NAMPA, Idaho, Aug. 17 /PRNewswire-FirstCall/ -- MPC Corporation today announced unaudited financial results for the quarter ended June 30, 2007. Net revenue was $53.6 million, a decline of $14.9 million, or 21.8%, compared to the same period in 2006. The net loss was $25.3 million, or $1.91 per basic and diluted common share. These results compare with a net loss of $25.4 million, or $2.11 per basic and diluted common share, over the same period in 2006.
The decline in revenue for the quarter was primarily the result of lower sales to the company's commercial, state/local government, and education customers partially offset by higher revenues from sales to federal government customers. The company's orders in backlog increased to $39 million at June 30, 2007 from $28 million at December 31, 2006.
Gross margin percentage for the second quarter was 13.1%, compared to 12.4% during the second quarter of 2006. SG&A expense for the quarter was $8.8 million, compared to $10.2 million during the second quarter of 2006, while R&D expense was $0.5 million, compared to $1.0 million during the second quarter of 2006. The improvement in the gross margin percentage and reductions in SG&A and R&D expense for the second quarter of 2007 were primarily due to cost cutting efforts initiated in 2006.
The $25.3 million net loss includes the effect of a non-operating non-cash charge of $20.5 million related to the increase in the fair value of derivative financial instruments carried as derivative liabilities. The financial instruments consist of convertible debentures and warrants to purchase common stock of the company. The fair values of the derivatives are determined in part by, and fluctuate with, the market value of the company's common stock, which increased in market value during the second quarter of 2007. The convertible debentures and warrants were sold in private placement financings in 2006.
More information about the Company's results will be available on the Company's Form 10-Q quarterly report to be filed with the U.S. Securities and Exchange Commission later today.
About MPC Corporation:
MPC Corporation , through its subsidiary MPC Computers, provides enterprise IT hardware solutions to mid-sized businesses, government agencies and education organizations. MPC offers standards-based server and storage products, along with PC products and computer peripherals, all of which are backed by an industry-leading level of service and support. For more information, visit MPC online at http://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, including the statement with respect to turning the Company's business around. 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. MPC Corporation continues to face significant liquidity challenges and there is no assurance that it will be able to continue as a going concern. Other factors, which could materially affect such forward-looking statements, can be found in MPC Corporation's filings with the Securities and Exchange Commission at http://www.sec.gov/. Investors, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such 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.
MPC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
June 30, December 31,
2007 2006
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 1,867 $ 4,839
Restricted cash 4,036 4,585
Accounts receivable, net 21,655 45,643
Inventories, net 26,532 18,189
Prepaid maintenance and warranty costs 7,584 6,391
Other current assets 683 935
Total Current Assets 62,357 80,582
Non-Current Assets
Property and equipment, net 3,591 4,914
Goodwill 22,197 22,197
Acquired intangibles, net 9,203 10,108
Long-term portion of prepaid maintenance and
warranty costs 1,311 844
Other assets 2,829 3,792
Total Non-Current Assets 39,131 41,855
TOTAL ASSETS $101,488 $122,437
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 24,208 $ 32,536
Accrued expenses 4,696 4,354
Accrued licenses and royalties 1,533 1,540
Current portion of accrued warranties 2,323 2,220
Current portion of deferred revenue 18,938 15,607
Notes payable and debt 31,025 34,834
Total Current Liabilities 82,723 91,091
Long Term Liabilities
Non-current portion of accrued warranties 1,978 2,127
Non-current portion of deferred revenue 21,567 22,979
Derivative warrant liability 11,768 6,129
Derivative financial instruments at
estimated fair value 34,362 21,234
Total Long Term Liabilities 69,675 52,469
TOTAL LIABILITIES 152,398 143,560
COMMITMENTS AND CONTINGENCIES
Shareholders' Equity
Preferred Stock, no par value; 1,000,000 shares
authorized; no shares issued and outstanding
at 2007 and 2006 -- --
Common Stock, no par value, 100,000,000 shares
authorized; 13,505,018 and 12,147,438 shares
issued and outstanding at 2007 and 2006,
respectively 62,169 61,454
Accumulated Deficit (113,079) (82,577)
Total Shareholders' Equity (Deficit) (50,910) (21,123)
TOTAL LIABILITIES AND EQUITY $101,488 $122,437
MPC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for share data)
Three Months Ended Six Months Ended
June 30 June 30
2007 2006 2007 2006
Revenue $53,613 $68,529 $110,365 $134,993
Cost of revenue 46,591 60,065 96,772 118,438
Gross margin 7,022 8,464 13,593 16,555
Operating expenses
Research and development
expense 542 985 1,039 2,135
Selling, general and
administrative expense 8,855 10,189 18,768 21,098
Depreciation and amortization 1,153 2,020 2,304 4,040
Impairment of acquired
intangibles -- 19,484 -- 19,484
Total operating expenses 10,550 32,678 22,111 46,757
Operating loss (3,528) (24,214) (8,518) (30,202)
Other (income) expense
Interest expense, net 1,503 1,166 3,021 2,644
Gain on vendor settlements (225) (843) (225) (843)
Change in estimated fair value
of derivative financial
instruments 20,559 909 19,313 909
Other income (44) (85) (125) (49)
Total other (income) expense,
net 21,793 1,147 21,984 2,661
Net loss $(25,321) $(25,361) $(30,502) $(32,863)
Basic and diluted weighted
average Common Shares
outstanding 13,260 12,041 12,979 11,696
Basic and diluted loss per
Common Share $(1.91) $(2.11) $(2.35) $(2.81)
MPC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended June 30,
2007 2006
OPERATING ACTIVITIES
Net Loss $(30,502) $(32,863)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation 1,399 1,510
Amortization of intangibles 905 2,530
Impairment of intangibles -- 19,484
Amortization of deferred loan costs 459 365
Change in estimated fair value of derivative
financial instruments 19,313 909
Stock compensation expense from vesting of
restricted stock units 170 36
Gain on vendor settlements (225) (843)
Valuation of warrant exchange -- 767
Loss on disposal of assets -- 43
Accrued interest included in notes payable 27 32
Provision for bad debt 71 (30)
Changes in Assets and Liabilities
Accounts receivable 23,917 12,586
Inventory (8,343) (1,049)
Prepaid maintenance and warranties (1,659) 7,742
Other current assets 249 627
Other non-current assets 504 (432)
Accounts payable and accrued expenses (3,184) (7,316)
Accrued licenses and royalties (7) 3,099
Accrued warranties (46) (308)
Deferred revenue 1,919 (5,604)
Net Cash Provided by Operating Activities 4,967 1,285
INVESTING ACTIVITIES
Purchase of property and equipment (76) (115)
Proceeds from the sale of fixed assets -- 2
Net Cash Used by Investing Activities (76) (113)
FINANCING ACTIVITIES
Net activity on line of credit (7,912) (11,640)
Net proceeds from notes payable -- 4,835
Restricted cash related to letters of credit
and financing facility 549 --
Payment of note payable (500) (126)
Payments on capital leases -- (121)
Net proceeds from the exercise of stock
options -- 27
Proceeds from the exercise of warrants -- 3,104
Payment of stock issuance costs -- (155)
Net Cash Used by Financing Activities (7,863) (4,076)
Net cash decrease for period (2,972) (2,904)
Cash at beginning of period 4,839 3,897
Cash at end of period $1,867 $993
