Accellent Inc. Announces Second Quarter 2006 Financial Results.WILMINGTON Wilmington. 1 City (1990 pop. 71,529), seat of New Castle co., NE Del., on the Delaware River and tributary streams, the Christina and the Brandywine; settled 1638, inc. as a city 1832. , Mass. -- Accellent Inc. (the "Company"), a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Accellent Holdings Corp. ("Accellent"), announced results for the three months ended June June: see month. 30, 2006. Historical Financial Results Second Quarter Financial Results Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the second quarter of 2006 increased 8.7% to $124.7 million compared with $114.7 million in the corresponding period of 2005. The net loss for the second quarter of 2006 was $(0.3) million compared to net income in the corresponding period of 2005 of $5.9 million. Compared to the second quarter of 2005, the second quarter of 2006 included $8.5 million in higher interest costs and $2.8 million in higher amortization expense related to the Kohlberg Kravis Roberts Kohlberg Kravis Roberts & Co (commonly referred to as KKR) is a New York City-based private equity firm that focuses primarily on late-stage leveraged buyouts. It was founded in 1976 by Jerome Kohlberg, Jr., and cousins Henry Kravis and George R. & Co. L.P. ("KKR KKR Korringa-Kohn-Rostoker (method) KKR Kohlberg, Kravis & Roberts & Co. KKR Kalkara (postal locality, Malta) KKR Kramers-Kronig Relations KKR Komarappa Gounder Ramalingam (hospital in India) ") and Bain Capital Bain Capital LLC is a Boston, Massachusetts-based private equity firm founded in 1984 by Mitt Romney, the former Governor of Massachusetts, and two other partners from the consulting firm Bain & Company: T. Coleman Andrews III and Eric Kriss. ("Bain n. 1. A bath; a bagnio. ") acquisition of the Company on November November: see month. 22, 2005 (the "2005 transaction"), $1.2 million in lower 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 expenses, and $0.7 million in higher non-cash compensation related to the Company's adoption of 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 No.123R. Six Months Financial Results Net sales for the six months ended June 30, 2006 increased 10.2% to $246.4 million compared with $223.6 million in the corresponding period of 2005. The net loss for the first six months of 2006 was $(10.5) million compared to net income in the corresponding period of 2005 of $9.1 million. Compared to the first six months of 2005, the first six months 2006 included $16.3 million in higher interest costs, $5.5 million in higher amortization expense and non-cash inventory step-up step-up A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock. charges of $6.4 million related to the 2005 transaction and $2.4 million in higher non-cash compensation related to the Company's adoption of SFAS No.123R. Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma 2006 Financial Results (1) Second Quarter Pro Forma Financial Results Giving pro forma effect to the 2005 transaction and the Company's acquisitions of Campbell Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. Engineering, Inc. ("Campbell") and Machining Technology Group, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("MTG MTG Meeting MTG Mortgage MTG Magic: The Gathering MTG Mounting MTG Mind the Gap (London underground announcement) MTG Methanol To Gasoline MTG Manual Tank Gauging MTG Master Timing Generator MTG Micro Turbine Generator ") as if they had occurred as of January January: see month. 1, 2005, net sales for the second quarter ended June 30, 2006 increased 2.6% to $124.7 million compared with net sales of $121.5 million in the corresponding period of 2005. The Company's facility rationalization rationalization, in psychology: see defense mechanism. program negatively impacted the 2006 sales growth rate by 1.2%. 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 (2) for the second quarter ended June 30, 2006 was $28.5 million, the same as Adjusted EBITDA of $28.5 million in the corresponding period of 2005. Adjusted EBITDA margins for the second quarter of 2006 declined to 22.8% from a record 23.4% in the second quarter of 2005 due to customer mix and consulting charges primarily related to integration. Six Months Pro Forma Financial Results Pro forma net sales for the six months ended June 30, 2006 increased 4.0% to $246.4 million compared with pro forma net sales of $237.0 million in the corresponding period of 2005. The Company's facility rationalization program negatively impacted 2006 net sales by 1.2%. Adjusted EBITDA for the six months ended June 30, 2006 increased 4.7% to $54.2 million compared to Adjusted EBITDA of $51.8 million in the corresponding period of 2005. Reconciliations of non-GAAP financial measures to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures are provided in the financial statements accompanying this press release. Conference Call Ron Sparks
Ron Sparks is a Canadian comedian, actor and writer. He was born in Chatham, Ontario but lives in Toronto, Ontario, where he is best known as a stand-up comedian and regular and favourite , President and Chief Executive Officer, and Stew Fisher, Executive Vice President and Chief Financial Officer, will discuss second quarter results in a conference call scheduled for today, August 3, at 5:00 p.m. (Eastern Time). The teleconference can be accessed live on 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 through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Accellent Web site at www.accellent.com or by calling (800) 510-0219 pass code 33502244. Please visit the Web site or dial in 10 to 15 minutes prior to the beginning of the call 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. and install any necessary audio software. A replay of the conference call will be available via www.accellent.com or by telephone at (888) 286-8010 pass code 47481454. About Accellent Accellent Inc. provides fully integrated outsourced manufacturing and engineering services to the medical device industry in the cardiology cardiology Medical specialty dealing with heart diseases and disorders. It began with the 1749 publication by Jean Baptiste de Sénac of contemporary knowledge of the heart. Diagnostic methods improved in the 19th century, and in 1905 the electrocardiograph was invented. , endoscopy endoscopy Examination of the body's interior through an instrument inserted into a natural opening or an incision, usually as an outpatient procedure. Endoscopes include the upper gastrointestinal endoscope (for the esophagus, stomach, and duodenum), the colonoscope (for the and orthopaedic 1. See otrthopedic and orthopedics. Adj. 1. orthopaedic - of or relating to orthopedics; "orthopedic shoes" orthopedic, orthopedical orthopaedic (US), orthopedic adj → markets. Accellent has broad capabilities in design & engineering services, precision component fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. , finished device assembly and complete supply chain management. These capabilities enhance customers' speed to market and return on investment by allowing companies to refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. internal resources more efficiently. For more information, please visit www.accellent.com. 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. This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as 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. , and Section 21E of the Securities Act of 1934, as amended. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the risk factors contained in the Company's 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 December December: see month. 31, 2005 filed with the Securities and Exchange Commission on March 30, 2006. All forward-looking statements are expressly qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by such factors.
Accellent Inc.
Consolidated Condensed Statements of Operations
(in thousands)
(unaudited)
Predecessor | Successor
-------------------------|------------
ProForma |
Three Months Three Months|Three Months
Ended Ended | Ended
June 30, June 30, | June 30,
2005 2005 | 2006
------------ ------------|------------
Net Sales $114,724 $121,512 | $124,727
Cost of Sales 77,505 80,473 | 85,196
------------ ------------|------------
Gross Profit 37,219 41,039 | 39,531
Selling, general & admin. |
expenses 15,823 16,250 | 16,278
Research & development expenses 763 762 | 896
Restructuring and other charges 1,790 1,790 | 568
Amortization of intangibles 1,515 4,303 | 4,301
------------ ------------|------------
Income from operations 17,328 17,934 | 17,488
Interest expense, net (7,776) (15,595)| (16,251)
Other expense (174) (203)| (395)
------------ ------------|------------
Income before income taxes 9,378 2,136 | 842
Income tax expense 3,476 3,583 | 1,190
------------ ------------|------------
Net income (loss) $5,902 $(1,447)| $(348)
============ ============|============
Accellent Inc.
Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDA
(in thousands)
(unaudited)
Predecessor | Successor
-------------------------|------------
Pro Forma |
Three Months Three Months|Three Months
Ended Ended | Ended
June 30, June 30, | June 30,
2005 2005 | 2006
------------ ------------|------------
Net income (loss) $5,902 $(1,447)| $(348)
|
Income tax expense 3,476 3,583 | 1,190
Interest expense, net 7,776 15,595 | 16,251
Depr. and amortization 5,211 7,224 | 8,479
------------ ------------|------------
EBITDA (2) $22,365 $24,955 | $25,572
============ |
|
Restructuring and other charges 1,790 | 568
Stock-based compensation 811 | 1,547
Inventory step-up -- | --
Losses from closed facilities 137 | --
Other 763 | 806
------------|------------
Adjusted EBITDA (2) $28,456 | $28,493
============|============
Accellent Inc.
Consolidated Condensed Statements of Operations
(in thousands)
(unaudited)
Predecessor |Successor
--------------------------|----------
ProForma |
Six Months Six Months |Six Months
Ended Ended | Ended
June 30, June 30, | June 30,
2005 2005 | 2006
------------ -------------|----------
Net Sales $223,597 $237,011 | $246,408
Cost of Sales 154,362 160,540 | 175,545
------------ -------------|----------
Gross Profit 69,235 76,471 | 70,863
Selling, general & admin. |
expenses 30,992 31,844 | 33,259
Research & development exp 1,428 1,428 | 1,872
Restructuring and other charges 2,640 2,640 | 2,297
Amortization of intangibles 3,089 8,606 | 8,602
------------ -------------|----------
Income from operations 31,086 31,953 | 24,833
Interest expense, net (15,761) (31,171)| (32,024)
Other expense (146) (198)| (421)
------------ -------------|----------
Income (loss) before income taxes 15,179 584 | (7,612)
Income tax expense 6,115 6,329 | 2,864
------------ -------------|----------
Net income (loss) $9,064 $(5,745)| $(10,476)
============ =============|==========
Accellent Inc.
Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDA
(in thousands)
(unaudited)
Predecessor |Successor
------------------------|----------
Pro Forma |
Six Months Six Months|Six Months
Ended Ended | Ended
June 30, June 30, | June 30,
2005 2005 | 2006
-----------------------------------
Net income (loss) $9,064 $(5,745)| $(10,476)
|
Income tax expense 6,115 6,329 | 2,864
Interest expense, net 15,761 31,171 | 32,024
Depr. and amortization 10,548 14,584 | 16,652
----------- ------------|----------
EBITDA (2) $41,488 $46,339 | $41,064
=========== |
|
Restructuring and other charges 2,640 | 2,297
Stock-based compensation 874 | 3,261
Inventory step-up -- | 6,422
Losses from closed facilities 703 | --
Other 1,199 | 1,155
------------|----------
Adjusted EBITDA (2) $51,755 | $54,199
============|==========
Accellent Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
Dec. 31, June 30,
2005 2006
----------- -----------
Assets
Current assets
Cash and cash equivalents $8,669 $1,641
Accounts receivable, net 54,916 60,888
Inventories 66,467 65,804
Prepaid expenses and other 3,877 3,388
----------- -----------
Total current assets 133,929 131,721
Property and equipment, net 116,587 124,786
Goodwill 855,345 854,488
Intangibles, net 276,109 267,507
Deferred financing costs and other assets 26,478 30,046
----------- -----------
Total assets $1,408,448 $1,408,548
=========== ===========
Liabilities and stockholder's equity
Current liabilities
Current portion of long-term debt $4,018 $4,027
Accounts payable 21,289 23,553
Accrued expenses 39,150 31,987
----------- -----------
Total current liabilities 64,457 59,567
Notes payable and long-term debt 697,074 704,269
Other long-term liabilities 28,117 46,045
----------- -----------
Total liabilities 789,648 809,881
Stockholder's equity 618,800 598,667
----------- -----------
Total liabilities and stockholder's
equity $1,408,448 $1,408,548
=========== ===========
(1) The Company has presented pro forma results of operations for the periods presented because (i) its 2005 historical results do not include operating results of Campbell and MTG and (ii) the capital structure changed significantly on November 22, 2005 as a result of the KKR and Bain acquisition of the Company and the related financings and other transactions. Accordingly, the Company believes the pro forma results of operations presented herein are useful in understanding its 2006 and 2005 operating results. The Company's pro forma results of operations for the periods presented give effect to the following transactions as if they had occurred on January 1, 2005: the acquisitions of Campbell and MTG; and the new debt incurred in connection with the KKR and Bain acquisition of the Company. The pro forma information included herein is presented for comparative purposes only and does not purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to represent what the Company's results of operations would actually have been had these transactions occurred on the date indicated or to project the Company's results of operations for any future period or date. The basis for the Company's pro forma results related to the acquisitions is detailed in the Company's registration statement on Form S-4 filed with the Securities and Exchange Commission (Commission File No. 333-130470) on February 14, 2006. (2) EBITDA and Adjusted EBITDA presented in this press release are supplemental measures of our performance that are not required by, or 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. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. EBITDA represents net income (loss) before net interest expense, income tax expense, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to give effect to unusual items, non-cash items, the pro forma effect of acquisitions as if they had taken place at the beginning of the periods covered by the covenant calculation and other adjustments, all of which are required in calculating covenant ratios and compliance under the indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. our senior subordinated notes and under our senior secured credit facility. For the periods presented, Adjusted EBITDA includes adjustments for: restructuring and other related charges, gain on sale of property, non-operating currency transaction losses, certain stock compensation related charges, 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 , gain on recovery of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying acquired as part of MedSource acquisition, write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of inventory step-up, executive relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. , losses from closed facilities, acquired Adjusted EBITDA from Campbell and MTG for the periods prior to the actual date of each respective acquisition and management fees. We believe that the presentation of EBITDA and Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of certain financial covenants in the indenture governing our senior subordinated notes and under our senior secured credit facility. Adjusted EBITDA is a material component of these covenants. We also present EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of high yield issuers, many of which present EBITDA when reporting their results. |
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