Company
Contact:
Wendy F. Clay
VP Administration, CPAC
Karen G. McCulley
Corp. Comm. Mgr, CPAC
585-382-3223
|
November 12, 2002 |
CPAC, INC. ANNOUNCES SECOND QUARTER
AND SIX MONTH RESULTS
LEICESTER, NY... November 12, 2002 - CPAC, Inc. (Nasdaq: CPAK), a manufacturer and marketer with holdings in the Cleaning & Personal Care and Imaging industries, today reported second quarter and six month results for Fiscal Year 2003 ended September 30, 2002 in line with guidance issued on October 14, 2002.
As previously announced, CPAC's Board of Directors declared a quarterly cash dividend in the amount of $0.07 per share payable on December 12, 2002 to shareholders of record at the close of business on November 22, 2002.
Consolidated Results
Net sales for the quarter were $23.8 million compared to $26.3 million for the same quarter last year. Net income was $523,000 or $0.10 per diluted share versus pro forma net income of $1.1 million or $0.22 per diluted share for the quarter ended September 30, 2001. Pro forma income and diluted earnings per share reflect the first quarter adoption of SFAS No. 142 "Goodwill and Other Intangible Assets" which resulted in a one-time non-cash charge (net of taxes) of $6.3 million or $1.22 per diluted share.
For the six months ending September 30, 2002, net sales were $48.4 million versus $50.5 million for the same period last year. Net income before the SFAS No. 142 adjustment was $1.2 million or $0.24 per diluted share versus pro forma income of $1.9 million or $0.36 per diluted share for the six-month period ended September 30, 2001. After the effect of SFAS No. 142, the Company reported a loss of $5.0 million or $0.98 per diluted share for the six-month period.
Thomas N. Hendrickson, CPAC's President and CEO, commented, "Revenues in the second quarter reflect the challenges imposed by the ongoing global economic slowdown on both segments of our business. In addition, we reviewed our relationship with a major distributor in Japan and as a result increased our allowance for doubtful accounts by the equivalent of $0.04 per diluted share. We remain committed to our marketing and sales initiatives while simultaneously continuing cost-cutting measures."
Fuller Brands
- Fuller Brush Company sales in the quarter exceeded prior year for the second consecutive quarter.
- Fuller Brush was named a "Partner of the Year" by Quixtar®, a top consumer-based e-retailer affiliated with Alticor.
- The Fuller Brush/QVC relationship continues to exceed expectations. A new "Fuller Brush Household Care Hour" program will be broadcast on December 22, 2002 at 7:00 P.M. EST with additional shows planned for the end of January 2003.
- Cleaning Technologies Group sales in the quarter were negatively affected by the weakened economy, as well as the ongoing effects of Kmart's Chapter 11 filing and resulting store closings.
Stanley Home Products sales were down 5% in the quarter over prior year.
Mr. Hendrickson commented, "Reduced consumer confidence and widespread unemployment are impacting many U.S. industries and the Fuller Brands segment is no exception. We remain committed to investments in high levels of customer support and service, as we believe these practices position us for renewed growth as the economy rebounds."
CPAC Imaging
- CPAC Imaging continues to benefit from our broadened relationship with TURA. We now manufacture and sell TURA-branded chemistry into Latin America. In addition, TURA USA carries Trebla-branded chemistry to complement its line of film and paper.
- In Healthcare Imaging, increased pricing pressures and lower overall demand has had a detrimental effect on chemical sales.
- Domestic color photochemical demand has decreased pursuant to a worldwide drop in film sales, which is related to the stagnant global economy and its impact on travel-related picture taking.
- CPAC Asia is expanding into new markets in Bangladesh, Sri Lanka, Australia, and Indonesia.
- CPAC Africa, which represents approximately 1.2% of total CPAC Imaging sales, is on track to achieve double-digit sales growth for the fiscal year, due to steadily increasing exports into sub-Saharan African markets.
Steven E. Baune, President of CPAC Imaging, commented, "Despite the continuance of the general worldwide economic slowdown, we believe we have maintained our market share versus our chemical manufacturing competitors."
Other Financial Information
Thomas J. Weldgen, CPAC's Chief Financial Officer, remarked, "We continue to exercise a conservative approach to our cash position. We began the fiscal year on April 1, 2002 with approximately $8.0 million in cash. By September 30, 2002, investments of $1.0 million were made in new property and equipment, $140,000 of debt was paid down, $197,000 was expended to repurchase CPAC stock in the marketplace, and dividends of $718,000 were distributed to shareholders. At September 30, 2002 the Company had $7.8 million in available cash, no outstanding balance on its $20 million corporate line of credit, working capital of $31.6 million, and a solid balance sheet."
About CPAC, Inc.
Established in 1969, CPAC, Inc. (cpac.com) manages holdings in two industries. CPAC's Global Imaging Group develops and markets innovative imaging chemicals, equipment, and supplies at eight business units worldwide. The Fuller Brands segment manufactures commercial, industrial, and household cleaning products, as well as custom brushes and personal care lines. 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, which 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.
(Tables Follow)
CPAC, Inc.
RESULTS OF OPERATIONS
SEPTEMBER 30, 2002, AND SEPTEMBER 30, 2001
(UNAUDITED)
| |
Three months ended
|
|
|
Six months ended |
|
|
| |
2002 |
2001 |
% change |
2002 |
2001 |
% change |
| |
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
Fuller Brands |
$ 14,290,560 |
$ 15,409,465 |
(7.3) |
$ 29,317,213 |
$ 30,194,556 |
(2.9) |
|
Imaging |
9,495,886 |
10,845,479 |
(12.4) |
19,090,911 |
20,341,511 |
(6.1) |
| |
|
|
|
|
|
|
|
Total sales: |
$ 23,786,446 |
$ 26,254,944 |
(9.4) |
$ 48,408,124 |
$ 50,536,067 |
(4.2) |
|
Income before cumulative
Change in accounting principle |
$ 522,702 |
$ 1,077,201 |
(51.5) |
$ 1,233,429 |
$ 1,785,140 |
(30.9) |
|
Cumulative effect of change
in accounting principle*
|
$ 0 |
$ 0 |
|
$ (6,281,251) |
$ 0 |
|
|
Net income |
$ 522,702 |
$ 1,077,201 |
(51.5) |
$ (5,047,822) |
$ 1,785,140 |
N/M |
| |
|
|
|
|
|
|
|
Income per common
share (diluted):
|
|
|
|
|
|
|
|
Before cumulative effect of
Change in accounting principle
|
$ 0.10 |
$ 0.21 |
(52.4) |
$ 0.24 |
$ 0.34 |
(29.4) |
|
Cumulative effect of change
in accounting principle*
|
$ 0 |
$ 0 |
|
$ (1.22) |
$ 0 |
|
|
Diluted net income per share |
$ 0.10 |
$ 0.21 |
(52.4) |
$ (0.98) |
$ 0.34 |
N/M |
| |
|
|
|
|
|
|
|
Weighted avg. number of common
shares outstanding (diluted)
|
5,132,626 |
5,230,298 |
(1.9) |
5,138,067 |
5,281,952 |
(2.7) |
|
|
|
|
|
|
|
|
|
*Adjustment reflects adoption of SFAS No. 142 "Goodwill and Other
Intangible Assets"
|
|
| |
CPAC, Inc.
SUPPLEMENTAL PRO FORMA INCOME COMPARISON
SEPTEMBER 30, 2002, AND SEPTEMBER 30, 2001
(UNAUDITED)
| |
Three months ended |
|
Six months ended |
|
| |
2002 |
2001 |
|
2002 |
2001 |
|
| |
|
|
|
|
|
|
|
Reported net income |
$ 522,702 |
$ 1,077,201 |
|
$ 1,233,429 |
$ 1,785,140 |
|
|
Add back: |
|
|
|
|
|
|
|
Goodwill amortization, net of tax |
$ 0 |
70,000 |
|
$ 0 |
$ 129,000 |
|
|
Cumulative effect of change
in accounting principle*
|
$ 0 |
$ 0 |
|
$ (6,281,251) |
$ 0 |
|
|
Pro forma income |
$ 522,702 |
$ 1,147,201 |
|
$ (5,047,822) |
$ 1,914,140 |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Basic earnings per share before cumulative effect of change in
accounting principle: |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Reported net income |
$ 0.10 |
$ 0.21 |
|
$ 0.24 |
$ 0.34 |
|
|
Add back: |
|
|
|
|
|
|
|
Goodwill amortization, net of tax |
$ 0 |
$ 0.01 |
|
$ 0 |
$ 0.02 |
|
|
Cumulative effect of change
in accounting principle*
|
$ 0 |
$ 0 |
|
$ ( 1.23) |
$ 0 |
|
|
Pro forma income |
$ 0.10 |
$ 0.22 |
|
$ (0.99) |
$ 0.36 |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Diluted earnings per share before
cumulative effect of change
in accounting principle:
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Reported net income (loss) |
$ 0.10 |
$ 0.21 |
|
$ 0.24 |
$ 0.34 |
|
|
Add back: |
|
|
|
|
|
|
|
Goodwill amortization, net of tax |
$ 0 |
$ 0.01 |
|
$ 0 |
$ 0.02 |
|
|
Cumulative effect of change
in accounting principle*
|
$____ |
___________ |
|
$ (1.22) |
___________ |
|
|
Pro forma income |
$ 0.10 |
$ 0.22 |
|
$ ( 0.98) |
$ 0.36 |
|
| |
|
|
|
|
|
|
|
*Adjustment reflects adoption of SFAS No. 142 "Goodwill and Other
Intangible Assets" |
|
|
CPAC, Inc.
SUPPLEMENTAL SEGMENT DATA
SEPTEMBER 30, 2002, AND SEPTEMBER 30, 2001
(UNAUDITED)
|
Three months ended 2002
|
|
|
|
| |
FULLER BRANDS |
IMAGING |
COMBINED |
| |
|
|
|
|
Net sales |
$ 14,290,560 |
$ 9,495,886 |
$ 23,786,446 |
|
Cost of sales |
7,160,153 |
5,980,334 |
13,140,487 |
|
Gross profit |
7,130,407 |
3,515,552 |
10,645,959 |
|
Selling, administrative and
Engineering expenses
|
5,989,883 |
3,350,649 |
9,340,532 |
|
Research and development
Expense
|
144,021 |
42,961 |
186,982 |
|
Operating income |
$ 996,503 |
$ 121,942 |
$ 1,118,445 |
|
Corporate income (loss) |
|
|
(99,557) |
|
Interest expense, net |
|
|
(135,186) |
|
Income before income taxes
and cumulative effect of change
in accounting principle*
|
|
|
$ 883,702 |
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Three months ended 2001
|
|
|
|
| |
FULLER BRANDS |
IMAGING |
COMBINED |
| |
|
|
|
|
Net sales |
$ 15,409,465 |
$ 10,845,479 |
$ 26,254,944 |
|
Cost of sales |
8,290,338 |
6,578,094 |
14,868,432 |
|
Gross profit |
7,119,127 |
4,267,385 |
11,386,512 |
|
Selling, administrative and
Engineering expenses
|
6,087,230 |
3,330,469 |
9,417,699 |
|
Research and development
expense
|
122,404 |
29,338 |
151,742 |
|
Operating income |
$ 909,493 |
$ 907,578 |
$ 1,817,071 |
|
Corporate income (loss) |
|
|
11,235 |
|
Interest expense, net |
|
|
(143,105) |
|
Income before income taxes
and cumulative effect of change
in accounting principle*
|
|
|
$ 1,685,201 |
| |
|
|
|
|
*Adjustment reflects adoption of SFAS No. 142
"Goodwill and Other Intangible Assets" |
CPAC, Inc.
SUPPLEMENTAL SEGMENT DATA
SEPTEMBER 30, 2002, AND SEPTEMBER 30, 2001
(UNAUDITED)
|
Six months ended 2002
|
|
|
|
| |
FULLER BRANDS |
IMAGING |
COMBINED |
| |
|
|
|
|
Net sales |
$ 29,317,213 |
$ 19,090,911 |
$ 48,408,124 |
|
Cost of sales |
14,441,343 |
12,069,789 |
26,511,132 |
|
Gross profit |
14,875,870 |
7,021,122 |
21,896,992 |
|
Selling, administrative and
Engineering expenses
|
12,688,021 |
6,500,551 |
19,188,572 |
|
Research and development
Expense
|
271,582 |
80,378 |
351,960 |
|
Operating income |
$ 1,916,267 |
$ 440,193 |
$ 2,356,460 |
|
Corporate income (loss) |
|
|
(127,247) |
|
Interest expense, net |
|
|
(260,784) |
|
Income before income taxes
and cumulative effect of change
in accounting principle*
|
|
|
$ 1,968,429 |
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Six months ended 2001
|
|
|
|
| |
FULLER BRANDS |
IMAGING |
COMBINED |
| |
|
|
|
|
Net sales |
$ 30,194,556 |
$ 20,341,511 |
$ 50,536,067 |
|
Cost of sales |
15,592,819 |
12,541,263 |
28,134,082 |
|
Gross profit |
14,601,737 |
7,800,248 |
22,401,985 |
|
Selling, administrative and
Engineering expenses
|
12,451,536 |
6,502,833 |
18,954,369 |
|
Research and development
expense
|
245,798 |
60,118 |
305,916 |
|
Operating income |
$ 1,904,403 |
$ 1,237,297 |
$ 3,141,700 |
|
Corporate income (loss) |
|
|
(51,950) |
|
Interest expense, net |
|
|
( 279,610) |
|
Income before income taxes
and cumulative effect of change
in accounting principle*
|
|
|
$ 2,810,140 |
| |
|
|
|
|
*Adjustment reflects adoption of SFAS No. 142 "Goodwill and Other
Intangible Assets" |
|
|
# # #
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