Aavid Thermal Technologies, Inc. Announces First Quarter Results.Business/Technology Editors CONCORD, N.H.--(BUSINESS WIRE)--May 9, 2001 Aavid Thermal thermal /ther·mal/ (ther´m'l) pertaining to or characterized by heat. ther·mal adj. 1. Of, relating to, using, producing, or caused by heat. 2. Technologies, Inc., a leading provider of thermal management solutions and developer of computational fluid dynamics Computational fluid dynamics The numerical approximation to the solution of mathematical models of fluid flow and heat transfer. Computational fluid dynamics is one of the tools (in addition to experimental and theoretical methods) available to solve software, today announced preliminary operating results for its first quarter ended March 31, 2001. For the quarter, total sales were $61.6 million or 9.8% lower than the $68.3 million reported in the prior quarter, and represented a $16.4 million decrease from the $78.0 million in sales reported for the first quarter of 2000. Sales for the Company's software subsidiary, Fluent fluent /flu·ent/ (floo´int) flowing effortlessly; said of speech. , Inc., were $17.8 million, or 14.9% higher than the $15.5 million in sales reported for the fourth quarter of 2000, and a 21.2% increase over first quarter 2000 sales of $14.7 million. First quarter sales for the thermal management division totaled $43.8 million or 17.0% lower than the prior quarter's sales of $52.8 million and 30.8% lower than the $63.3 million in sales reported for the first quarter of 2000. The Company's Adjusted 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 (adjusted earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
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. and non-recurring charges) for the first quarter of 2001 was $6.0 million. This represents a 34.9% decrease from the $9.2 million of Adjusted EBITDA for the first quarter of 2000 as well as 38.8% decrease from the $9.8 million reported in the fourth quarter of 2000. Due to the continued softness in the computer, networking and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industries served by its thermal management division, the Company anticipates that its revenues and EBITDA for the second quarter of 2001 will approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. the first quarter 2001 levels. However, the Company does expect to see revenue growth in the second half of 2001. EBITDA is also expected to grow in the second half of the year as a result of cost reductions at the thermal management division, such as personnel reductions and manufacturing consolidations. The Company also announced that on May 4, 2001, it amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its senior credit facility 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 an equity contribution made by the Company's investors as part of their February February: see month. 2, 2000 agreement with the Company's bondholders. The investors contributed $8.0 million in cash, $6.0 million of which the Company used to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. the three remaining principal payments on the bank term debt due in
2001, and the remaining $2.0 million reduced the four principal payments
due in 2002 by $0.5 million each. The investors also contributed $26.2
million in face value of the Company's 12.75% Senior Subordinated SubordinatedA claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. Notes due 2007 to be retired. Additionally, certain covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the ratios and definitions were amended as further described in the attached Appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. II. Bart Noun 1. Bart - a member of the British order of honor; ranks below a baron but above a knight; "since he was a baronet he had to be addressed as Sir Henry Jones, Bart." baronet aristocrat, blue blood, patrician - a member of the aristocracy Patel, Aavid's President and Chief Executive Officer, commented, "We appreciate the level of confidence that our investors and lenders have demonstrated through the completion of these transactions. As a result, the Company has the financial strength and flexibility to vigorously vig·or·ous adj. 1. Strong, energetic, and active in mind or body; robust. See Synonyms at healthy. 2. Marked by or done with force and energy. See Synonyms at active. compete in all of our markets." The Company has scheduled its quarterly conference call for Thursday Thursday: see week. , May 10, 2001 at 10:00 a.m. Eastern. The call may be accessed by dialing 1-888-413-1986 and entering reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number 18732286. The conference call will also be webcast and archived on the audio portion of the Company's website at http://www.aatt.com Company Background Aavid Thermal Technologies, Inc. is a leading provider of thermal management solutions for dissipating potentially damaging heat from digital and industrial electronics. Aavid serves a highly diversified diversified (di·verˑ·s range of markets, principally in 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. , Europe Europe (y  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 the Far East, driven by the company's
operations in two distinct markets: thermal management solutions and
computational fluid dynamics software.
Thermal management solutions include products and services that solve problems associated with the dissipation Dissipation See also Debauchery. Breitmann, Hans lax indulger. [Am. Lit.: Hans Breitmann’s Ballads] Burley, John wasteful ne’er-do-well. [Br. Lit. of unwanted heat in electronic and electrical components and systems. Computational fluid dynamics (CFD CFD - Computational Fluid Dynamics ) software permits computer modeling and flow analysis of products and processes that would otherwise require time-consuming time-con·sum·ing adj. Taking up much time. time-consuming Adjective taking up a great deal of time Adj. 1. and expensive physical models and the facilities to test them. Ongoing increases in silicon and system integration, higher processing speeds See MHz. and frequencies, smaller form factors, more sophisticated power requirements and other advances in chip technology create excessive heat in microprocessors This is a list of microprocessors. Intel
Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. operate efficiently only in a narrow temperature band. The excessive heat generated by these semiconductors not only harms their own performance but also degrades system performance and reliability and can cause system failure. The increasingly wide range of environmental conditions, including temperature extremes, in which electronic systems are expected to operate, exacerbates these negative effects. The use of Aavid's thermal solutions helps maintain device and system performance and reliability and helps avoid premature pre·ma·ture adj. 1. Occurring or developing before the usual or expected time. 2. Born after a gestation period of less than the normal time, especially, in human infants, after a period of less than 37 weeks. component and system failure. Additional information on Aavid Thermal Technologies is available on the World Wide Web at http://www.aatt.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 Under 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 The matters discussed in this release contain 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. (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company that is based on the beliefs of the management of the Company, as well as assumptions made by and information currently available to the management of the Company. The words "estimate," "project," "believe," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events, and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. The Company does not undertake any obligation to publicly release any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. Adjusted EBITDA is included because the Company understands that such information is considered to be an additional basis on which to evaluate our ability to pay interest, repay debt and make capital expenditures. Adjusted EBITDA is not intended to represent and should not be considered more meaningful than, or as an alternative to, measures of performance, profitability or liquidity determined 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 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 . Summary Financial Statements Attached
Aavid Thermal Technologies, Inc.
Summary Financial Statements - Appendix I
Quarter Ending March 31, 2001
Consolidated Statements of Operations (Unaudited)
Quarter Quarter Quarter
Ending Ending Ending
March 31, December 31, April 1,
2001 2000 2000
(in thousands) (Company) (Company) (Predecessor)
(Pro forma)
(1)
Aavid Thermalloy $ 43,808 $ 52,808 $ 63,316
Fluent 17,803 15,492 14,686
Combined net sales 61,611 68,300 78,002
Cost of goods sold 38,144 43,047 55,567
Gross profit 23,467 25,253 22,435
S,G&A expenses 17,964 16,389 18,261
Write-off of in-process R&D -- -- 15,000
Amortization of intangibles 8,560 11,500 5,354
Restructuring charge (3) 12,457 -- --
Research and development 2,884 3,148 2,475
Operating income(loss) (18,398) (5,784) (18,655)
Interest (expense)income, net (6,278) (6,349) (4,805)
Other (expense)income (146) 95 (64)
Income before taxes (24,822) (12,038) (23,524)
Income tax benefit (expense) (909) 4,197 (1,841)
Minority interest income
(expense) 3,170 1,484 (4)
Net income $(22,561) $ (6,357) $(25,369)
Interest 6,056 6,293 4,534
Taxes 909 (4,197) 1,841
Depreciation 3,196 3,638 3,108
Amortization 9,113 11,909 5,564
Minority interest (3,170) (1,484) 4
Write-off in process R&D -- -- 15,000
Other one time charges (3) 12,457 -- --
Non-cash inventory charge from
purchase accounting write-up
to fair value (2)
-- -- 4,532
Adjusted EBITDA $ 6,000 $ 9,802 $ 9,214
North America cost savings
add-back (4) 2,707 -- --
Amended Adjusted EBITDA $ 8,707 $ 9,802 $ 9,214
(1) Pro forma combines the period January 1, 2000 to February 1,
2000 (operations of the Predecessor) with the period February 2, 2000
to April 1, 2000 (operations of the Company). Results are considered
pro forma as Aavid Thermal Technologies, Inc.'s financial statements
are presented using a new basis of accounting subsequent to the Willis
Stein merger. Presentation of periods prior to the Willis Stein merger
are referred to as operations of the predecessor.
(2) Inventory write-up to fair value that was recorded as part of
purchase accounting is included as additional expense within cost of
sales for the first three months of 2000.
(3) One-time restructuring charge related to the closure of the
Dallas, Texas manufacturing facility and employee cost reductions in
New Hampshire.
(4) As further discussed in 1.) on Appendix II, as provided by our
Amended Senior Credit Facility, this represents a pro forma add-back
to EBITDA associated with estimated cost savings which will result
from certain employee cost reductions in New Hampshire and the
cessation (on or about June 30, 2001) of manufacturing operations in
our Dallas, Texas facility.
Consolidated Condensed Balance Sheets (Unaudited)
March 31, December 31,
2001 2000
(in thousands)
ASSETS
Cash $ 14,472 $ 23,849
Accounts receivable 43,784 49,094
Inventory 23,471 25,203
Other current assets 5,264 4,625
Current assets 86,991 102,771
Property, plant and equipment 50,114 57,013
Goodwill, net 156,636 162,430
Developed technology and
Assembled workforce 46,291 49,015
Other assets 10,484 15,059
Total assets $ 350,516 $ 386,288
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Current portion long-term debt $ 10,745 $ 10,768
Accounts payable 16,915 18,582
Accrued expenses 22,477 29,998
Restructuring charges 3,745 1,274
Other current liabilities 17,758 17,381
Current liabilities 71,640 78,003
Revolving line of credit 7,700 7,700
Term loan 39,000 41,000
12 3/4% senior subordinated notes 144,451 144,290
Other long term debt 173 244
Deferred taxes 9,923 9,977
Total liabilities 272,887 281,214
Commitments and Contingencies
Minority interest in consolidated
subsidiaries 1,744 4,915
Preferred stock -- --
Common stock -- --
Warrants 4,560 4,560
Additional paid in capital 147,187 147,187
Cumulative translation
adjustment (3,321) (1,608)
Retained Earnings (72,541) (49,980)
Total Stockholder's equity 75,885 100,159
Total liabilities, minority
Interest and stockholder's equity $ 350,516 $ 386,288
Consolidated Condensed Statements of Cash Flows (Unaudited)
Quarter Quarter Quarter
Ending Ending Ending
March 31, December 31, April 1,
2001 2000 2000
(Pro Forma)
(in thousands) (Company) (Company) (Predecessor)
Net Income $ (22,561) $(6,357) $(25,369)
Depreciation and amortization 12,308 15,547 8,672
In-process R&D -- -- 15,000
Inventory fair value adjustment -- -- 4,532
Interest paid on Sr. Credit
Facility (1,213) (2,368) (781)
Interest paid on 123/4% senior
subordinated notes (9,562) -- --
Restructuring charge 12,457 -- --
Other operating cash flows 4,609 4,345 (63)
Total cash flows from
operations (3,962) 11,167 1,991
Purchase of property, plant and
equipment (2,612) (2,851) (2,110)
Proceeds from sale of property -- -- --
Total cash flows from investing
activities (2,612) (2,851) (2,110)
Issuance of common stock -- -- 349
Advances under line of credit -- -- 7,700
Repayments of line of credit -- -- (8,182)
Advances under other debt
obligations -- -- 53,856
Repayments other debt
obligations (2,080) (2,760) (80,025)
Payment of merger expenses -- -- (15,793)
Repurchase of common stock,
options and warrants -- -- (261,268)
Proceeds from 12 3/4% senior
subordinated notes -- -- 148,312
Proceeds from investors -- -- 152,000
Cash flows from financing
activities (2,080) (2,760) (3,051)
Foreign exchange effect (723) (608) (126)
Net increase (decrease) in cash (9,377) 4,948 (3,296)
Cash at beginning of period 23,849 18,901 18,273
Cash at end of period $ 14,472 $ 23,849 $ 14,977
Aavid Thermal Technologies, Inc.
Appendix II - Amended Senior Credit Ratio Definitions
1.) Solely for purposes of calculating the covenants contained
within the amended credit agreement EBITDA will include an add-back to
net income for the following: salaries and other expenses that will be
eliminated as a result of the Borrower's permanent reduction of its
workforce in Texas and New Hampshire and the cessation of its
manufacturing operations in Dallas, Texas which have occurred or will
have occurred on or before June 30, 2001 in an amount not to exceed
(I) $10,800,000 for the twelve month period ending on the last day of
the first fiscal quarter of 2001, (II) $9,600,000 for the twelve month
period ending on the last day of the second fiscal quarter of 2001,
(III) $6,900,000 for the twelve month period ending on the last day of
the third fiscal quarter of 2001, (IV) $4,200,000 for the twelve month
period ending on the last day of the fourth fiscal quarter of 2001,
(V) $1,500,000 for the twelve month period ending on the last day of
the first fiscal quarter of 2002.
2.) The definition of "Fixed Charges" was amended in its
entirety
to read as follows:
"Fixed Charges" shall mean, with respect to any period, the sum
(without duplication) of (a) cash Interest Expense for such period,
(b) Capital Expenditures during such period, (c) income or other taxes
actually paid or payable during such period, (d) regularly scheduled
payments of principal on the Term Loans during such period (other than
any such payments during the fiscal year ending December 31, 2001) and
(e) regularly scheduled payments of principal on other Funded Debt of
the Borrower and its Subsidiaries on a consolidated basis during such
period.
3.) The definition of "Fixed Charges Ratio" was amended in its
entirety to read as follows: "Fixed Charges Ratio" shall mean, in
respect of any period, the ratio of:
(i) EBITDA for the preceding four consecutive fiscal quarters, to
(ii) the excess of (x) Fixed Charges for such four quarters, over
(y) all interest expense attributable to the Permitted High Yield
Securities, as defined, surrendered to the Trustee for cancellation in
connection with the Permitted Makewell Acquisition, as defined, during
such period.
4.) The definition of "Interest Coverage Ratio" was amended in
its
entirety to read as follows: "Interest Coverage Ratio" shall mean, as
of any date of determination, the ratio of:
(i) EBITDA for the preceding four consecutive fiscal quarters, to
(ii) the excess of (x) cash Interest Expense for such four
quarters, over (y) all interest expense attributable to the Permitted
High Yield Securities surrendered to the Trustee for cancellation in
connection with the Permitted Makewell Acquisition, as defined, during
such period; provided, that for purposes of calculating the Interest
Coverage Ratio for (a) the last day of the first full fiscal quarter
of 2000, Interest Expense shall be based on Interest Expense for such
fiscal quarter multiplied by 4, (b) the last day of the second full
fiscal quarter 2000, Interest Expense shall be based on Interest
Expense for the six month period ending on such date multiplied by 2
and (c) the last day of the third full fiscal quarter of 2000,
Interest Expense shall be based on Interest Expense for the nine month
period ending on such date multiplied by 4/3.
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