Thursday April 3 5:30 PM EDT
Cerplex announces sale of PCS, negotiation of credit facility and 1996 year
end results
TUSTIN, Calif.--(BUSINESS WIRE)--April 3, 1997--The Cerplex Group Inc., a leading provider of high technology service
outsourcing, Thursday announced it has signed a definitive agreement for the sale of one of its subsidiaries, Peripheral
Computer Support Inc. (PCS) to the current management of PCS and their financial partners.
The net proceeds of the sale, which the company anticipates will be approximately $13 million in cash, will be used to pay
down bank debt and for working capital. The consummation of the sale is subject to the fulfillment of several closing conditions
which the company believes will be fulfilled by the middle of April 1997.
PCS is located in San Jose, Calif., and specializes in the repair, refurbishment, and parts sales of disk drives and other mass
storage devices. Executives at both companies said that existing service contracts will not be interrupted, and that they plan to
partner in the future in support of their customers' disk drive and other mass storage service needs.
Negotiation of Lending Agreement
The company also announced that the lenders under the company's senior credit facility have agreed to extend and forebear
certain defaults through April 9, 1997. The holders of the company's subordinated notes also agreed to waive certain defaults
through that same date. The company is currently negotiating a new or extended facility with its senior lenders, and new
covenants with its subordinated note holders, and believes it will have a new credit facility in effect by April 9, 1997.
1996 Year End Results
The company reported net sales from continuing operations for the fourth quarter and year ended Dec. 31, 1996 of $48.7
million and $191.5 million, respectively, compared with $42.5 million and $144.3 million in the comparable period of the prior
year.
For the quarter ended Dec. 31, 1996, Cerplex reported a net loss of $13.6 million, or $0.99 per share, compared with a net
loss of $15.5 million, or $1.18 per share, in the quarter ended Dec. 31, 1995. The loss reported for the quarter ended Dec.
31, 1995, included losses from discontinued operations of $1.9 million, or $0.15 per share.
The net loss for the fourth quarter of 1996 included a write-down of assets in the company's telephone repair business; a
write-down of certain assets associated with the company's parts business; losses on the sale of common stock received in
settlement of various transactions; and reserves for a note receivable.
For the year ended Dec. 31, 1996, Cerplex reported a net loss of $27.4 million, or $2.04 per share, compared with a net loss
of $39.4 million, or $3.01 per share, for the year ended Dec. 31, 1995. The loss reported for the year ended Dec. 31, 1995,
included losses from discontinued operations of $17.3 million, or $1.33 per share.
The results for the year reflect, to a large degree, the resolution to several matters that have been adversely impacting the
company. Specifically, the company closed its unprofitable Texas operations and reached a settlement with the SpectraVision
bankruptcy; it established reserves for the impairment of assets, and incurred additional losses on sales of common stock
received in settlement of various transactions; it closed several other unprofitable operations and businesses, resulting in
restructuring charges and asset write-downs; and, due to changes in the company's business, or the business of third parties,
the company recorded charges for inventory write-downs, uncollectable receivables and other assets.
About Cerplex
Cerplex is an independent provider of service outsourcing specializing in depot repair, parts distribution management, and
logistics management services. The company has developed extensive capabilities in these areas, focusing on the computer and
peripherals, office automation and communication markets. Services include returns processing, fulfillment and materials
management, product repair, remanufacturing and reutilization, parts sales, guaranteed availability and advanced exchange
services.
The company offers custom developed programs to manufacturers and service providers that help to reduce their service costs,
shorten response times, and improve customer satisfaction. The company has transportation hubs and specialized facilities in
the United States and Europe that enable it to support the diverse services needs of its global customers. The company is
traded on the Over-The-Counter Bulletin Board (CPLX). Visit Cerplex's homepage at www.cerplex.com .
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Quarter ended Dec. 31, Year ended Dec. 31,
1996 1995 1996 1995
Net sales $ 48,672 $ 42,458 $191,493 $144,328
Cost of sales 44,078 40,766 165,248 127,817
Gross profit 4,594 1,692 26,245 16,511
Selling, general and
administrative
expenses 13,379 11,323 39,488 33,805
Restructuring Charges --- --- 2,084 ---
Operating loss (8,785) (9,631) (15,327) (17,294)
Equity in income from
joint venture --- 919 357 2,425
Gain on sale of
InCirT division --- --- 450 ---
Other expense, net 2,258 157 2,881 14
Interest expense, net 2,149 1,335 8,269 5,075
Loss from continuing
operations before
taxes (13,192) (10,204) (25,670) (19,958)
Income taxes 385 3,370 1,718 2,089
Loss from continuing
operations before
extraordinary item (13,577) (13,574) (27,388) (22,047)
Discontinued operations,
net of income taxes:
Loss from operations --- --- --- (1,966)
Estimated loss from
liquidation of
discontinued
operations --- (1,935) --- (15,381)
Loss from discontinued
operations --- (1,935) --- (17,347)
Net loss $(13,577) $(15,509) $(27,388) $(39,394)
Net loss per share:
Continuing
operations $ (0.99) $ (1.03) $ (2.04) $ (1.68)
Discontinued
operations --- (0.15) --- (1.33)
Net loss per share $ (0.99) $ (1.18) $ (2.04) $ (3.01)
Weighted average common
and common equivalent
shares outstanding 13,680 13,121 13,419 13,091
CONSOLIDATED BALANCE SHEETS
(in thousands)
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 23,782 $ 3,807
Accounts receivable 20,360 30,102
Inventories 17,623 27,789
Prepaid expenses and other
current assets 8,146 4,864
Total current assets 69,911 66,562
Property, plant and equipment, net 28,039 17,988
Investment in joint venture --- 7,723
Goodwill, net 4,953 6,647
Other long-term assets 2,028 2,973
Total assets $104,931 $101,893
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,909 $ 17,024
Note payable 5,201 ---
Accrued liabilities and other current
assets 24,991 13,622
Current portion of long-term debt 207 536
Short-term borrowings 44,741 ---
Income taxes payable 1,729 2,161
Total current liabilities 95,778 33,343
Long-term debt, less current portion 18,076 68,382
Long-term obligations, less current
portion 6,214 ---
Stockholders' equity:
Preferred Stock 7,070 ---
Common Stock 14 13
Additional paid-in capital 51,775 47,528
Notes receivable from stockholders (139) (226)
Unearned compensation (73) (143)
Accumulated deficit (74,414) (47,026)
Cumulative translation adjustment 630 22
Total stockholders' equity (15,137) 168
Total liabilities and stockholders'
equity $ 104,931 $ 101,893
This news story contains forward-looking statements which involve risks and uncertainties. The company's actual results may
differ significantly from the results discussed in the forward-looking statements. Forward-looking statements include statements
regarding the renegotiation of the company's senior credit facility and subordinated note purchase agreements and the closing of
the PCS transaction.
There can be no assurances the company will be able to renegotiate its credit facilities or close the sale of PCS. Factors that
might cause such differences include, but are not limited to, the effect of losses and other factors on the company's credit
facilities, business and results of operations; the company's limited capital resources and its ability to fulfill its existing obligations
and ongoing capital needs; risks associated with excess or obsolete inventory; the potential impairment of assets; the company's
dependence on key customers and their financial viability; the impact of competition; and the company's abilities to effectively
manage growth. These and other risk factors are discussed in the company's filing on Forms 8-K, 10-Q and 10-K.
CONTACT: Cerplex, Tustin
Robert W. Hughes, Sr. VP & Chief Financial Officer
714/258-5631
rhughes@cerplex.com
or
Bonni L. Parsons, Director of Marketing
714/258-5159
bparsons@cerplex.com |
