Berg Electronics' Quarterly Operating Earnings Up 17.5%; 8.3% Sales Growth Outpaces Connector Market.ST. LOUIS--(BUSINESS WIRE)--July 30, 1996--Berg Electronics Corp. (NYSE NYSE See: New York Stock Exchange :BEI Bei (pā, bā), river, c.200 mi (320 km) long, formed by the union of two headstreams in the Nanling Mts., N Guangdong prov., S China. It flows S into the Xi River, E of Guangzhou, to form the Pearl River delta. ), the world's fourth largest supplier of electronic connector, socket and cable assembly products, today reported strong earnings growth during the second quarter coupled with better-than-industry sales growth and gains in market share, a continuation of the robust financial performance in the first quarter. Management attributed Berg's second quarter performance to the company's unique strength in global telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. markets, continued growth in the Asia Pacific region, and improvements in cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. , operational efficiencies and cost reduction efforts. Earnings per share were ahead of analysts expectations. Second Quarter Results For the quarter ended June 30, 1996, the company posted net income of $7.6 million, an increase of 244 percent over the $2.2 million net income before preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. charges recorded for the same period 1995. The company reported sales of $178.1 million, up 8.3 percent over the $164.3 million recorded for the corresponding quarter in 1995. Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the second quarter were $19.4 million versus $16.5 million, 1996 and 1995 respectively, a gain of 17.5 percent. 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.
To facilitate comparison, earnings per share data have been reported on both a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). weighted average basis and a 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 basis to reflect the application of proceeds of the company's March initial public offering and the 7.5 million increase in shares outstanding due to the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. . Nineteen ninety-six second quarter income was $0.37 per share (GAAP), or $0.38 per share pro forma; these figures compare with $0.17 per share before preferred stock requirements (GAAP) and $0.17 per share pro forma recorded for the same quarter in 1995. The weighted average shares outstanding in the second quarter 1996, for GAAP purposes, were 20.8 million, which assumes an exercise of all outstanding options, versus 13.0 million during the same period 1995. The pro forma shares outstanding for the second quarter of both years were 20.5 million. Geographically, 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. accounted for 54 percent of consolidated sales in the second quarter of 1996, 20.1 percent ahead of the same period last year. Expressed in terms of local currencies, European billings were down 3.2 percent compared to 1995 and sales in Asia were up 11.4 percent. After converting sales to U.S. dollars, Europe represented 22 percent of consolidated sales; Japan and the Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. contributed 24 percent of consolidated 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 . Currency translations - reflected primarily in a strengthening U.S. dollar against the Japanese yen “Yen” redirects here. For the other use, see Yen (disambiguation). “JPY” redirects here. For the Australian singer with the same moniker, see John Paul Young. - had approximately a 3.5 percent adverse impact on net sales during the quarter. Currency translations were partially offset by increased billings in Asia - primarily due to the success of Berg's redefined path-to-market in Japan - and provided longer-term benefits by reducing foreign currency based expenses. Management Comment & Significant Events in Second Quarter James N. Mills, chairman of the board and chief executive officer, characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. the second quarter as a very solid period in both the revenue performance and cost containment areas. "One of the industry's leading analysts indicates the global connector market grew approximately 1 percent in U.S. dollars during the first half of 1996, with the majority of that growth coming in the first quarter. Berg's second quarter sales grew at eight times that rate, which resulted in a gain in market share. Outperforming the connector market as we did places us in an enviable en·vi·a·ble adj. So desirable as to arouse envy: "the enviable English quality of being able to be mute without unrest" Henry James. market position as we move beyond the historic summer slowdown and into the latter part of the year," Mills added. He went on to state that "Berg's position and the merits of its focused growth strategy mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. any impact the general connector market might have had, and in some ways worked to our advantage. For us, the softer computer market, for example, continued to shift sales away from commodity products in favor of a higher-margin product mix. On a trailing 12-month basis we have seen a 2.4 percentage point improvement in our gross margin. On a consecutive basis, second quarter over first, we continued this trend with a 40 basis point gain in margin. At a time when others are seeing their margins squeezed, our value-added focus has mitigated many of the chronic problems seen of late in the high-tech markets." Mills also went on to say that one of the high points in the quarter was the June 25th announcement that Berg had signed a letter of intent with Ericsson Telecom AB to buy its connector business in Sweden. While the transaction is not expected to be completed until some time in the fourth quarter, Mills indicated the acquisition represents a significant action in terms of Berg's strategic plan to expand its position as the industry leader in the high-growth telecommunications sector of the connector industry. A key agreement in the memorandum with Ericsson calls for Berg to supply Ericsson with connectors used in its switching and transmission systems. At the time of the original announcement, Berg management indicated that the cash purchase would be non-dilutive. Six Month Results For the six months ended June 30, 1996, the company reported sales of $358.2 million, up 10.3 percent over the $324.6 million recorded for the same period in 1995. Operating earnings for the first half were $36.8 million versus $31.0 million, 1996 and 1995 respectively, a gain of 18.8 percent. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the six months just ended were $66.2 million compared with $59.2 million for the prior year period, an increase of 11.8 percent, 1996 over 1995. Earnings before extraordinary charges related to the company's 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. and before charges for preferred stock requirements were $13.2 million for the first half of the year, up 110.5 percent over the $6.3 million a year ago. Earnings applicable to common shares, after Extraordinary items and all preferred stock charges, amounted to a net loss of $32.8 million for the first six months of 1996 compared with a net loss of $0.9 million in the comparable 1995 period. Again, to facilitate comparison, earnings per share data have been reported on both a GAAP weighted average basis and a pro forma basis to reflect the company's March IPO. Nineteen ninety-six first half net income, before Extraordinary items and preferred stock requirements, was $0.73 per share (GAAP), or $0.68 per share pro forma; these figures compare with $0.48 per share (GAAP) and $0.37 per share pro forma recorded for the same period in 1995. Earnings applicable to common shares, after Extraordinary items and charges related to preferred stock, resulted in a six month loss of $1.82 per share (GAAP), or pro forma net income of $0.68 per share in 1996, versus a net loss of $0.07 per share (GAAP) and net income of $0.37 per share pro forma in 1995. The weighted average shares outstanding in the 1996 period, for GAAP purposes, were 18.0 million versus 13.0 million in 1995. The pro forma shares outstanding for the first six months of both years were 20.5 million. On an after tax basis for the six months just ended, the company expensed, as an Extraordinary item, $18.7 million in interest charges and redemption requirements paid for the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt during the first quarter of 1996. In addition, the company incurred charges of $27.3 million for accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the , dividend and redemption premiums redemption premium See call premium. on the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of preferred stock in this same period. In a series of transactions between March 1 and April 9, 1996, 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 7.5 million common shares sold and from a new credit facility funded the payoff of (i) the previous credit facility; (ii) the redemption of all subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before , and (iii) the redemption of all preferred stock, plus all costs of the transactions. The purpose ofthe company's recapitalization is to reduce interest expense and preferred stock dividend requirements and to improve operating and financial flexibility. Geographically, North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sales were up 18.4 percent and accounted for 54 percent of consolidated sales in the first half of 1996. In terms of local currencies, sales in Asia increased 13.8 percent and European billings were down 1.9 percent compared to 1995, both percentages representing first half 1996 over first half 1995. The strengthening U.S. dollar did not have a major impact on earnings results during the six month period just ended. Management Comment & Outlook Reflecting on the company's performance during the first six months of 1996, Mills stated, "Based on industry data, Berg's sales growth during the period was eight times that of the general industry. We achieved deeper market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" , grew market share, and increased profitability at a time when the market as a whole performed below expectations. "Having fueled the bull market for more than five years, its not unexpected that the technology sector should be involved in inventory and market adjustments, particularly at a time when manufacturers are involved in model changeovers for third and fourth quarter product introductions," Mills explained. "We believe that the third quarter - historically the weakest in the connector industry - may continue the industry's trends of the second quarter. However, its important to realize that the interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. markets and components manufactured by Berg are not as severely impacted as the passive component industry. This being the case, Berg remains confident in the earnings estimates currently in the market," Mills concluded. Except for historical information, matters set forth in this news release should be viewed as 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. . These statements are predicated on certain risks and uncertainties, including such factors, among others, as economic and currency conditions; market demand and pricing; competitive and cost factors; and such other risk factors as listed 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. report for 1995 and Form 10Q for the quarter ended June 30, 1996 (See Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations). Company Profile Berg Electronics Corp. is the fourth largest worldwide supplier of connector, socket and cable assembly products with 1995 sales of $667 million. The company's broad range of products serve high-end data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a , personal computing Refers to users working on their own computers rather than a terminal to a mainframe. Sometimes, the term refers to using computers at home for work and/or entertainment in contrast to business use only. See personal computer. , all segments of telecommunications, industrial and instrumentation markets. Headquartered in St. Louis, Mo., USA, Berg Electronics employs more than 5,400 people worldwide at its 19 manufacturing and research facilities, which are strategically located in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , the Netherlands, France, Japan, Taiwan, Singapore, China, Korea, Mexico and India. The company's stock trades on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol BEI. FINANCIAL HIGHLIGHTS TO FOLLOW -0-
BERG ELECTRONICS CORPORATION
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
(UNAUDITED)
ACTUAL PRO FORMA
Three Months Three Months
Ended June 30, Ended June 30,
($ in thousands,
except per share
data) 1996 1995 1996(a) 1995(b)
Net Sales $178,063 $164,346 $178,063 $164,346 Operating expenses: Cost of goods sold (116,132) (106,440) (116,132) (106,440) Other (42,558) (41,414) (42,558) (41,414) Operating Income 19,373 16,492 19,373 16,492
Other income (expense):
Interest expense (6,818) (8,530) (6,718) (7,274)
Amortization of
deferred financing
costs (716) (1,583) (716) (693)
Other, net 639 (3,129) 639 (3,129)
Income tax expense (4,866) (1,035) (4,913) (1,847) Net income 7,612 2,215 7,685 3,549 Preferred stock requirements - (3,636) - - Net income (loss) applicable to common shares $ (7,612) $ (1,421) $ 7,685 $ 3,549 Net income (loss) per share: $0.37 $(0.11) $0.38 $0.17 Average common shares outstanding 20,764,031(c) 12,988,771 20,471,038 20,471,038
(a) 1996 Pro forma presents results as if the IPO and refinancing
had been effective at December 31, 1995.
(b) 1995 Pro forma presents results as if the IPO and refinancing
had been effective at December 31, 1994.
(c) Includes 20,471,038 shares actually outstanding, plus effects of
exercise of outstanding options.
BERG ELECTRONICS CORPORATION
CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS
(UNAUDITED)
ACTUAL PRO FORMA
Six Months Six Months
Ended June 30, Ended June 30,
($ in thousands,
except per share data) 1996 1995 1996(a) 1995(b)
Net Sales $358,181 $324,646 $358,181 $324,646
Operating expenses:
Cost of goods sold (234,336) (212,256) (234,336) (212,256)
Other (87,015) (81,385) (87,015) (81,385)
Operating Income 36,830 31,005 36,830 31,005
Other income (expense):
Interest expense (14,648) (17,298) (13,989) (14,825)
Amortization of deferred
financing costs (1,972) (3,183) (1,434) (1,392)
Other, net 1,525 (541) 1,525 (3,129)
Income tax expense (8,568) (3,728) (9,046) (4,352)
Income before
extraordinary items and
preferred stock
requirements 13,167 6,255 13,886 7,307
Extraordinary items,
net of tax (18,664) - - -
Net (loss) income (5,497) 6,255 13,886 7,307
Preferred stock
requirements (27,335) (7,178) - -
Net (loss) income
applicable to common
shares $(32,832) $ (923) $ 13,886 $ 7,307
Net (loss) income
per share:
Before
extraordinary items $ (0.79) $ (0.07) $ 0.68 $ 0.36
After
extraordinary items $ (1.82) $ (0.07) $ 0.68 $ 0.36
Average common
shares outstanding 17,990,681(c) 12,988,771(c) 20,471,038 20,471,038
(a) 1996 Pro forma presents results as if the IPO and refinancing had been effective at December 31, 1995. (b) 1995 Pro forma presents results: (i) as if the IPO and refinancing had been effective at December 31, 1994; (ii) excluding the effects of a non-recurring currency gain of $2,588 in the first quarter of 1995 and (iii) including the tax effects of (i) and (ii) at an assumed rate of 40%. Had the currency gain not been eliminated, pro forma net income and EPS would be $8,860 and $0.43, respectively. (c) Represents weighted average common shares outstanding for the period. CONTACT: Gary D. Strong Director Investor Relations Investor relations The process by which the corporation communicates with its investors. 314/746-2235 |
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