Exhibit 99.1
MPC Corporation | MPC Corporation |
Phone (208) 893-1057 | Phone (720) 528-4038 |
mjboss@mpccorp.com | bcoy@mpccorp.com |
MPC CORPORATION REPORTS UNAUDITED SECOND QUARTER 2008 FINANCIAL RESULTS
NAMPA, ID – AUG. 14, 2008 – 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.
MPC Corporation Announces Second Quarter 2008 Financial Results
August 14, 2008
Page | 2
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 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 Announces Second Quarter 2008 Financial Results
August 14, 2008
Page | 3
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 Announces Second Quarter 2008 Financial Results
August 14, 2008
Page | 4
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 Announces Second Quarter 2008 Financial Results
August 14, 2008
Page | 5
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 | -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.
