WEST SPRINGFIELD, Mass., Nov. 23, 2009 (GLOBE NEWSWIRE) -- Cyalume Technologies Holdings, Inc. (OTCBB:CYLU) today announced results for the three months ending September 30, 2009, reporting adjusted net income, which is net income and amortization, of $1.3 million on revenues of $9.9 million, compared to adjusted net income of $0.6 million on revenues of $8.0 million for the second quarter of 2009 and adjusted net income of $1.4 million on revenues of $10.8 million for the third quarter of 2008. Adjusted EBITDA, which is earnings before interest, taxes, depreciation, amortization, foreign currency gains and losses, and certain one-time gains or expenses, was $2.0 million for the third quarter of 2009 compared to $1.3 million for the second quarter of 2009 and $3.4 million in for the third quarter of 2008. Adjusted net income and adjusted EBITDA are important measures because they present a view of our performance on an ongoing basis without regard to capital structures, capital investments cycles and corresponding ages of related assets among comparable companies.
Comparable GAAP amounts and a reconciliation to GAAP are later contained in this release.
Derek Dunaway, Cyalume's President and CEO, said, "Overall, Q3 was the strongest quarter of the year. The improvements that we saw in Q2 from Q1 continued. Our core military chemical business which suffered from some contracting problems in the early part of the year has rebounded. Overall performance for US Military Chemical for the quarter was over 38% above Q2 levels. We are still facing challenges in our European and Commercial business areas, most of which are driven by budget constraints, but our ammunition business has continued to deliver strong growth, with third quarter performance continuing at the levels we estimated and well above the same period last year."
Forward-Looking Statements
This press release includes forward-looking statements concerning sales and operating earnings. These forward-looking statements are based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to: the effect of regional and global economic and industrial market conditions including our expectations concerning their impact on the markets we serve; the effect of conditions in the financial and credit markets and their impact on the Company and our customers and suppliers; the impact of the Company's cost reduction initiatives; the Company's ability to execute its business plan to meet its sales, operating income, cash flow and capital expenditure guidance; the impact on the Company's gross profit margins as a result of changes in product mix; the Company's vulnerability to industry conditions and competition; the effect of any interruption in the Company's supply of raw materials or a substantial increase in the price of raw materials; ongoing capital expenditures and investment in research and development; compliance with any changes in government regulations and environmental and health and safety laws; the effect on the Company's international operations of unexpected changes in legal and regulatory requirements, export restrictions, currency controls, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, political and economic instability, difficulty in accounts receivable collection and potentially adverse tax consequences; the effect of foreign currency exchange rates as the Company's non-U.S. sales continue to increase; reliance for a significant portion of the Company's total revenues on a limited number of large organizations and the continuity of business relationships with major customers; the loss of key personnel; the nature and extent of military operations being conducted by customers.
Actual results and events may differ significantly from those projected in the forward-looking statements. Reference is made to Cyalume's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2008, its quarterly reports on Form 10-Q, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
Investor Conference Call
A live Internet broadcast of the Company's conference call discussing quarterly and year to date results can be accessed via the investor relations page on the Cyalume web site (www.cyalume.com) on Tuesday, November 24, 2009, at 11:00 a.m. Eastern time. To participate please dial 877-941-8606 and ask for the "Cyalume Technologies Conference Call, ID number: 4183622." A simultaneous webcast will also be at: http://w.on24.com/r.htm?e=178528&s=1&k=1C81CA36DB8CDB8E868610CDB635CEFD.
About Cyalume Technologies
Cyalume Technologies is the world leader in the chemiluminescent industry providing dependable light for uses by militaries, police, fire and other public safety organizations in the U.S., NATO countries and the Middle East. Cyalume's chemical lights are depended on in emergencies such as blackouts, industrial accidents, acts of terrorism and natural disasters. A full complement of Military grade Cyalume(R) brand, Industrial grade SnapLight(R) brand and Consumer grade SafetyBright(R) brand emergency lighting solutions are manufactured at its plant in West Springfield, MA. The company employs 200 people at its locations in West Springfield and Aix-en-Provence, France.
Cyalume Technologies Holdings, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except shares and per share information)
(Unaudited)
Predecessor
For the For the
Three Three
Months Months
Ended Ended
Sept.30, Sept. 30,
2009 2008
----------- -----------
Revenues $ 9,860 $ 10,833
Cost of goods sold 5,938 5,411
----------- -----------
Gross profit 3,922 5,422
Other expenses (income):
Sales and marketing 791 738
General and administrative 887 1,210
Research and development 487 306
Interest, net 673 1,221
Interest - related party 16 --
Amortization of intangible assets 878 659
Other, net 16 59
----------- -----------
Total other expenses (income) 3,748 4,193
----------- -----------
Income (loss) before income taxes 174 1,229
Provision for (benefit from) income taxes (151) 517
----------- -----------
Net income (loss) $ 325 $ 712
----------- -----------
Net income (loss) per common share:
Basic $ 0.02
Diluted $ 0.02
Weighted average shares used to compute net
income (loss) per common share:
Basic 15,352,478
Diluted 15,418,949
Source: Financial statements from Form 10-Q filed November 23, 2009.
Cyalume Technologies Holdings, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except shares and per share information)
Sept. 30,
2009 Dec. 31,
(unaudited) 2008
--------- ---------
Assets
Current assets:
Cash $ 1,831 $ 3,952
Accounts receivable, net of allowance for
doubtful accounts of $217 and $452 at
September 30, 2009 and December 31, 2008,
respectively 4,542 3,508
Inventories, net 9,734 11,447
Income taxes refundable 377 701
Deferred income taxes 425 317
Prepaid expenses and other current assets 204 195
--------- ---------
Total current assets 17,113 20,120
Property, plant and equipment, net 8,250 7,882
Goodwill 58,452 60,896
Other intangible assets, net 48,908 49,426
Derivatives -- --
Other noncurrent assets 138 188
--------- ---------
Total assets $ 132,861 $ 138,512
--------- ---------
Liabilities and Stockholders' Equity
Current liabilities:
Lines of credit $ 3,300 $ 3,500
Current portion of notes payable 4,120 3,621
Accounts payable 3,450 3,230
Accrued expenses and other current
liabilities 2,451 2,550
Common stock subject to mandatory redemption -- 1,123
Notes payable and advance due to related
parties 9 64
Income taxes payable 7 5
--------- ---------
Total current liabilities 13,337 14,093
Notes payable, net of current portion 22,626 25,581
Notes payable due to related parties, net of
current portion 1,048 1,000
Deferred income taxes 7,801 9,237
Derivatives 127 163
Asset retirement obligation, net of current
portion 156 128
--------- ---------
Total liabilities 45,095 50,202
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000
shares authorized, no shares issued or
outstanding -- --
Common stock, $0.001 par value; 50,000,000
authorized; 15,360,925 and 13,719,035
issued and outstanding at September 30,
2009 and December 31, 2008, respectively 15 14
Additional paid-in capital 87,410 87,348
Retained earnings (accumulated deficit) 286 1,229
Accumulated other comprehensive loss 55 (281)
--------- ---------
Total stockholders' equity 87,766 88,310
--------- ---------
Total liabilities and stockholders' equity $ 132,861 $ 138,512
--------- ---------
Source: Financial statements from Form 10-Q filed November 23, 2009.
Cyalume Technologies Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands, except shares)
(Unaudited)
Predecessor
For the For the
Nine Nine
Months Months
Ended Ended
Sept. 30, Sept. 30,
2009 2008
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (943) $ 3,050
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation of property, plant and
equipment 479 651
Amortization 3,446 2,216
Provision for deferred income taxes (1,009) 1,056
Expense associated with share-based
awards 271 --
Other non-cash expenses 357 254
Changes in operating assets and
liabilities:
Accounts receivable (1,024) (35)
Inventories 953 (2,000)
Prepaid expenses and other current
assets (9) 208
Deferred acquisition costs -- --
Accounts payable and accrued
liabilities (22) (1,354)
Income taxes payable, net 329 (1,834)
Accrued interest on notes payable to
related parties -- --
----------- -----------
Net cash provided by operating activities 2,828 1,367
Cash flows from investing activities:
Payments to trust account -- --
Purchases of long-lived assets (449) (1,212)
----------- -----------
Net cash used in investing activities (449) (1,212)
Cash flows from financing activities:
Repayment of advances from and notes
payable to related parties -- --
Payments for common stock subject to
redemption (1,123) --
Net repayment of line of credit (200) --
Payments of Predecessor notes payable -- (2,428)
Repayment of long-term notes payable (2,633) --
Payments to reacquire and retire common
stock (263) --
Payment of stock registration costs (279) --
Payment of deferred financing costs (75) --
Refund of debt issue costs 10 --
Proceeds from exercises of warrants 27 --
----------- -----------
Net cash used in financing activities (4,536) (2,428)
Effect of exchange rate changes on cash 36 30
----------- -----------
Net decrease in cash (2,121) (2,243)
Cash, beginning of period 3,952 5,743
----------- -----------
Cash, end of period $ 1,831 $ 3,500
----------- -----------
Source: Financial statements from Form 10-Q filed November 23, 2009.
Results of Operations -- Adjusted Basis
Adjusted net income is an alternative view of performance used by management and we believe that investors' understanding of our performance is enhanced by disclosing this information. We define adjusted net income as the net income of Cyalume excluding amortization expense. The adjusted net income measure is not, and should not be viewed as, a substitute for U.S. GAAP net income. Adjusted net income is an important internal measurement for us. We measure the performance of the overall Company on this basis. The following are examples of how we use adjusted net income:
* Senior management receives a monthly analysis of our operating results that is prepared on an adjusted net income basis; * Our annual budget for 2009 is prepared on an adjusted net income basis * Certain annual compensation computations, including annual cash bonuses, are calculated in part on an adjusted net income basis.
Despite the importance of this measure to management in goal setting and performance measurement, we stress that adjusted net income is a non-GAAP financial measure that has no standardized meaning under U.S. GAAP and therefore, has limits in its usefulness to investors. Due to its non-standardized definition, adjusted net income (unlike U.S. GAAP net income) may not be comparable with the calculation of similar measures for other companies. Adjusted net income is presented solely to permit investors to more fully understand how management assesses our performance.
Cyalume Technologies Holdings, Inc.
Adjusted Consolidated Statements of Operations
(unaudited, in thousands)
Predecessor
For the Three For the Three For the Three
Months Ended Months Ended Months Ended
September 30, June 30, September 30,
2009 2009 2008
------------- ------------- -------------
Revenues $ 9,860 $ 7,959 $ 10,833
Cost of goods sold 5,938 4,575 5,411
------------- ------------- -------------
Gross profit 3,922 3,384 5,422
Other expenses (income):
Sales and marketing 791 746 738
General and
administrative 887 1,377 1,210
Research and
development 487 415 306
Interest, net 673 625 1,221
Interest - related
party 16 15 --
Amortization of
intangible assets 878 739 659
Other, net 16 19 59
------------- ------------- -------------
Total other expenses
(income) 3,748 3,936 4,193
------------- ------------- -------------
Income (loss) before
income taxes 174 (552) 1,229
Provision for (benefit
from) income taxes (151) (57) 517
------------- ------------- -------------
Net income (loss) 325 (495) 712
Amortization of
intangible assets and
inventory step-up 961 1,049 659
------------- ------------- -------------
Adjusted net income $ 1,286 $ 554 $ 1,371
------------- ------------- -------------
Adjusted EBITDA (a Non-GAAP Financial Measure)
Cyalume defines Adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization, foreign currency gains or losses and one time income or expense items. Management uses Adjusted EBITDA for establishing internal budgets, goals and performance bonuses. Internal financial reports including those provided to the Board of Directors, focus on Adjusted EBITDA. Since Adjusted EBITDA is not necessarily an indicator of overall cash flows of Cyalume, management reviews capital budgets and cash flow forecasts in parallel with Adjusted EBITDA analysis. Because Adjusted EBITDA eliminates interest expense, income taxes and depreciation, amortization and one-time income or expense items, Cyalume considers this financial measure an important indicator of Cyalume's liquidity, operational strength and performance. Investors may find Adjusted EBITDA useful as it illustrates underlying operating trends in Cyalume's business.
In addition, components of Adjusted EBITDA are a key component in the determination of our compliance with certain covenants under our credit agreements. Adjusted EBITDA is not a measure of financial performance under GAAP. Adjusted EBITDA should not be considered in isolation, or as a substitute for net income, cash flows, or other consolidated income or cash flow data presented in accordance with GAAP or as a measure of our liquidity or financial condition. Because Adjusted EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as discussed may not be comparable to other similarly titled measures of other companies.
The use of Adjusted EBITDA as a supplemental liquidity measure is useful as it assists management in understanding and evaluating the Company's capacity, excluding the impact of interest, taxes, and non-cash depreciation and amortization charges, for servicing debt and other cash needs, prior to our consideration of the impacts of other potential sources and uses of cash, such as working capital items. Investors may find it useful for these purposes as well. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net cash provided by operating activities, as determined in accordance with GAAP, since it omits the impact of interest, taxes and changes in working capital that use or provide cash (such as receivables, payables and inventories) as well as the sources or uses of cash associated with changes in other balance sheet items (such as long-term loss accruals and deferred items). Because Adjusted EBITDA excludes depreciation and amortization, Adjusted EBITDA does not reflect any cash requirements for the replacement of the assets being depreciated and amortized, which assets will often have to be replaced in the future. Further, Adjusted EBITDA, because it also does not reflect the impact of debt service, income taxes, cash dividends, capital expenditures and other cash commitments, does not represent how much discretionary cash we have available for other purposes. Nonetheless, Adjusted EBITDA is a key measure expected by and useful to our investors, rating agencies and the banking community in the analysis of a Company's ability to service debt, fund capital expenditures and otherwise meet cash needs, respectively. Cyalume also evaluates Adjusted EBITDA because it is clear that movements in these non-GAAP measures impact the Company's ability to attract financing. Adjusted EBITDA, as calculated, may not be comparable to similarly titled measures reported by other companies.
Cyalume Technologies Holdings, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(unaudited, in thousands)
Predecessor
For the Three For the Three For the Three
Months Ended Months Ended Months Ended
September 30, June 30, September 30,
2009 2009 2008
------------- ------------- --------------
Net income (loss) $ 325 $ (495) $ 712
Plus:
Interest 689 640 1,221
Taxes (151) (57) 517
Depreciation 159 162 223
Amortization of
intangible assets 878 739 659
------------- ------------- --------------
EBITDA 1,900 989 3,332
Plus:
Amortization of
inventory step-up 83 310 --
One-time expenses 16 19 59
------------- ------------- --------------
Adjusted EBITDA $ 1,999 $ 1,318 $ 3,391
------------- ------------- --------------