MPC Corporation Reports 2007 Financial Results
NAMPA, Idaho, April 14 /PRNewswire-FirstCall/ — MPC Corporation today announced financial results for the year ended on December 31, 2007.
Net revenue was $365 million with a net loss of $11.5 million, or $0.64 per basic share and diluted share. The fiscal 2007 results include the results of operations of the Gateway Professional Business beginning on October 1, 2007, the date of its acquisition by MPC Corporation.
For the previous year ended December 31, 2006, net revenue was $285 million with a net loss of $58.7 million, or $4.93 per basic and diluted share. The loss included a $19.5 million impairment charge for acquired intangibles and a $10.5 million loss on debt extinguishment.
For 2007, gross margin improved to 13.2 percent compared to 10.1 percent in 2006. Operating expense for 2007 included an expense of $5.3 million related to a Transition Services Agreement between Gateway and MPC Corporation related to MPC Corporation’s acquisition of the Gateway Professional Business.
“We are pleased with the impact of the Gateway Professional acquisition on our company’s market presence and potential,” noted MPC Corporation CEO and Chairman John P. Yeros. “While challenges remain in integrating the two companies’ product lines and infrastructures, the combined company has increased scale and a stronger product portfolio that better positions us to compete in our key commercial and public sector markets.”
Additional financial details are available through the 10-K filed today.
In addition, the company announced the signing of a major contract with Flextronics Computing, a segment of Flextronics, under which it will transition selected manufacturing operations to an outsourced model. Over the next six months, the MPC Nashville manufacturing operation will be transitioned to the Flextronics facility located in Juarez, Mexico. The company will continue to evaluate additional means of reducing costs and improving productivity.
More detail on the contract with Flextronics Computing will be included in an 8K filing to be issued in the next four days.
About MPC Corporation
MPC Corporation , a major U.S. PC vendor since 1991, provides enterprise IT hardware solutions to mid-size businesses, government agencies and education organizations. With its October 2007 acquisition of Gateway’s Professional business, MPC Corporation became the only top-10 U.S. PC vendor focused exclusively on the $38 billion Professional PC market. For more information, visit MPC online at http://www.mpccorp.com/.
Cautionary Statement
Certain statements in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of MPC Corporation to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Other factors that could materially affect such forward-looking statements can be found in MPC Corporation’s filings with the Securities and Exchange Commission, including risk factors, at http://www.sec.gov/. Investors, potential investors and other readers are urged to consider these risk factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on forward-looking statements. There is no assurance that the acquisition of the Gateway Professional Business will allow the combined company to better compete in the commercial and public market sectors. There is no assurance that MPC Corporation’s decision to outsource manufacturing operations will be successful in reducing costs or improving productivity. The forward-looking statements made herein are only made as of the date of this press release and MPC Corporation undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
MPC CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands except share data) December 31, 2007 2006 ASSETS Current Assets Cash and cash equivalents $9,009 $4,839 Restricted cash 9,852 4,585 Accounts receivable, net 86,056 45,643 Inventories, net 62,050 18,189 Prepaid maintenance and warranty costs 10,699 6,391 Other current assets 1,146 935 Total Current Assets 178,812 80,582 Non-Current Assets Property and equipment, net 10,697 4,914 Goodwill 45,255 22,197 Acquired intangibles, net 28,455 10,108 Long-term portion of prepaid maintenance and warranty costs 1,388 844 Other assets 1,668 3,792 Total Non-Current Assets 87,463 41,855 TOTAL ASSETS $266,275 $122,437 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 61,079 $32,536 Accrued expenses 26,928 4,354 Accrued licenses and royalties 5,084 1,540 Current portion of accrued warranties 24,700 2,220 Current portion of deferred revenue 33,357 15,607 Notes payable and debt 64,249 34,834 Derivative financial instruments at estimated fair value 1,590 – Total Current Liabilities 216,987 91,091 Long Term Liabilities Non-current portion of accrued warranties 16,491 2,127 Non-current portion of deferred revenue 25,848 22,979 Derivative warrant liability 634 6,129 Derivative financial instruments at estimated fair value – 21,234 Total Long Term Liabilities 42,973 52,469 TOTAL LIABILITIES 259,960 143,560 COMMITMENTS AND CONTINGENCIES PREFERRED STOCK, Series B, 260,000 shares authorized, 249,171 issued and outstanding 6,308 – SHAREHOLDERS’ EQUITY Preferred Stock, no par value; 100,000 shares authorized; no shares issued and outstanding at 2007 and 2006 – – Preferred Stock, Series A, 640,000 shares authorized; 626,546 issued and outstanding 9,008 – Common Stock, no par value, 100,000,000 shares authorized; 33,948,489 and 12,147,438 shares issued and outstanding at 2007 and 2006, respectively 85,029 61,454 Accumulated Deficit (94,030) (82,577) Total Shareholders’ Equity (Deficit) 7 (21,123) TOTAL LIABILITIES AND EQUITY $266,275 $122,437 MPC CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except share data) Years Ended December 31, 2007 (1) 2006 Revenue $364,972 $284,971 Cost of revenue 316,935 256,074 Gross margin 48,037 28,897 Operating expenses Research and development expense 2,462 3,432 Selling, general and administrative expense 55,259 40,336 Depreciation and amortization 4,615 4,688 Impairment of acquired intangibles – 19,484 Total operating expenses 62,336 67,940 Operating loss (14,299) (39,043) Other (income) expense Interest expense, net 5,584 5,259 Gain on vendor settlements (479) (2,231) Change in estimated fair value of derivative financial instruments (7,899) 4,284 Loss (gain) on debt extinguishment (52) 10,511 Merger related stock compensation expense – 1,261 Total other (income) expense, net (2,846) 19,084 Net loss, before cumulative effect of a change in accounting principle (11,453) (58,127) Cumulative effect of a change in accounting principle – loss – 589 Net loss $(11,453) $(58,716) Loss per common share: Basic $(0.64) $(4.93) Diluted $(0.64) $(4.93) Common shares used to compute loss per share: Basic 17,842 11,913 Diluted 17,842 11,913 (1) The results of the Gateway Professional Business have been consolidated effective October 1, 2007, the date the acquisition by MPC Corporation became effective, and therefore the results of the Professional Business are not included for periods prior to October 1, 2007. MPC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2007 (1) 2006 OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash used in operating activities $(11,453) $(58,716) Depreciation 3,479 2,942 Amortization of acquired intangibles 3,153 3,426 Impairment on intangibles – 19,484 Amortization of deferred loan costs 572 711 Change in estimated fair value of derivative financial instruments (7,899) 4,284 Loss on debt extinguishment – 10,511 Stock compensation on vesting of RSU’s 595 578 Cumulative effect of change in accounting principle – 589 Merger related stock compensation expense – 1,261 Valuation of warrant exchange – 767 Gain on vendor settlements (479) (2,231) Provision for bad debt 1,489 (30) Other 157 194 Changes in assets and liabilities Accounts receivable (37,863) (4,689) Inventory (18,422) 2,885 Prepaid maintenance & warranties (4,852) 11,495 Other current assets (209) 366 Other non-current assets 564 (1,369) Accounts payable and accrued liabilities 49,433 (9,225) Accrued licenses and royalties 3,678 (66) Accrued warranties (2,283) (427) Deferred revenue 1,588 (5,023) Net cash used in operating activities (18,752) (22,283) INVESTING ACTIVITIES Purchase of property and equipment (1,316) (97) Proceeds from the sale of fixed assets – 17 Acquisition costs of the Professional Business (1,240) – Net cash used in investing activities (2,556) (80) FINANCING ACTIVITIES Net proceeds from sale of debentures – 13,757 Net activity under financing facility 25,070 34,239 Net activity and extinguishment of line of credit – (22,641) Restricted cash related to letters of credit and financing facility (5,266) (4,585) Payment of note payable (2,659) (253) Payments on capital leases – (188) Net proceeds from the exercise of stock options 34 27 Net proceeds from the exercise of warrants 8,299 3,104 Payment of stock issuance costs – (155) Net cash provided by financing activities 25,478 23,305 Net cash increase for period 4,170 942 Cash at beginning of period 4,839 3,897 Cash at end of period $9,009 $4,839 (1) The results of the Gateway Professional Business have been consolidated effective October 1, 2007, the date the acquisition by MPC Corporation became effective, and therefore the results of the Professional Business are not included for periods prior to October 1, 2007.
MPC Corporation
CONTACT: Media, Michael Boss, +1-208-893-1057, mjboss@mpccorp.com, orIR, Marlys Johnson, +1-605-232-7456, marlys.johnson@mpccorp.com, both of MPCCorporation
Web site: http://www.micronpc.com/