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(SOM.L) Somero Enterprises, Inc Buy/Sell
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| Date/Time | Headline | Source |
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| 15-10-09 | RNS |
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RNS Number : 8719A Somero Enterprises Inc. 15 October 2009
PRESS ANNOUNCEMENT
FOR IMMEDIATE RELEASE 15 October 2009 Somero Enterprises, Inc ® ("Somero" or "the Company") Directorate Change Somero today announces that Stuart Doughty has informed the Board of his decision to step down as non-executive Chairman to focus on his other commitments, in particular his recent appointment as Executive Chairman at Silverdell PLC, and that Lawrence Horsch has been appointed with immediate effect as Chairman. Lawrence comes to Somero with extensive experience having served on 26 company boards, invested in 30 venture projects and conducted four corporate turnarounds. He co-founded SciMed Life Systems prior to its merger with Boston Scientific Corporation, after which he served on the Boston Scientific Corporation board. Lawrence (74 years old) currently serves on the boards of directors of Leuthold Funds Inc. and Pioneer Sales Group, and in the past five years has also served on the board of Medical CV Inc. and Gillette Children's Specialty Healthcare. In accordance with Schedule 2 g) of the AIM Rules, Lawrence served as a director of Munsingwear Inc. until late 1990. In mid-1991, the company filed fo Enquiries
Hawkpoint Partners Limited
Piers Coombs This information is provided by RNS The company news service from the London Stock Exchange END
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| 15-10-09 | RNS |
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RNS Number : 8719A Somero Enterprises Inc. 15 October 2009
PRESS ANNOUNCEMENT
FOR IMMEDIATE RELEASE 15 October 2009 Somero Enterprises, Inc ® ("Somero" or "the Company") Directorate Change Somero today announces that Stuart Doughty has informed the Board of his decision to step down as non-executive Chairman to focus on his other commitments, in particular his recent appointment as Executive Chairman at Silverdell PLC, and that Lawrence Horsch has been appointed with immediate effect as Chairman. Lawrence comes to Somero with extensive experience having served on 26 company boards, invested in 30 venture projects and conducted four corporate turnarounds. He co-founded SciMed Life Systems prior to its merger with Boston Scientific Corporation, after which he served on the Boston Scientific Corporation board. Lawrence (74 years old) currently serves on the boards of directors of Leuthold Funds Inc. and Pioneer Sales Group, and in the past five years has also served on the board of Medical CV Inc. and Gillette Children's Specialty Healthcare. In accordance with Schedule 2 g) of the AIM Rules, Lawrence served as a director of Munsingwear Inc. until late 1990. In mid-1991, the company filed for bankruptcy. The company subsequently emerged from the bankruptcy proceedings and continued in business. Jack Cooney, CEO of Somero, commented: "Stuart guided Somero through our successful AIM IPO, and we will miss his tireless work ethic and valuable insights. On behalf of the Company I would like to thank Stuart for his significant contribution over a long period of time and wish him every success in the future. "We welcome Lawrence to the role of Chairman, where his knowledge and experience will be instrumental to the strategic development of Somero." Enquiries
Hawkpoint Partners Limited
Piers Coombs This information is provided by RNS The company news service from the London Stock Exchange END
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| 15-09-09 | RNS |
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This news article is displayed preformatted as it may contain results tables
RNS Number : 0454Z
Somero Enterprises Inc.
15 September 2009
PRESS ANNOUNCEMENT
15 September 2009
Somero Enterprises, Inc ®
("Somero" or "the Company" or "the Group")
Interim Results for the six months ended 30 June 2009
Somero Enterprises, Inc.®, is pleased to report its interim results for the six months to 30 June 2009. Somero is a North American manufacturer of patented laser guided equipment used for the spreading and levelling of high volumes of concrete for floors in the commercial
construction industry. Expanding into new geographic markets, Somero's innovative, proprietary products help contractors worldwide achieve a high level of precision in flat floor construction which reduces construction time and improves cost savings.
Financial Highlights
§ Revenue and operating results in line with management*s expectations following 24 June 2009 trading update and equity placing announcement§ Group revenue of US$13.4m (H1 2008: US$31.0m)§ Pre-tax (loss)/income of US($2.0m) (H1 2008: US$3.1m)§
Successful equity placing has reduced adjusted net debt to US$4.8(4)m (31 December 2008 US$9.7m)
Business Highlights
§ Increased focus on opportunities for growth in international markets* Investment in China and the Middle East now producing good interest and response* Latin and South America continue to produce positive results§ Balance of cost management and
investment for growth* Strategic investment in new products targeted for release in Q4 2009* Continued commitment to increasing penetration of the Middle and Far East markets§ Positive actions keep progress on track* Further cost saving program
implemented in June with continued focus on creating additional cost savings across the Group* Placing has reduced adjusted net debt from US$9.7m at end 2008 to US$4.8(4)m at 30 June 2009* Management retention and incentive plan agreedCommenting, Jack Cooney,
President and Chief Executive Officer of Somero, said:
"We are pleased to report revenue today that is consistent with our expectations. We believe our markets are at or near their bottom and we are continuing to focus on every sales opportunity, while maintaining tight controls on cost. We are also pursuing the increasing
internationalisation of our business and focusing on new product development with new products expected in the second half of 2009.
"The recent placing, raising gross proceeds of US$5.5m, was successfully completed alongside lowered covenant requirements from our lending bank. The placing has strengthened our balance sheet considerably and significantly reduced interest payments and we are well placed
as our markets rebuild. This along with our aggressive cost cutting policy provides a stable platform from which to address opportunities as the markets start to improve".
For further information please contact:
Hawkpoint Partners +44 (0)20 7665 4500
Christopher Kemball / Chris Robinson
Collins Stewart +44 (0)20 7523 8000
Piers Coombs
* References to adjusted EBITDA are to Somero's net (loss)/income plus interest income, interest expense, taxes, depreciation, amortization, foreign exchange, stock based compensation and other expense.
* References to adjusted net (loss)/income before amortization are to Somero's net (loss)/income plus amortization expense of intangibles.
* Adjusted EBITDA and adjusted net (loss)/income before amortization are not measurements of the Company's financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance
with GAAP or as an alternative to GAAP cash flow from operating activities as a measure of profitability or liquidity. Adjusted EBITDA and adjusted net (loss)/income before amortization are presented herein because management believes they are useful analytical tools for
measuring the profitability and cash generation of the business. Adjusted EBITDA is also used to determine pricing and covenant compliance under the Company's credit facility and as a measurement for calculation of management incentive compensation. The Company understands
that although adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, its calculation of adjusted EBITDA may not be comparable to other similarly titled measures reported by other companies. See reconciliation of
adjusted EBITDA and adjusted net (loss)/income before amortization to net (loss)/income.
Adjusted net debt consists of actual net debt of $4.5m plus $0.3m in costs associated with the equity raise that were paid subsequent to 30 June 2009.
About Somero
Somero® designs, manufactures and sells equipment that automates the process of spreading and leveling large volumes of concrete for commercial flooring and other horizontal surfaces, such as paved parking lots. Somero's innovative, proprietary products, including the large
SXP®-D Laser Screed®, CopperHead® and new Mini Screed*, employ laser-guided technology to achieve a high level of precision.
Somero's products have been sold primarily to concrete contractors for use in non-residential construction projects in over 60 countries across every time zone around the globe. Laser Screed equipment has been specified for use in constructing warehouses, assembly plants,
retail centers and in other commercial construction projects requiring extremely flat concrete slab floors by a variety of companies, such as Costco, Home Depot, B&Q, DaimlerChrysler, various Coca-Cola bottling companies, Westinghouse, the United States Postal Service,
Lowe's and Toys 'R' Us.
Somero's executive offices and training facility are located in Florida, USA. Its main operations, including manufacturing, are in Michigan, USA. There is also a sales and service office in Chesterfield, England. Somero has 73 employees, and markets and sells its products
through a direct sales force, external sales representatives and independent dealers in North America, Latin America, Europe, the Middle East, South Africa, Asia and Australia. Somero is listed on the Alternative Investment Market of the London Stock Exchange and its
trading symbol is SOM.L.
Chairman's and Chief Executive Officer's Statement
While revenues in 1H 2009 were lower than the same period last year, we are pleased to confirm that they are in line with our expectations.
Operational Performance
As expected, revenues declined in all our end markets but we have responded by dramatically reducing our cost base and by renegotiating our bank covenants to remain compliant through a period of turbulence. We have experienced extensive customer interest in our new Somero
As-Is Program offering of used Large Line machines and Small Line machines that opens a new market niche for sales of refurbished inventory. We have also continued product development and expect to introduce new products in the second half of 2009. The new Mini-Screed
Commercial has been a highlight, contributing over 6% of year to date revenue. The new SXP-D along with our Somero Total Care warranty program (introduced Q4 2008) has been well received and we expect it to improve significantly the replacement demand for Large Line as
concrete contractors regain the confidence to invest in their businesses.
Emerging Markets
Emerging markets such as Latin and South America, China and the Middle East remain a key area of focus for Somero. We are pleased by the relative strength of Latin and South America, and continue to see increased interest in China and the Middle East.
A central component of our business strategy continues to be our entry into emerging international markets where construction demand is expected to recover quickly and demand for ever higher building quality standards continues to rise. We will continue to position
ourselves to take advantage of these trends by adding additional resources in these markets.
The rollout of our emerging markets' strategy is centered on three core aims:
* to identify international blue chip logistics companies, development companies and building owners with a view to ensuring Western floor flatness specifications are carried through to their new markets
* to target joint venture relationships with major western contractors and local contractors who are tendering for projects for these major international players
* to enhance our current training program to provide a more comprehensive service offering to contractors for the complete floor/slab construction
Product Development
As well as focusing on emerging market opportunities, we remain committed to developing innovative
For the six months ended 30 June
2009 2008
US$ US$
000 000
Revenue 13,429 31,016
Cost of sales 7,285 13,460
Gross profit 6,144 17,556
Operating expenses
Selling expenses 3,055 6,760
Engineering expenses 382 981
General and administrative expenses 4,174 6,459
Total operating expenses 7,611 14,200
Operating (loss)/income (1,467) 3,356
Other income (expense)
Interest expense (734) (457)
Interest income 2 22
Foreign exchange gain 150 225
Other 4 (22)
(Loss)/income before income taxes (2,045) 3,124
Provision for income taxes 766 (1,164)
Net (loss)/income (1,279) 1,960
(Loss)/earnings per share diluted US ($0.04) US
$0.06
(Loss)/earnings per share diluted - adjusted net (loss)/income before amortisation US US
$0.00 $0.09
Other data
Adjusted EBITDA 101 4,918
Adjusted net (loss)/income before amortisation (112) 3,126
Depreciation expense 184 184
Amortisation of intangibles 1,167 1,166
Capital expenditures 7 347
* References to adjusted EBITDA are to Somero's net (loss)/income plus interest income, interest expense, taxes, depreciation, amortization, foreign exchange and other expense.
* References to adjusted net (loss)/income before amortization are to Somero's net (loss)/income plus amortization expense of intangibles.
* Adjusted EBITDA and adjusted net (loss)/income before amortization are not measurements of the Company's financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance
with GAAP or as an alternative to GAAP cash flow from operating activities as a measure of profitability or liquidity. Adjusted EBITDA and adjusted net (loss)/income before amortization are presented herein because management believes they are useful analytical tools for
measuring the profitability and cash generation of the business. Adjusted EBITDA is also used to determine pricing and covenant compliance under the Company's credit facility and as a measurement for calculation of management incentive compensation. The Company understands
that although adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, its calculation of adjusted EBITDA may not be comparable to other similarly titled measures reported by other companies. See reconciliation of
adjusted EBITDA and adjusted net (loss)/income before amortization to net income.
* Diluted (loss)/earnings per share represents (loss)/income available to shareholders divided by the weighted average shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. All common stock
equivalents were anti-dilutive at 30 June 2009. Diluted earnings per share on net (loss)/income before amortization is not a GAAP measurement and has been presented because management believes it is a useful analytical tool.
Net (loss)/income to EBITDA reconciliation and net (loss)/income before amortization
For the six months ended 30 June
2009 2008
US$ 000 US$ 000
Adjusted EBITDA reconciliation
Net (loss)/income (1,279) 1,960
Tax provision (766) 1,164
Interest expense 734 457
Interest income (2) (22)
Foreign exchange gain (150) (225)
Other (4) 22
Depreciation 184 184
Amortisation 1,167 1,166
Stock-based compensation 217 212
Adjusted EBITDA 101 4,918
Net (loss)/income before amortisation reconciliation
Net (loss)/income (1,279) 1,960
Amortisation 1,167 1,166
Net (loss)/income before amortisation (112) 3,126
Notes
References to adjusted net (loss)/income before amortization in this document are to Somero's net (loss)/income plus amortization of intangibles. Although adjusted net (loss)/income before amortization is not a measure of operating income, operating performance or liquidity
under US GAAP, this financial measure is included because management believes it will be useful to investors when comparing Somero's results of operations by eliminating the effects of amortization of intangibles that have occurred as a result of the write-up of assets in
connection with the Somero Acquisition. Adjusted net (loss)/income before amortization should not, however, be considered in isolation or as a substitute for operating income as determined by US GAAP, or as an indicator of operating performance, or of cash flows from
operating activities as determined in accordance with US GAAP. Since adjusted net (loss)/income before amortization is not a measure determined in accordance with US GAAP and is thus susceptible to varying calculations, adjusted net (loss)/income before amortization, as
presented, may not be comparable to other similarly titled measures of other companies. A reconciliation of net (loss)/income to EBITDA and adjusted net (loss)/income before amortization is presented above.
Revenues
Somero's consolidated revenues for the six months ended 30 June 2009 were US$13.4m, which represented a 56.8% decrease from US$31.0m in consolidated revenues for the six months ended 30 June 2008. Somero's revenues consist primarily of sales of new Large Line products (the
SXP-D Large Laser Screed), sales of new Small Line products (the CopperHead and PowerRake) and other revenues, which consist of, among other things, revenue from sales of spare parts, refurbished machines, topping spreaders, accessories, and the new Mini-Screed Commercial.
The overall decrease in revenues for the six months ended 30 June 2009 as compared to the six months ended 30 June 2008 was driven, as expected, by reduced Large Line sales. The table below shows the breakdown between Large Line sales, Small Line sales and other revenues
during the six months ended 30 June 2009 and the six months ended 30 June 2008
six months ended 30 June 2009 six months ended 30 June 2008
(unaudited) (unaudited)
In US$ 000 Percentage of net sales In US$ 000 Percentage of net sales
Large Line sales 4,106 30.6% 13,197 42.5%
Small Line sales 3,467 25.8% 9,542 30.8%
Other revenues 5,856 43.6% 8,277 26.7%
Total 13,429 100% 31,016 100%
Revenue by Product Line
Large Line unit sales were 15 units for the period (43 units comparable period last year). Both North America and EMEA were lower with six units sold each (18 units and 20 units respectively for the comparable period). In addition to lower unit volumes average selling
prices were lower due to larger discounts.
Small Line unit sales were 76 for the period down from 198 for the comparable period last year. North America units were 41 and 124 for the respective periods, while EMEA contributed 22 and 56 units respectively.
Other revenues, including sales of spare parts, refurbished machines, topping spreaders and accessories, decreased from US$8.3m during the six months ended 30 June 2008 to US$5.9m during the six months ended 30 June 2009. Our 3-D product remained strong and the new
Mini-Screed contributed $0.9m (38 Units) of new revenue compared to none in the comparable period.
Revenue by Geography
Sales made in North America totaled $6.9m for the period as compared with $15.0m last year and represented 51.7% of total revenues (prior period was 48.1% of total). Sales in EMEA were $4.5m in H1 2009 compared to $13.1m in H1 2008.
Gross Profit
Somero's gross profit percentage for H1 2009 was 45.8% as compared to 56.6% in H1 2008. The lower margins were due to larger discounts, a larger mix of lower margin other products, and lower absorption of manufacturing overhead.
Operating Expenses
Operating expenses excluding depreciation, amortization and stock based compensation for H1 2009 were $6.2m ($12.8m in H1 2008). The reduction has been driven by aggressive cost cutting including the elimination of approximately 100 jobs, and by salary, bonus, benefit and
commission reductions. Additionally, the management team was required to reduce costs in all other categories of expense.
Placing of new shares
The Company placed new shares in a private placement announced 24 June 2009. The effect was to raise approximately $5.5 million before expenses ("the Placing"). A total of 20,606,730 shares of common stock of $0.001 par value each ("New Shares") were placed with
institutional investors at a price of 15 pence per New Share, representing a discount of approximately 14.3% to the closing middle market price (derived from the Daily Official List) on 23 June 2009. The senior management team of Somero subscribed for 1,536,900 New Shares
at a price of 15 pence per New Share, representing an investment of approximately $0.4 million. The net proceeds available to the Company were approximately $5 million.
Debt Restructuring
In conjunction with the placing of new shares the Company was able to renegotiate its debt agreement with Citizens Bank New Hampshire, a wholly owned subsidiary of Royal Bank of Scotland, to allow for greater flexibility on the debt service covenant as well as the funded
debt to EBITDA covenant. Additionally, the Company used $0.6m of the placing proceeds to break interest rate hedges at approximately 5.15% and 5.20% to allow for reduced interest rates going forward. At 30 June 2009, bank debt was $4.6m as compared with $10.5m at 31
December 2008. (See note 5 to the financial statements).
Earnings per Share
Basic (loss)/earnings per share represents income available to common stockholders divided by the weighted average number of shares outstanding during the period. Diluted (loss)/earnings per share reflect additional common shares that would have been outstanding if dilutive
potential common shares had been issued, as well as any adjustment to (loss)/income that would result from the assumed issuance.
Potential common shares that may be issued by the Company relate to outstanding stock options. (Loss)/earnings per common share have been computed based on the following:
30June 2009 30 June 2008
US$ 000 US$ 000
(Loss)/income available to shareholders (1,279) 1,960
Basic and diluted weighted average shares outstanding 34,894 34,282
30 June 30 June
2009 2008
Basic and diluted ($0.04) $ 0.06
(loss)/earnings per share
Net (loss)/income before $0.00 $0.09
amortization of intangibles
earnings per share
(See note attached to the net (loss)/income to EBITDA reconciliation and adjusted net (loss)/income before amortization table for discussion of the non-GAAP
measures used).
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
AS OF 30 JUNE 2009 AND 31 DECEMBER 2008 (in thousands, except share amounts)
30 June 2009 31December
US$ 000 2008
US$ 000
Assets
Current assets:
Cash and cash equivalents 158 789
Accounts receivable - net 2,005 2,434
Inventories - net 5,536 5,819
Prepaid expenses and other assets 287 800
Income tax receivable 945 137
Deferred tax asset 413 466
Total current assets 9,344 10,445
Property, plant and equipment - net 4,073 4,260
Intangible assets - net 15,705 16,872
Goodwill 16,400 16,400
Deferred financing costs 31 52
Other assets 81 75
Total assets 45,634 48,104
Liabilities and stockholder's equity
Current liabilities
Accounts payable 1,871 1,960
Accrued expenses 1,329 1,279
Notes payable - current portion 460 1,429
Other liabilities 11 360
Total current liabilities 3,671 5,028
Notes payable, net of current portion 4,177 9,026
Deferred income taxes 335 239
Other liabilities, net of current portion 30 422
Total liabilities 8,213 14,715
Commitments and contingencies - -
Stockholder's equity
Preferred stock, US$0.001 par value, 50m shares authorised, no shares - -
issued and outstanding
Common stock, US$0.001 par value, 80m shares authorised, 56,425,598 and 26 4
34,281,968 shares issued and outstanding at 30 June 2009 and 31 December
2008, respectively.
Additional paid in capital 27,916 22,759
Retained earnings 10,449 11,728
Other comprehensive loss (970) (1,102)
Total stockholder's equity 37,421 33,389
Total liabilities and stockholder's equity 45,634 48,104
See notes to condensed consolidated financial statements.
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED 30 JUNE 2009 AND 30 JUNE 2008
For the six months ended 30 June For the six months ended 30 June
2009 2008
US$ 000 US$ 000
Revenue 13,429 31,016
Cost of sales 7,285 13,460
Gross profit 6,144 17,556
Operating expenses
Selling expenses 3,055 6,760
Engineering expenses 382 981
General and administrative expenses 4,174 6,459
Total operating expenses 7,611 14,200
Operating (loss)/income (1,467) 3,356
Other income (expense)
Interest expense (734) (457)
Interest income 2 22
Foreign exchange gain 150 225
Other 4 (22)
(Loss)/income before income taxes (2,045) 3,124
Provision for income taxes 766 (1,164)
Net (loss)/income (1,279) 1,960
(Loss)/earnings per common share
Basic and diluted US($0.04) US$0.06
See notes to consolidated financial statements.
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2009
Consolidated Statements of Changes in Stockholders' Equity
For the six months ended 30 June 2009
Other
Common Stock - Series A Common Stock - Series B Common Stock Additional Retained earnings Comprehensive income (loss) Total stockholders equity Comprehensive income
paid in capital
Shares Amount Shares Amount Shares Amount
US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000
Balance - 31 December 2008 - - - - 34,281,968 4 22,759 11,728 (1,102) 33,389 803
Cumulative translation adjustment (156) (156) (156)
Change in fair value of derivative 289 289 289
instruments
Net loss (1,279) (1,279) (1,279)
Stock based compensation 217 217
Common stock issuance 22,143,630 22 4,940 4,962
Balance - 30 June 2009 - - - - 56,425,598 26 27,916 10,449 (969) 37,422 (1,146)
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 6 MONTHS ENDED 30 JUNE 2009 AND THE 6 MONTHS ENDED 30 JUNE 2008
Consolidated Statements of Cash Flows
For the six months ended 30 June 2009 and the six months ended 30 June 2008
Six months ended Six months ended
30 June 2009 30 June 2008
(unaudited) (unaudited)
US$ 000 US$ 000
Cash flows from operating activities:
Net (loss)/income (1,279) 1,960
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Deferred taxes 149 (19)
Depreciation and amortization 1,178 1,350
Amortisation of deferred financing costs 21 21
Loss on sale of assets (4) 22
Realised gain (loss) on currency exchange 0 0
Share based compensation 217 212
Working capital changes:
Accounts receivable 561 (221)
Inventories 283 94
Prepaid expenses and other assets 775 145
Income taxes receivable 0 0
Other assets (6) (148)
Accounts payable and other liabilities (917) (338)
Income taxes payable (737) (229)
Net cash provided by operating activities 241 2,849
Cash flows from investing activities:
Proceeds from sale of property and equipment 11 637
Property and equipment purchases (7) (347)
Net cash used in investing activities 4 290
Cash flows from financing activities:
Repayment of notes payable (5,818) (3,714)
Payment of dividends 0 (1,029)
Proceeds from offering of common stock, net of costs 5,233 0
Net cash used in financing activities (585) (4,743)
Effect of exchange rates on cash and cash equivalents (291) (1)
Net decrease in cash and cash equivalents (631) (1,605)
Cash and cash equivalents:
Beginning of period 789 3,842
End of period 158 2,237
See notes to consolidated financial statements.
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
FOR THE 6 MONTHS ENDED 30 JUNE 2009 AND 30 JUNE 2008
1. Organization and Description of Business
Nature of Business Somero Enterprises, Inc. (the "Company" or "Somero") designs, manufactures, refurbishes, sells and distributes concrete leveling, contouring and placing equipment, related parts and accessories, and training services worldwide. The operations are conducted from a corporate office in Houghton, Michigan, executive offices in Fort Myers, Florida, a European distribution office in the United Kingdom, and sales
offices in Canada, Germany, Italy, Spain, Dubai and China.
2. Summary of Significant Accounting Policies
Basis of Presentation The interim financial data as of 30 June 2009 and the six months ended 30 June 2009 and 30 June 2008 is unaudited. The condensed consolidated financial statements, in the opinion of Somero management, includes all normal recurring adjustments necessary for a fair presentation of the statement of results for the interim periods. The statements have been prepared in accordance with accounting principles
generally accepted in the United States of America ("US GAAP") but do not include all of the information and note disclosures required by US GAAP. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Somero's Annual Report and filing with the AIM exchange for the year ended 31 December 2008. The results for the six month
period ended 30 June 2009 are not necessarily indicative of the results to be expected for the year ending 31 December 2009 or for any other interim period.
Principles of Consolidation The consolidated financial statements include the accounts of Somero Enterprises, Inc. and its subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.
Cash and Cash Equivalents Cash includes cash on hand, cash in banks, and temporary investments with a maturity of three months or less when purchased.
Accounts Receivable and Allowances for Doubtful Accounts Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company's accounts receivable are derived from revenue earned from a diverse group of customers primarily located in the United States. The Company performs credit evaluations of its commercial customers and maintains an allowance for
doubtful accounts receivable based upon the expected ability to collect accounts receivable. Allowances, if necessary, are established for amounts determined to be uncollectible based on specific identification and historical experience. As of 30 June 2009 and 31 December 2008, the allowance for doubtful accounts was approximately US$514,000 and US$650,000, respectively.
Inventories Inventories are stated at the lower of cost, using the first in, first out ("FIFO") method, or market. Provision for potentially obsolete or slow-moving inventory is made based on management's analysis of inventory levels and future sales forecasts.
Deferred Financing Costs Deferred financing costs incurred in relation to long-term debt, are reflected net of accumulated amortization and are amortized over the expected repayment term of the debt instrument, which was four years from the debt inception date. These financing costs are being amortized using the effective interest method.
Intangible Assets Intangible assets consist principally of customer relationships and patents, and are carried at their fair value, less accumulated amortization. Intangible assets are amortized using the straight-line method over a period of three to twelve years, which is their estimated period of economic benefit. The Company evaluates the carrying value of long-lived assets, excluding goodwill, whenever events and
circumstances indicate the carrying amount of an asset may not be recoverable. For the periods ended 30 June 2009 and 31 December 2008, no such events or circumstances were
2009 2008
US$ 000 US$ 000
Net (loss)/Income (1,279) 1,960
Cumulative Translation Adjustment (156) (1)
Change in fair value of derivative instruments - net of income taxes 289 6
Total Comprehensive (loss)/Income (1,146) 1,965
(Loss)/earnings Per Share Basic earnings per share represents income available to common stockholders divided by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate to outstanding stock options. All
common stock equivalents were anti-dilutive at 30 June 2009. Earnings per common share have been computed based on the following:
2009 2008
Net (loss)/income US$ 000 US$ 000
(1,279) 1,960
Basic and diluted weighted average shares outstanding 34,893,670 34,281,968
Fair Value Measurements Effective 1 January 2008, the Company adopted SFAS No. 157. This standard establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements of financial assets and financial liabilities. The Company recorded no change to 1 January 2008 retained earnings as a result of adopting SFAS No. 157.
These valuation techniques may be based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy.
* Level 1 - Quoted prices for identical instruments in active markets.
* Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities.
* Level 3 -Unobservable inputs for the asset or liability which are supported by little or no market activity and reflect the Company's assumptions that a market participant would use in pricing the asset or liability.
Fair Value of Financial Instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be
determined with precision. The assumptions used have a significant effect on the estimated amounts reported. The amounts reported in the accompanying consolidated balance sheets approximate fair value due to the nature and short-term maturities of such assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities.
New Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for financial assets and liabilities for fiscal years beginning after 15
November 2007. In February 2008, the FASB also issued FSP FAS 157-2, Effective Date of FASB Statement No. 157, which delayed the effective date of SFAS 157 to fiscal years beginning after 15 November 2008, for non-financial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Certain aspects of SFAS 157 were effective as of 1 January 2008 and
affected certain note disclosures.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. This statement requires companies to provide enhanced disclosures about (a) how and why they use derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect a
company's financial position, financial performance, and cash flows. SFAS No.161 is effective for financial statements for fiscal years and interim periods beginning after 15 November 2008. The Company adopted the new disclosure requirements in the period beginning 1 January 2009 and the adoption had no impact on the Company's financial position, results of operations and cash flows.
In June 2008, the FASB ratified EITF Issue No. 08-3, Accounting for Lessees for Maintenance Deposits Under Lease Arrangeme
2009 2008
US$ 000 US$ 000
Raw materials 2,075 2,078
Finished goods and work in process 2,281 3,231
Refurbished 1,180 510
Total 5,536 5,819
4. Property, Plant and Equipment
Property, plant and equipment consist of the following at 30 June 2009 and 31 December 2008:
2009 2008
US$ 000 US$ 000
Land 207 207
Buildings and improvements 3,637 3,572
Machinery and equipment 1,324 1,410
Sub-total 5,168 5,189
Less: accumulated depreciation and amortization (1,095) (929)
4,073 4,260
Depreciation expense for the six months ended 30 June 2009 and 30 June 2008 was approximately US$184,000 and US$184,000, respectively.
5. Notes Payable
Summary The Company renegotiated bank covenants associated with its credit facility in June 2009. Company's debt obligations consisted of the following at 30 June 2009 and 31 December 2008:
2009 2008
US$ 000 US$ 000
Bank debt:
Five year secured reducing revolving line of credit 2,337 2,954
Five year secured term loan 2,300 7,501
Less debt obligations due within one year (460) (1,429)
Obligations due after one year 4,177 9,026
Credit Facility The Company has a credit facility with a bank dated 16 March 2007 that was amended in June 2009 and composed of the following at 30 June 2009:
* US$8,000,000 five year secured reducing revolving line of credit
* US$2,300,000 five year secured reducing term loan
In January 2009 the Company renegotiated its loan agreements with the bank to obtain concessions on its debt service covenant and its funded debt to EBITDA covenant. In return, the Company agreed to an immediate increase of 1.6% in its interest rate with a changed pricing grid that allowed for a further maximum increase of 1.75%. The Company's maximum revolving line of credit was set at US$8,000,000.
In June 2009, in conjunction with a private placement of $5,463,000 of new equity, the Company again renegotiated its loan agreements with the bank to obtain concessions on its debt service covenant and its funded debt to EBITDA covenant and paid off the remaining liability on its interest rate swaps at a cost of $615,000. As a result of the renegotiation and pay down of debt, $328,000 of loss on cash flow hedges was
recognized in the statement of operations as interest expense and removed from other comprehensive income. The remaining $287,000 in other comprehensive income will be amortized over the term of the amounts outstanding under the credit facility. The interest rates on the revolver and term loan are Libor 1-month and Libor 3-month, respectively, plus an amount determined by the ratio of "funded debt/last 12 months EBITDA," as
defined in the loan agreement. The interest rates were 4.57% and 4.87% on the revolver and term loan at 30 June 2009. The interest rates were 6.05% and 6.10% on the revolver and term loan at December 31, 2008. The credit facilities are secured by substantially all of the Company's assets and contain a number of restrictive covenants that among other things limit the ability of the Company to incur debt, issue capital stock,
change ownership and dispose of certain assets. The revolving line of credit available reduces over the five year term and as of 30 June 2009 the borrowed balance is below the credit line available. At 30 June 30 2009, the Company had $5,663,000 additional funds available on its revolver
Future Payments The future payments by year under the Company's debt obligations are as follows:
30 June
US$ 000
2009 230
2010 460
2011 460
2012 3,487
Total payments 4,637
Interest Interest expense on the credit facility for the six months ended 30 June 2009 and 30 June 2008 was approximately US$406,000 and US$454,000, respectively, related to the debt obligation. Additionally, there was $328,000 charged to interest expense as a result of the modification to the term loan.
6. Equity raise
The Company successfully raised $5.5m through a private placement in June 2009. The Company incurred approximately $517,000 in costs for the equity raise which were netted against the gross proceeds.
7. Operating Leases
The Company leases property, vehicles and office equipment under leases accounted for as operating leases without renewal options. Future minimum payments by year under non cancellable operating leases with initial terms in excess of one year were as follows:
30 June
US$ 000
2009 172
2010 296
2011 196
2012 162
2013 82
Total 908
Total rent expense under operating leases for the periods ended 30 June 2009 and 30 June 2008 was approximately US$184,000 and US$318,000.
8. Commitments and Contingencies
The Company has entered into employment agreements with certain members of senior management. The terms of these agreements range from six months to one year and include non-compete and nondisclosure provisions as well as providing for defined severance payments in the event of termination or change in control.
The Company entered into a 5 year or minimum purchase obligation of US$625,000 with a supplier as of 31 December 2007. There is a related contingent liability of US$38,000 to cancel the contract as of 30 June 2009 which declines over 5 years on a pro-rated basis.
The Company is subject to various unresolved legal actions which arise in the normal course of its business. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible losses, the Company believes these unresolved legal actions will not have a material effect on its financial statements.
9. Income Taxes
Somero adopted FIN 48 on 1 January 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This
pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
The Company's effective tax rate for the six months ended 30 June 2009 was 37.5% compared to the federal statutory rate of 34.0%. The effective tax rate is greater than the statutory rate mainly due to the effect of state and foreign taxes.
As of 30 June 2009, the Company had a gross unrecognized tax benefit (including interest and penalties) of $4,000. Accrued interest and penalties related to unrecognized tax benefits are not included in tax expense.
Somero is subject to US federal income tax as well as income tax of multiple state jurisdictions. The Company began business in 2005 and therefore the statute of limitations for all federal, foreign and state income tax matters for tax years from 2005 forward is still open. Somero has no federal, foreign or state income tax returns currently under examination.
10. Supplemental Cash Flow and Non-Cash Financing Disclosures
2009 2008
US$ 000 US$ 000
Cash paid for interest 734 457
Cash paid for taxes (86) 1,568
Non-cash financing activities - Change in fair value of derivative instruments 289 6
Accrued stock issuance costs 271 0
11. Intangible Assets
The following table reflects intangible assets that are subject to amortization under
the provisions of SFAS No. 142, Goodwill and Other Intangible Assets:
Weighted average 30 June 2009 31 December 2008
amortization US$ 000 US$ 000
period
Capitalized cost
Customer relationships 8 years 6,300 6,300
Patents 12 years 18,538 18,538
Other intangibles 3 years 4 4
24,842 24,842
Accumulated amortization
Customer relationships 8 years 3,084 2,691
Patents 12 years 6,051 5,278
Other intangibles 3 years 2 1
9,137 7,970
Net carrying costs
Customer relationships 8 years 3,216 3,609
Patents 12 years 12,487 13,260
Other intangibles 3 years 2 3
15,705 16,872
Amortization expense for the six months ended 30 June 2009 and 30 June 2008 was US$1,167,000 and US$1,166,000, respectively.
Estimated amortization expense on intangibles for the remainder of 2009 is US$1,165,000 and US$2,332,000 for each of the years ending 2010, 2011, 2012 and 2013.
12. Intangible Assets
As of 15 September 2009, Somero's Remuneration Committee has reviewed the alternatives for ensuring that management are appropriately incentivized to rebuild shareholder value and to be retained within the Group. The Remuneration Committee has agreed to the terms of a Stock Appreciation Rights Plan and no awards have been granted as of 15 September 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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This news article is displayed preformatted as it may contain results tables
RNS Number : 0454Z
Somero Enterprises Inc.
15 September 2009
PRESS ANNOUNCEMENT
15 September 2009
Somero Enterprises, Inc ®
("Somero" or "the Company" or "the Group")
Interim Results for the six months ended 30 June 2009
Somero Enterprises, Inc.®, is pleased to report its interim results for the six months to 30 June 2009. Somero is a North American manufacturer of patented laser guided equipment used for the spreading and levelling of high volumes of concrete for floors in the commercial
construction industry. Expanding into new geographic markets, Somero's innovative, proprietary products help contractors worldwide achieve a high level of precision in flat floor construction which reduces construction time and improves cost savings.
Financial Highlights
§ Revenue and operating results in line with management*s expectations following 24 June 2009 trading update and equity placing announcement§ Group revenue of US$13.4m (H1 2008: US$31.0m)§ Pre-tax (loss)/income of US($2.0m) (H1 2008: US$3.1m)§
Successful equity placing has reduced adjusted net debt to US$4.8(4)m (31 December 2008 US$9.7m)
Business Highlights
§ Increased focus on opportunities for growth in international markets*
For further information please contact:
Hawkpoint Partners +44 (0)20 7665 4500
Christopher Kemball / Chris Robinson
Collins Stewart +44 (0)20 7523 8000
Piers Coombs
* References to adjusted EBITDA are to Somero's net (loss)/income plus interest income, interest expense, taxes, depreciation, amortization, foreign exchange, stock based compensation and other expense.
* References to adjusted net (loss)/income before amortization are to Somero's net (loss)/income plus amortization expense of intangibles.
* Adjusted EBITDA and adjusted net (loss)/income before amortization are not measurements of the Company's financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance
with GAAP or as an alternative to GAAP cash flow from operating activities as a measure of profitability or liquidity. Adjusted EBITDA and adjusted net (loss)/income before amortization are presented herein because management believes they are useful analytical tools for
measuring the profitability and cash generation of the business. Adjusted EBITDA is also used to determine pricing and covenant comp
About Somero
Somero® designs, manufactures and sells equipment that automates the process of spreading and leveling large volumes of concrete for commercial flooring and other horizontal surfaces, such as paved parking lots. Somero's innovative, proprietary products, including the large
SXP®-D Laser Screed®, CopperHead® and new Mini Screed*, employ laser-guided technology to achieve a high level of precision.
Somero's products have been sold primarily to concrete contractors for use in non-residential construction projects in over 60 countries across every time zone around the globe. Laser Screed equipment has been specified for use in constructing warehouses, assembly plants,
retail centers and in other commercial construction projects requiring extremely flat concrete slab floors by a variety of companies, such as Costco, Home Depot, B&Q, DaimlerChrysler, various Coca-Cola bottling companies, Westinghouse, the United States Postal Service,
Lowe's and Toys 'R' Us.
Somero's executive offices and training f
For the six months ended 30 June
2009 2008
US$ US$
000 000
Revenue 13,429 31,016
Cost of sales 7,285 13,460
Gross profit 6,144 17,556
Operating expenses
Selling expenses 3,055 6,760
Engineering expenses 382 981
General and administrative expenses 4,174 6,459
Total operating expenses 7,611 14,200
Operating (loss)/income (1,467) 3,356
Other income (expense)
Interest expense (734) (457)
Interest income 2 22
Foreign exchange gain 150 225
Other 4 (22)
(Loss)/income before income taxes (2,045) 3,124
Provision for income taxes 766 (1,164)
Net (loss)/income (1,279) 1,960
(Loss)/earnings per share diluted US ($0.04) US
$0.06
(Loss)/earnings per share diluted - adjusted net (loss)/income before amortisation US US
$0.00 $0.09
Other data
Adjusted EBITDA 101 4,918
Adjusted net (loss)/income before amortisation (112) 3,126
Depreciation expense 184 184
Amortisation of intangibles 1,167 1,166
Capital expenditures 7 347
* References to adjusted EBITDA are to Somero's net (loss)/income plus interest income, interest expense, taxes, depreciation, amortization, foreign exchange and other expense.
* References to adjusted net (loss)/income before amortization are to Somero's net (loss)/income plus amortization expense of intangibles.
* Adjusted EBITDA and adjusted net (loss)/income before amortization are not measurements of the Company's financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance
with GAAP or as an alternative to GAAP cash flow from operating activities as a measure of profitability or liquidity. Adjusted EBITDA and adjusted net (loss)/income before amortization are presented herein because management believes they are useful analytical tools for
measuring the profitability and cash generation of the business. Adjusted EBITDA is also used to determine pricing and covenant compliance under the Company's
Net (loss)/income to EBITDA reconciliation and net (loss)/income before amortization
For the six months ended 30 June
2009 2008
US$ 000 US$ 000
Adjusted EBITDA reconciliation
Net (loss)/income (1,279) 1,960
Tax provision (766) 1,164
Interest expense 734 457
Interest income (2) (22)
Foreign exchange gain (150) (225)
Other (4) 22
Depreciation 184 184
Amortisation 1,167 1,166
Stock-based compensation 217 212
Adjusted EBITDA 101 4,918
Net (loss)/income before amortisation reconciliation
Net (loss)/income (1,279) 1,960
Amortisation 1,167 1,166
Net (loss)/income before amortisation (112) 3,126
Notes
References to adjusted net (loss)/income before amortization in this document are to Somero's net (loss)/income plus amortization of intangibles. Although adjusted net (loss)/income before amortization is not a measure of operating income, operating performance or liquidity
under US GAAP, this financial measure is included because management believes it will be useful to investors when comparing Somero's results of operations by eliminating the effects of amortization of intangibles that have occurred as a result of the write-up of assets in
connection with the Somero Acquisition. Adjusted net (loss)/income before amortization should not, however, be considered in isolation or as a substitute for operating income as determined by US GAAP, or as an indicator of operating performance, or of cash flows from
operating activities as determined in accordance with US GAAP. Since adjusted net (loss)/income before amortization is not a measure determined in accordance with US GAAP and is thus susceptible to va
Revenues
Somero's consolidated revenues for the six months ended 30 June 2009 were US$13.4m, which represented a 56.8% decrease from US$31.0m in consolidated revenues for the six months ended 30 June 2008. Somero's revenues consist primarily of sales of new Large Line products (the
SXP-D Large Laser Screed), sales of new Small Line products (the CopperHead and PowerRake) and other revenues, which consist of, among other things, revenue from sales of spare parts, refurbished machines, topping spreaders, accessories, and the new Mini-Screed Commercial.
The overall decrease in revenues for the six months ended 30 June 2009 as compared to the six months ended 30 June 2008 was driven, as expected, by reduced Large Line sales. The table below shows the breakdown between Large Line sales, Small Line sales and other revenues
during the six months ended 30 June 2009 and the six months ended 30 June 2008
six months ended 30 June 2009 six months ended 30 June 2008
(unaudited) (unaudited)
In US$ 000 Percentage of net sales In US$ 000 Percentage of net sales
Large Line sales 4,106 30.6% 13,197 42.5%
Small Line sales 3,467 25.8% 9,542 30.8%
Other revenues 5,856 43.6% 8,277 26.7%
Total 13,429 100% 31,016 100%
Revenue by Product Line
Large Line unit sales were 15 units for the period (43 units comparable period last year). Both North America and EMEA were lower with six units sold each (18 units and 20 units respectively for the comparable period). In addition to lower unit volumes average selling
prices were lower due to larger discounts.
Small Line unit sales were 76 for the period down from 198 for the comparable period last year. North America units were 41 and 124 for the respective periods, while EMEA contributed 22 and 56 units respectively.
Other revenues, including sales of spare parts, refurbished machines, topping spreaders and accessories, decreased from US$8.3m during the six months ended 30 June 2008 to US$5.9m during the six months ended 30 June 2009. Our 3-D product remained strong and the new
Mini-Screed contributed $0.9m (38 Units) of new revenue compared to none in the comparable period.
Revenue by Geography
Sales made in North America totaled $6.9m for the period as compared with $15.0m la
30June 2009 30 June 2008
US$ 000 US$ 000
(Loss)/income available to shareholders (1,279) 1,960
Basic and diluted weighted average shares outstanding 34,894 34,282
30 June 30 June
2009 2008
Basic and diluted ($0.04) $ 0.06
(loss)/earnings per share
Net (loss)/income before $0.00 $0.09
amortization of intangibles
earnings per share
(See note attached to the net (loss)/income to EBITDA reconciliation and adjusted net (loss)/income before amortization table for discussion of the non-GAAP
measures used).
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
AS OF 30 JUNE 2009 AND 31 DECEMBER 2008 (in thousands, except share amounts)
30 June 2009 31December
US$ 000 2008
US$ 000
Assets
Current assets:
Cash and cash equivalents 158 789
Accounts receivable - net 2,005 2,434
Inventories - net 5,536 5,819
Prepaid expenses and other assets 287 800
Income tax receivable 945 137
Deferred tax asset 413 466
Total current assets 9,344 10,445
Property, plant and equipment - net 4,073 4,260
Intangible assets - net 15,705 16,872
Goodwill 16,400 16,400
Deferred financing costs 31 52
Other assets 81 75
Total assets 45,634 48,104
Liabilities and stockholder's equity
Current liabilities
Accounts payable 1,871 1,960
Accrued expenses 1,329 1,279
Notes payable - current portion 460 1,429
Other liabilities 11 360
Total current liabilities 3,671 5,028
Notes payable, net of current portion 4,177 9,026
Deferred income taxes 335 239
Other liabilities, net of current portion 30 422
Total liabilities 8,213 14,715
Commitments and contingencies - -
Stockholder's equity
Preferred stock, US$0.001 par value, 50m shares authorised, no shares - -
issued and outstanding
Common stock, US$0.001 par value, 80m shares authorised, 56,425,598 and 26 4
34,281,968 shares issued and outstanding at 30 June 2009 and 31 December
2008, respectively.
Additional paid in capital 27,916 22,759
Retained earnings 10,449 11,728
Other comprehensive loss (970) (1,102)
Total stockholder's equity 37,421 33,389
Total liabilities and stockholder's equity 45,634 48,104
See notes to condensed consolidated financial statements.
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED 30 JUNE 2009 AND 30 JUNE 2008
For the six months ended 30 June For the six months ended 30 June
2009 2008
US$ 000 US$ 000
Revenue 13,429 31,016
Cost of sales 7,285 13,460
Gross profit 6,144 17,556
Operating expenses
Selling expenses 3,055 6,760
Engineering expenses 382 981
General and administrative expenses 4,174 6,459
Total operating expenses 7,611 14,200
Operating (loss)/income (1,467) 3,356
Other income (expense)
Interest expense (734) (457)
Interest income 2 22
Foreign exchange gain 150 225
Other 4 (22)
(Loss)/income before income taxes (2,045) 3,124
Provision for income taxes 766 (1,164)
Net (loss)/income (1,279) 1,960
(Loss)/earnings per common share
Basic and diluted US($0.04) US$0.06
See notes to consolidated financial statements.
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2009
Consolidated Statements of Changes in Stockholders' Equity
For the six months ended 30 June 2009
Other
Common Stock - Series A Common Stock - Series B Common Stock Additional Retained earnings Comprehensive income (loss) Total stockholders equity Comprehensive income
paid in capital
Shares Amount Shares Amount Shares Amount
US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000
Balance - 31 December 2008 - - - - 34,281,968 4 22,759 11,728 (1,102) 33,389 803
Cumulative translation adjustment (156) (156) (156)
Change in fair value of derivative 289 289 289
instruments
Net loss (1,279) (1,279) (1,279)
Stock based compensation 217 217
Common stock issuance 22,143,630 22 4,940 4,962
Balance - 30 June 2009 - - - - 56,425,598 26 27,916 10,449 (969) 37,422 (1,146)
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 6 MONTHS ENDED 30 JUNE 2009 AND THE 6 MONTHS ENDED 30 JUNE 2008
Consolidated Statements of Cash Flows
For the six months ended 30 June 2009 and the six months ended 30 June 2008
Six months ended Six months ended
30 June 2009 30 June 2008
(unaudited) (unaudited)
US$ 000 US$ 000
Cash flows from operating activities:
Net (loss)/income (1,279) 1,960
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Deferred taxes 149 (19)
Depreciation and amortization 1,178 1,350
Amortisation of deferred financing costs 21 21
Loss on sale of assets (4) 22
Realised gain (loss) on currency exchange 0 0
Share based compensation 217 212
Working capital changes:
Accounts receivable 561 (221)
Inventories 283 94
Prepaid expenses and other assets 775 145
Income taxes receivable 0 0
Other assets (6) (148)
Accounts payable and other liabilities (917) (338)
Income taxes payable (737) (229)
Net cash provided by operating activities 241 2,849
Cash flows from investing activities:
Proceeds from sale of property and equipment 11 637
Property and equipment purchases (7) (347)
Net cash used in investing activities 4 290
Cash flows from financing activities:
Repayment of notes payable (5,818) (3,714)
Payment of dividends 0 (1,029)
Proceeds from offering of common stock, net of costs 5,233 0
Net cash used in financing activities (585) (4,743)
Effect of exchange rates on cash and cash equivalents (291) (1)
Net decrease in cash and cash equivalents (631) (1,605)
Cash and cash equivalents:
Beginning of period 789 3,842
End of period 158 2,237
See notes to consolidated financial statements.
SOMERO ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
FOR THE 6 MONTHS ENDED 30 JUNE 2009 AND 30 JUNE 2008
1. Organization and Description of Business
Nature of Business Somero Enterprises, Inc. (the "Company" or "Somero") designs, manufactures, refurbishes, sells and distributes concrete leveling, contouring and placing equipment, related parts and accessories, and training services worldwide. The operations are conducted from a corporate office in Houghton, Michigan, executive offices in Fort Myers, Florida, a European distribution office in the United Kingdom, and sales
offices in Canada, Germany, Italy, Spain, Dubai and China.
2. Summary of Significant Accounting Policies
Basis of Presentation The interim financial data as of 30 June 2009 and the six months ended 30 June 2009 and 30 June 2008 is unaudited. The condensed consolidated financial statements, in the opinion of Somero management, includes all normal recurring adjustments necessary for a fair presentation of the statement of results for the interim periods. The statements have been prepared in accordance with accounting principles
generally
2009 2008
US$ 000 US$ 000
Net (loss)/Income (1,279) 1,960
Cumulative Translation Adjustment (156) (1)
Change in fair value of derivative instruments - net of income taxes 289 6
Total Comprehensive (loss)/Income (1,146) 1,965
(Loss)/earnings Per Share Basic earnings per share represents income available to common stockholders divided by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate to outstanding stock options. All
common stock equivalents were anti-dilutive at 30 June 2009. Earnings per common share have been computed based on the following:
2009 2008
Net (loss)/income US$ 000 US$ 000
(1,279) 1,960
Basic and diluted weighted average shares outstanding 34,893,670 34,281,968
Fair Value Measurements Effective 1 January 2008, the Company adopted SFAS No. 157. This standard establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements of financial assets and financial liabilities. The Company recorded no change to 1 January 2008 retained earnings as a result of adopting SFAS No. 157.
These valuation techniques may be based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy.
* Level 1 - Quoted prices for identical instruments in active markets.
* Level 2 - Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived other inputs that are observable or can be corroborated by observable market data for substa
2009 2008
US$ 000 US$ 000
Raw materials 2,075 2,078
Finished goods and work in process 2,281 3,231
Refurbished 1,180 510
Total 5,536 5,819
4. Property, Plant and Equipment
Property, plant and equipment consist of the following at 30 June 2009 and 31 December 2008:
2009 2008
US$ 000 US$ 000
Land 207 207
Buildings and improvements 3,637 3,572
Machinery and equipment 1,324 1,410
Sub-total 5,168 5,189
Less: accumulated depreciation and amortization (1,095) (929)
4,073 4,260
Depreciation expense for the six months ended 30 June 2009 and 30 June 2008 was approximately US$184,000 and US$184,000, respectively.
5. Notes Payable
Summary The Company renegotiated bank covenants associated with its credit facility in June 2009. Company's debt obligations consisted of the following at 30 June 2009 and 31 December 2008:
2009 2008
US$ 000 US$ 000
Bank debt:
Five year secured reducing revolving line of credit 2,337 2,954
Five year secured term loan 2,300 7,501
Less debt obligations due within one year (460) (1,429)
Obligations due after one year 4,177 9,026
Credit Facility The Company has a credit facility with a bank dated 16 March 2007 that was amended in June 2009 and composed of the following at 30 June 2009:
* US$8,000,000 five year secured reducing revolving line of credit
* US$2,300,000 five year secured reducing term loan
In January 2009 the Company renegotiated its loan agreements with the bank to obtain concessions on its debt service covenant and its funded debt to EBITDA covenant. In return, the Company agreed to an immediate increase of 1.6% in its interest rate with a changed pricing grid that allowed for a further maximum increase of 1.75%. The Company's maximum revolving line of credit was set at US$8,000,000.
In June 2009, in conjunction with a private placement of $5,463,000 of new equity, the Company again renegotiated its loan agreements with the bank to obtain concessions on its debt service covenant and its funded debt to EBITDA covenant and paid off the remaining liability on its interest rate swaps at a cost of $615,000. As a result of
30 June
US$ 000
2009 230
2010 460
2011 460
2012 3,487
Total payments 4,637
Interest Interest expense on the credit facility for the six months ended 30 June 2009 and 30 June 2008 was approximately US$406,000 and US$454,000, respectively, related to the debt obligation. Additionally, there was $328,000 charged to interest expense as a result of the modification to the term loan.
6. Equity raise
The Company successfully raised $5.5m through a private placement in June 2009. The Company incurred approximately $517,000 in costs for the equity raise which were netted against the gross proceeds.
7. Operating Leases
The Company leases property, vehicles and office equipment under leases accounted for as operating leases without renewal options. Future minimum payments by year under non cancellable operating leases with initial terms in excess of one year were as follows:
30 June
US$ 000
2009 172
2010 296
2011 196
2012 162
2013 82
Total 908
Total rent expense under operating leases for the periods ended 30 June 2009 and 30 June 2008 was approximately US$184,000 and US$318,000.
8. Commitments and Contingencies
The Company has entered into employment agreements with certain members of senior management. The terms of these agreements range from six months to one year and include non-compete and nondisclosure provisions as well as providing for defined severance payments in the event of termination or change in control.
The Company entered into a 5 year or minimum purchase obligation of US$625,000 with a supplier as of 31 December 2007. There is a related contingent liability of US$38,000 to cancel the contract as of 30 June 2009 which declines over 5 years on a pro-rated basis.
The Company is subject to various unresolved legal actions which arise in the normal course of its business. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible losses, the Company believes these unresolved legal actions will not have a material effect on its financial statements.
9. Income Taxes
Somero adopted FIN 48 on 1 January 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This
pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
The Company's effective tax rate for the six months ended 30 June 2009 was 37.5% compared to the federal statutory rate of 34.0%. The effective tax rate is greater than the statutory rate mainly due to the effect of state and foreign taxes.
As of 30 June 2009, the Company had a gross unrecognized tax benefit (including interest and penalties) of $4,000. Accrued interest and penalties related to unrecognized tax benefits are no
10. Supplemental Cash Flow and Non-Cash Financing Disclosures
2009 2008
US$ 000 US$ 000
Cash paid for interest 734 457
Cash paid for taxes (86) 1,568
Non-cash financing activities - Change in fair value of derivative instruments 289 6
Accrued stock issuance costs 271 0
11. Intangible Assets
The following table reflects intangible assets that are subject to amortization under
the provisions of SFAS No. 142, Goodwill and Other Intangible Assets:
Weighted average 30 June 2009 31 December 2008
amortization US$ 000 US$ 000
period
Capitalized cost
Customer relationships 8 years 6,300 6,300
Patents 12 years 18,538 18,538
Other intangibles 3 years 4 4
24,842 24,842
Accumulated amortization
Customer relationships 8 years 3,084 2,691
Patents 12 years 6,051 5,278
Other intangibles 3 years 2 1
9,137 7,970
Net carrying costs
Customer relationships 8 years 3,216 3,609
Patents 12 years 12,487 13,260
Other intangibles 3 years 2 3
15,705 16,872
Amortization expense for the six months ended 30 June 2009 and 30 June 2008 was US$1,167,000 and US$1,166,000, respectively.
Estimated amortization expense on intangibles for the remainder of 2009 is US$1,165,000 and US$2,332,000 for each of the years ending 2010, 2011, 2012 and 2013.
12. Intangible Assets
As of 15 September 2009, Somero's Remuneration Committee has reviewed the alternatives for ensuring that management are appropriately incentivized to rebuild shareholder value and to be retained within the Group. The Remuneration Committee has agreed to the terms of a Stock Appreciation Rights Plan and no awards have been granted as of 15 September 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFDEELSUSESU
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