APW Ltd. Announces Second Quarter Results.Business Editors ST. MICHAEL, Barbados--(BUSINESS WIRE)--April 1, 2002 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 second quarter ended February 28, 2002. The following results are for the quarter and six months ended February 28, 2002. FISCAL SECOND QUARTER SUMMARY Sales for the three months ended February 28, 2002 were $201 million, an 8.6% decline from the first quarter ended November 30, 2001, and a decline of 36.8% from the same period last year. Allowing for the lesser number of working days in the second quarter and the effect of the sale of the company's Zero Cases business unit, sales per shipping day in the second quarter were comparable to those in the first quarter. Sales for the six months ended February 28, 2002 were $421 million, a decline of 37.9% from the same period last year. Sales have been relatively stable since September 2001 at approximately $70 million per month, with the exception of December, which was lower due to holidays. APW expects sales to increase in its third quarter compared to the second quarter based on ramps in two major programs, new program start-ups and a continued lessening of inventory corrections at our customers. During the second quarter, APW was awarded nineteen new programs with a total anticipated program value of $195 million. These new program awards were from both existing and new customers and reflect the high levels of customer service that APW has consistently provided. 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 $(0.4) million during the quarter and $(2.7) million for the six months ended February 28, 2002. Free cash flow, defined as cash flow from operations less capital expenditures of $5.9 million and including $5.2 million of cash used in restructuring, was $(11.6) million during the quarter. APW continues to be effective in managing its operations to minimize its use of cash while it restructures its operations. APW's projections indicate that free cash flow will continue to improve. Net debt was $635 million at February 28, 2002, slightly less than the $638 million at November 30, 2001. Cost reduction initiatives continued during the quarter and were focused on further reducing Manufacturing Overhead (MOH See modem on hold. ) and Sales, Administrative, and Engineering (SAE) expenses through the rationalization of its global facilities. During the quarter, the company announced the closing of three small facilities in Austin, TX, Hudson, NH and New Forest, England. As a result of these restructuring initiatives and in accordance with EITF-94-03, the company recorded GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). 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 $9.5 million to cover lease exit and severance costs. Additionally, the Company recorded non-recurring restructuring related charges of $9.5 million primarily for non-cash write-offs of 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. associated with exited facilities. Also during the quarter, APW completed investments in and occupied its new 150,000 sq.ft. facility in Shanghai, PRC and just recently occupied a new 120,000 sq. ft. facility in Galway, Ireland. The combination of consolidating and adding sites is directed at minimizing APW's total fixed cost while providing the capacity and regional service that our global customers need. MOH and SAE expenses were a combined $80.7 million in the second quarter, down from $84.3 million in the first quarter. APW expects to reduce MOH and SAE expenses to below $75 million per quarter during the fourth quarter of fiscal 2002. Recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. Update APW is in advanced discussions with its lenders on a recapitalization of the company. This plan would dramatically reduce APW's debt. Although some work remains to be completed and no assurances can be made, APW expects to be able to make a more definitive announcement during April as to when and how it will implement the recapitalization. Richard G. Sim, Chairman, 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. and President of APW commented, "I am pleased with the underlying performance of our business in the quarter. Our revenue has stabilized, we were awarded significant new programs from our existing customer base as well as new customers, and we continue to realize the benefits of our cost reduction efforts. Our underlying financial results are improving as evidenced by the minimal use of operating cash in the quarter which was somewhat masked by the non-recurring, non-cash charges 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. recorded in the quarter. We accomplished many things in the quarter including the sale of our Zero Case business and made significant progress on our recapitalization plan. The recapitalization plan as conceived should be reassuring to our customers and to our suppliers. We are looking forward to completing our recapitalization as soon as possible so that we can completely focus on exploiting our competitive advantages in the markets we serve." Non-recurring Items The company incurred and recorded additional non-recurring charges in the quarter partially driven by its efforts to recapitalize re·cap·i·tal·ize tr.v. re·cap·i·tal·ized, re·cap·i·tal·iz·ing, re·cap·i·tal·iz·es To change the capital structure of (a corporation). re·cap its balance sheet. In accordance with Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") 121 a non-cash charge of $392 million to reduce the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of goodwill and other intangibles was recorded. In accordance with SFAS 109, a non-cash income tax expense of $40 million was recorded to provide for a valuation allowance against the Company's net deferred tax asset position. Other non-recurring charges include professional fees associated with the recapitalization and a charge related to an obligation of the company's 401(k) benefit plan tied to the company's stock price. Additionally, the company recorded a non-recurring gain of $8 million on the sale of its Zero Case business. Including all non-recurring items in the quarter, GAAP net loss was ($488.8) million. In accordance with EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 86-30, as of February 28, 2002 the Company's revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility debt has been reclassified as current. The Company received a waiver of its financial covenants for the second quarter ended February 28, 2002 from its lenders. 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 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 in product and system design, integration and supply chain management. APW Ltd. operates in over 30 locations throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , Europe and Asia. The Company's 10-Q with complete financial statements for the quarter ended February 28, 2002 will be filed on April 15, 2002. For further information contact: APW Ltd. Mike Gasick, Treasurer 262-523-7631 www.apw.com 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's results are also subject to general economic conditions, market conditions in the computer, semiconductor, telecommunications, 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
Customer Sales Summary
Top 10 Customers
Actual Actual Forecast
Quarter Ended Quarter Ended Six Months Ended
November 30, 2001 February 28, 2002 February 28, 2002
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Compaq Compaq Compaq
Cymer Cymer Cymer
EMC EMC EMC
Ericsson Ericsson Ericsson
Hewlett-Packard Hewlett-Packard Hewlett-Packard
IBM Hoffman IBM
Lucent IBM Lucent
Motorola Lucent Motorola
NCR NCR NCR
Sun Microsystems Sun Microsystems Sun Microsystems
Top 10 Customers Top 10 Customers Top 10 Customers
Sales $94,686 Sales $94,907 Sales $189,174
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% of Total Sales 43% % of Total Sales 47% % of Total Sales 45%
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Top Customer Top Customer Top Customer
% of Total Sales 8% % of Total Sales 11% % of Total Sales 8%
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