TMCnet News
Telex Communications, Inc. Announces Fourth Quarter and Full Year ResultsMINNEAPOLIS --(Business Wire)-- March 14, 2005 -- Telex Communications, Inc. today announced operating results for its fourth quarter and twelve months ended December 31, 2004. Net sales for the fourth quarter were $74.5 million, an increase of 8% compared to net sales of $69.2 million for the fourth quarter a year ago. Fourth quarter 2004 operating income, excluding goodwill and asset impairment charges of $7.9 million, increased 18% to $8.9 million. Net sales for the twelve months ended December 31, 2004 were $296.8 million, an increase of 11% over net sales of $268.5 million for the same period a year ago. 2004 operating income, excluding the goodwill and asset impairment charges of $7.9 million, increased 38% to $37.3 million compared to operating income of $27.0 million for the twelve months of 2003. The goodwill and asset impairment charges, determined as part of our annual impairment analysis, are related primarily to our Germany electronics operating unit. Telex will host a teleconference call beginning at 1:00 PM Central Standard Time today. A replay of this teleconference will be available on the Internet on a listen-only basis at www.telex.com. All remarks made during the teleconference will be current at the time of the call and the replay will not be updated to reflect any subsequent material developments. About Telex Communications, Inc. Telex Communications, Inc. is a worldwide industry leader in the design, manufacture and marketing of audio and communications products and systems to commercial, professional and industrial customers. The Company markets over 30 product lines that span the professional audio and communications sectors. The Company operates through two business segments, Professional Audio and Audio and Wireless Technology. The Professional Audio segment product lines include sophisticated loudspeaker systems, wired and wireless intercom systems, mixing consoles, amplifiers, wired and wireless microphones and other related products. The Audio and Wireless Technology segment product lines include digital audio duplication products, military and aviation products, land mobile communication systems, wireless assistive listening systems and other related products. Telex Communications, Inc. (Telex or Successor), a Delaware corporation, is an indirect wholly owned subsidiary of Telex Communications Holdings, Inc. (Old Telex or Predecessor). Telex was formed in connection with the November 2003 restructuring of Old Telex's debt obligations. Upon the closing of the restructuring, Old Telex changed its name and Successor was renamed. Reference to "the Company" in this press release means Predecessor and/or Successor, as appropriate, for the relevant period(s). The consolidated financial statements for the three and twelve months ended December 31, 2004 reflect the results of Telex while the consolidated financial statements for the three and twelve months ended December 31, 2003 reflect the combined results of Telex for the month of December 2003 and of Old Telex for the remainder of the quarter (October and November 2003) and the eleven-months ended November 2003. -0- *T TELEX COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, December 31, 2004 2003 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $14,959 $6,698 Accounts receivable, net 50,177 47,455 Inventories 52,573 45,967 Other current assets 4,983 7,437 ------------ ------------ Total current assets 122,692 107,557 Property, plant and equipment, net 32,025 29,951 Deferred financing costs, net 5,350 6,368 Goodwill, net 15,845 23,353 Other assets 3,296 2,981 ------------ ------------ $179,208 $170,210 ============ ============ LIABILITIES AND SHAREHOLDER'S DEFICIT Current liabilities: Revolving lines of credit $1,011 $- Current maturities of long-term debt 479 446 Accounts payable 13,173 12,879 Accrued wages and benefits 11,643 10,384 Other accrued liabilities 10,966 11,557 Income taxes payable 5,548 9,046 ------------ ------------ Total current liabilities 42,820 44,312 Long-term debt, net 126,079 126,413 Other long-term liabilities 12,523 7,474 ------------ ------------ Total liabilities 181,422 178,199 ------------ ------------ Shareholder's deficit: Common stock and capital in excess of par 143,029 143,029 Accumulated other comprehensive loss (1,996) (3,260) Accumulated deficit (143,247) (147,758) ------------ ------------ Total shareholder's deficit (2,214) (7,989) ------------ ------------ $179,208 $170,210 ============ ============ TELEX COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) (UNAUDITED) Successor Predecessor Combined ------------------- ----------- --------- 3 Months 1 Month 2 Months 3 Months Ended Ended Ended Ended Dec. 31, Dec. 31, Nov. 30, Dec. 31, 2004 2003 2003 2003 --------- --------- ----------- --------- Net sales $74,459 $25,433 $43,808 $69,241 Cost of sales 41,918 14,957 25,320 40,277 --------- --------- ----------- --------- Gross profit 32,541 10,476 18,488 28,964 --------- --------- ----------- --------- Operating expenses: Engineering 4,032 1,224 2,396 3,620 Selling, general and administrative 19,583 6,117 11,668 17,785 Goodwill and asset impairment charges 7,915 - - - --------- --------- ----------- --------- 31,530 7,341 14,064 21,405 --------- --------- ----------- --------- Operating income 1,011 3,135 4,424 7,559 Interest expense (4,172) (1,403) (4,745) (6,148) Other income, net 700 85 6 91 Loss on early extinguishment of debt - (1,186) - (1,186) --------- --------- ----------- --------- (Loss) income before income taxes (2,461) 631 (315) 316 Provision for income taxes 2,118 1,171 551 1,722 --------- --------- ----------- --------- Net loss $(4,579) $(540) $(866) $(1,406) ========= ========= =========== ========= TELEX COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) Successor Predecessor Combined ------------------- ----------- --------- Year 1 Month 11 Months Year Ended Ended Ended Ended Dec. 31, Dec. 31, Nov. 30, Dec. 31, 2004 2003 2003 2003 --------- --------- ----------- --------- Net sales $296,828 $25,433 $243,106 $268,539 Cost of sales 163,206 14,957 140,863 155,820 --------- --------- ----------- --------- Gross profit 133,622 10,476 102,243 112,719 --------- --------- ----------- --------- Operating expenses: Engineering 15,423 1,224 12,947 14,171 Selling, general and administrative 80,865 6,117 67,816 73,933 Goodwill and asset impairment charges 7,915 - - - Pension curtailment gain - - (2,414) (2,414) --------- --------- ----------- --------- 104,203 7,341 78,349 85,690 --------- --------- ----------- --------- Operating income 29,419 3,135 23,894 27,029 Interest expense (16,605) (1,403) (26,897) (28,300) Other income, net 1,124 85 529 614 Loss on early extinguishment of debt - (1,186) - (1,186) --------- --------- ----------- --------- Income (loss) before income taxes 13,938 631 (2,474) (1,843) Provision for income taxes 8,544 1,171 3,585 4,756 --------- --------- ----------- --------- Net income (loss) $5,394 $(540) $(6,059) $(6,599) ========= ========= =========== ========= TELEX COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Successor Predecessor Combined ------------------ ----------- --------- Year 1 Month 11 Months Year Ended Ended Ended Ended Dec. 31, Dec. 31, Nov. 30, Dec. 31, 2004 2003 2003 2003 -------- --------- ----------- --------- Operating activities: Net income (loss) $5,394 $(540) $(6,059) $(6,599) Adjustments to reconcile net income (loss) to cash flows from operations: Depreciation and amortization 6,068 482 5,612 6,094 Amortization of finance charges and pay-in-kind interest charge 1,432 132 21,017 21,149 Goodwill and asset impairment charges 7,915 - - - Gain on disposition of assets (268) - (319) (319) Pension curtailment gain - - (2,414) (2,414) Loss on early retirement of debt - 1,186 - 1,186 Change in operating assets and liabilities (9,440) 5,491 (4,421) 1,070 Change in long-term liabilities 1,785 (335) 986 651 Other, net 838 (670) 887 217 -------- --------- ----------- --------- Net cash provided by operating activities 13,724 5,746 15,289 21,035 -------- --------- ----------- --------- Investing activities: Additions to property, plant and equipment (7,722) (546) (5,165) (5,711) Proceeds from disposition of assets 2,338 - 1,158 1,158 Other 221 - 166 166 -------- --------- ----------- --------- Net cash used in investing activities (5,163) (546) (3,841) (4,387) -------- --------- ----------- --------- Financing activities: Borrowings under revolving lines of credit, net 1,011 (12,107) (372) (12,479) Borrowing of long-term debt, net of discount - 125,000 - 125,000 Repayment of long-term debt (443) (110,297) (9,078) (119,375) Dividends to shareholder (883) (466) - (466) Payments for deferred financing costs (319) (6,519) - (6,519) -------- --------- ----------- --------- Net cash used in financing activities (634) (4,389) (9,450) (13,839) -------- --------- ----------- --------- Effect of exchange rate changes on cash and cash equivalents 334 242 273 515 -------- --------- ----------- --------- Cash and cash equivalents: Net increase 8,261 1,053 2,271 3,324 Balance at beginning of period 6,698 5,645 3,374 3,374 -------- --------- ----------- --------- Balance at end of period $14,959 $6,698 $5,645 $6,698 ======== ========= =========== ========= TELEX COMMUNICATIONS, INC. SUPPLEMENTARY FINANCIAL DATA (In thousands) (UNAUDITED) Successor Predecessor Combined ------------------- ----------- --------- 3 Months 1 Month 2 Months 3 Months Ended Ended Ended Ended Dec. 31, Dec. 31, Nov. 30, Dec. 31, 2004 2003 2003 2003 --------- --------- ----------- --------- Consolidated net sales Professional Audio $59,715 $19,774 $33,961 $53,735 Audio and Wireless Technology 14,744 5,659 9,847 15,506 --------- --------- ----------- --------- $74,459 $25,433 $43,808 $69,241 ========= ========= =========== ========= Operating income (loss) Professional Audio $(2,405) $1,645 $840 $2,485 Audio and Wireless Technology 3,039 879 1,620 2,499 Corporate 377 611 1,964 2,575 --------- --------- ----------- --------- $1,011 $3,135 $4,424 $7,559 ========= ========= =========== ========= Net sales by geographic region United States $36,542 $12,830 $20,385 $33,215 Other Americas 1,923 819 2,166 2,985 Europe 21,848 6,761 13,026 19,787 Asia 11,205 4,476 5,291 9,767 Other countries 2,941 547 2,940 3,487 --------- --------- ----------- --------- $74,459 $25,433 $43,808 $69,241 ========= ========= =========== ========= Gross margin % 43.7% 41.2% 42.2% 41.8% Operating expenses as a % of net sales 42.3% 28.9% 32.1% 30.9% Operating income as a % of net sales 1.4% 12.3% 10.1% 10.9% The following table reconciles Telex's or Old Telex's net loss to EBITDA: Net loss $(4,579) $(540) $(866) $(1,406) Income taxes 2,118 1,171 551 1,722 Interest expense 4,172 1,403 4,745 6,148 Interest income (82) (50) (15) (65) Loss on early extinguishment of debt - 1,186 - 1,186 Goodwill and asset impairment charges 7,915 - - - Depreciation and amortization 1,541 482 966 1,448 --------- --------- ----------- --------- EBITDA $11,085 $3,652 $5,381 $9,033 ========= ========= =========== ========= The non-GAAP financial measure in the table above is provided to assist the reader's understanding of the comparability of the company's operations for 2004 and 2003. The company believes that EBITDA, defined as net income (loss) plus income taxes, interest expense, loss on early extinguishment of debt, goodwill and asset impairment charges and depreciation and amortization minus interest income, is a useful basis to compare the company's results. The presentation above reconciles reported net income (loss) (U.S. GAAP amounts) to EBITDA for the quarter ended December 31, 2004 and 2003, respectively. The EBITDA information should not be construed as an alternative to reported results under U.S. GAAP. TELEX COMMUNICATIONS, INC. SUPPLEMENTARY FINANCIAL DATA (In thousands) (UNAUDITED) Successor Predecessor Combined ------------------- ----------- --------- Year 1 Month 11 Months Year Ended Ended Ended Ended Dec. 31, Dec. 31, Nov. 30, Dec. 31, 2004 2003 2003 2003 --------- --------- ----------- --------- Consolidated net sales Professional Audio $240,521 $19,774 $189,196 $208,970 Audio and Wireless Technology 56,307 5,659 53,910 59,569 --------- --------- ----------- --------- $296,828 $25,433 $243,106 $268,539 ========= ========= =========== ========= Operating income (loss) Professional Audio $19,310 $1,645 $17,561 $19,206 Audio and Wireless Technology 10,122 879 5,331 6,210 Corporate (13) 611 1,002 1,613 --------- --------- ----------- --------- $29,419 $3,135 $23,894 $27,029 ========= ========= =========== ========= Net sales by geographic region United States $148,803 $12,830 $121,650 $134,480 Other Americas 9,904 819 10,420 11,239 Europe 84,702 6,761 69,628 76,389 Asia 41,539 4,476 30,470 34,946 Other countries 11,880 547 10,938 11,485 --------- --------- ----------- --------- $296,828 $25,433 $243,106 $268,539 ========= ========= =========== ========= Gross margin % 45.0% 41.2% 42.1% 42.0% Operating expenses as a % of net sales 35.1% 28.9% 32.2% 31.9% Operating income as a % of net sales 9.9% 12.3% 9.8% 10.1% The following table reconciles Telex's or Old Telex's net income (loss) to EBITDA: Net income (loss) $5,394 $(540) $(6,059) $(6,599) Income taxes 8,544 1,171 3,585 4,756 Interest expense 16,605 1,403 26,897 28,300 Interest income (187) (50) (59) (109) Loss on early extinguishment of debt - 1,186 - 1,186 Goodwill and asset impairment charges 7,915 - - - Depreciation and amortization 6,068 482 5,612 6,094 --------- --------- ----------- --------- EBITDA $44,339 $3,652 $29,976 $33,628 ========= ========= =========== ========= The non-GAAP financial measure in the table above is provided to assist the reader's understanding of the comparability of the company's operations for 2004 and 2003. The company believes that EBITDA, defined as net income (loss) plus income taxes, interest expense, loss on early extinguishment of debt, goodwill and asset impairment charges and depreciation and amortization minus interest income, is a useful basis to compare the company's results. The presentation above reconciles reported net income (loss) (U.S. GAAP amounts) to EBITDA for the twelve months ended December 31, 2004 and 2003, respectively. The EBITDA information should not be construed as an alternative to reported results under U.S. GAAP. *T |
