Exhibit 99.1
Michael Boss | Marlys Johnson |
MPC Corporation | MPC Corporation |
Phone (208) 893-1057 | Phone (605) 232-7456 |
mjboss@mpccorp.com | marlys.johnson@mpccorp.com |
MPC CORPORATION REPORTS 2007 FINANCIAL RESULTS
NAMPA, ID – April 14, 2008 - MPC Corporation (AMEX:MPZ) 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
MPC Corporation Reports 2007 Financial Results
April 14, 2007
Page | 2
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 (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 $38 billion Professional PC market. For more information, visit MPC online at 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 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 Reports 2007 Financial Results
April 14, 2007
Page | 3
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 Reports 2007 Financial Results
April 14, 2007
Page | 4
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 Reports 2007 Financial Results
April 14, 2007
Page | 5
MPC Corporation Reports 2007 Financial Results
April 14, 2007
Page | 6
MPC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended |
| December 31 |
| 2007 (1) | 2006 |
OPERATING ACTIVITIES | | |
Net loss | $ (11,453) | $ (58,716) |
Adjustments to reconcile net loss to net cash used in operating activities | | |
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 Reports 2007 Financial Results
April 14, 2007
Page | 7
