2008-08-14 18:00:00
NAMPA, Idaho, Aug. 14 /EMWNews/ -- MPC Corporation (Amex: MPZ) today announced unaudited financial results for the second quarter ended June 30, 2008. Net revenue was $125.4 million, an increase of $71.8 million, or 134%, compared to the same period in 2007. The net loss was $12.5 million, or $0.37 per basic and diluted common share. These results compare with a net loss of $25.3 million, or $1.91 per basic and diluted common share, over the same period in 2007. Gross margin percentage for the second quarter was 13.2 %, compared to 12.3% during the second quarter of 2007. The improvement in gross margin percentage was due primarily to an increase in revenue and gross margin from the company's Professional Business, where the increase in volume reduced the impact of our fixed manufacturing costs. SG&A expense for the quarter was $22.0 million, compared to $8.8 million during the second quarter of 2007, while R&D expense was $1.3 million, compared to $0.5 million during the second quarter of 2007. The increase in SG&A expense and R&D expense for the quarter was primarily due to additional expense from the acquisition of the Professional Business. The Professional Business was acquired from Gateway, Inc. on October 1, 2007. As previously announced, during the second quarter ended June 30, 2008, MPC Corporation entered into a Manufacturing Services Agreement (MSA) with Flextronics. Under the MSA, Flextronics will perform procurement, supply chain management, manufacturing, assembly and testing for MPC Corporation at the Flextronics manufacturing facility in Juarez, Mexico. Additional financial details are available through the 10-Q filed today. "Delays in manufacturing and customer deliveries, and service and support issues have caused our inventory and accounts payable to grow materially throughout the first six months of 2008," noted MPC Corporation's Chairman and CEO, John Yeros. "Nevertheless, we anticipate the outsourcing of our manufacturing operations could result in potential manufacturing and overhead cost savings. Our revenue backlog at the end of the second quarter was in excess of $104 million, so we are looking forward to catching up with customer orders as we complete this transition."
About MPC Corporation
MPC Corporation (Amex: MPZ), 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 $43 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. Forward-looking
statements in the press release include statements with regard to
manufacturing and overhead cost savings, and with regard to catching up
with customer orders. 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
June 30, December 31,
2008 2007
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $718 $9,009
Restricted cash 9,766 9,852
Accounts receivable, net 59,673 86,056
Inventories, net 97,796 62,050
Prepaid maintenance and warranty costs 7,627 10,699
Other current assets 1,492 1,146
Total Current Assets 177,072 178,812
Non-Current Assets
Property and equipment, net 6,827 10,697
Goodwill 45,255 45,255
Acquired intangibles, net 23,814 28,455
Long-term portion of prepaid maintenance
and warranty costs 2,108 1,388
Other assets 3,237 1,668
Total Non-Current Assets 81,241 87,463
TOTAL ASSETS $258,313 $266,275
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $105,063 $61,079
Accrued expenses 13,977 26,928
Accrued licenses and royalties 4,835 5,084
Current portion of accrued warranties 20,479 24,700
Current portion of deferred revenue 31,234 33,357
Notes payable and debt 56,598 64,249
Derivative financial instruments at
estimated fair value 1,498 1,590
Total Current Liabilities 233,684 216,987
Long Term Liabilities
Non-current portion of accrued
warranties 14,305 16,491
Non-current portion of deferred
revenue 29,547 25,848
Derivative warrant liability 297 634
Total Long Term Liabilities 44,149 42,973
TOTAL LIABILITIES 277,833 259,960
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK, Series B, 260,000 shares
authorized, 249,171 issued and
outstanding 6,308 6,308
SHAREHOLDERS' EQUITY
Preferred Stock, no par value; 100,000 shares
authorized; no shares issued and
outstanding at 2008 and 2007 - -
Preferred Stock, Series A, 640,000 shares
authorized; 626,546 issued and
outstanding 9,008 9,008
Common Stock, no par value, 100,000,000 shares
authorized; 34,196,343 and
33,948,489 shares issued and outstanding at
2008 and 2007, respectively 85,743 85,029
Accumulated Deficit (120,579) (94,030)
Total Shareholders' Equity (Deficit) (25,828) 7
TOTAL LIABILITIES AND EQUITY $258,313 $266,275
MPC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share data)
Three Months ended Six Months ended
June 30, June 30,
2008 2007(1) 2008 2007(1)
Revenue $125,473 $53,613 $249,180 $110,365
Cost of revenue 108,906 46,972 217,620 97,534
Gross margin 16,567 6,641 31,560 12,831
Operating expenses
Research and
development
expense 1,324 542 2,395 1,039
Selling, general
and
administrative
expense 22,055 8,811 46,181 18,643
Depreciation and
amortization 4,314 772 7,263 1,542
Total operating
expenses 27,693 10,125 55,839 21,224
Operating loss (11,126) (3,484) (24,279) (8,393)
Other (income)
expense
Interest expense,
net 1,432 1,503 2,698 3,021
Change in
estimated fair
value of
derivative
financial
instruments 15 20,559 (428) 19,313
Gain on vendor
settlements - (225) - (225)
Total other (income)
expense, net 1,447 21,837 2,270 22,109
Net loss $(12,573) $(25,321) $(26,549) $(30,502)
Loss per common
share:
Basic $(0.37) $(1.91) $(0.78) $(2.35)
Diluted $(0.37) $(1.91) $(0.78) $(2.35)
Common shares used to
compute net
loss per share:
Basic 34,190,472 13,260,372 34,128,763 12,979,052
Diluted 34,190,472 13,260,372 34,128,763 12,979,052
(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 Businesses are not included for periods prior to October
1, 2007.
MPC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
June 30,
2008 2007(1)
OPERATING ACTIVITIES
Net loss $(26,549) $(30,502)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation 5,070 1,399
Amortization of acquired intangibles 4,641 905
Amortization of deferred loan costs - 459
Change in estimated fair value of derivative
financial instruments (429) 19,313
Stock compensation on vesting of restricted
stock units 620 170
Cumulative effect of change in accounting
principle - 71
Gain on vendor settlements - (225)
Provision for bad debt 441 27
Gain on disposal (7) -
Changes in assets and liabilities
Accounts receivable 25,942 23,917
Inventory (35,746) (8,343)
Prepaid maintenance & warranties 2,352 (1,659)
Other current assets (346) 249
Other non-current assets (1,569) 504
Accounts payable and accrued liabilities 25,828 (3,184)
Accrued licenses and royalties (249) (7)
Accrued warranties (6,407) (46)
Deferred revenue 1,576 1,919
Net cash (used) provided by operating activities (4,832) 4,967
INVESTING ACTIVITIES
Purchase of property and equipment (1,214) (76)
Net cash used by investing activities (1,214) (76)
FINANCING ACTIVITIES
Net activity under financing facility (7,699) (7,912)
Borrowings from debt 8,735 -
Payment of note payable (3,367) (500)
Restricted cash related to letters of credit
and financing facility 86 549
Net cash used by financing activities (2,245) (7,863)
Net cash decrease for period (8,291) (2,972)
Cash at beginning of period 9,009 4,839
Cash at end of period $718 $1,867
Supplemental disclosure of cash flow information:
Interest paid $2,160 $1,674
Income taxes paid
(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 Businesses are not included for periods prior to October
1, 2007.
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