EX-99.1 2 b74892ccexv99w1.htm EX-99.1 H3C - SUMMARY FINANCIAL INFORMATION PROVIDED TO BANK LENDERS exv99w1
EXHIBIT 99.1
H3C Summary Financial Information Provided to Bank Lenders
H3C Holdings Limited
For the Fiscal Years Ended December 31, 2008 and 2007
(Audited; amounts in thousands except percentages)
Unit: US$K for Amounts
                         
        Items   FY 2007   FY 2008
  (1 )  
Sales
   $ 755,499     $ 884,959  
  (2 )  
Gross profit
   $ 382,427     $ 524,150  
  (3 )  
Gross profit as a percent of sales
     50.6 %     59.2 %
  (4 )  
Consolidated Adjusted EBITDA (a)
   $ 211,187     $ 311,372  
  (5 )  
Consolidated Adjusted EBITDA as a percent of sales
     28.0 %     35.2 %
  (6 )  
Taxes
   $ 13,784     $ 17,419  
  (7 )  
Deferred income tax
     ($231 )     ($14,289 )
  (8 )  
Consolidated Net Income (a)
     ($23,920 )   $ 164,035  
  (9 )  
Net Income based on GAAP
     ($23,920 )   $ 164,035  
  (10 )  
Cash, Cash equivalents and short term investments
   $ 387,721     $ 528,677  
  (11 )  
Net property plant and equipment
   $ 22,873     $ 14,264  
  (12 )  
Consolidated Working Capital (a)
     ($5,154 )     ($35,907 )
  (13 )  
Consolidated Capital Expenditures (a)
   $ 7,766     $ 6,779  
  (14 )  
Consolidated Capital Expenditures as a percent of sales
     1.0 %     0.8 %
  (15 )  
Increase (decrease) in Consolidated Working Capital
   $ 44,374       ($30,753 )
  (16 )  
The result of Consolidated Adjusted EBITDA less Consolidated Working Capital
   $ 216,341     $ 347,279  
 
(a)   These are Non-GAAP financial measures. Where the measure differs from its most comparable GAAP measure, a reconciliation to the most comparable GAAP measure has been provided on next page.

 

 

Reconciliation of Consolidated Adjusted EBITDA to Net Income based on GAAP:
                 
    FY 2007     FY 2008  
Net Income based on GAAP
     ($23,920 )   $ 164,035  
 
                
Add:
                
Minority Interest (Huawei’s 49% portion of H3C’s net income)
     ($12,516 )   $ 0  
Purchase accounting adjustment for H3C acquisition transaction
   $ 38,926     $ 0  
Consolidated Net Interest Expense
   $ 23,608     $ 17,534  
Provisions for taxes based on income
   $ 14,120     $ 17,419  
Total depreciation expense
   $ 21,817     $ 15,640  
Total amortization expense
   $ 68,070     $ 97,412  
EARP expense due to the change of control
   $ 68,227     $ 0  
Other non-cash items reducing Consolidated Net Income (consists primarily of amortization of stepped-up inventory from purchase accounting for H3C acquisition transaction)
   $ 12,855     $ 227  
 
                
Less:
                
Other non-cash items increasing Consolidated Net Income
   $ 0     $ 895  
 
            
 
                
Consolidated Adjusted EBITDA
   $ 211,187     $ 311,372  
 
            
Reconciliation of Consolidated Working Capital to Working Capital based on GAAP:
                 
    FY 2007     FY 2008  
Working Capital based on GAAP
   $ 227,972     $ 358,975  
Less:
                
Cash & Cash equivalent
   $ 281,126     $ 281,126  
Current portion of Long Term Debt
     ($48,000 )     ($48,000 )
 
            
 
                
Consolidated Working Capital
     ($5,154 )   $ 125,849  
 
            
Defined terms have the definitions ascribed to such terms in the Company’s senior secured credit agreement.