EX-99.1 2 b409945_ex99-1.txt PRESS RELEASE Exhibit 99.1 Aearo Announces Record Results for Fiscal Year 2005 INDIANAPOLIS, November 21, 2005 - Aearo Company I (the "Company"), one of the world's leading designers, manufacturers and marketers of a broad range of personal protective products, today announced net sales for the year ended September 30, 2005 increased $60.6 million, or 16.7%, to $423.4 million from $362.8 million for the year ended September 30, 2004. Adjusted EBITDA increased 25.0% to $77.8 million for the year ended September 30, 2005 from $62.2 million for the year ended September 30, 2004. Net income for the year months ended September 30, 2005 increased to $27.6 million from $3.5 million for the year ended September 30, 2004. This performance represents the best fiscal year for sales and earnings in the Company's history. The increase in net sales was primarily driven by organic growth in the Safety Products and Specialty Composites segments and foreign currency translation. The weakness of the U.S. dollar favorably impacted net sales by $7.7 million or 2.1%. Gross profit for the year ended September 30, 2005 increased 33.1% to $206.7 million from $155.3 million for the year ended September 30, 2004. Gross profit for 2004 was adversely affected by a non-recurring charge of $17.1 million resulting from the write-up of inventory required by SFAS No. 141 on the merger date and subsequent sale of such inventory. Gross profit as a percentage of sales for the year ended September 30, 2005 was 48.8% as compared to 47.5% for the year ended September 30, 2004 with fiscal year 2004 calculated by excluding the effects of the purchase accounting adjustment. The improvement in the gross profit percentage, to the highest annual gross profit percentage in the Company's history, is primarily due to the favorable impacts of higher manufacturing volumes in the Company's plants covering its manufacturing costs, favorable product mix, productivity improvements and the impact of foreign currency translation. The provision for income taxes for the year ended Sept 30, 2005 was $11.2 million compared to $1.0 million for the year ended September 30, 2004. The effective tax rate for the year ended September 30, 2005 and 2004 was different from the statutory rate due to the mix of income between the Company's foreign and domestic subsidiaries. The Company's foreign subsidiaries had taxable income in their foreign jurisdictions while the Company's domestic subsidiaries have net operating loss carry-forwards for income tax purposes. The Company uses Adjusted EBITDA, a non-GAAP financial measure, as a management tool to measure and monitor financial performance and as part of the calculation of Company performance as stated in senior bank facility covenants. While the Company believes Adjusted EBITDA is a useful indicator of its ability to service debt, Adjusted EBITDA should not be considered as a substitute for net income (loss) determined in accordance with GAAP as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Investors should be aware that Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies and comparisons could be misleading unless all companies and analysts calculate this measure in the same fashion. 3 The following table provides a reconciliation of Adjusted EBITDA to net income for the years ended September 30, 2005 and 2004, respectively:
TWELVE MONTHS ENDED SEPTEMBER 30, ------------------------------ 2005 2004 ---- ---- Adjusted EBITDA $ 77,827 $ 62,250 Depreciation 10,631 10,951 Amortization of intangibles 5,229 2,873 Other non-cash charges (income), net 1,181 (316) Inventory purchase accounting -- 17,067 Restructuring -- (1,091) Bond call premium -- 1,532 Interest 22,010 26,744 Taxes 11,187 1,036 -------- -------- Net Income $ 27,589 $ 3,454 ======== ========
Other non-cash charges are defined as extraordinary gains or losses, or gains or losses from sales of assets other than in the ordinary course of business. EARNINGS CALL The Company has scheduled a conference call to discuss its financial results on Tuesday, November 22, 2005 at 1:30 p.m. Eastern. The call in number is (703) 639-1156 conference ID 814697. A recording of the conference call will be available through November 29, 2005. The recording can be accessed by dialing (703) 925-2533, conference ID 814697. ABOUT AEARO Headquartered in Indianapolis, Ind., Aearo Company (www.aearo.com) is one of the world's leading designers, manufacturers and marketers of a broad range of personal protective products and energy-absorbing products, including head and hearing protection devices, prescription and non-prescription eyewear, and eye/face protection devices for use in a wide variety of industrial and household applications. 4 AEARO COMPANY I AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands, Except Share Amounts)
SEPTEMBER 30, SEPTEMBER 30, 2004 2005 ---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 27,724 $ 30,068 Accounts receivable (net of allowance for doubtful accounts of $1,334 and $1,206, respectively) 54,159 61,998 Inventories 40,849 48,132 Deferred and prepaid expenses 4,146 8,385 --------- --------- Total current assets 126,878 148,583 --------- --------- LONG TERM ASSETS: Property, plant and equipment, net 54,750 50,444 Goodwill 133,745 107,887 Other intangible assets, net 185,855 180,787 Other assets 15,144 13,644 --------- --------- Total assets $ 516,372 $ 501,345 ========= ========= LIABILITIES CURRENT LIABILITIES: Current portion of long-term debt $ 1,639 $ 3,432 Accounts payable and accrued liabilities 46,730 58,632 Accrued interest 6,996 6,678 U.S. and foreign income taxes 1,648 1,888 --------- --------- Total current liabilities 57,013 70,630 --------- --------- LONG TERM LIABILITIES: Long-term debt 302,842 297,625 Deferred income taxes 59,699 45,340 Due to parent -- 1,161 Other liabilities 14,726 12,984 --------- --------- Total liabilities 434,280 427,740 COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDER'S EQUITY Common stock, $.01 par value- Authorized--100 shares Issued and outstanding--100 shares -- -- Paid in capital 101,610 101,750 Accumulated deficit (19,415) (26,820) Accumulated other comprehensive loss (103) (1,325) --------- --------- Total stockholder's equity 82,092 73,605 --------- --------- Total liabilities and stockholder's equity $ 516,372 $ 501,345 ========= =========
5 AEARO COMPANY I AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands)
-------------------------------- ----------------------------------- PREDECESSOR SUCCESSOR -------------------------------- ----------------------------------- SIX SIX YEAR ENDED MONTHS ENDED MONTHS ENDED YEAR ENDED SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 2003 2004 2004 2005 ---- ---- ---- ---- Net sales $ 316,428 $ 169,579 $ 193,261 $ 423,420 Cost of sales 164,289 89,056 118,491 216,710 Restructuring (270) -- -- -- --------- --------- --------- --------- Gross profit 152,409 80,523 74,770 206,710 Selling and administrative 101,257 56,835 56,752 131,232 Research and technical services 6,402 3,623 4,028 9,175 Amortization expense 267 242 2,631 5,229 Other charges (income), net 1,737 (506) 1,545 288 Restructuring -- (1,091) -- -- --------- --------- --------- --------- Operating income 42,746 21,420 9,814 60,786 Interest income (107) (53) (33) (100) Interest expense 19,563 10,889 15,941 22,110 --------- --------- --------- --------- Income (loss) before provision for income taxes 23,290 10,584 (6,094) 38,776 Provision (benefit) for income taxes 2,603 2,020 (984) 11,187 --------- --------- --------- --------- Net income (loss) $ 20,687 $ 8,564 $ (5,110) $ 27,589 ========= ========= ========= =========
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