MPC Corporation Announces First Quarter 2008 Financial Results
nounced financial results for the first quarter ended
March 31, 2008.
Net revenue for the quarter ended March 31, 2008 was $123.7 million with a
net loss of $0.41 per basic and diluted share. The results for the quarter
reflect the combined operations of MPC Corporation and the Gateway
Professional business, which was acquired in October 2007.
For comparison purposes, net revenue for the quarter ended March 31, 2007
was $56.8 million with a net loss of $0.41 per basic and diluted share.
Gross margin as a percentage of sales for Q1 2008 increased to 12.1
percent from 10.9 percent in Q1 2007. Revenue and operating income for the
first quarter of 2008 were impacted by the transition of IT and manufacturing
systems from Gateway Professional to MPC Computers' existing systems in
February 2008. The company experienced material delays in manufacturing and
customer deliveries, which resulted in lower than expected shipment volumes
and revenues in the first quarter of 2008 as compared to the fourth quarter of
2007.
Additional financial details are available through the 10-Q filed today.
'The transition issues that we faced in the wake of MPC's acquisition of
Gateway's Professional business posed a tough challenge for us in the first
quarter,' noted MPC Corporation's Chairman and CEO, John Yeros. 'We are
encouraged by the improvement in our gross margin over this same period last
year, and by our growing backlog of orders. We are working hard to show
improvement in the second quarter and beyond.'
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. 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)
March 31, December 31,
2008 2007
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $3,817 $9,009
Restricted cash 9,898 9,852
Accounts receivable, net 53,381 86,056
Inventories, net 71,688 62,050
Prepaid maintenance and warranty costs 9,063 10,699
Other current assets 1,188 1,146
Total Current Assets 149,035 178,812
Non-Current Assets
Property and equipment, net 10,112 10,697
Goodwill 45,255 45,255
Acquired intangibles, net 26,134 28,455
Long-term portion of prepaid maintenance
and warranty costs 1,577 1,388
Other assets 2,582 1,668
Total Non-Current Assets 85,660 87,463
TOTAL ASSETS $234,695 $266,275
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $74,001 $61,079
Accrued expenses 20,121 26,928
Accrued licenses and royalties 6,291 5,084
Current portion of accrued
warranties 24,108 24,700
Current portion of deferred
revenue 31,634 33,357
Notes payable and debt 42,485 64,249
Derivative financial instruments
at estimated fair value 1,478 1,590
Total Current Liabilities 200,118 216,987
Long Term Liabilities
Non-current portion of accrued
warranties 14,204 16,491
Non-current portion of deferred
revenue 27,317 25,848
Derivative warrant liability 303 634
Total Long Term Liabilities 41,824 42,973
TOTAL LIABILITIES 241,942 259,960
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK, Series B, 260,000
shares authorized, 249,171 issued
and outstanding at 2008 and 2007 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 at 2008 and 2007 9,008 9,008
Common Stock, no par value, 100,000,000
shares authorized; 34,175,866 and
33,948,489 shares issued and outstanding
at 2008 and 2007, respectively 85,444 85,029
Accumulated Deficit (108,007) (94,030)
Total Shareholders' Equity (Deficit) (13,555) 7
TOTAL LIABILITIES AND EQUITY $234,695 $266,275
MPC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share data)
Three Months ended
March 31,
2008 2007(1)
Revenue $123,707 $56,751
Cost of revenue 108,715 50,561
Gross margin 14,992 6,190
Operating expenses
Research and development expense 1,071 497
Selling, general and administrative
expense 24,126 9,831
Depreciation and amortization 2,949 770
Total operating expenses 28,146 11,098
Operating loss (13,154) (4,908)
Other (income) expense
Interest expense, net 1,266 1,519
Change in estimated fair value of
derivative financial instruments (443) (1,246)
Total other (income) expense, net 823 273
Net loss $(13,977) $(5,181)
Loss per common share:
Basic $(0.41) $(0.41)
Diluted $(0.41) $(0.41)
Common shares used to compute net
loss per share:
Basic 34,067,054 12,694,606
Diluted 34,067,054 12,694,606
(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)
Three Months Ended
March 31,
2008 2007(1)
OPERATING ACTIVITIES
Net loss $(13,977) $(5,181)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation 1,411 698
Amortization of acquired intangibles 2,320 453
Amortization of deferred loan costs - 243
Change in estimated fair value of
derivative financial instruments (443) (1,246)
Stock compensation on vesting of RSUs 322 61
Provision for bad debt 752 (19)
Other 2 -
Changes in assets and liabilities
Accounts receivable 31,923 12,114
Inventory (9,638) (2,722)
Prepaid maintenance & warranties 1,447 (1,606)
Other current assets (42) 220
Other non-current assets (914) -
Accounts payable and accrued liabilities 6,127 (2,360)
Accrued licenses and royalties 1,207 654
Accrued warranties (2,879) (96)
Deferred revenue (254) 2,013
Net cash provided by operating activities 17,364 3,226
INVESTING ACTIVITIES
Purchase of property and equipment (834) (75)
Proceeds from the sale of fixed assets 6 -
Net cash used in investing activities (828) (75)
FINANCING ACTIVITIES
Net activity under financing facility (19,193) (6,679)
Restricted cash related to letters of
credit and financing facility (46) 208
Payment of notes payable (2,489) -
Net cash used in financing activities (21,728) (6,471)
Net cash decrease for period (5,192) (3,320)
Cash at beginning of period 9,009 4,839
Cash at end of period $3,817 $1,519
Supplemental disclosure of cash flow information:
Interest paid $1,386 $896
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.
SOURCE MPC Corporation
