EXHIBIT 99.7
Selected historical financial data
The following selected historical financial data is derived from our the
historical consolidated financial statements of our parent, EaglePicher
Holdings, Inc. This table does not include the obligations of our unconsolidated
accounts receivable asset-backed securitization entity. The following table
should be read in conjunction with "Management's discussion and analysis of
financial condition and results of operations" and the historical financial
statements and related notes of our parent included elsewhere in this offering
memorandum. Data and ratios relating to preferred stock refer to our parent's
11 3/4% cumulative redeemable exchangeable preferred stock.
NINE MONTHS YEAR ENDED NOVEMBER 30,
ENDED ------------------------------------------------------------
NOVEMBER 30,
1998 1999 2000 2001 2002
------------ --------- --------- --------- ---------
(IN THOUSANDS EXCEPT RATIOS)
STATEMENTS OF INCOME (LOSS) DATA:
Net sales(1) .......................... $ 567,774 $ 824,133 $ 752,509 $ 689,776 $ 682,829
Costs of products sold (exclusive of
depreciation) ....................... 441,405 647,297 593,688 559,748 534,605
--------- --------- --------- --------- ---------
Gross profit .......................... 126,369 176,836 158,821 130,028 148,224
Selling and administrative ............ 52,670 66,665 57,654 49,343 60,348
Depreciation and amortization ......... 27,059 44,101 40,676 42,338 47,299
Goodwill amortization ................. 11,908 15,877 15,877 15,825 15,822
Restructuring ......................... -- -- -- 14,163 5,898
Losses (gains) from divestitures ...... -- 21,407 (3,149) 2,105 6,497
Management compensation-special(2) .... 26,808 556 1,560 3,125 3,383
Insurance (gains) losses(3) ........... -- -- (16,000) -- 3,100
--------- --------- --------- --------- ---------
Operating income (loss) ............... 7,924 28,230 62,203 3,129 5,877
Interest expense(4) ................... (32,295) (44,297) (42,644) (38,883) (40,022)
Other income, net ..................... 1,839 3,893 624 3,566 1,516
--------- --------- --------- --------- ---------
Income (loss) from continuing
operations before taxes ............. (22,532) (12,174) 20,183 (32,188) (32,629)
Income tax (provision) benefit ........ 4,812 96 (9,321) 10,063 (1,938)
--------- --------- --------- --------- ---------
Income (loss) from continuing
operations .......................... (17,720) (12,078) 10,862 (22,125) (34,567)
Discontinued operations, net(5) ....... 3,356 (5,509) (5,252) (31,846) (2,265)
--------- --------- --------- --------- ---------
Net income (loss) ..................... $ (14,364) $ (17,587) $ 5,610 $ (53,971) $ (36,832)
========= ========= ========= ========= =========
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents ............. $ 13,681 $ 10,071 $ 7,467 $ 24,620 $ 31,522
Working capital ....................... 115,501 114,737 72,405 48,408 8,681
Property, plant and equipment, net .... 226,043 218,993 219,559 210,421 177,135
Total assets .......................... 807,307 833,947 767,699 728,934 613,041
Total debt(6) ......................... 484,095 540,275 456,118 440,989 373,725
Preferred stock ....................... 87,387 97,956 109,804 123,086 137,973
Shareholders' equity (deficit) ........ 80,612 49,311 39,197 (33,655) (87,578)
OTHER DATA AND SELECTED RATIOS:
Adjusted EBITDA(7) .................... $ 59,492 $ 115,271 $ 102,951 $ 85,259 $ 92,500
Earnings to fixed charges and preferred
stock dividends(8) .................. N/A N/A 1.15x N/A N/A
Adjusted EBITDA/interest expense(9) ... 2.3x 2.2x 2.0x 2.2x
Total debt/Adjusted EBITDA(10) ........ 4.7x 4.4x 5.2x 4.0x
Capital expenditures .................. N/A $ 41,746 $ 40,846 $ 35,711 $ 16,397
Gross margin .......................... 22.3% 21.5% 21.1% 18.9% 21.7%
TWELVE
SIX MONTHS ENDED MONTHS
MAY 31, ENDED
-------------------------- MAY 31,
2002 2003 2003
--------- --------- ---------
STATEMENTS OF INCOME (LOSS) DATA:
Net sales(1) .......................... $ 340,555 $ 345,610 $ 687,884
Costs of products sold (exclusive of
depreciation) ....................... 267,253 266,285 533,637
--------- --------- ---------
Gross profit .......................... 73,302 79,325 154,247
Selling and administrative ............ 33,797 29,797 56,348
Depreciation and amortization ......... 22,864 22,458 46,893
Goodwill amortization ................. 7,912 -- 7,910
Restructuring ......................... 2,998 -- 2,900
Losses (gains) from divestitures ...... 5,970 -- 527
Management compensation-special(2) .... 2,381 424 1,426
Insurance (gains) losses(3) ........... 3,100 (5,736) (5,736)
--------- --------- ---------
Operating income (loss) ............... (5,720) 32,382 43,979
Interest expense(4) ................... (21,696) (18,146) (36,472)
Other income, net ..................... 918 73 671
--------- --------- ---------
Income (loss) from continuing
operations before taxes ............. (26,498) 14,309 8,178
Income tax (provision) benefit ........ (1,205) (2,046) (2,779)
--------- --------- ---------
Income (loss) from continuing
operations .......................... (27,703) 12,263 5,399
Discontinued operations, net(5) ....... (472) (3,409) (5,202)
--------- --------- ---------
Net income (loss) ..................... $ (28,175) $ 8,854 $ 197
========= ========= =========
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents ............. $ 22,088 $ 13,508 $ 13,508
Working capital ....................... (3,529) (87,237) (87,237)
Property, plant and equipment, net .... 195,668 164,705 164,705
Total assets .......................... 640,565 608,250 608,250
Total debt(6) ......................... 378,533 370,762 370,762
Preferred stock ....................... 130,317 146,079 146,079
Shareholders' equity (deficit) ........ (67,877) (82,648) (82,648)
OTHER DATA AND SELECTED RATIOS:
Adjusted EBITDA(7) .................... $ 44,856 $ 49,874 $ 97,518
Earnings to fixed charges and preferred
stock dividends(8) .................. N/A 1.23x N/A
Adjusted EBITDA/interest expense(9) ... 2.6x
Total debt/Adjusted EBITDA(10) ........ 3.8x
Capital expenditures .................. $ 8,516 $ 8,808 $ 16,689
Gross margin .......................... 21.5% 23.0% 22.4%
- --------------------
(1) Net sales includes $121.6 million in the nine months ended November 30,
1998; $146.1 million in the year ended November 30, 1999; $56.2 million
in year ended November 30, 2000; $10.2 million in the year ended
November 30, 2001; $3.4 million in the year ended November 30, 2002;
$2.6 million in the six months ended May 31, 2002; and $0.8 million in
the twelve months ended May 31, 2003, which is attributed to certain
divested or sold businesses.
(2) Management compensation -- special expense consists of payments to
former officers upon their separation from employment.
(3) In 2000, we received $16.0 million from insurance companies as a result
of the settlement of certain claims relating primarily to environmental
remediation. In the second quarter of 2002, we recorded a provision of
$3.1 million primarily related to a dispute with an insurance carrier
over the coverage on a fire which occurred at one of our facilities
during 2001. In the second quarter of 2003, we recorded a $5.7 million
gain primarily related to the settlement of a claim with our insurance
carrier over the coverage on a fire during 2002 at a non-operating
facility.
(4) Interest expense excludes $4.0 million in the nine months ended
November 30, 1998; $4.8 million in the year ended November 30, 1999;
$4.7 million in the year ended November 30, 2000; $4.5 million in the
year ended November 30, 2001; $1.1 million in the
year ended November 30, 2002; $0.6 million in the six months ended May
31, 2002; $0.6 million in the six months ended May 31, 2003; and $1.1
million in the twelve months ended May 31, 2003, which has been
allocated to discontinued operations (see footnote 5).
(5) In 2001, we discontinued the operations of our former Construction
Equipment Division, which represented our entire former Machinery
Segment. We completed this sale on December 14, 2001, effective
November 30, 2001. In addition, during the second quarter of 2003, we
discontinued the operations of our Hillsdale UK automotive operation.
We sold our Hillsdale UK automotive operation on June 11, 2003.
(6) Total debt excludes $0.3 million at November 30, 1998; $3.8 million at
November 30, 1999; $1.8 million at November 30, 2000; $2.1 million at
November 30, 2001; and $2.2 million at May 31, 2002, which has been
allocated to discontinued operations (see footnote 5). In addition,
total debt excludes $46.5 million at November 30, 2002; $52.4 million
at May 31, 2002; and $26.2 million at May 31, 2003, which represents
amounts advanced under our accounts receivable asset-backed
securitization.
(7) Adjusted EBITDA represents net income (loss) adjusted for (i) loss
(gain) from discontinued operations, net; (ii) loss on disposal of
discontinued operations, net; (iii) income taxes; (iv) interest
expense; (v) depreciation and amortization; (vi) restructuring; (vii)
losses (gains) from divestitures; (viii) insurance related losses
(gains); (ix) certain legal and litigation costs; and (x) Adjusted
EBITDA impact from discontinued operations. Adjusted EBITDA is
presented herein because we believe it is a useful supplement to
operating income and cash flow from operations in understanding cash
flows generated from operations that are available for taxes, debt
service and capital expenditures. Management also uses this measurement
as part of its evaluation of core operating results and underlying
trends and therefore believes it is a key measure of its performance.
However, Adjusted EBITDA, which does not represent operating income or
net cash provided by operating activities as those items are defined by
GAAP, should not be considered by prospective purchasers of the notes
to be an alternative to operating income or cash flow from operations
or indicative of whether cash flows will be sufficient to fund our
future cash requirements. In addition, Adjusted EBITDA may differ from
and may not be comparable to similarly titled measures used by other
companies.
The following table reconciles our net income (loss) to Adjusted EBITDA
for each period presented:
NINE MONTHS
ENDED YEAR ENDED NOVEMBER 30,
NOVEMBER 30, ------------------------------------------------------
1998 1999 2000 2001 2002
----------- --------- -------- -------- --------
(IN THOUSANDS)
Net income (loss) ................ $(14,364) $ (17,587) $ 5,610 $(53,971) $(36,832)
Loss (gain) from discontinued
operations, net .............. (3,356) 5,509 5,252 1,430 2,265
Loss on disposal of discontinued
operations, net .............. -- -- -- 30,416 --
Income taxes ................... (4,812) (96) 9,321 (10,063) 1,938
Interest expense ............... 32,295 44,297 42,644 38,883 40,022
Depreciation and amortization .. 38,967 59,978 56,553 58,163 63,121
Restructuring .................. -- -- -- 14,163 5,898
Losses (gains) from
divestitures ................. -- 21,407 (3,149) 2,105 6,497
Insurance related losses
(gains) ...................... -- -- 16,000) -- 3,100
Certain legal and litigation
costs(11) .................... -- -- -- -- 6,050
Adjusted EBITDA impact from
discontinued operations ...... 10,762 1,763 2,720 4,133 441
-------- --------- -------- -------- --------
Adjusted EBITDA .................. $ 59,492 $ 115,271 $102,951 $ 85,259 $ 92,500
======== ========= ======== ======== ========
TWELVE
SIX MONTHS ENDED MONTHS
MAY 31, ENDED
----------------------- MAY 31,
2002 2003 2003
-------- -------- --------
Net income (loss) ................ $(28,175) $ 8,854 $ 197
Loss (gain) from discontinued
operations, net .............. 472 431 2,224
Loss on disposal of discontinued
operations, net .............. -- 2,978 2,978
Income taxes ................... 1,205 2,046 2,779
Interest expense ............... 21,696 18,146 36,472
Depreciation and amortization .. 30,776 22,458 54,803
Restructuring .................. 2,998 -- 2,900
Losses (gains) from
divestitures ................. 5,970 -- 527
Insurance related losses
(gains) ...................... 3,100 (5,736) (5,736)
Certain legal and litigation
costs(11) .................... 6,250 -- (200)
Adjusted EBITDA impact from
discontinued operations ...... 564 697 574
-------- -------- --------
Adjusted EBITDA .................. $ 44,856 $ 49,874 $ 97,518
======== ======== ========
(8) For purposes of determining the ratio of earnings to fixed charges and
preferred stock dividends, "earnings" consist of income from continuing
operations before provision (benefit) for income taxes and fixed
charges. "Fixed charges" consist of interest expense (including
amortization of deferred financing costs) and approximately 30% of our
rental expense, representing that portion of interest expense deemed to
be representative of the interest factor. Earnings were insufficient to
cover fixed charges and preferred stock dividends by $29.9 million in
the nine months ended November 30, 1998; $22.7 million in the year
ended November 30, 1999; $45.5 million in the year ended November 30,
2001; $47.5 million in the year ended November 30, 2002; $33.7 million
in the six months ended May 31, 2002; and $7.6 million in the twelve
months ended May 31, 2003.
(9) For purposes of calculating Adjusted EBITDA/interest expense, we have
included the interest expense from the summary financial table and
interest expense allocated to discontinued operations (see footnote 4
above).
(10) For purposes of calculating total debt/Adjusted EBITDA, we have
included the total debt from the summary financial table and debt
allocated to discontinued operations (see footnote 6).
(11) Certain legal and litigation costs are included in selling and
administrative expense and are discussed in greater detail in Note M to
our parent's November 30, 2002 consolidated financial statements
included in Exhibit 99.4 of this Report.