American Achievement Group Holding Corp. Completes Issuance of Senior PIK Notes; Transaction Reflects Success of Relationship with Fenway Partners.AUSTIN Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum -- American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Achievement Group Holding Corp., the indirect parent company of American Achievement Corporation (AAC (Advanced Audio Coding) An audio compression technology that is part of the MPEG-2 and MPEG-4 standards. AAC, especially MPEG-4 AAC, provides greater compression and better sound quality than MP3, which also came out of the MPEG standard. ), today announced that it has completed an offering of $150 million 12.75% senior PIK PIK See: Payment-in-kind bond PIK See payment-in-kind security (PIK). notes due October October: see month. 1, 2012. The notes, which were initially purchased by Goldman Gold·man , Emma 1869-1940. Russian-born American anarchist. Jailed repeatedly for her advocacy of birth control and opposition to military conscription, she was deported to the Soviet Union in 1919. , Sachs Sachs , Hans 1494-1576. German writer and Meistersinger noted for his many dramas, poems, and songs. His life inspired Wagner's opera Die Meistersinger von Nürnberg (1868). & Co. and Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. , will pay interest in-kind in-kind adj. Given in goods, commodities, or services rather than money: cash and in-kind benefits. until April 1, 2011 and cash interest thereafter until maturity. Up to 100% of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the issuance of the notes will be distributed to AAC's stockholders. AAC is 82% owned by Fenway Partners, a private equity firm headquartered in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of with an office in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . AAC, with $309 million in LTM LTM abbr. long-term memory sales, is a leading manufacturer and supplier of high school and college yearbooks, class rings, graduation Graduation is the action of receiving or conferring an academic degree or the associated ceremony. The date of event is often called degree day. The event itself is also called commencement, convocation or invocation. products, achievement publications and recognition and affinity jewelry jewelry, personal adornments worn for ornament or utility, to show rank or wealth, or to follow superstitious custom or fashion. The most universal forms of jewelry are the necklace, bracelet, ring, pin, and earring. . AAC'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 growth rate has increased substantially since Fenway's purchase. (See accompanying exhibit for AAC's definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.) Said Mac LaFollette, Managing Director, Fenway Partners, "AAC and Fenway Partners have worked closely together since 2004 to unlock the value of the Company's brands, streamline its operations and introduce new products. The results are impressive. AAC has strong organic EBITDA growth, exceptional customer loyalty and improved returns on capital invested. Since our acquisition two years ago, Adjusted EBITDA has increased nearly 40% from $57 million to $77 million." Said Don Percenti, American Achievement Corporation's Chief Executive Officer. "This issuance will enable a return of capital to the Company's shareholders while also allowing us to continue to invest in strengthening our business and expanding our product offerings. AAC will continue to use its strong cash flow generation to reduce overall debt levels over time." "AAC is an excellent example of Fenway's established formula of investing in companies with substantial cash flow to protect our investors' equity, that compete in stable markets and that have well-defined well-de·fined adj. 1. Having definite and distinct lines or features: a well-defined silhouette. 2. growth and productivity improvement opportunities. To date, Fenway's Limited Partners have received substantial distributions relative to their original investment in AAC while retaining the future benefit of our continued ownership of 82% of the company," said LaFollette. Fenway and its co-investors recently sold 3% of the fully-diluted equity to the Carlyle Group  The of this article or section may be compromised by "weasel words".You can help Wikipedia by removing weasel words. The Carlyle Group is a Washington, D.C. . Following the distribution that is part of this transaction, the Carlyle Group will have received nearly 65% of its investment back in the first four months of its investment. Said Leo Leo, in astronomy Leo [Lat.,=the lion], northern constellation lying S of Ursa Major and on the ecliptic (apparent path of the sun through the heavens) between Cancer and Virgo; it is one of the constellations of the zodiac. Helmers, Managing Director of Carlyle Mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. , "We are delighted to already realize a return on our investment in American Achievement Corporation. This realization is a validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of the Company's robust free cash flow generation and the result of the on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" efforts of Fenway and management to improve the Company's operations. Fenway has been a great partner with its daily, on-site on-site adj. Done or located at the site, as of a particular activity: on-site monitoring of a production run; an on-site film shoot. presence at the AAC and we look forward to working with them and management to position the Company for future growth." About American Achievement Corporation American Achievement, a Fenway Partners portfolio company, is one of the leading manufacturers and suppliers of class rings, yearbooks, graduation products, achievement publications, and recognition and affinity jewelry. AAC has leading market shares and a strong portfolio of brands, including Balfour Bal·four , Francis Maitland 1851-1882. Scottish embryologist and zoologist noted for his studies of the development of the urogenital and nervous systems in vertebrates. (established 1913), Taylor Taylor, city (1990 pop. 70,811), Wayne co., SE Mich., a suburb of Detroit adjacent to Dearborn; founded 1847 as a township, inc. as a city 1968. A small rural village until World War II, it developed significantly in the second half of the 20th cent. Publishing (established 1939), ArtCarved (established 1954) and Who's Who Who’s Who biographical dictionary of notable living people. [Am. Hist.: Hart, 922] See : Fame (established 1967). For further information about AAC, visit the firm's web site at http://www.cbi-rings.com. About Fenway Partners Fenway Partners, dedicated to building long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. value through direct investment in leading middle market companies, is a private equity firm based in New York and Los Angeles with funds under management of more than $1.4 billion. In partnership with management, Fenway invests in market-leading and profitable businesses with significant unrealized upside potential Upside potential The amount by which analysts or investors expect the price of a security may increase. upside potential The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar . The firm provides human, financial, and strategic resources to help portfolio companies achieve their potential. For further information about Fenway, visit the firm's web site at www.fenwaypartners.com. Note: This announcement is neither an offer to sell nor a solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of an offer to buy the securities described herein. American Achievement Group Holding Corp. is offering the notes in reliance upon an exemption from registration under the Securities Act of 1933 for an offer and sale of securities that does not involve a public offering. The securities to be offered have not been and will not be registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold in the 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. absent registration or an applicable exemption from registration requirements. Forward Looking Statements: Statements in this press release regarding the expected offering of senior discount notes are "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 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. 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. Any statements that are not statements of historical fact (including without limitation statements to the effect that American Achievement Group Holding Corp, AAC Group Holding Corp. or American Achievement or their respective management "believes," "expects," "anticipates," "plans," "looks forward" and similar expressions) should be considered forward-looking statements. Any forward-looking statements in these materials are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Neither American Achievement Group Holding Corp., AAC Group Holding Corp. nor American Achievement undertakes any obligation to revise or publicly update these forward-looking statements, whether as a result of new information or otherwise.
Predecessor Successor
------------------------- -------------------------
For the For the
Period Period
Fiscal August 31, March 26, Fiscal
Year 2003 2004 Year
Ended through through Ended
August 30, March 25, August 28, August 27,
2003 2004 2004 2005
------------ ------------ ------------ ------------
(As restated)
(dollars in thousands)
Net income (loss) $ 10,766 $ (4,583) $ 6,466 $ 1,812
------------ ------------ ------------ ------------
Interest
expense, net 28,940 16,455 10,257 31,271
Provision
(benefit) for
income taxes 132 -- 4,459 1,738
Depreciation and
amortization
expenses 14,149 8,530 10,344 25,281
------------ ------------ ------------ ------------
EBITDA $ 53,987 $ 20,402 $ 31,526 $ 60,102
------------ ------------ ------------ ------------
Plus:
Re-branding
costs(a) -- -- -- 694
Inventory step-
up(b) -- -- 6,412 --
Management
fees(c) 3,000 1,750 1,050 3,192
Consulting and
professional
fees and other
items(d) -- 94 354 2,182
Severance(e) -- -- -- 1,348
Special
management
bonus(f) -- -- -- 2,185
El Paso
closing(g) -- -- -- --
Malvern
closing(h) -- -- 1,506 --
------------ ------------ ------------ ------------
Adjusted EBITDA $ 56,987 $ 22,246 $ 40,848 $ 69,703
============ ============ ============ ============
Successor
----------------------------------------------------
Six Six Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
February 26, February 25, February 25, April 1,
2005 2006 2006 2006
------------ ------------ ------------ ------------
(As restated)
(dollars in thousands)
Net income (loss) $ (7,714) $ (6,320) $ 3,206 $ 4,562
------------ ------------ ------------ ------------
Interest
expense, net 14,290 17,032 34,013 34,266
Provision
(benefit) for
income taxes (6,217) (4,811) 3,144 4,158
Depreciation and
amortization
expenses 12,692 13,015 25,604 25,685
------------ ------------ ------------ ------------
EBITDA $ 13,051 $ 18,916 $ 65,967 $ 68,671
------------ ------------ ------------ ------------
Plus:
Re-branding
costs(a) 342 50 402 331
Inventory step-
up(b) -- -- -- --
Management
fees(c) 1,618 1,625 3,199 3,200
Consulting and
professional
fees and other
items(d) 1,126 1,320 2,377 2,436
Severance(e) 268 969 2,049 2,036
Special
management
bonus(f) 2,185 -- -- --
El Paso
closing(g) -- 593 593 494
Malvern
closing(h) -- -- -- --
------------ ------------ ------------ ------------
Adjusted EBITDA $ 18,590 $ 23,473 $ 74,587 $ 77,168
============ ============ ============ ============
(a) Represents expenses incurred from the re-branding of our college
products. During fiscal 2005, we changed the branding of our
college rings and college graduation products from ArtCarved to
Balfour.
(b) Represents that portion of the excess purchase price allocated to
inventory as a result of purchase accounting following
consummation of our acquisition by Fenway Partners and the related
financing transactions in March 2004.
(c) For the predecessor periods, represents the annual management fees
and expenses paid to our former stockholder. For the successor
periods, represents the annual management fees and expenses paid
to an affiliate of Fenway Partners Capital Fund II, L.P. pursuant
to the management agreement entered into in connection with the
March 2004 transactions. Although the indenture governing the
notes will permit payments under the management agreement, such
payments will be restricted during an event of default under the
notes.
(d) Represents (i) fees paid to independent consultants for
recommendations we received relating to streamlining our business
and improving operational efficiencies, which fees we do not
expect to continue to incur in the future, (ii) fees paid to
independent consultants to assist our management in becoming ready
to comply with the new Sarbanes-Oxley requirements, which fees we
do not expect to continue to incur after fiscal 2007, (iii) legal
fees paid in connection with the prosecution and settlement of two
legal matters, (iv) legal and other professional fees and expenses
paid in connection with an investigation of a potential
acquisition that has since been abandoned and (v) fees and
expenses paid in connection with the recruitment and relocation of
new officers as part of the recent restructuring of our management
team.
(e) Represents severance costs related to the restructuring of our
management team and the closing of our El Paso ring plant in June
2005.
(f) Represents a special bonus paid to management in fiscal 2005.
(g) Represents expected savings from costs incurred in connection with
the operation of our ring facility in El Paso, Texas, which was
closed in June 2005.
(h) Represents estimated savings from costs incurred in connection
with the operation of our yearbook facility in Malvern,
Pennsylvania, which was closed in August 2004.
We consider EBITDA and Adjusted EBITDA to be key indicators of
operating performance as they and similar measures are instrumental in
the determination of compliance with certain financial covenants in
our senior secured credit facility, and are used by our management in
the calculation of the aggregate fee payable under our management
agreement and in determining compensation for certain of our
employees. EBITDA and Adjusted EBITDA are not defined terms under GAAP
and have important limitations as analytical tools. For example,
EBITDA and Adjusted EBITDA: (i) do not reflect our cash expenditures,
or future requirements, for capital expenditures or contractual
commitments; (ii) do not reflect changes in, or cash requirements for,
our working capital needs; (iii) do not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on our debts; (iv) exclude tax
payments that represent a reduction in cash available to us; and (v)
do not reflect any cash requirements for the assets being depreciated
and amortized that may have to be replaced in the future. In addition,
Adjusted EBITDA does not reflect the impact of earnings or charges
resulting from matters that we and the lenders under the existing
senior secured credit facility do not consider to be indicative of our
ongoing operations. In particular, although the definition of Adjusted
EBITDA in the existing senior secured credit facility allows us to add
back certain non-cash, extraordinary, unusual charges that are
deducted in calculating net income, these are expenses that may recur,
vary greatly and are difficult to predict. They can represent the
effect of long-term strategies as opposed to short-term results. In
addition, certain of these expenses can represent the reduction of
cash that could be used for other corporate purposes. Because of these
limitations, we rely primarily on our GAAP results and use EBITDA and
Adjusted EBITDA only supplementally. You should not consider them in
isolation or as a substitute for analysis of our results as reported
under GAAP.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion