WAYNE, Pa. and AUSTIN, Texas, Dec. 10 /Xinhua-PRNewswire/ -- Ascend Acquisition Corp. ("Ascend") (OTC Bulletin Board: ASAQ, ASAQU, ASAQW), a specified purpose acquisition company, today announced the unaudited financial results for the three and nine months ended September 30, 2007, for its merger partner, e.PAK Resources (S) Pte. Ltd. ("ePAK").
Third Quarter Highlights
-- Net sales increased 31% year-over-year to $12.4 million
-- Gross profit rose 27% year-over-year to $4.1 million
-- Adjusted EBITDA increased 21% year-over-year to $2.0 million
-- Net income increased 41% year-over-year to $686,000
-- Tripled manufacturing space at Shenzhen facility to 600,000 square feet
-- Expanding cleanroom space by about 50% due to strong demand for wafer
and disk drive products
Third Quarter 2007 Results
In the third quarter of 2007, ePAK generated net sales of $12.4 million, up 31.2% from $9.4 million in the same quarter in 2006. This growth was primarily the result of a substantial increase in sales of wafer shippers, wafer transport media and data storage devices to new customers and an increase in sales to existing customers. Sales of IC handling products also increased during the quarter.
"Our third quarter results reflect strong demand for our wafer products from both new and existing customers, which translated into double-digit growth in revenues, adjusted EBITDA and profits," said Steve Dezso, ePAK's CEO. "We expect our margins to improve as wafer handling and other new consumable products represent a larger portion of our product mix going forward."
Don K. Rice, Chairman of the Board and CEO of Ascend, commented, "ePAK is a high growth, high margin business managed by semiconductor veterans who have operated successfully in China over the last 15 years. We believe ePAK will utilize the additional capital from the merger to continue to deliver exceptional financial performance well into the future."
Gross profit increased 26.6% in the third quarter of 2007 to $4.1 million. Gross margin was 33.1% in the third quarter of 2007, down from 34.3% in the same quarter of 2006. During the quarter, the increased contribution of higher margin wafer products to the product sales mix had a positive impact on gross margin, which was offset by higher materials costs for IC handling products.
Operating expenses were $3.0 million, up 19.4% from $2.5 million in the same quarter of 2006, primarily due to higher selling and administrative expenses in support of increased sales and increased costs at its manufacturing facilities in China. Operating expenses accounted for 24.5% of sales in the third quarter of 2007, down from 26.9% of sales in the year ago period.
Operating profit increased 52.5% to $1.1 million and adjusted EBITDA increased 20.6% to $2.0 million in the third quarter of 2007.
Net income was $686,000, up 41.4% from $485,000 in the same quarter of 2006. After an accretion of convertible contingently redeemable common shares, which will be eliminated following the close of ePAK's merger with Ascend, net income attributable to common shareholders was $245,000, up from $43,000 in the third quarter of 2006.
Nine-Month Results
Net sales for first nine months of 2007 increased 25.6% to $32.8 million, compared to $26.1 million in the first nine months of 2006. Gross profit increased 18.9% to $11.3 million, up from $9.5 million in the first nine months of 2006. Gross margin was 34.3%, compared to 36.2% in the first nine months of 2006. Operating profit increased 29.4% to $2.9 million and adjusted EBITDA increased 19.1% to $5.0 million in the first nine months of 2007. Net income was $1.8 million, up 14.4% from $1.6 million in the first nine months of 2006. After an accretion of convertible contingently redeemable common shares, net income attributable to common shareholders was $359,000, up from $61,000 in the first nine months of 2006.
Financial Condition
At September 30, 2007, ePAK had cash and cash equivalents of $1.9 million, total assets of $38.0 million and short-term bank borrowings of $5.1 million. The Company generated $10.7 million in cash flow from operating activities in the first nine months of 2007.
Outlook
"In the coming months, we will continue to reinvest our growing cash flows into our business in order to meet the rapidly rising demand for our products and minimize the impact of our capacity constraints," Mr. Dezso said. "We look forward to the closing of the merger with Ascend, which will allow us to make the capital investments we need to fully take advantage of the multiple growth opportunities available to us."
"We are confident that our shareholders will agree that ePAK provides an attractive opportunity to invest in the rapidly growing $40 billion semiconductor materials market," Mr. Rice said. "Ascend's planned merger with ePAK meets the 80% valuation test and is fair based on industry comparables. This transaction is structured for aggressive growth, in which all of the cash at closing and from the warrant conversion will be available for ePAK's continued growth."
In July 2007, Ascend entered into a definitive agreement to merge with ePAK. Under the terms of the agreement, at the closing of the transaction, Ascend will reincorporate as a Bermuda public company and acquire 100% of the outstanding capital stock of ePAK. Upon completion of the transaction, which is expected in the first quarter of 2008, the resulting public company will be domiciled in Bermuda and renamed ePAK International Ltd. It is expected that ePAK International's common stock and warrants will trade on the NASDAQ Global Market.
Additional Information
The parties have filed with the SEC a registration statement and proxy statement under Form S-4 in connection with the proposed acquisition of ePAK and reincorporation of Ascend in Bermuda. STOCKHOLDERS OF ASCEND AND OTHER INTERESTED PERSONS ARE ADVISED TO READ, WHEN AVAILABLE, THE FINAL PROSPECTUS AND DEFINITIVE PROXY STATEMENT IN CONNECTION WITH THE TRANSACTIONS AND THE SOLICITATION OF PROXIES FOR THE SPECIAL MEETING OF ASCEND'S STOCKHOLDERS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
The final prospectus and definitive proxy statement will be mailed to Ascend's stockholder as of a record date to be established for voting on the acquisition and redomestication. These documents also will be available without charge online at the Securities and Exchange Commission's Internet site (http://www.sec.gov) and by mail through requests to Ascend Acquisition Corp., 435 Devon Park Drive, Bldg. 400 Wayne, PA 19087, Attention: T. Anderson.
Stockholders and other interested persons can also read Ascend's final prospectus, dated May 11, 2006, for a description of the security holdings of Ascend's directors and officers and of EarlyBirdCapital, Inc., the underwriters of Ascend's initial public offering, and their respective interests in the successful consummation of the proposed transactions.
Use of Non-GAAP Financial Information
This press release contains adjusted EBITDA, a financial measure that is not defined by US GAAP. Adjusted EBITDA was derived by calculating earnings before interest, taxes, depreciation and amortization and non-cash charges including share based compensation, and provisions for bad debt and inventory. The Company's management uses adjusted EBITDA as an important financial measure to assess the ability of ePAK's assets to generate cash sufficient to pay interest on its indebtedness, meet capital expenditure and working capital requirements, and otherwise meet its obligations as they become due. The Company's management believes that the presentation of adjusted EBITDA provides useful information regarding ePAK's results of operations because it assists in analyzing and benchmarking the performance and value of ePAK's business. The Company's calculation of adjusted EBITDA may not be consistent with similarly titled measures of other companies. The table below presents a reconciliation of adjusted EBITDA to net income, its most directly comparable U.S. GAAP financial measure, on a historical basis, for the periods presented.
About e.PAK Resources (S) Pte. Ltd.
ePAK is a full-service designer, manufacturer and supplier of precision engineered products and solutions for the automated transport and handling of semiconductor and electronic devices. ePAK's product areas include front-end wafer handling, back-end IC transport, and end-system sub-assembly handling. The Company's products are sold globally to top tier global customers including semiconductor companies, system OEMs, and IC assembly and test operations. The Company's low cost, large-scale manufacturing operations in Shenzhen, the People's Republic of China ("PRC") are centrally located to the semiconductor industry. ePAK's executive offices are located in Austin, Texas and the Company maintains nine sales and applications engineering offices worldwide.
About Ascend Acquisition Corporation
Ascend Acquisition Corp. was formed on December 5, 2005 for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business. Ascend's registration statement for its initial public offering was declared effective on May 11, 2006 and the offering closed on May 22, 2006, generating net proceeds of approximately $38.5 million from the sale of 6.9 million units, including the full exercise of the underwriters' over-allotment option and the sale of 166,667 units to the Ascend's Chairman and CEO, Don K. Rice. Each unit was comprised of one share of Ascend common stock and two warrants, each with an exercise price of $5.00. As of September 30, 2007, Ascend held approximately $40.3 million in a trust account maintained by an independent trustee, which will be released to Ascend upon the consummation of the business combination.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Ascend, ePAK and their combined business after completion of the proposed business combination. These forward-looking statements are based on current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, Ascend's ability to effect a business combination, ePAK's ability to grow future revenues and earnings, changes in demand for ePAK's products, market acceptance of the ePAK's products, changes in the laws of the People's Republic of China that affect ePAK's operations, and other factors that may be detailed from time to time in Ascend's filings with the United States Securities and Exchange Commission and other regulatory authorities.
e.PAK RESOURCES AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(United States dollars in thousands)
Three Months Nine Months
ended ended
September 30, September 30,
2007 2006 2007 2006
(Unaudited)(Unaudited) (Unaudited)(Unaudited)
Net sales $12,355 $9,420 $32,818 $26,131
Cost of sales (8,260) (6,185) (21,564) (16,667)
Gross profit 4,095 3,235 11,254 9,464
Selling, general and
administrative
expenses (2,953) (2,488) (8,210) (7,102)
Research and development (70) (44) (165) (137)
Operating profit 1,072 703 2,879 2,225
Interest income 5 5 15 14
Other income 3 3 8 15
Interest expense (112) (102) (351) (236)
Other expense (118) (47) (324) (194)
Income before income taxes 850 562 2,227 1,824
Income tax expense (164) (77) (389) (218)
Net income 686 485 1,838 1,606
Accretion of convertible
contingently redeemable
common shares (441) (442) (1,479) (1,545)
Net income attributable to
common shareholders $245 $43 $359 $61
e.PAK RESOURCES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(United States dollars in thousands)
September 30, December 31,
2007 2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $1,501 $2,624
Restricted cash and cash equivalents 395 381
Accounts receivable, net 9,090 6,535
Inventories 9,559 8,994
Deferred tax assets 7 8
Other current assets 765 462
Total current assets 21,317 19,004
Long-term deposits 13 13
Property, plant and equipment, net 16,686 14,506
Total assets $38,016 $33,523
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities:
Accounts payable $11,213 $9,432
Accrued liabilities 1,897 1,571
Current maturities of long-term debt 709 501
Short-term borrowings 5,139 4,964
Short-term loan from Parent Company 4,807 4,903
Income taxes payable 1,144 930
Total current liabilities 24,909 22,301
Non-current liabilities:
Long-term debt, less current
maturities 901 1,061
Deferred tax liabilities 338 147
Redeemable common shares:
Convertible contingently redeemable
common shares 25,685 24,205
Shareholders' deficit:
Common shares 400 400
Common share warrants -- 19
Accumulated deficit (14,251) (14,698)
Non-distributable reserves 121 121
Accumulated other comprehensive loss (87) (33)
Total shareholders' deficit (13,817) (14,191)
Total liabilities and shareholders'
deficit $38,016 $33,523
e.PAK RESOURCES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States dollars in thousands)
9 Months ended September 30,
2007 2006
Cash flows from operating activities Unaudited Unaudited
Net income $1,838 $1,606
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation of property,
plant and equipment 2,049 1,728
Share-based compensation 69 225
Write-off of inventory 253 188
Provision for bad debt -- 6
Deferred tax expenses 192 108
Unrealized exchange
differences 102 35
Increase (decrease) in cash
from changes in:
Accounts receivable (2,555) (318)
Inventories (819) (2,047)
Due from Parent Company -- 125
Other current assets (303) (477)
Accounts payable 9,319 7,101
Accrued liabilities 331 (93)
Income tax payables 214 86
Net cash flows provided
by operating activities 10,690 8,273
Cash flows from investing activities
Purchase of property, plant
and equipment (3,435) (3,607)
Net cash flows used in
investing activities (3,435) (3,607)
Cash flows from financing activities
Increase in restricted cash
and cash equivalents (14) (12)
Proceeds from short-term
borrowings 15,280 13,987
Repayment of short-term
borrowings (23,540) (18,741)
Proceeds from long-term debt 490 600
Repayment of long-term debt (442) (248)
Repayment of loans from Parent
Company (96) (139)
Net cash flows used in
financing activities (8,322) (4,553)
Net (decrease) increase
in cash and cash
equivalents (1,067) 113
Cash and cash equivalents at
beginning of period 2,624 1,979
Effects of exchange rates on cash
and cash equivalents (56) (21)
Cash and cash equivalents at end of
period $1,501 $2,071
Supplemental cash flow disclosures :
Cash paid for interest 351 236
Cash Paid for income taxes 4 22
Non-cash purchase of property,
plant and equipment through
accounts payable 794 553
Non-cash settlement of
accounts payable through
issuance of notes payable 8,435 6,303
e.PAK RESOURCES (S) PTE. LTD. AND SUBSIDIARIES
Reconciliation of Net Income to Adjusted EBITDA
(Amounts expressed in United States dollars, in thousands; US GAAP)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Net income $686 $485 $1,838 $1,606
Income taxes 164 77 389 218
Interest 107 97 336 222
Depreciation and
amortization 713 765 2,049 1,728
Non-cash items 289 200 424 454
Adjusted EBITDA $1,959 $1,624 $5,036 $4,228
