
(benefit)
for income
taxes (1,757) (3,450) (1,245) (9,160) (4,123) 2,038
Interest
expense 305 402 189 1,408 620 1,131
Changes in
operating
assets and
liabilities (987) 2,793 2,382 (5,431) 2,981 (16,208)
Asset
impairment
charges (10,762) - - (10,886) (2,234) (420)
Loss (gain)
on sale of
property and
equipment 398 (59) - 339 - -
Increase in
deferred
income taxes 1,121 3,651 4,152 9,007 3,394 (937)
Non-cash
restructuring (175) (707) 204 (904) (75) (107)
--------- ------------------ ---------------------------
Free Cash
Flow ($12,571) ($4,156) ($4,492) ($26,731)($10,153) $11,175
========= ================== ===========================
Restructuring
and other
charges
(benefits) 2,074 5,005 (136) 8,216 1,873 3,238
Asset
impairment
charges 10,762 - - 10,886 2,234 420
--------- ------------------ ---------------------------
Adjusted Free
Cash Flow $265 $849 ($4,628) ($7,629) ($6,046) $14,833
========= ================== ===========================
Free Cash Flow and Adjusted Free Cash Flow do not represent funds
available for our discretionary use and are not intended to represent
or to be used as a substitute for cash flow from operations data as
measured under GAAP. The items excluded from Free Cash Flow and
Adjusted Free Cash Flow are significant components of our Statements
of Operations and Statements of Cash Flows and must be considered in
performing a comprehensive assessment of our overall financial
results. Free Cash Flow and Adjusted Free Cash Flow and the associated
sequential trends should not be considered in isolation. Our
calculation of Free Cash Flow and Adjusted Free Cash Flow may not be
consistent with calculations of Free Cash Flow and Adjusted Free Cash
Flow used by other companies.
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