Symmetry Medical Inc. (SMA, Financial) filed Quarterly Report for the period ended 2010-04-03.
Symmetry Medical Inc. has a market cap of $397.8 million; its shares were traded at around $11.1 with a P/E ratio of 21.8 and P/S ratio of 1.1. SMA is in the portfolios of Richard Blum of Blum Capital Partners, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Chuck Royce of Royce& Associates.
Facility Consolidation and Severance Costs. Results of Operations include net pre-tax charges of $0.5 million and $0.1 million for the three months ended April 3, 2010 and April 4, 2009, respectively, associated with employee cost reduction and efficiency actions and the consolidation of our Auburn, ME facilities into other facilities that produce similar products. For the period ended April 3, 2010, these costs are comprised of $0.3 million of severance costs and an additional $0.2 million of moving expenses compared to $0.1 million of severance costs for the period ended April 4, 2009. Costs charged to operations in the first three months of 2010 associated with severance of $0.3 million are included in accrued and other liabilities in the consolidated balance sheet as of April 3, 2010, as well as $0.1 million of costs incurred during fiscal 2009 that have not yet been paid. These costs are all expected to be paid during 2010.
Other (Income) Expense. Interest expense for the three month period ended April 3, 2010 decreased $0.2 million, or 14.1%, to $1.6 million from $1.8 million for the comparable period in 2009. This decrease reflects the general decline in the interest rate market in the first quarter 2010 as compared to 2009. Additionally, aggregate outstanding indebtedness has decreased $41.9 million, or 30.9% as compared to April 4, 2009. The net derivatives gain in first quarter 2010 consists of a gain on interest rate swap valuation of $0.3 million related to our interest rate swap that has not been designated as a hedge as compared to a gain of $0.4 million for the comparable period in 2009. The interest rate swaps are used to convert our variable rate long-term debt to fixed rates. Other expense for the three month period ended April 3, 2010 increased $0.5 million from the comparable period in 2009, from a gain of $0.3 million to a loss of $0.2 million, due to unfavorable foreign exchange rate fluctuations on transactions denominated in foreign currencies.
Operating Activities. Operating activities generated cash of $2.7 million in the three month period ended April 3, 2010 compared to $9.5 million for the three month period ended April 4, 2009, a decrease of $6.8 million. The decrease in cash from operations is primarily a result of a reduction in net income due to lower revenue. Net cash used by working capital for the three month period ended April 3, 2010 was $0.7 million higher than the comparable 2009 period.
Financing Activities. Financing activities used $2.7 million of cash in the three month period ended April 3, 2010 compared to cash generated of $4.1 million in the three month period ended April 4, 2009, due primarily to payments on long-term debt, capital leases and our revolving line of credit, partially offset by cash received from a new asset-based 24 month term note of $2.7 million at our Sheffield, UK facility.
As of April 3, 2010, we had an aggregate of $93.7 million of outstanding indebtedness, which consisted of $84.5 million of term loan borrowings outstanding under our Senior Credit Agreement, $2.0 million of borrowings outstanding under our revolving credit facility, $2.7 million of borrowings under our new UK asset-based 24-month term note, $1.2 million of borrowings under our Malaysia short-term credit facility, and $3.3 million of capital lease obligations. We had two outstanding letters of credit as of April 3, 2010 in the amounts of $3.5 million and $0.2 million.
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Symmetry Medical Inc. has a market cap of $397.8 million; its shares were traded at around $11.1 with a P/E ratio of 21.8 and P/S ratio of 1.1. SMA is in the portfolios of Richard Blum of Blum Capital Partners, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
Gross Profit. Gross profit for the three month period ended April 3, 2010 decreased $7.5 million, or 30.6%, to $17.0 million from $24.6 million for the comparable 2009 period primarily due to the decline in revenue of 16.7%. Additionally, there was a decreased number of large volume projects from our top customers, which resulted in increased overhead costs as a percentage of revenue as well as unfavorable product mix. Gross margin as a percentage of revenue for the first quarter 2010 was 20.2% compared to 24.2% in the same period last year. Although consolidated gross profit as a percentage of revenue for the first quarter 2010 was down compared to the same period last year, we recognized improved operational performance at our Sheffield, UK operating unit, as indicated by a 14.5% increase in its gross margin due to the favorable impacts of our headcount reduction initiatives and improved manufacturing processes.Facility Consolidation and Severance Costs. Results of Operations include net pre-tax charges of $0.5 million and $0.1 million for the three months ended April 3, 2010 and April 4, 2009, respectively, associated with employee cost reduction and efficiency actions and the consolidation of our Auburn, ME facilities into other facilities that produce similar products. For the period ended April 3, 2010, these costs are comprised of $0.3 million of severance costs and an additional $0.2 million of moving expenses compared to $0.1 million of severance costs for the period ended April 4, 2009. Costs charged to operations in the first three months of 2010 associated with severance of $0.3 million are included in accrued and other liabilities in the consolidated balance sheet as of April 3, 2010, as well as $0.1 million of costs incurred during fiscal 2009 that have not yet been paid. These costs are all expected to be paid during 2010.
Other (Income) Expense. Interest expense for the three month period ended April 3, 2010 decreased $0.2 million, or 14.1%, to $1.6 million from $1.8 million for the comparable period in 2009. This decrease reflects the general decline in the interest rate market in the first quarter 2010 as compared to 2009. Additionally, aggregate outstanding indebtedness has decreased $41.9 million, or 30.9% as compared to April 4, 2009. The net derivatives gain in first quarter 2010 consists of a gain on interest rate swap valuation of $0.3 million related to our interest rate swap that has not been designated as a hedge as compared to a gain of $0.4 million for the comparable period in 2009. The interest rate swaps are used to convert our variable rate long-term debt to fixed rates. Other expense for the three month period ended April 3, 2010 increased $0.5 million from the comparable period in 2009, from a gain of $0.3 million to a loss of $0.2 million, due to unfavorable foreign exchange rate fluctuations on transactions denominated in foreign currencies.
Operating Activities. Operating activities generated cash of $2.7 million in the three month period ended April 3, 2010 compared to $9.5 million for the three month period ended April 4, 2009, a decrease of $6.8 million. The decrease in cash from operations is primarily a result of a reduction in net income due to lower revenue. Net cash used by working capital for the three month period ended April 3, 2010 was $0.7 million higher than the comparable 2009 period.
Financing Activities. Financing activities used $2.7 million of cash in the three month period ended April 3, 2010 compared to cash generated of $4.1 million in the three month period ended April 4, 2009, due primarily to payments on long-term debt, capital leases and our revolving line of credit, partially offset by cash received from a new asset-based 24 month term note of $2.7 million at our Sheffield, UK facility.
As of April 3, 2010, we had an aggregate of $93.7 million of outstanding indebtedness, which consisted of $84.5 million of term loan borrowings outstanding under our Senior Credit Agreement, $2.0 million of borrowings outstanding under our revolving credit facility, $2.7 million of borrowings under our new UK asset-based 24-month term note, $1.2 million of borrowings under our Malaysia short-term credit facility, and $3.3 million of capital lease obligations. We had two outstanding letters of credit as of April 3, 2010 in the amounts of $3.5 million and $0.2 million.
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