CPAC, Inc. Announces Fourth Quarter and Full-Year Results
LEICESTER, N.Y., June 29 /PRNewswire-FirstCall/ -- CPAC, Inc.
(NASDAQ:CPAK) today reported fourth quarter and full-year results
for the fiscal year ended March 31, 2004. These results reflect an
impairment loss related to the Company's minority equity investment
in a German company. On June 10, 2004 the Board of Directors
declared a quarterly cash dividend in the amount of $0.07 per
share, payable on June 28, 2004 to shareholders of record at the
close of business on June 21, 2004. Q4 Consolidated Results Net
sales for the fourth quarter totaled $22.8 million compared to
$23.2 million for the same quarter last year, a decrease of 1.8% (a
4.4% decrease excluding the impact of foreign currency exchange.)
During the fourth quarter, the Company recognized a $2.3 million
impairment charge ($0.47 per diluted share) related to the carrying
value of its investment in TURA AG, a German photographic paper
distributor, which has sustained continuing operating losses over
the last 18 months. This charge was agreed to by consensus, as
TURA's financial difficulties are believed to be other than
temporary. While cross-distribution agreements with TURA have
brought increased market opportunities, the changing worldwide
Imaging marketplace, coupled with TURA's strained financial
condition, makes the future economic benefits of this relationship
uncertain at this time. The Company also incurred expenses in the
quarter of $144,000 related to the consolidation of its domestic
Imaging facilities that impacted earnings by approximately $(0.02)
per diluted share. The Company's consolidated net loss was $(2.7)
million or $(0.55) per diluted share for the fourth quarter.
Exclusive of these non-recurring items, the Company lost
approximately $(308,000) or $(0.06) per diluted share during the
quarter ended March 31, 2004 versus net income of $431,000 or $0.09
per diluted share for the same period last year (see supplemental
note.) "CPAC continues to focus on its long term objectives in both
segments," said Thomas N. Hendrickson, CPAC's President and CEO.
"In Fuller Brands, the focus is on entry into retail and other new
channels with our recognized brands. In Imaging, our initiatives
include domestic cost reduction and international expansion. While
positioning the Company for future success, additional costs and
resources associated with the execution of these strategies
continued in the fourth quarter and throughout fiscal '04. We
expect a return to profitability in fiscal '05." Q4 Results and
Highlights by Segment Fuller Brands Segment Fourth quarter net
sales in the Fuller Brands segment were $12.9 million versus $13.3
million last year. Operating profit for the period was $144,000
compared with $516,000 for the fourth quarter of fiscal 2003. --
The Fuller Brush Company sales were up 7% versus prior year's
fourth quarter, due to increases in its television home shopping
and retail store initiatives. Profits in the quarter were impacted
by the loss of a significant OEM customer and start-up costs for
its retail initiative. -- Cleaning Technologies Group (CTG) sales
were off by 12% for the quarter, largely the result of lower
distributor sales to school districts and a reduction in floor care
products sales. -- Stanley Home Products sales were down 3%.
Imaging Segment Fourth quarter Imaging segment sales were flat at
$9.9 million versus $9.9 million last year (a decrease of 6.5%
excluding the impact of foreign currency exchange.) Operating loss
was $(222,000) compared with operating income of $236,000 in last
year's fourth quarter. -- The strength of the Euro against the
dollar continued to create unfavorable export pricing in operations
in Belgium and Italy, and made the sale of German-made (TURA)
products into its export markets cost prohibitive. -- CPAC Asia
reported double-digit sales increases versus the prior year. --
CPAC Africa, the smallest of CPAC's international operations,
continued its strong move into the Health Care market with
significant new private-label accounts. Full Year Results -- For
the twelve months ended March 31, 2004, net sales decreased 5.5% to
$90.0 million versus $95.3 million for the same period last year (a
7.5% decrease excluding the impact of foreign currency exchange.)
-- On April 1, 2003 the Company had approximately $9.9 million in
cash on hand. During this fiscal year, $2.7 million was invested in
new property and equipment, debt in the amount of $862,000 was
retired, and shareholder dividends of $1.4 million were
distributed. On March 31, 2004 the Company had $7.7 million in cash
and working capital of $30.0 million. -- For the full year, the
Company recorded restructuring expenses of $0.15 per diluted share
related to its Imaging consolidation; a loss of $0.12 per diluted
share due to its equity in losses of TURA; and a charge of $0.47
per diluted share in recognition of the TURA investment impairment
charge. -- The Company reported a net loss of $(3.4) million or
$(0.68) per diluted share for FY '04. Comparatively, in FY '03,
CPAC, Inc. adopted SFAS No. 142, "Goodwill and Other Intangible
Assets" and, after accounting for this change, reported a full year
net loss of $(4.2) million or $(0.84) per diluted share. About
CPAC, Inc. Established in 1969, CPAC, Inc. (http://cpac.com/)
manages holdings in two industries. The Fuller Brands segment
manufactures commercial, industrial, and household cleaning
products, as well as custom brushes and personal care lines. The
CPAC Imaging segment develops and markets innovative Imaging
chemicals, equipment, and supplies at eight operations worldwide.
Products are sold under more than 350 registered trademarks. Stock
is traded under the symbol: CPAK. Except for the historical matters
contained herein, statements in this press release are
forward-looking and are made pursuant to the safe harbor provisions
of the Securities Litigation Reform Act of 1995. Investors are
cautioned that forward-looking statements involve risks and
uncertainties that may affect CPAC's business and prospects,
including economic, competitive, governmental, technological, and
other factors discussed in CPAC's filings with the Securities and
Exchange Commission. CPAC, Inc. RESULTS OF OPERATIONS DATA MARCH
31, 2004 and MARCH 31, 2003 (UNAUDITED) Three months ended 2004
2003 % change Net sales: Fuller Brands $12,938,689 $13,328,957
(2.9) Imaging 9,850,801 9,867,403 (0.2) Total sales: $22,789,490
$23,196,360 (1.8) Income (loss) before cumulative effect of change
in accounting principle $(2,713,911) $430,850** N/M Cumulative
effect of change in accounting principle* $0 $0 Net income (loss)
$(2,713,911) $430,850** N/M Income (loss) per common share
(diluted): Before cumulative effect of change in accounting
principle $(0.55) $0.09** N/M Cumulative effect of change in
accounting principle* $0.00 $0.00 Diluted net income (loss) per
share $(0.55) $0.09** N/M Diluted shares outstanding 4,946,774
4,975,733 (0.6) Twelve months ended 2004 2003 % change Net sales:
Fuller Brands $52,101,111 $56,068,290 (7.1) Imaging 37,909,634
39,222,050 (3.3) Total sales: $90,010,745 $95,290,340 (5.5) Income
(loss) before cumulative effect of change in accounting principle
$(3,349,540) $2,041,435** N/M Cumulative effect of change in
accounting principle* $0 $(6,281,251) N/M Net income (loss)
$(3,349,540) $(4,239,816)** N/M Income (loss) per common share
(diluted): Before cumulative effect of change in accounting
principle $(0.68) $0.40* N/M Cumulative effect of change in
accounting principle* $0.00 $(1.24) N/M Diluted net income (loss)
per share $(0.68) $(0.84)** N/M Diluted shares outstanding
4,945,717 5,077,728 (2.6) SUPPLEMENTAL NOTES: * Adjustment reflects
adoption of SFAS No. 142 "Goodwill and Other Intangible Assets" **
Restated as required by GAAP to present the impact of a change to
the equity method of accounting for the increased investment in
TURA AG. CPAC, Inc. SUPPLEMENTAL SEGMENT DATA MARCH 31, 2004 and
MARCH 31, 2003 (UNAUDITED) Three months ended March, 2004 FULLER
BRANDS IMAGING COMBINED Net sales $12,938,689 $9,850,801
$22,789,490 Cost of sales 6,933,445 6,584,803 13,518,248 Gross
profits 6,005,244 3,265,998 9,271,242 Selling, administrative and
engineering expenses 5,707,853 3,282,398 8,990,251 Restructuring
expenses 144,352 144,352 Research and development expense 153,624
61,596 215,220 Operating income (loss) $143,767 $(222,348) (78,581)
Corporate income 15,063 Interest expense, net (73,294) Loss before
non-operating expense and income taxes (136,812) Non-operating
expense: Minority interests (86,453) Equity in loss of affiliate,
net of impairment charge (2,680,646) (2,767,099) Loss before income
taxes (2,903,911) Income tax benefit (190,000) Net loss
$(2,713,911) Three months ended March, 2003 FULLER BRANDS IMAGING
COMBINED Net sales $13,328,957 $9,867,403 $23,196,360 Cost of sales
6,797,856 6,069,048 12,866,904 Gross profits 6,531,101 3,798,355
10,329,456 Selling, administrative and engineering expenses
5,896,033 3,529,091 9,425,124 Restructuring expenses Research and
development expense 118,795 33,662 152,457 Operating income
$516,273 $235,602 $751,875 Corporate expense (75,355) Interest
expense, net (47,400) Income before non-operating expense and
income taxes 629,120 Non-operating expense: Minority interests
(82,801) Equity in loss of affiliate (56,469) (139,270) Income
before income taxes 489,850 Income tax expense 59,000 Net income **
$430,850 SUPPLEMENTAL NOTES: ** In April 2003, the Company
increased its investment in affiliate to 40% and, in accordance
with APB 18, adopted the equity method of accounting. 2003
financial statements have been restated to account for the previous
19% ownership, as if it had been accounted for under the equity
method. CPAC, Inc. SUPPLEMENTAL SEGMENT DATA MARCH 31, 2004 and
MARCH 31, 2003 (UNAUDITED) Twelve months ended March, 2004 FULLER
BRANDS IMAGING COMBINED Net sales $52,101,111 $37,909,634
$90,010,745 Cost of sales 26,850,471 24,420,366 51,270,837 Gross
profits 25,250,640 13,489,268 38,739,908 Selling, administrative
and engineering expenses 23,574,488 13,336,212 36,910,700
Restructuring expenses 1,275,349 1,275,349 Research and development
expense 568,135 166,430 734,565 Operating income (loss) $1,108,017
$(1,288,723) (180,706) Corporate expense (42,986) Interest expense,
net (460,899) Loss before non-operating expense, income tax, and
cumulative effect of change in accounting principle (684,591)
Non-operating expense: Minority interests (219,372) Equity in loss
of affiliate, net of impairment charge (2,914,577) (3,133,949) Loss
before income taxes and cumulative effect of change in accounting
principle (3,818,540) Income tax benefit (469,000) Loss before
cumulative effect of change in accounting principle (3,349,540)
Cumulative effect of change in accounting principle Net loss
$(3,349,540) Twelve months ended March, 2003 FULLER BRANDS IMAGING
COMBINED Net sales $56,068,290 $39,222,050 $95,290,340 Cost of
sales 27,838,340 24,528,915 52,367,255 Gross profits 28,229,950
14,693,135 42,923,085 Selling, administrative and engineering
expenses 24,888,352 13,260,280 38,148,632 Restructuring expenses
Research and development expense 502,871 150,424 653,295 Operating
income $2,838,727 $1,282,431 4,121,158 Corporate expense (246,239)
Interest expense, net (446,812) Income before non-operating income,
income tax, and cumulative effect of change in accounting principle
3,428,107 Non-operating income: Minority interests (151,088) Equity
in loss of affiliate (179,584) (330,672) Income before income taxes
and cumulative effect of change in accounting principle 3,097,435
Income tax expense 1,056,000 Income before cumulative effect of
change in accounting principle 2,041,435 Cumulative effect of
change in accounting principle (6,281,251) Net loss ** $(4,239,816)
SUPPLEMENTAL NOTES: ** In April 2003, the Company increased its
investment in affiliate to 40% and, in accordance with APB 18,
adopted the equity method of accounting. 2003 financial statements
have been restated to account for the previous 19% ownership, as if
it had been accounted for under the equity method. DATASOURCE:
CPAC, Inc. CONTACT: Karen G. McCulley, Mgr., Corp Comm, or Wendy F.
Clay, VP, Admin, both of CPAC, Inc., +1-585-382-3223 Web site:
http://www.cpac.com/
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