Watson General/USTMAN Reports First Quarter Fiscal 1998 Results
LAKEWOOD, Colo.--(BUSINESS WIRE)--Nov. 14, 1997--Watson General/USTMAN (Nasdaq:WGEN - news)reported financial results for the first quarter of fiscal 1998, ended Sept. 30, 1997.
For the first quarter compared with the same quarter in the prior year, sales increased 179 percent to $1,560,000. The net loss was $554,000 or 3 cents per share compared with a net loss of $652,000 or 6 cents per share.
In July 1997, the company changed its fiscal year end from Sept. 30 to June 30.
''The increase in sales is due primarily to the acquisition of Ustman Industries in May 1997,'' said Dan Cook, president.
''Gross margins of 63 percent were achieved by focusing our business on Statistical Inventory Reconciliation (SIR) services. The loss for the quarter included approximately $312,000 for transitioning operations from Kansas City and Irvine to Denver. These costs should be significantly reduced in the second quarter.''
Cook noted that considering the elimination of the transitioning costs and depreciation and amortization charges of $391,000 for the first quarter on an ongoing basis, the company would have achieved positive cash flow during the quarter.
Subsequent to the Watson General/Ustman combination, the company implemented a strategic plan to reposition itself in pursuit of its most significant market opportunity -- leak detection/monthly monitoring of underground storage tanks using SIR -- and to eliminate its holding company structure. During the first quarter, its Toxguard Systems Inc. subsidiary ceased operations and filed a voluntary petition for bankruptcy under Chapter 7.
Toxguard Systems' financial statements have not been consolidated with those of the company and prior quarter results have been restated. The company intends to divest its Toxguard Fluid Technologies Inc. subsidiary.
Watson General/USTMAN is the largest provider of critical information to owners of underground storage tanks through statistical inventory reconciliation services and remote tank monitoring -- building a recurring revenue base from each tank being monitored.
Statistical Inventory Reconciliation (SIR) is one of the most cost-effective methods of detecting leaks in underground storage
tanks and is fully approved for purposes of compliance with EPA leak-detection regulations, which cover nearly every UST in
the United States.
Except for the historical information contained in this release, the other statements in this release are forward-looking
statements that involve risks and uncertainties, including without limitations, the company's ability to sell its products, the timely
negotiations of new contracts, the level of increased sales with existing customers, as well as such other risks as from time to
time may be detailed in the company's Securities and Exchange Commission reports.
WATSON GENERAL/USTMAN
Financial Highlights
(unaudited)
Quarter Ended Sept. 30,
1997 1996
Sales $ 1,560,000 $ 559,000
Cost of sales $ (580,000) $ (170,000)
Gross profit $ 980,000 $ 389,000
Selling, general and administrative
expenses $ (1,312,000) $ (1,006,000)
Interest and expense, net
of interest income $ (222,000) $ (35,000)
Loss from operations before benefit
for income taxes $ (554,000) $ (652,000)
Benefit for income taxes $ -- $ --
Net (loss) $ (554,000) $ (652,000)
Net income (loss) per share $ (0.03) $ (0.06)
-0-
At Sept. 30, June 30,
1997 1997
Cash and equivalents $ 624,000 $ 799,000
Total assets $ 10,720,000 $ 11,180,000
Stockholders' equity $ 1,798,000 $ 2,325,000
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