Vari-Lite International, Inc. Reports Fiscal 2002 Third Quarter Results.Business Editors DALLAS--(BUSINESS WIRE)--Aug. 19, 2002 Vari-Lite Vari*Lite™ is the brand name of one of the first automated variable-color lighting systems to be created. The lighting systems are generally based on dichroic glass color filters and metal halide bulbs and are used for theatre, concerts, television, and several other International, Inc. (Nasdaq:LITE) today reported financial results for the three-month and nine-month periods ended June June: see month. 30, 2002. Financial highlights (in thousands, except per share data) are as follows:
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
---- ---- ---- ----
Revenue $ 15,585 $ 15,584 $ 46,972 $ 54,299
Operating income
(loss) (a) (7,775) (1,800) (9,254) 6,544
Net income (loss) (a) (6,706) (1,301) (7,968) 2,873
Net income (loss)
per share (a) $ (0.86) $ (0.17) $ (1.02) $ 0.37
Weighted average
shares outstanding 7,800 7,800 7,800 7,800
EBITDA (a)(b) $ (5,137) $ 803 $ (1,395) $ 14,367
Adjusted EBITDA (c) 1,111 803 4,853 7,461
(a) The three and nine months ended June 30, 2002 include a $4.9 million charge to increase the reserve for excess, slow moving and obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. and a $1.3 million 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 receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed related to premiums paid under split-dollar life insurance policies. The nine months ended June 30, 2001 includes a $7.1 million gain on the sale of the Company's concert sound reinforcement reinforcement /re·in·force·ment/ (-in-fors´ment) in behavioral science, the presentation of a stimulus following a response that increases the frequency of subsequent responses, whether positive to desirable events, or business. (b) 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 is defined as income before income taxes plus depreciation, amortization and net interest expense. (c) Adjusted EBITDA for the three and nine months ended June 30, 2002 is defined as EBITDA, plus the $4.9 million charge to increase the reserve for excess, slow moving and obsolete OBSOLETE. This term is applied to those laws which have lost their efficacy, without being repealed, 2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. inventory and the $1.3 million write-off of receivables related to premiums paid under split-dollar life insurance policies. Adjusted EBITDA for the nine months ended June 30, 2001 is defined as EBITDA, minus the $7.1 million gain on the sale of the Company's concert sound reinforcement business. Results for the third quarter of fiscal 2002 reflect continued weakness in the live entertainment industry resulting from soft economic conditions. The flat revenue comparison between the third quarter of fiscal 2002 and the third quarter of fiscal 2001 resulted from a decrease in rental revenues to $10.0 million from $12.6 million, offset by an increase in product sales and services revenues to $5.6 million from $3.0 million. During the third quarter of fiscal 2002, the Company took several steps to reduce its financial obligations to certain members of its Board of Directors. Effective June 30, 2002, all deferred compensation and consulting agreements between the Company and certain members of the Board of Directors were cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. , the CEO's salary was decreased and the Company's obligation to pay premiums under split-dollar life insurance policies for the benefit of certain directors was terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: by assigning as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. the rights and obligations under the split-dollar life insurance agreements to the directors. The fiscal third quarter results include a $1.3 million charge to write-off receivables related to premiums paid under the split-dollar life insurance policies. Also included in the third quarter of fiscal 2002 is a $4.9 million charge to increase the reserve for excess, slow moving and obsolete inventory, primarily consisting of repair and maintenance parts for the Company's Series 200 and Series 300 automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. lighting products, which are no longer produced by the Company but continue to be rented through the Company's rental operations. Including the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. charges, Vari-Lite reported negative EBITDA of $5.1 million and $1.4 million for the third quarter and first nine months of fiscal 2002, respectively, compared with positive EBITDA of $0.8 million and $14.4 million (including a $7.1 million gain on the sale of the Company's sound reinforcement business) in the respective prior-year periods. Excluding the fiscal 2002 third quarter charges, Vari-Lite's adjusted EBITDA was a positive $1.1 million for the third quarter and $4.9 million for the nine months, compared with $0.8 million and $7.5 million (excluding the $7.1 million gain on the sale of the Company's sound reinforcement business) for the respective fiscal 2001 periods. Rusty rust·y adj. rust·i·er, rust·i·est 1. Covered with rust; corroded. 2. Consisting of or produced by rust. 3. Of a yellowish-red or brownish-red color. 4. Brutsche, Chairman and Chief Executive Officer, commented, "Industry softness continued to adversely affect rental revenues into the third quarter, overshadowing continued progress in building our product sales business. However, positive EBITDA for the quarter, excluding non-recurring charges, does reflect the significant cost reduction and 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). initiatives that we have implemented. Our decision regarding director compensation reductions shows our continued commitment to running a lean operation. These adjustments will result in cash savings of over $0.8 million during the next 12 months and over $2.3 million during the next three years. The cuts we made earlier have resulted in reductions in selling, general and administrative expense and research and development expense in the third quarter of fiscal 2002 of approximately $1.1 million and $0.4 million, respectively, compared to the third quarter of fiscal 2001." Mr. Brutsche continued, "While we are seeing some increased activity at the beginning of the fourth quarter, we remain cautious as to the sustainability of any up-turn. Despite the difficult economy, our product sales business and VLPS VLPS Vari-Lite Production Services (lighting company) VLPS Victims of the Legal Profession Society (Ireland and UK) rental operations are well positioned to benefit when the economy improves. Our VLPS rental operation was recently appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. the primary lighting contractor for the upcoming Rolling Stones Rolling Stones, English rock music group that rose to prominence in the mid-1960s and continues to exert great influence. Members have included singer Mick Jagger (Michael Phillip Jagger), 1943–; guitarists Brian Jones world tour and has been providing the automated lighting equipment for the popular new television show, American Idol American Idol is an annual American televised singing competition, which began its first season on June 11, 2002. Part of the Idol franchise, it originated from the British reality program Pop Idol. . Also during the third quarter, the Company's recently introduced VL1000(TM) luminaire luminaire or light fixture Complete lighting unit, consisting of one or more lamps (bulbs or tubes that emit light), along with the socket and other parts that hold the lamp in place and protect it, wiring that connects the lamp to a power source, and a won the Product of the Year award at the ABTT ABTT Association of British Theatre Technicians ABTT Alabama Bureau of Tourism and Travel trade show. This product continues to experience increasing demand." As of June 30, 2002, all balances outstanding under the Company's U.S. Bank, N.A. credit facility were classified as current due to the likelihood that the Company will not be able to meet all of the financial ratio covenants under this facility beginning on December December: see month. 31, 2002. If the Company is not successful in amending or refinancing Refinancing An extension and/or increase in amount of existing debt. this credit facility, the bank will be entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to pursue all rights available under the facility in the event that the Company does not meet the financial ratio covenants or the terms of other compliance covenants. About Vari-Lite Vari-Lite International, Inc. is a leading worldwide designer and manufacturer of automated lighting products and distributor of lighting systems and production services. The Company markets its products and services primarily to the entertainment industry, serving such markets as concert touring, theater, television and film and corporate events. The Company's manufacturing and sales division sells VARI Va´ri n. 1. (Zool.) The ringtailed lemur (Lemur catta) of Madagascar. Its long tail is annulated with black and white. *LITE automated lighting equipment through a dedicated sales staff and a worldwide network of independent dealers. Through its domestic and international offices, the Company's VLPS rental division offers complete automated and conventional lighting systems and lighting production services. Vari-Lite International, Inc. shares are traded on the Nasdaq National Market under the symbol LITE. The foregoing paragraphs contain certain 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. Although the Company believes the expectations contained in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These expectations may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, factors detailed in the Company's Securities and Exchange Commission filings.
Vari-Lite International, Inc. and Subsidiaries
Condensed Consolidated Statement of Income and
Summary Balance Sheet Information
(In thousands except per share data)
Three Months Ended Nine Months Ended
June 30, June 30,
2002 2001 2002 2001
---- ---- ---- ----
Income Statement Data:
Rental revenues $ 10,007 $ 12,572 $ 31,577 $ 41,908
Product sales and
services revenues 5,578 3,012 15,395 12,391
-------- -------- -------- --------
Total revenues 15,585 15,584 46,972 54,299
Rental costs 5,496 6,264 16,113 19,019
Product sales and
services costs 3,887 1,892 10,011 8,118
-------- -------- -------- --------
Gross profit 6,202 7,428 20,848 27,162
Selling, general and
administrative expense 6,840 7,910 20,470 24,002
Research and development
expense 889 1,318 3,384 3,716
Reserve for excess, slow
moving and obsolete
inventory 4,900 - 4,900 -
Write-off of receivables
related to premiums paid
under split-dollar life
insurance policies 1,348 - 1,348 -
Gain on sale of concert
sound reinforcement
business - - - (7,100)
-------- -------- -------- --------
Operating income (loss) (7,775) (1,800) (9,254) 6,544
Interest expense, net 349 351 957 1,913
-------- -------- -------- --------
Income (loss) before
income tax (8,124) (2,151) (10,211) 4,631
Income tax expense
(benefit) (1,418) (850) (2,243) 1,758
-------- -------- -------- --------
Net income (loss) $ (6,706) $ (1,301) $ (7,968) $ 2,873
======== ======== ======== ========
Net income (loss) per
share - basic $ (0.86) $ (0.17) $ (1.02) $ 0.37
Net income (loss) per
share - diluted $ (0.86) $ (0.17) $ (1.02) $ 0.36
Weighted average shares
outstanding - basic 7,800 7,800 7,800 7,800
Weighted average shares
outstanding - diluted 7,800 7,800 7,800 7,876
Other Data:
EBITDA (a) $ (5,137) $ 803 $(1,395) $ 14,367
Adjusted EBITDA (b) $ 1,111 $ 803 $ 4,853 $ 7,461
(a) EBITDA is defined as income before income taxes plus
depreciation, amortization and net interest expense.
(b) Adjusted EBITDA for the three and nine months ended
June 30, 2002 is defined as EBITDA, plus the $4.9 million
charge to increase the reserve for excess, slow moving and
obsolete inventory and the $1.3 million write-off of
receivables related to premiums paid under split-dollar life
insurance policies. Adjusted EBITDA for the nine months ended
June 30, 2001 is defined as EBITDA, minus the $7.1 million
gain on the sale of the Company's concert sound reinforcement
business.
June 30, September 30,
2002 2001
---- ----
Balance Sheet Data:
Total assets $ 71,276 $ 80,218
Total debt 23,244 23,256
Stockholders' equity 37,601 45,327
Note to Editors: The last name of Rusty Brutsche should be written with an accent on the "e." |
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