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Authorizes Additional Stock Repurchase
Carrollton, Texas -- December 18, 1997-- Ultrak, Inc.
(Nasdaq: ULTK) today announced that it will take after-tax
charges to earnings in its quarter ending December 31, 1997,
totaling approximately $2.7 million or $0.19 per share. This is
partially offset by an approximate $750,000 or $0.05 a share
after-tax gain on the sale of investments. Separately, Ultrak's
board of directors authorized the repurchase of up to 1 million
shares of Ultrak's common stock on the open market. This is in
addition to the total of 1 million shares authorized for
repurchase earlier this year, of which slightly less than 500,000
have been repurchased. The Company has put contracts outstanding
on 2.6 million shares of its stock ranging in price from $8.75 to
$12.50 per share, all expiring within 13 months. Put premiums of
$4.5 million have been received on the contracts, but no income
has been recorded to date.
Regarding operations, the Company estimates that sales for
the fourth quarter will be $51-53 million. After-tax earnings
from operations and other income before the charges and gain on
sale of investments are expected to be $0.03-0.05 per share.
Earnings for the quarter are below earlier expectations due to
softer than expected sales in November and higher expenses,
primarily associated with new product development, marketing
costs associated with the introduction of new products, legal
expense involving patents, and additional personnel and increased
travel and lodging expenses relating to training associated with
the worldwide implementation of the SAP R3 enterprise software.
Sales in December were adversely impacted by a three-day phone
outage in Dallas caused by an external power surge. It is
believed that the Company's business interruption insurance
policy will cover any losses that may have resulted from theoutage.
Looking ahead, the Company expects sales in the first
quarter of 1998 to more or less approximate those of the fourth
quarter of this year, but with worthwhile increases in the
subsequent periods. Operating earnings in the first quarter of
1998 are expected to be comparable to those of this year's fourth
quarter and should increase thereafter as new products are
introduced and sales rise. It is Ultrak's plan to reduce
operating expenses as a percentage of sales in 1998.
The non-recurring fourth quarter charges totaling $1.2
million after taxes consist of (1) the write-off of computer
hardware and software currently on the books that will be made
obsolete the implementation of SAP's R3 software and related
hardware and (2) the estimated cost of Ultrak's late December
1997 move to its recently completed Worldwide Support Center in
Lewisville, Texas, including a write-off of leasehold
improvements and other abandonment costs associated with its
existing leased facility. The other charges, totaling $15 million
after taxes, consist of (1) the costs incurred to date for the
implementation of the SAP R3 software and (2) the increase of
inventory reserves primarily for electronic article surveillance
systems introduced in 1995 that the Company no longer plans to
sell as well as for additional reserves for accounts receivable.
Said George Broady, chairman and CEO of Ultrak, ''We have
made good progress in integrating the eight companies we have
purchased over the past 18 months, but have not yet harvested the
real advantages of using common Ultrak-branded products. This is
now happening. A number of our new products have taken longer to
come to market than anticipated, but many are now being
introduced. Competition remains fierce, but with our new products
we expect to gain market share. The implementation of SAP R3
software is both expensive and time consuming. It is a big price
to pay, but, it is the leading enterprise software in the world,
and companies that master software this powerful can compete to
be leaders in their fields. This is our commitment. Our new
Worldwide Support Center also costs more money. But we think it
will yield a great return. We expect this facility to make our
operations more efficient, to give us the wherewithal to
accommodate a doubling in sales, to help with marketing as we can
bring senior executives of major companies into our facility for
demonstrations, and to provide a world-class training facility
for our new families of high-tech products and systems.'' Added
Broady, ''Altogether, we are building a strong foundation for
future growth and profitability. Our mission and strategy remain
the same. Our mission to be the world leader in our markets
remains intact and we believe we have made great strides toward
achieving it. At the same time, we believe that we have only
begun to realize the full potential of our opportunity.'' |
