EXHIBIT 99-1
LEXINGTON PRECISION CORPORATION
40 EAST 52ND STREET
NEW YORK, NY 10022
FOR IMMEDIATE RELEASE
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LEXINGTON PRECISION ANNOUNCES NEW FINANCING PACKAGE AND REPORTS
FIRST QUARTER RESULTS
NEW YORK, June 1, 2006 -- Lexington Precision Corporation (LEXP) announced today
that it had successfully completed a refinancing of all of its secured and
senior unsecured debt with a group of lenders headed by CapitalSource Finance
LLC. The new financing package consists of a $17,500,000 secured revolving line
of credit, a $12,500,000 equipment term loan, and a $15,000,000 real estate term
loan. At closing the proceeds of the term loans were used for the following
purposes:
- Repay the Company's existing $8,512,000 equipment term loan;
- Repay the Company's existing $4,152,000 real estate term loan;
- Repay $62,000 principal amount of other equipment financing;
- Repay the Company's existing $7,000,000 senior, unsecured note;
- Reduce the loans outstanding under the Company's revolving line of
credit by $6,923,000; and
- Pay $851,000 of expenses related to the refinancing.
Before the refinancing, the Company had approximately $1,000,000 of unused
availability under its revolving line of credit; after the refinancing, the
Company had approximately $7,100,000 of unused availability.
The new revolving line of credit expires on May 15, 2009. Loans under the new
revolving line of credit bear interest at the London Interbank Offered Rate
("LIBOR") plus 2.75%. Revolving loans and letters of credit are limited to the
lesser of $17,500,000 or an amount equal to 85% of eligible accounts receivable
plus 65% of eligible inventories. The Company's obligations under the new
revolving line of credit are secured by a first priority lien on substantially
all of the Company's assets other than real estate and a second priority lien on
the Company's real estate.
The new equipment term loan matures on May 15, 2009, and is payable in monthly
principal installments of $208,000, commencing on September 1, 2006. Interest on
the new equipment term loan is payable monthly at LIBOR plus 4.50%. The new
equipment term loan is secured by a first
priority lien on substantially all of the Company's assets other than real
estate and a second priority lien on the Company's real estate.
The new real estate term loan matures on May 15, 2009, and is payable in monthly
principal installments of $61,000, commencing on September 1, 2006. Interest on
the new real estate term loan is payable monthly at LIBOR plus 4.50% on
$11,000,000 of the loan and the prime rate plus 6.00% on $4,000,000 of the loan.
The new real estate term loan is secured by a first priority lien on the
Company's real estate and a second priority lien on substantially all of the
Company's other assets.
The new real estate term loan contains certain provisions that may limit the
Company's ability to make interest payments on its subordinated debt in the
future. Unless the Company makes prepayments, in addition to the scheduled
monthly principal payments, on the new real estate term of at least $3,000,000
by December 31, 2007, the Company will thereafter be permitted to make interest
payments on its subordinated debt only to the extent that its unused
availability under the new revolving line of credit exceeds an amount equal to
$3,000,000 minus the amount of such prepayments made to date.
Also today, the Company announced its operating results for the first quarter of
2006. The Company's quarterly report on Form 10-Q for the quarter will be filed
with the Security and Exchange Commission shortly.
The Company reported a net loss of $400,000, or 8 cents per diluted common
share, for the first quarter ended March 31, 2006, compared to a net loss of
$700,000, or 14 cents per diluted common share, for the first quarter of 2005.
The loss from continuing operations totaled $330,000, or 7 cents per diluted
common share, for the first quarter of 2006, compared to a loss from continuing
operations of $994,000, or 20 cents per diluted common share, for the first
quarter of 2005. The loss from discontinued operations totaled $70,000, or 1
cent per diluted common share, for the first quarter of 2006, compared to income
from discontinued operations of $294,000, or 6 cents per diluted common share,
for the first quarter of 2005.
Net sales for the first quarter of 2006 were $24,798,000, compared to
$26,284,000 for the first quarter of 2005, a decrease of 6%. Net sales of the
Rubber Group decreased by 6% to $21,709,000, while net sales of the Metals Group
decreased by 6% to $3,089,000.
During the first quarter of 2006, income from operations totaled $1,963,000,
compared to $1,337,000 for the first quarter of 2005. Income from operations at
the Rubber Group increased to $2,876,000 from $2,306,000. The Metals Group
reported a loss from operations of $274,000, compared to a loss of $304,000 for
the first quarter of 2005. The loss from operations at the Corporate Office
decreased to $639,000 from $665,000.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) from
continuing operations for the first quarter of 2006, totaled $3,828,000,
compared to EBITDA from continuing operations of $3,472,000 for the first
quarter of 2005, an increase of 10%. EBITDA for the Rubber Group increased to
$4,508,000 from $4,109,000, EBITDA for the Metals Group decreased to negative
$50,000 from positive $24,000, and EBITDA for the Corporate Office improved to
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negative $630,000 from negative $661,000. For more information about EBITDA,
please see the section of the press release captioned "Notice Relating to Use of
Non-GAAP Measure."
Net cash provided by operating activities of continuing operations for the first
quarter of 2006 totaled $113,000 compared to a use of cash of $157,000 for the
first quarter of 2005.
NOTICE RELATING TO USE OF NON-GAAP MEASURE
EBITDA is not a measure of performance under U.S. generally accepted accounting
principles (GAAP) and should not be considered in isolation or used as a
substitute for income from operations, net income, net cash provided by
operating activities, or other operating or cash flow statement data prepared in
accordance with GAAP. We have presented EBITDA because this measure is used by
investors, as well as our own management, to evaluate the operating performance
of our business, including its ability to incur and to service debt, and because
it is used by our lenders in setting financial covenants. Nevertheless, EBITDA
has distinct limitations as compared to a GAAP number such as net income. By
excluding interest and tax payments, for example, an investor may not see that
both represent a reduction in cash available to the Company. Likewise,
depreciation and amortization, while non-cash items, represent generally the
devaluation of assets that produce revenue for the Company. Our definition of
EBITDA may not be the same as the definition of EBITDA used by other companies.
Lexington Precision Corporation manufactures rubber and metal components that
are used primarily by manufacturers of automobiles, automotive replacement
parts, and medical devices.
Contact: Warren Delano, President (212) 319-4657
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LEXINGTON PRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED MARCH 31
-----------------------------
2006 2005
---- ----
(UNAUDITED)
Net sales $ 24,798 $ 26,284
Cost of sales 21,059 23,162
-------- --------
Gross profit 3,739 3,122
Selling and administrative expenses 1,776 1,785
-------- --------
Income from operations 1,963 1,337
Interest expense (2,278) (2,310)
-------- --------
Loss before income taxes (315) (973)
Income tax provision (15) (21)
-------- --------
Loss from continuing operations (330) (994)
Income (loss) from discontinued operations (70) 294
-------- --------
Net loss $ (400) $ (700)
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Basic and diluted income (loss) per share of common stock:
Continuing operations $ (0.07) $ (0.20)
Discontinued operations (0.01) 0.06
-------- --------
Net loss $ (0.08) $ (0.14)
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Reconciliation of loss from continuing
operations to EBITDA from continuing operations:
Loss from continuing operations $ (330) $ (994)
Add:
Depreciation and amortization 1,865 2,135
Interest expense 2,278 2,310
2,310
Income tax provision 15 21
-------- --------
EBITDA from continuing operations $ 3,828 $ 3,472
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Net cash provided by operating activities $ 113 $ (157)
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LEXINGTON PRECISION CORPORATION
SELECT CONSOLIDATED AND SEGMENT FINANCIAL DATA
CONTINUING OPERATIONS
(IN THOUSANDS)
QUARTER ENDED MARCH 31
--------------------------
2006 2005
---- ----
(UNAUDITED)
Net sales:
Rubber Group $ 21,709 $ 23,004
Metals Group 3,089 3,280
-------- --------
Total net sales $ 24,798 $ 26,284
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Income (loss) from operations:
Rubber Group $ 2,876 $ 2,306
Metals Group (274) (304)
Corporate Office (639) (665)
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Total income from operations 1,963 1,337
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Add back depreciation and amortization included
in income from operations:
Rubber Group 1,632 1,803
Metals Group 224 328
Corporate Office 9 4
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Total depreciation and amortization 1,865 2,135
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Earnings (loss) before interest, taxes, depreciation,
and amortization (EBITDA):
Rubber Group 4,508 4,109
Metals Group (50) 24
Corporate Office (630) (661)
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Total EBITDA $ 3,828 $ 3,472
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Capital expenditures:
Rubber Group $ 295 $ 1,300
Metals Group 63 42
Corporate Office -- 3
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Total capital expenditures $ 358 $ 1,345
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