ATC Technology Corporation (ATC) (Nasdaq:ATAC), today reported
financial results for the second quarter 2010.
Second Quarter Results
For the quarter ended June 30, 2010, revenue decreased 9.6% to
$104.4 million from $115.5 million for the same period in 2009.
Income from continuing operations for the second quarter of 2010
was $7.8 million versus a loss of $16.7 million for the second
quarter of 2009. Income from continuing operations per diluted
share for the quarter was $0.39, as compared to a loss of $0.85 per
share or income of $0.53 per diluted share on an adjusted basis,
for the second quarter of 2009. Additionally, the Company
recorded a loss from discontinued operations of $5.4 million, or
$0.27 per share primarily related to the sale of its U.K.-based
engine remanufacturing business.
Logistics segment revenue for the second quarter decreased 8.6%
to $77.6 million from $84.9 million in the second quarter of
2009. Logistics segment profit for the quarter decreased 24.2%
to $11.9 million from $15.7 million in the same quarter of last
year. The decreases in revenue and profit were primarily
attributable to a reduction in returns volumes with AT&T driven
by increased device quality and wider consumer acceptance of
smartphones and the impact of price concessions in connection with
contract renewals, partially offset by an increase in revenue with
TomTom.
Drivetrain segment revenue decreased 12.4% to $26.8 million from
$30.6 million in the second quarter of 2009. Second quarter
segment loss was $0.4 million compared to a loss of $37.4 million,
or segment profit of $1.7 million excluding a goodwill impairment
charge of $37.0 million and restructuring charges of $2.1 million
in last year's second quarter. The decreases were driven by
the loss of the Honda transmission remanufacturing program and
launch costs associated with new engine remanufacturing programs,
which were partially offset by the cost savings attributable to
last year's restructuring of the Drivetrain business.
Todd R. Peters, President and CEO said, "On July 19, 2010 we
announced that ATC had entered into a definitive agreement and plan
of merger to be acquired by GENCO Distribution System, Inc.
(GENCO), a privately held third-party provider of logistics
services for retailers, manufacturers, and U.S. government
agencies, in an all-cash merger valued at $512.6 million. Our
news release, along with our merger agreement and other documents
filed with the Securities and Exchange Commission (SEC) on July
19th, highlight various aspects of the proposed
transaction. In light of this recent development, specifically
including the pending filing of our proxy statement related to the
proposed transaction with GENCO, we will not hold a conference call
on July 28th to discuss second quarter results as previously
announced.
"I am pleased to report that during the second quarter in our
Logistics business, we set the stage for growth in the second half
of the year. Although not material to the quarter's result, we
launched new or expanded programs with AT&T, U.S. Cellular, and
a leading wireless device manufacturer. We also won $38
million in new business. These wins include the expansion of
programs with existing customers, new programs with existing
customers and a program with a new customer. While revenue
related to returns volumes with AT&T was down, it was in line
with our expectations and recent run rate, and we benefitted from
strong volumes with TomTom. Our segment profit for the quarter
of $11.9 million or 15.3% of net sales met our
expectations.
"Also, in early July, we invested $10 million in a joint venture
with Genesis Networks Enterprises, LLC (Genesis), a leading
minority-owned provider of network, IT and supply chain solutions
to the communications industry, to form Genesis-ATC. Genesis
owns 51% of Genesis-ATC and our subsidiary, ATC Logistics &
Electronics, Inc., owns the remaining 49%. Genesis-ATC
combines the strengths of two companies to provide value-added
distribution services for consumer electronic products such as
cable set-top boxes, along with field service support and reverse
logistics services to AT&T and other customers.
Genesis-ATC will open a wider range of new business
opportunities for both partners. In certain cases, ATC
Logistics & Electronics, Inc. will provide services to
Genesis-ATC.
"As we previously announced, we sold the U.K.-based operation of
our Drivetrain business in May to two senior members of the local
management team. During the quarter, we continued to make
significant progress on the launch of the new U.S.-based engine
remanufacturing programs. We remain optimistic that we will
achieve our modest profitability targets for the full year.
"I refer you to our Form 10-Q for the three and six months ended
June 30, 2010 for additional details on our results."
For further information, please see the Company's periodic
reports filed with the SEC.
ATC Technology Corporation is headquartered in Downers Grove,
Illinois. The Company provides comprehensive engineered
solutions for logistics and refurbishment services to the consumer
electronics industries and the light-, medium- and heavy-duty
vehicle service parts markets.
Additional Information
The proxy statement that ATC plans to file with the SEC and mail
to its stockholders will contain information about ATC, GENCO, the
proposed merger, and related matters. Stockholders are urged
to read the proxy statement carefully when it is available, as it
will contain important information that stockholders should
consider before making a decision about the merger. In
addition to receiving the proxy statement or a notice of internet
availability of the proxy statement from ATC by mail, stockholders
will also be able to obtain the proxy statement, as well as other
filings containing information about ATC, without charge, from the
SEC's website (www.sec.gov) or, without charge, from ATC by mail or
from ATC's website (www.goATC.com). This announcement is
neither a solicitation of proxy, an offer to purchase nor a
solicitation of an offer to sell shares of ATC. ATC and its
executive officers and directors may be deemed to be participants
in the solicitation of proxies from ATC's stockholders with respect
to the proposed merger. Information regarding any interests
that ATC's executive officers and directors may have in the
transaction will be set forth in the proxy statement.
The ATC Technology Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5184
Certain statements in this news release are "forward-looking
statements" (as defined in Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of
1934). These forward-looking statements generally include all
statements other than statements of historical fact, including
statements that are predictive, that depend upon or refer to future
events or conditions, or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates,"
"hopes," and similar expressions. In addition, any statements
concerning future financial performance or position (including
future revenues, expenses, earnings, growth rates or margins),
ongoing business strategies, budgets or prospects, and possible
future actions are also forward-looking statements. The
forward-looking statements contained in this news release are based
on information available to our management as of the date of this
news release, and reflect management's judgments, beliefs and
assumptions as of the date of this news release with respect to
future events, the outcome of which is subject to risks and
uncertainties that could have a significant impact on our business,
operating results or financial condition in the future. Should one
or more of these risks or uncertainties materialize, or should
underlying information, judgments, beliefs, or assumptions prove
incorrect, actual results or outcomes could differ materially from
those expressed or implied by the forward-looking statements in
this news release. Some of these risks and uncertainties are
described in our periodic filings with the Securities and Exchange
Commission. We disclaim any intention or obligation to update
the forward-looking statements contained in this news release.
goATC.com
| ATC TECHNOLOGY
CORPORATION |
| CONSOLIDATED STATEMENTS
OF OPERATIONS |
| (In thousands, except
per share data) |
| |
|
|
|
|
| |
For the three months ended June
30, |
For the six months ended June
30, |
| |
2010 |
2009 |
2010 |
2009 |
| |
(Unaudited) |
(Unaudited) |
|
|
| |
|
|
|
|
| Net sales: |
|
|
|
|
| Services |
$ 77,621 |
$ 84,887 |
$ 152,718 |
$ 162,203 |
| Products |
26,816 |
30,585 |
52,716 |
63,920 |
| Total net sales |
104,437 |
115,472 |
205,434 |
226,123 |
| |
|
|
|
|
| Cost of sales: |
|
|
|
|
| Services |
58,216 |
60,479 |
114,872 |
115,786 |
| Products |
24,870 |
25,653 |
48,655 |
53,706 |
| Products - exit, disposal, certain
severance and other charges |
-- |
566 |
-- |
946 |
| Total cost of sales |
83,086 |
86,698 |
163,527 |
170,438 |
| |
|
|
|
|
| Gross profit |
21,351 |
28,774 |
41,907 |
55,685 |
| |
|
|
|
|
| Selling, general and administrative
expense |
9,556 |
11,987 |
19,545 |
24,301 |
| Impairment of goodwill |
-- |
36,991 |
-- |
36,991 |
| Exit, disposal, certain severance and other
charges |
281 |
1,561 |
345 |
4,343 |
| |
|
|
|
|
| Operating income (loss) |
11,514 |
(21,765) |
22,017 |
(9,950) |
| |
|
|
|
|
| Interest income |
73 |
67 |
107 |
130 |
| Other income (expense), net |
(59) |
(2) |
(219) |
9 |
| Interest expense |
(126) |
(349) |
(258) |
(607) |
| |
|
|
|
|
| Income (loss) from continuing operations
before income taxes |
11,402 |
(22,049) |
21,647 |
(10,418) |
| |
|
|
|
|
| Income tax expense (benefit) |
3,553 |
(5,393) |
6,883 |
(1,149) |
| |
|
|
|
|
| Income (loss) from continuing operations |
7,849 |
(16,656) |
14,764 |
(9,269) |
| |
|
|
|
|
| Income (loss) from discontinued operations,
net of income taxes |
(5,399) |
100 |
(5,229) |
(103) |
| |
|
|
|
|
| Net income (loss) |
$ 2,450 |
$ (16,556) |
$ 9,535 |
$ (9,372) |
| |
|
|
|
|
| |
|
|
|
|
| Per common share - basic: |
|
|
|
|
| Income (loss) from continuing
operations |
$ 0.39 |
$ (0.85) |
$ 0.73 |
$ (0.47) |
| Income (loss) from discontinued
operations |
$ (0.27) |
$ 0.01 |
$ (0.26) |
$ (0.01) |
| Net income (loss) |
$ 0.12 |
$ (0.84) |
$ 0.47 |
$ (0.48) |
| |
|
|
|
|
| Weighted average number of common shares
outstanding |
19,961 |
19,631 |
19,913 |
19,588 |
| |
|
|
|
|
| |
|
|
|
|
| Per common share - diluted: |
|
|
|
|
| Income (loss) from continuing
operations |
$ 0.39 |
$ (0.85) |
$ 0.73 |
$ (0.47) |
| Income (loss) from discontinued
operations |
$ (0.27) |
$ 0.01 |
$ (0.26) |
$ (0.01) |
| Net income (loss) |
$ 0.12 |
$ (0.84) |
$ 0.47 |
$ (0.48) |
| |
|
|
|
|
| Weighted average number of common and
common equivalent shares outstanding |
19,996 |
19,631 |
20,013 |
19,588 |
| ATC TECHNOLOGY
CORPORATION |
| |
|
|
| Reconciliation of
certain financial measures reported in accordance with Generally
Accepted Accounting Principles ("GAAP") to those presented on the
basis of methodologies other than in accordance with GAAP
("non-GAAP") |
| (In millions, except
per share data) |
| |
|
|
| |
|
|
| |
For the three months ended June 30,
2009 |
For the six months ended June 30,
2009 |
| |
(Unaudited) |
| Consolidated
Data: |
|
|
| |
|
|
| Loss from continuing operations (GAAP
basis) |
$ (16.7) |
$ (9.3) |
| |
|
|
| Impairment of goodwill - Drivetrain Segment,
net of tax (a) |
26.0 |
26.0 |
| Drivetrain segment plant closure and
restructuring costs, net of tax |
1.3 |
3.3 |
| |
|
|
| Adjusted income from continuing
operations (non-GAAP basis) |
$ 10.6 |
$ 20.0 |
| |
|
|
| Earnings Per Diluted
Share: |
|
|
| Loss from continuing operations (GAAP
basis) |
$ (0.85) |
$ (0.47) |
| |
|
|
| Impairment of goodwill - Drivetrain Segment,
net of tax |
1.32 |
1.32 |
| Drivetrain segment plant closure and
restructuring costs, net of tax |
0.07 |
0.17 |
| Impact of two-class method of reporting
earnings per share |
(0.01) |
(0.01) |
| |
|
|
| Adjusted income from continuing
operations (non-GAAP basis) |
$ 0.53 |
$ 1.01 |
| |
|
|
| Diluted Shares Outstanding |
19.7 |
19.6 |
| |
|
|
| Drivetrain Segment
Data: |
|
|
| |
|
|
| Segment loss (GAAP
basis) |
$ (37.4) |
$ (39.1) |
| |
|
|
| Impairment of goodwill - Drivetrain
Segment |
37.0 |
37.0 |
| Plant closure and restructuring costs |
2.1 |
5.3 |
| |
|
|
| Adjusted Segment profit (non-GAAP
basis) |
$ 1.7 |
$ 3.2 |
| |
|
|
| (a) Includes income tax
expense of $0.9 million, or $0.05 per diluted share, recorded
during the second quarter of 2009, primarily related to valuation
allowances on applicable state deferred tax assets. |
| |
|
|
| Explanation of non-GAAP financial
measures: |
|
|
| The Company reports its financial
results of operations in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP"). The Company also provides
non-GAAP financial information to complement its consolidated
financial statements presented in accordance with GAAP. This
press release includes such non-GAAP financial measures. A
"non-GAAP financial measure" is defined as a numerical measure of
the Company's financial performance, financial position or cash
flows that excludes (or includes) amounts that are included in (or
excluded from) the most directly comparable measure calculated and
presented in accordance with GAAP in the Company's financial
statements. |
| |
|
|
| Following is a description of
certain of the non-GAAP financial measures used by the
Company: |
|
|
| |
|
|
| Adjusted Income From Continuing
Operations: Represents income (loss) from continuing
operations (GAAP basis) adjusted to exclude, on an after-tax basis,
(i) the Drivetrain impairment of goodwill charge and (ii) the
Drivetrain plant closure and restructuring costs. |
| |
|
|
| Adjusted Income From Continuing
Operations Per Diluted Share: Represents income (loss) from
continuing operations per share (GAAP basis) adjusted to exclude,
on an after-tax basis per diluted share, (i) the Drivetrain
impairment of goodwill charge and (ii) the Drivetrain plant closure
and restructuring costs. Our earnings per share amounts are
calculated under the two-class method of presenting earnings per
share for all periods presented, which requires that we allocate a
portion of our income to participating securities (outstanding
unvested share-based awards that contain rights to nonforfeitable
dividends). |
| |
|
|
| Adjusted Segment
profit: Represents segment profit (loss) (GAAP basis) adjusted
to exclude (i) the Drivetrain impairment of goodwill charge and
(ii) the Drivetrain plant closure and restructuring
costs. |
| |
|
|
| The Company believes these
non-GAAP financial measures provide management, investors, equity
analysts, and rating agencies with useful information by which to
measure our performance. In addition, many of the Company's
internal performance measures are based on these non-GAAP financial
measures. |
| |
|
|
| The Company's non-GAAP financial
measures may vary from similar titled measures of other companies
because of differences in the way the measures are calculated and
therefore should not be used to compare the Company's performance
to that of other companies. |
| |
|
|
| Whenever the Company presents
non-GAAP financial measures, a reconciliation to the most directly
comparable financial measure calculated and presented in accordance
with GAAP is made available. The non-GAAP financial measures
used by the Company are not intended to supercede or replace the
Company's GAAP results or expectations. |
CONTACT: ATC Technology Corporation
Mary Ryan
630.663.8283
maryan@corpatc.com
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