APW Ltd. Announces First Quarter Results.Business Editors/High Tech Writers ST. MICHAEL, Barbados--(BUSINESS WIRE)--Dec. 19, 2001 APW APW All Pro Wrestling APW Altmar Parish Williamstown (School District; Parish, New York) APW Add-Printer Wizard (Microsoft Windows) APW Augmented Plane Wave APW Apparent Polar Wander Ltd. (NYSE NYSE See: New York Stock Exchange : APW), a leading Technically Enabled Manufacturing Services "TEMS TEMS Terrestrial Ecosystem Monitoring Sites TEMS Tactical Emergency Medical Support TEMS Toyota Electronic Modulated Suspension TEMS Tactical Emergency Medical Services (EMS) TEMS Total Electronic Migration System " Company, announced today its financial results for the fiscal first quarter ended November November: see month. 30, 2001. The following results exclude all non-recurring charges in both the current and prior year periods. FISCAL FIRST QUARTER SUMMARY Sales for the three months ended November 30, 2001 were $220 million, a 24% decline from the fourth quarter ended August 31, 2001, and a decline of 39% from the same period last year. Cash earnings, which exclude amortization and non-cash financing costs, were a $14.1 million loss or ($0.35) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the first quarter ended November 30, 2001 compared to cash earnings of $21.6 million or $0.52 per diluted share for the prior year quarter on a pro-forma basis.
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Summary of Financial Results for APW Ltd. (excluding non-recurring
charges)
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(Dollars in millions, except per share amounts)
Q1 02 Q1 01
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Sales $219.8 $359.7
EBITDA $2.1 $44.3
Cash Earnings $(14.1) $21.6
Cash EPS $(0.35) $0.52
Net Earnings $(22.0) $15.4
Diluted EPS $(0.55) $0.37
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FIRST QUARTER REVIEW Sales for the three months ended November 30, 2001 were $220 million. Following five months of relatively flat sales for the months of April through August, a severe disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. occurred from August to September September: see month. . The events of September 11, 2001 clearly negatively impacted the psychology of many businesses leading to a reduction in demand. Sales for the months of September, October October: see month. and November were relatively flat at reduced levels. The lower revenues of the first quarter reflect additional softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. in end user demand coupled with efforts by our customers to further reduce their inventory. 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. in the first quarter was 14.3% compared with 18.3% in the fourth quarter of fiscal 2001. The decrease is primarily the result of lower absorption absorption [Lat.,=sucking from], taking of molecules of one substance directly into another substance. It is contrasted with adsorption, in which the molecules adhere only to the surface of the second substance. of fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). on the lower sales volume. APW was able to partially offset the margin loss from lower sales by reducing Manufacturing Overhead (MOH See modem on hold. ) expenses to $43.9 million from $49.3 million in the fourth quarter, an 11% sequential One after the other in some consecutive order such as by name or number. decline. Sales, Administrative and Engineering (SAE sae abbr (BRIT) (= stamped addressed envelope) → sobre con las propias señas de uno y con sello ) costs were $40.4 million in the first quarter, representing a sequential decline of $5.6 million or 12% from the fourth quarter of fiscal 2001. MOH and SAE expenses declined to $84.3 million in the quarter, down 12% from $95.2 million in the fourth quarter and down 31% from the levels in the second quarter of fiscal 2001, adjusted to include the full quarter impact of the Mayville Mayville is the name of a number of places in the United States of America:
Under United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), including all non-recurring charges, APW incurred a loss of $36.7 million or ($0.92) per diluted share in the current quarter. 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 non-recurring items recorded in the quarter totaled $19.6 million, before taxes. GAAP recognized restructuring expenses totaled $10.0 million and relate primarily to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and lease exit costs associated with facility closings. Other non-recurring items totaled $9.6 million and consist primarily of the non-cash write down of equipment and leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. of exited facilities. APW's operational team has continued to be successful in maintaining high levels of quality and delivery throughout the implementation of the Company's restructuring initiatives. 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 , excluding cash used in restructuring, was ($2.0) million during the quarter. Free cash flow, defined as cash flow from operations less capital expenditures and including all cash used in restructuring, was ($15.3) million. During the quarter, primary working capital was reduced by a further $11 million from the fourth quarter of fiscal 2001. Net inventory on November 30, 2001, was $118.5 million, down $16.5 million or 12.2% from August 31, 2001. FISCAL 2002 OUTLOOK APW's business suffered a sharp correction in September. Since then, APW's sales have been relatively flat. Even though end market conditions remain challenging, a number of factors suggest that after a relatively flat second quarter, APW's sales should improve. This expectation is based on an anticipated improvement in our short cycle non-OEM business, the increasing demand of specific large programs and a tapering off tapering off Sports medicine A format for competition training, where a world-class athlete ↓ frequency and intensity of training in the wks before an Olympic or other sport event of importance, with the hope that perfomance in the key event will be medal-worthy of the negative effects of inventory corrections on demand. Modest sales growth in the third and fourth quarters of fiscal 2002 due to the factors described above, combined with additional reductions to MOH and SAE, should allow APW's recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. EBITDA to increase with an objective of obtaining at least a 10% EBITDA margin in the fourth quarter of fiscal 2002. Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a G. Sim (1) (Society for Information Management, Chicago, IL, www.simnet.org) Founded in 1968 as the Society for MIS, it is a membership organization made up of corporate and division heads of IT organizations. , Chairman, President, and Chief Executive Officer of APW Ltd. commented: "APW's greatest strength is the combination of our global supply chain solution and our people that allow us to provide our customers with a level of service that is second to none. APW's challenge has been supporting a leveraged balance sheet during the severe downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. that has occurred across the technology sector. During this downturn, we have significantly reduced our fixed costs and working capital and by so doing, we have been successful in minimizing our use of cash. APW has continued to win large electronic integration programs and gain market share with our customers. However, we believe that APW would be winning more business if it were not for our level of debt. Consequently, it is a priority to improve our capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. and we are evaluating all of our financial and strategic alternatives." About APW Ltd. APW Ltd. is a Technically Enabled Manufacturing Services "TEMS" company that designs and manufactures large, complex infrastructure products for OEMs in the communications, large enterprise hardware and 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 markets. APW Ltd. has particular skills in the areas of designing and manufacturing enclosures, thermal management, power supplies and backplanes; as well as core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
 r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia.Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Certain of the above comments represent 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. made pursuant to the provisions 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. Management cautions that these statements are based on current estimates of future performance and are highly dependent upon a variety of factors, which could cause actual results to differ from these estimates. APW Ltd.'s results are also subject to general economic conditions, market conditions in the computer, semiconductor, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , and electronic industries in North America, South America, Europe and Asia, the impact of events occurring September 11, 2001, continued market acceptance of APW's existing products and new product introductions, competitive product and pricing pressures, foreign currency risk, interest rate risk, APW's ability to access capital markets and APW's ability to continue to meet required debt covenants. See our 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. and Form S-3 for further information on risk factors.
APW Ltd.
Adjusted Comparative Statements of Operations
(In thousands, except per share data)
Three Months Ended November 30, 2001 (2)
------------------------------------ Adjusted
APW (1) APW Three Months
Reported 1st Quarter Adjusted Ended
Results Adjustments Results Nov 30, 2000
--------- ---------- ---------- ----------
Net sales $ 219,829 $ - $ 219,829 $ 359,723
Cost of products sold 197,942 (9,625) 188,317 268,959
--------- ---------- ---------- ----------
Gross profit 21,887 9,625 31,512 90,764
Engineering, selling and
administrative expenses 40,358 - 40,358 56,011
--------- ---------- ---------- ----------
EBITA (18,471) 9,625 (8,846) 34,753
Amortization of intangible
assets 6,302 - 6,302 6,025
Restructuring expenses 10,011 (10,011) - -
Other expense (income):
Net financing costs 14,500 - 14,500 6,464
Other - net (362) - (362) 317
--------- ---------- ---------- ----------
Earnings (loss) before
income taxes (48,922) 19,636 (29,286) 21,947
Income tax expense (benefit) (12,230) 4,909 (7,321) 6,518
--------- ---------- ---------- ----------
Net earnings (loss) $ (36,692)$ 14,727 $ (21,965)$ 15,429
========== ========== ========== ==========
Cash earnings (loss) (3) $ (28,785)$ 14,727 $ (14,058)$ 21,640
========== ========== ========== ==========
Depreciation expense $ 18,820 $ 7,914 $ 10,906 $ 9,500
EBITDA $ 349 $ (1,711)$ 2,060 $ 44,253
Memo: Non-cash financing
costs $ 1,605 $ - $ 1,605 $ 186
Earnings (loss) per share:
Cash earnings (loss) per
share: (3) $ (0.71)$ 0.36 $ (0.35)$ 0.52
========== ========== ========== ==========
Basic earnings (loss) per
share: $ (0.92)$ 0.37 $ (0.55)$ 0.39
========== ========== ========== ==========
Diluted earnings (loss) per
share: $ (0.92)$ 0.37 $ (0.55)$ 0.37
========== ========== ========== ==========
Weighted average common
shares outstanding (000's) 40,046 40,046 40,046 39,213
========== ========== ========== ==========
Weighted average common and potential dilutive
common shares
outstanding (000's) (4) 40,046 40,046 40,046 41,381
========== ========== ========== ==========
(1) Adjustments in the quarter ended November 30, 2001 are: (i) $10.0
million restructuring charge for severance, lease exit and
dilapidation costs, and (ii) $9.6 million in other items related
to the restructuring.
(2) Excludes a $2.7 million book loss on the sale of a subsidiary.
(3) Cash earnings exclude the amortization of intangible assets and
non-cash financing costs. Shares used in calculating cash loss
per share for the three months ended November 30, 2001 include
the dilutive effect of 653,000 shares.
(4) Shares outstanding for the three months ended November 30, 2001
reflect no dilution due to the loss in the quarter then ended.
APW Ltd.
Comparative Balance Sheets
(In Thousands)
November 30, August 31,
2001 2001
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 7,816 $ 8,542
Accounts receivable, net 100,633 112,992
Inventories, net 118,518 135,019
Prepaid expenses and other assets 31,385 30,975
----------- -----------
Total current assets 258,352 287,528
Property, plant & equipment:
Gross property, plant & equipment 461,615 477,915
Less: accumulated depreciation (224,381) (222,886)
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Net property, plant & equipment 237,234 255,029
----------- -----------
Goodwill, net 674,407 679,225
Other intangible assets, net 26,730 27,616
Deferred income tax asset 23,212 11,273
Other assets 42,573 43,173
----------- -----------
Total assets $ 1,262,508 $ 1,303,844
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ - $ 5,745
Trade accounts payable 88,223 118,466
Accrued compensation and benefits 25,615 29,594
Income taxes payable 41,962 37,196
Other current liabilities 44,989 40,163
----------- -----------
Total current liabilities 200,789 231,164
Long-term debt 642,434 611,549
Other non-current liabilities 41,824 45,375
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Total liabilities 885,047 888,088
Shareholders' equity 377,461 415,756
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Total liabilities and shareholders' equity $ 1,262,508 $ 1,303,844
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APW Ltd.
Comparative Statements of Operations
(In thousands, except per share data)
Three Months Ended
November 30,
-----------------------
2001 2000
----------- -----------
Net sales $ 219,829 $ 359,723
Cost of products sold 197,942 268,959
----------- -----------
Gross profit 21,887 90,764
Engineering, selling
and administrative expenses 40,358 56,011
Loss on sale of subsidiary - 2,667
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EBITA (18,471) 32,086
Amortization of intangible assets 6,302 6,025
Restructuring expenses 10,011 -
Other expense (income):
Net financing costs 14,500 6,464
Other - net (362) 317
----------- -----------
Earnings (loss) before income taxes (48,922) 19,280
Income tax expense (benefit) (12,230) 6,518
----------- -----------
Net loss $ (36,692) $ 12,762
=========== ===========
Depreciation expense $ 18,820 $ 9,500
EBITDA $ 349 $ 41,586
Loss per share:
Basic earnings (loss) per share: $ (0.92) $ 0.33
=========== ===========
Diluted earnings (loss) per share: $ (0.92) $ 0.31
=========== ===========
Weighted average common
shares outstanding (000's) 40,046 39,213
=========== ===========
Weighted average common and potential dilutive
common shares outstanding (000's)(1) 40,046 41,381
=========== ===========
(1) Shares outstanding for the three months ended November 30, 2001
reflect no dilution due to the loss in the quarter then ended.
APW Ltd.
Customer Sales Summary
Top 10 Customers
Actual
Quarter Ended November 30, 2001
Compaq
Cymer
EMC
Ericsson
Hewlett-Packard
IBM
Lucent
Motorola
NCR
Sun Microsystems
Top 10 Customers Sales $ 94,686
-----------
% of Total Sales 43%
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Top Customer
% of Total Sales 8%
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