Polypore Announces Second Quarter Results CHARLOTTE, N.C., Aug. 19
/PRNewswire-FirstCall/ -- Polypore, Inc. announces net sales for
the quarter ended July 3, 2004 of $127.9 million, representing an
increase of 19% compared to net sales of $107.5 million for the
same quarter in 2003. This $20.4 million increase in net sales was
attributable to a $15.1 million, or 22%, increase in energy storage
net sales and a $5.3 million, or 14%, increase in separations media
net sales. Net sales for the six months ended July 3, 2004 was
$268.0 million, a 28% increase compared to $210.0 million in the
first half of 2003. Net income for the second quarter of 2004 was
$8.7 million compared to $7.9 million in the second quarter of
2003. Net income includes the effect of non-cash charges related to
the application of purchase accounting in connection with the
acquisition of the Company by, and subsequent merger with, PP
Acquisition Corporation on May 13, 2004. The non-cash charges
consist of the write-off of in-process research and development
costs of $3.6 million (net of income taxes of $1.7 million) and the
sale of inventory written up to fair value, less costs to sell, of
$5.7 million (net of income taxes of $2.8 million). Net income
before these non-cash charges was $18.0 million in the second
quarter, a 128% increase over the second quarter a year ago. Net
income for the first half of 2004 was $29.5 million, an 80%
increase over the first half of 2003. Net income before the
non-cash charges was $38.7 million in the first half of 2004, a
136% improvement over the first half of 2003. Operating income for
the second quarter of 2004 was $22.2 million, an 11% increase over
the $19.9 million in operating income in the second quarter of
2003. For the second quarter of 2004, operating income before the
non-cash charges related to purchase accounting described above was
$35.9 million, an 80% increase over the $19.9 million in the second
quarter of 2003. For the six months ended July 3, 2004, operating
income was $57.0 million, an improvement of 49% over the first half
of 2003. For the first half of 2004, operating income before the
non-cash charges was $70.7 million, an 84% improvement over the
first half of 2003. Earnings before interest, taxes, depreciation
and amortization ("EBITDA") was $33.7 million in the second
quarter, a 15% increase over the $29.2 million recorded in the
second quarter of 2003. EBITDA for the first half of 2004 was $81.2
million, a 41% increase over the first half of 2003. Under our
credit agreement, certain non-cash and non-recurring items are
excluded from EBITDA in order to calculate adjusted EBITDA, which
is a measure used to calculate certain ratios for determining
compliance with our debt covenants. Adjusted EBITDA, as defined in
our credit agreement, was $45.9 million and $94.2 million for the
second quarter of 2004 and the first half of 2004, respectively.
This represents a 48% and 54% improvement over the second quarter
of 2003 and the first half of 2003, respectively. The last four
quarters adjusted EBITDA was $164.0 million. As of July 3, 2004
Polypore Inc. had total debt of $825.8 million and cash of $20.8
million. Polypore, Inc., a subsidiary of Polypore International,
Inc., is a worldwide developer, manufacturer and marketer of highly
specialized polymer- based membranes used in separation and
filtration processes. Due to Polypore International, Inc. being in
a quiet period in connection with its planned initial public
offering, the Company will not be hosting an earnings call this
quarter. For more information, contact: Lynn Amos at Polypore,
Inc., 13800 South Lakes Drive, Charlotte, NC 28273: (704) 587-8409.
This release contains statements that are forward-looking in
nature. Statements that are predictive in nature, that depend upon
or refer to future events or conditions or that include words such
as "expects," "anticipates," "intends," "plans," "believes,"
"estimates," and similar expressions are forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results
and performance to be materially different from any future results
or performance expressed or implied by these forward-looking
statements. These factors include the following: the highly
competitive nature of the markets in which we sell our products;
the failure to continue developing innovative products; the
increased use of synthetic hemodialysis filtration membranes by our
customers; the loss of our customers; the vertical integration by
our customers of the production of our products into their own
manufacturing process; increases in prices for raw materials or the
loss of key supplier contracts; employee slowdowns, strikes or
similar actions; product liability claims exposure; risks in
connection with our operations outside the United States; the
incurrence of substantial costs to comply with, or as a result of
violations of, or liabilities under environmental laws; the failure
in protecting our intellectual property; the failure to replace
lost senior management; the incurrence of additional debt,
contingent liabilities and expenses in connection of future
acquisitions; the failure to effectively integrate newly acquired
operations; and absence of expected returns from the amount of
intangible assets we have recorded. Additional information
concerning these and other important factors can be found within
the Polypore International's filings with the Securities and
Exchange Commission. Statements in this release should be evaluated
in light of these important factors. Although we believe that these
statements are based upon reasonable assumptions, we cannot
guarantee future results. Given these uncertainties, the
forward-looking statements discussed in this press release might
not occur. Polypore, Inc. Condensed Consolidated Statements of
Income (Unaudited, in thousands) Three Months Three Months Ended
Ended July 3, 2004* June 28, 2003 Net Sales $127,882 $ 107,516 Cost
of goods sold 81,938 70,549 Gross profit 45,944 36,967 Selling,
general and administrative expenses 23,782 17,070 Operating income
22,162 19,897 Other (income) expense: Interest expense, net 9,889
6,161 Foreign currency and other 541 504 Unrealized (gain) loss on
derivative interest (1,308) 136 Income before income taxes 13,040
13,096 Income taxes 4,303 5,238 Net income $8,737 $7,858 Polypore,
Inc. Condensed Consolidated Statements of Income (Unaudited, in
thousands) Six Months Six Months Ended Ended July 3, 2004* June 28,
2003 Net Sales $268,002 $210,018 Cost of goods sold 168,234 138,885
Gross profit 99,768 71,133 Selling, general and administrative
expenses 42,789 32,854 Operating income 56,979 38,279 Other
(income) expense Interest expense, net 14,420 10,618 Foreign
currency and other (581) 513 Unrealized (gain) loss on derivative
interest (1,321) (163) Income before income taxes 44,461 27,311
Income taxes 14,986 10,924 Net income $29,475 $16,387 * The income
statement for the three and six months ended July 3, 2004 includes
the effect of the application of purchase accounting for the
acquisition by and merger with PP Acquisition, Inc. The purchase
price allocation is based on preliminary estimates and may be
adjusted based on the finalization of independent appraisals and
certain accruals to be recorded in connection with the transaction.
For accounting purposes, the Transaction was accounted for as if it
occurred on the last day of the Company's fiscal month ended May 2,
2004, which is the closest month end to the Transaction date of May
13, 2004. Polypore, Inc. Condensed Consolidated Balance Sheets
(Unaudited, in thousands) July 3, 2004* January 3, 2004 Assets
Current assets 207,422 181,938 Property, plant and equipment, net
483,740 480,602 Intangibles, loan acquisition and other costs, net
248,368 17,735 Goodwill 518,456 32,200 Other assets 19,108 18,167
Total assets $1,477,094 $730,642 Liabilities and shareholders'
equity Current liabilities 71,913 100,988 Debt, less current
portion 823,796 250,519 Deferred income taxes & other 251,468
173,157 Redeemable preferred stock and cumulative dividends payable
- 16,221 Shareholders' equity 329,917 189,757 Total liabilities and
shareholders' equity $1,477,094 $730,642 * Polypore, Inc. was
purchased by PP Acquisition Corporation on May 13, 2004. At the
time of the closing of the acquisition, PP Acquisition merged with
and into Polypore, Inc., with Polypore, Inc. as the surviving
corporation. The total cost of the merger of PP Acquisition with
and into Polypore has been allocated as a change in basis to the
tangible and intangible assets acquired and liabilities assumed
based on their respective fair values as of May 13, 2004, the date
of the merger. The purchase price allocation is based on
preliminary estimates and may be adjusted based on the finalization
of independent appraisals and certain accruals to be recorded in
connection with the transaction. For accounting purposes, the
Transaction was accounted for as if it had occurred on the last day
of the Company's fiscal month ended May 2, 2004, which is the
closest month end to the Transaction date of May 13, 2004. EBITDA
EBITDA represents net income before interest, taxes, depreciation
and amortization. EBITDA is not a recognized term under GAAP and
does not purport to be an alternative to net income as a measure of
operating performance or to cash flows from operating activities as
a measure of liquidity. Additionally, EBITDA is not intended to be
a measure of free cash flow for management's discretionary use, as
it does not consider certain cash requirements such as interest
payments, tax payments, debt service requirements and capital
expenditures. Our calculation of EBITDA may not be comparable to
the calculation of similarly titled measures reported by other
companies. The following is a reconciliation of EBITDA to net
income for the periods indicated. Reconciliation of EBITDA Three
Months Three Months Ended Ended July 3, 2004 June 29, 2003 Net
income $8,737 $7,858 + Interest expense 9,889 6,161 + Income taxes
4,303 5,238 + Depreciation and amortization expense 10,809 9,968
EBITDA 33,738 29,225 + Write-off in process R&D 5,280 - + Sale
of inventory written-up to fair value 8,490 - + Other (1,636) 1,697
Adjusted EBITDA as defined in credit agreement* $45,872 $ 30,922
Six Months Six Months Ended Ended July 3, 2004 June 29, 2003 Net
income $29,475 $ 16,387 + Interest expense 14,420 10,618 + Income
taxes 14,986 10,924 + Depreciation and amortization expense 22,350
19,637 EBITDA 81,231 57,566 + Write-off in process R&D 5,280 -
+ Sale of inventory written-up to fair value 8,490 - + Other (835)
3,535 Adjusted EBITDA as defined in credit agreement* $94,166
$61,101 * Under our senior credit facility, compliance with the
minimum interest coverage ratio and maximum leverage ratio tests is
determined based on a calculation of adjusted EBITDA in which
certain items are added back to EBITDA. These items include
non-cash charges, impairments and expenses other than depreciation
and amortization, cash charges resulting from the acquisition of
Polypore, Inc. that arise within six months of the closing of the
transaction, restructuring and acquisition integration costs and
certain salary and bonus payments made to former officers of
Polypore, Inc. prior to the closing of the transaction, who are no
longer affiliated with us as a result of the transaction.
DATASOURCE: Polypore, Inc. CONTACT: Lynn Amos of Polypore, Inc.,
+1-704-587-8409 Web site: http://www.polypore.net/
Copyright