Exhibit 99.1
[LOGO OF MEDSOURCE TECHNOLOGIES]
MEDSOURCE TO BE ACQUIRED BY UTI CORPORATION,
REPORTS FISCAL THIRD-QUARTER RESULTS
Webcast Today, Wednesday, April 28, 2004, at 11:00 a.m. Eastern Time
Minneapolis, April 28, 2004--MedSource Technologies, Inc. (Nasdaq: MEDT) today
announced that it has entered into a definitive merger agreement to be acquired
by UTI Corporation. Under the agreement, which was unanimously approved by
MedSource's Board of Directors, the MedSource common stockholders will receive
upon the closing of the merger $7.10 per share in cash. The aggregate
transaction value is approximately $230 million, including assumed net debt. The
price per share represents a premium of 20 percent over the 30-day per-share
trading average for MedSource. The acquisition, which is subject to certain
conditions, including regulatory and stockholder approval, as well as completion
of a committed financing, is expected to close in the summer of 2004.
Stockholder approval will be solicited by MedSource by means of a proxy
statement, which will be mailed to MedSource's stockholders upon completion of
the required Securities and Exchange Commission filing and review process.
MedSource's principal stockholders, who collectively own approximately 25
percent of the outstanding shares of MedSource's common stock, have agreed to
vote their shares in favor of the merger at the MedSource stockholder meeting.
UTI Corporation, based in Collegeville, Pa., is a privately held, fully
integrated provider of metal and plastic components, assemblies and finished
devices to medical device manufacturers worldwide. UTI, whose lead equity
sponsor is KRG Capital Partners, LLC, has received an equity financing
commitment from DLJ Merchant Banking Partners, part of the family of funds of
CSFB Private Equity, and debt commitments from a nationally recognized financial
institution to finance the transaction. Currently available committed financing
is sufficient to enable UTI to close the transaction upon satisfaction of the
closing conditions.
"Combining MedSource and UTI will yield a broadly capable and versatile
outsourcer for medical device companies to rely on," said Richard J. Effress,
MedSource Chairman and Chief Executive Officer. "Merging our two businesses
makes sense long term from a competitive standpoint, and MedSource's board and
management are pleased with the terms of this transaction and believe it is in
the best interests of our shareholders, employees and customers. MedSource's
board unanimously approved UTI's offer."
According to Ron Sparks, President and CEO of UTI, this acquisition, "allows UTI
to continue fulfilling its mission to be the world's best order fulfillment and
design organization to the medical device industry as ranked by our customers."
"By virtue of this acquisition, we will be able to offer the customer the widest
array of capabilities possible, thereby allowing them to maximize return on
their own resources and accelerate their speed to market," adds Sparks.
"We are pleased to have a chance to partner with KRG Capital Partners, LLC and
invest in UTI to acquire MedSource," said Andy Rush, Managing Director of DLJ
Merchant Banking Partners. "Combining UTI and MedSource creates a leader in the
fast-growing medical technology outsourcing market."
Piper Jaffray & Co. acted as lead financial advisor to MedSource on this
transaction; Morgan Stanley, who rendered a fairness opinion to the board of
MedSource, also advised the Company in the transaction. Jenkens & Gilchrist
Parker Chapin LLP acted as legal advisors to MedSource. UTI is represented by
Hogan & Hartson LLP and DLJ Merchant Banking Partners is represented by Weil,
Gotshal & Manges LLP.
The proxy statement that MedSource plans to file with the Securities and
Exchange Commission and mail to its stockholders will contain information about
MedSource, UTI, the proposed merger and related matters. Stockholders are urged
to read the proxy statement carefully when it is available because it will
contain important information that stockholders should consider before making a
decision about the merger. In addition to receiving the proxy statement by mail,
stockholders will also be able to obtain the proxy statement, as well as other
filings (including annual, quarterly and current reports) containing information
about MedSource, without charge, at the Securities and Exchange Commission's web
site (http://www.sec.gov). Stockholders may also obtain copies of these
documents without charge by requesting them from MedSource in writing at 110
Cheshire Lane, Suite 100, Minneapolis, MN 55305, or by phone at (952) 807-1234.
MedSource and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from MedSource stockholders with
respect to the proposed merger. Information regarding any interests that
MedSource's executive officers and directors may have in the transaction will be
set forth in the proxy statement.
Fiscal Third-Quarter Results
MedSource also reported today results for its fiscal 2004 third quarter ended
March 28, 2004. Third-quarter revenues were $46.0 million, up 3.4 percent from
the year-ago quarter, with net income of $1.5 million, or $0.05 per diluted
share. These results compare to revenues of $44.5 million and net loss of
($30.4) million, or ($1.10) per diluted share, in the year-ago quarter.
For the nine months ended March 28, 2004, revenues were $136.3 million, up 4.7
percent over the year-ago period, with net income of $2.7 million, or $0.09 per
diluted share. This compares to prior-year nine-month revenues of $130.1
million, and net loss of ($26.1) million, or ($0.95) per diluted share.
In addition to generally accepted accounting principles (GAAP) income statement
results, MedSource also presents income statement results on a pro forma basis
before restructuring charges and after tax effecting pro forma earnings. Please
refer to the "Reconciling Items From GAAP to Pro Forma Results" section of this
release and review the attached supplementary schedules.
On a pro forma basis, MedSource reported fiscal 2004 third-quarter net income of
$1.6 million, or $0.06 per diluted share, below the analysts' First Call mean
estimate of $0.07, which is reported on a pro forma basis.
For the nine-month period ended March 31, 2004, pro forma net income totaled
$4.2 million, or $0.15 per diluted share, versus $3.6 million, or $0.13 per
diluted share, for the year-earlier period.
Reconciling Items from GAAP to Pro Forma Results
Pro forma income statement results for the fiscal third quarter of 2004 and 2003
exclude restructuring charges, and include "tax effecting" pro forma earnings.
The Company also has "net operating loss carryforwards" available to reduce its
income tax expense for the foreseeable future. MedSource believes that it would
have recorded income taxes of approximately 38.5 percent of its pro forma income
before taxes if the carryforwards were not available. Accordingly, management
believes that this pro forma information provides greater comparability to
MedSource's past and ongoing operating performance.
MedSource discloses pro forma or non-GAAP measures of net income and earnings
per share. These measures should not be considered an alternative to
measurements required by GAAP. These pro forma numbers are unlikely to be
comparable to pro forma information provided by other issuers. In accordance
with SEC Regulation G, reconciliation of the MedSource GAAP to pro forma
information is provided in the table attached. MedSource also will make this
press release available on the investor relations page of its Web site at
www.medsourcetech.com. It will also make available on the investor relations
page of its Web site: any other non-GAAP metrics that may be discussed on the
earnings call and Webcast; the most directly comparable GAAP financial measures;
and, a reconciliation of the difference between GAAP and non-GAAP metrics.
Conference Call
Effress and William J. Kullback, senior vice president and CFO, will host a
conference call with the investment community to discuss the Company's
acquisition today, Wednesday, April 28, at 11:00 a.m. ET.
To access the live Webcast of this call, visit the investor relations section of
MedSource's Web site at www.medsourcetech.com. A replay will be available at
this site for one month.
If you do not have Internet access and want to listen to an audio replay of the
conference call, phone (800) 405-2236 and enter passcode 578482#. The telephone
replay will be available beginning at 1:00 p.m. ET on Wednesday, April 28,
through 1:00 p.m. ET on Friday, April 30.
April 29 Conference Call and Webcast Canceled
MedSource had originally planned to report third-quarter earnings on April 29,
2004, and host a conference call and Webcast that day as well. When the Company
finalized the transaction with UTI, MedSource's management team released
third-quarter earnings in conjunction with the UTI announcement. Therefore,
today's conference call and Webcast will take the place of the previously
scheduled call on April 29.
About MedSource
MedSource Technologies, Inc. provides engineering and manufacturing services and
supply chain management solutions to the medical device industry. Customers
include many of the largest medical device companies in the world as well as
emerging device companies. Headquartered in Minneapolis, MedSource offers
product development and design services, precision metal and plastic part
manufacturing, and product assembly and supply chain management services.
Production facilities are located throughout the United States as well as in
Mexico. The Company's common stock is traded on The Nasdaq Stock Market under
the symbol "MEDT."
MedSource is on the Internet at www.medsourcetech.com
About UTI Corporation
UTI provides fully integrated contract manufacturing services to medical device
manufacturers worldwide in the cardiovascular, endoscopy and orthopedic markets.
UTI can help speed new products to market and manage mature product lines,
allowing companies to refocus internal resources more efficiently. The company's
Design Center provides clients with rapid prototyping and engineering support.
In addition, UTI offers a comprehensive portfolio of applied technologies and
manufacturing solutions, with particular expertise in state-of-the-art
fabrication and plastic/metallic injection molding. A Class III/PMA-experienced
manufacturer, UTI is equipped to manage projects from assembly to
direct-to-inventory finished goods. UTI employs 2000 people at 13 specialized
facilities in five countries.
Forward-Looking Statements
This press release contains "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, as amended. In many cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expect," "plan," "anticipate," "believe," "estimate, " "predict," "intend,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. These forward-looking statements involve risks and uncertainties.
The Company's actual results could differ materially from those indicated in
these statements as a result of certain factors contained in the company's
Annual Report on Form 10-K for the year ended June 30, 2003. Readers should not
place undue reliance on any such forward-looking statements, which are made
pursuant to the Private Securities Litigation Reform Act of 1995 and, as such,
speak only as of the date made. The company does not assume any obligation to
update the forward-looking statements after the date hereof.
MedSource Technologies Inc. and Subsidiaries
Consolidated Balance Sheet
(In thousands)
March 28, 2004 June 30, 2003
(Unaudited)
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 13,978 $ 10,781
Accounts receivable, net 23,075 23,710
Inventories, net 24,292 25,617
Prepaid expenses and other current assets 4,002 4,318
--------- ---------
Total current assets 65,347 64,426
Property, plant and equipment, net 50,551 52,752
Goodwill, net 96,637 96,582
Other identifiable intangible assets, net 1,327 1,432
Deferred financing costs 1,364 1,682
Other assets 1,338 1,343
--------- ---------
Total assets $ 216,564 $ 218,217
========= =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 10,579 $ 10,868
Accrued compensation and benefits 4,279 5,498
Other accrued expenses 2,916 2,293
Reserve for restructuring 489 958
Current portion of obligations under capital lease 1,290 1,326
Current portion of long-term debt 7,955 6,427
--------- ---------
Total current liabilities 27,508 27,370
Obligations under capital leases, less current portion 2,999 3,962
Long-term debt, less current portion 25,877 30,073
Other long-term liabilities 602 731
Stockholders' equity:
Common stock 292 289
Additional paid-in capital 278,192 277,791
Treasury stock (1,500) (1,463)
Accumulated other comprehensive loss (217) (288)
Accumulated deficit (115,676) (118,326)
Unearned compensation (1,513) (1,922)
--------- ---------
Total stockholders' equity 159,578 156,081
--------- ---------
Total liabilities and stockholders' equity $ 216,564 $ 218,217
========= =========
MedSource Technologies Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
(Unaudited)
(In thousands except share and per share amounts)
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
March 28, March 30, March 28, March 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues $ 46,027 $ 44,511 $ 136,258 $ 130,135
Costs and expenses:
Cost of product sold 35,037 34,007 104,107 97,989
Selling, general and administrative expense 7,692 8,379 23,224 24,475
Restructuring charges 1,100 1,948 3,989 1,948
Goodwill impairment - 30,000 - 30,000
------------ ------------ ------------ ------------
Operating income (loss) 2,198 (29,823) 4,938 (24,277)
Interest expense, net (668) (590) (2,027) (1,748)
------------ ------------ ------------ ------------
Income before income taxes 1,530 (30,413) 2,911 (26,025)
Income tax expense (56) (12) (261) (27)
------------ ------------ ------------ ------------
Net income (loss) $ 1,474 $ (30,425) $ 2,650 $ (26,052)
============ ============ ============ ============
Net income (loss) per share
Basic and diluted $ 0.05 $ (1.10) $ 0.09 $ (0.95)
============ ============ ============ ============
Weighted average common shares outstanding
Basic 28,125,901 27,639,127 28,044,846 27,413,489
Diluted 29,046,182 27,639,127 28,753,689 27,413,489
MedSource Technologies, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Unaudited)
(In thousands except share and per share amounts)
For the Three Months For the Three Months
Ended March 28, 2004 Ended March 30, 2003
---------------------------------------- ------------------------------------
Restructuring Restructuring
and Pro Forma and Pro Forma
As Reported Other Charges Results As Reported Other Charges Results
-------- -------- -------- ------- ------- -------
Revenues $ 46,027 $ - $ 46,027 $ 44,511 $ - $ 44,511
Costs and expenses:
Cost of product sold 35,037 - 35,037 34,007 - 34,007
Selling, general and administrative expense 7,692 - 7,692 8,379 - 8,379
Restructuring charges 1,100 (1,100)(a) - 1,948 (1,948)(a) -
Goodwill Impairment - - - 30,000 (30,000)(b) -
-------- -------- -------- ------- ------- -------
Operating income (loss) 2,198 1,100 3,298 (29,823) 31,948 2,125
Interest expense, net (668) - (668) (590) - (590)
-------- -------- -------- ------- ------- -------
Income (loss) before income taxes 1,530 1,100 2,630 (30,413) 31,948 1,535
Income tax expense (56) (957)(c) (1,013) (12) (591)(c) (603)
-------- -------- -------- ------- ------- -------
Net income (loss) $ 1,474 $ 143 $ 1,617 $(30,425) $ 31,357 $ 932
======== ======== ======== ======== ======== ========
Net income (loss) per share
Basic and diluted 0.05 $ 0.06 $ (1.10) $ 0.03
======== ======== ======== ========
Weighted average common shares outstanding
Basic 28,125,901 28,125,901 27,639,127 27,639,127
Diluted 29,046,182 29,046,182 27,639,127 27,802,487
(a) Adjustment to exclude restructuring charges related to consolidation of
facilities from pro forma results.
(b) Adjustment to exclude goodwill impairment charge from proforma results.
(c) Adjustment to tax effect pre-tax earnings at a rate of 38.5% for pro forma
purposes.
MedSource Technologies, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Unaudited)
(In thousands except share and per share amounts)
For the Nine Months For the Nine Months
Ended March 28, 2004 Ended March 30, 2003
---------------------------------------- ----------------------------------------
Restructuring Restructuring
and Pro Forma and Pro Forma
As Reported Other Charges Results As Reported Other Charges Results
--------- --------- --------- --------- --------- ---------
Revenues $ 136,258 $ - $ 136,258 $ 130,135 $ - $ 130,135
Costs and expenses:
Cost of product sold 104,107 - 104,107 97,989 - 97,989
Selling, general and administrative
expense 23,224 - 23,224 24,475 - 24,475
Restructuring charges 3,989 (3,989)(a) - 1,948 (1,948)(a) -
Goodwill impairment - - - 30,000 (30,000)(b) -
--------- --------- --------- --------- --------- ---------
Operating income (loss) 4,938 3,989 8,927 (24,277) 31,948 7,671
Interest expense, net (2,027) - (2,027) (1,748) - (1,748)
--------- --------- --------- --------- --------- ---------
Income (loss) before income taxes 2,911 3,989 6,900 (26,025) 31,948 5,923
Income tax expense (261) (2,395)(c) (2,656) (27) (2,280)(c) (2,307)
--------- --------- --------- --------- --------- ---------
Net income (loss) $ 2,650 $ 1,594 $ 4,244 $ (26,052) $ 29,668 $ 3,616
========= ========= ========= ========= ========= =========
Net income (loss) per share
Basic and diluted $ 0.09 $ 0.15 $ (0.95) $ 0.13
======== ========= ========= =========
Weighted average common
shares outstanding
Basic 28,044,846 28,044,846 27,413,489 27,413,489
Diluted 28,753,689 28,753,689 27,413,489 27,610,021
(a) Adjustment to exclude restructuring charges related to consolidation of
facilities from pro forma results.
(b) Adjustment to exclude goodwill impairment charge from pro forma results.
(c) Adjustment to tax effect pre-tax earnings at a rate of 38.5% for pro forma
purposes.
Contact: MedSource Technologies, Inc.
William J. Kullback, 952-807-1218
or
UTI Corporation
Stewart A. Fisher, 610-409-2225
Source: MedSource Technologies, Inc.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this press release regarding MedSource Technologies, Inc.'s
business which are not historical facts are "forward-looking statements" that
involve risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from those contained
in the forward-looking statements, see "Risk Factors" in the Company's Annual
Report or Form 10-K for the most recently ended fiscal year.