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 ANNOUNCES FIRST QUARTER 2008 FINANCIAL RESULTS
NAMPA, ID – MAY 15, 2008 – MPC Corporation (AMEX:MPZ) today announced 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.
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MPC Corporation Announces First Quarter 2008 Financial Results
May 15, 2008
Page | 2
“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 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.
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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 Announces First Quarter 2008 Financial Results
May 15, 2008
Page | 3
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 Announces First Quarter 2008 Financial Results
May 15, 2008
Page | 5
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 -0- -0- |
| (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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