Pacer Technology Reports Record Year-End Results
RANCHO CUCAMONGA, Calif.--(BUSINESS WIRE)--Aug. 19, 1998--Pacer Technology (Nasdaq:PTCH), owner of such branded consumer products as Super Glue, ZAP(R), PRO SEAL(R), Cook Bates(R), Diamond Deb(R)/Kurlash(R) and Gem(R), Wednesday announced continued gains in net sales, operating income and net income for its fiscal 1998 year-end.
Continued growth both domestically and internationally for Pacer's products, including the contribution from the California Chemical acquisition last summer, drove operating results for the year. Also proceeding as planned, the Cook Bates acquisition favorably impacted Pacer's revenue performance, according to President and Chief Executive Officer Jim Munn. Cook Bates, which was acquired in March 1998, manufactures and markets manicure implements such as nail clippers, emery boards, tweezers and related manicure products.
Financial Results
For the three months ended June 30, 1998, net sales were $9,968,812, a 53% increase over the $6,498,765 reported for the fourth quarter of 1997. This was the largest quarter, in terms of revenues, in the company's history. Operating income decreased to $564,571 for the fourth quarter from $671,096 in the same period a year ago as Pacer and Cook Bates ran parallel operations from March 1998 through June 1998. Net income was $386,313, or $.02 per share, versus $382,101, or $.02 per share, for the corresponding quarter last year.
For the year ended June 30, 1998, net sales improved 24% to $31,938,514, up from $25,677,840 during the last fiscal year. Operating income was $2,972,265, a 16% increase over $2,562,033 in 1997. Net income rose 27% to $1,541,049, or $0.09 per share, up from $1,217,402, or $0.07 per share, in the prior fiscal year.
Domestic Operations
The company reported domestic sales of $26,503,842 for the fiscal year versus $20,988,624 in 1997. The increase was driven largely by revenues from California Chemical and Cook Bates. Domestic sales represented approximately 83% of total company sales.
International Operations
International sales increased to $5,434,672 representing 17% of total sales for fiscal year 1998, compared with $4,689,216, or 18% of total sales in 1997. The company continues to benefit from increases in sales in European markets as well as from its expanding presence in emerging Eastern Bloc countries.
Operating Expenses
Pacer's gross margin was 34% for the 1998 fourth quarter versus 36% in the same quarter the year before. Operating margin was 6% of net sales during the fourth quarter of fiscal year 1998 compared with 10% in the corresponding quarter in the prior year. Selling, general and administrative expenses were 28% of sales for the three-month period versus 25% reported during the same quarter a year ago. This performance was directly attributable to running parallel operations with Cook Bates from March 1998 through June 1998.
For the year ended June 30, 1998, gross margin was 36%, the same as in 1997. Operating margins were 9% for the year, compared with 10% in 1997. Selling, general and administrative expenses were 26% of revenues in 1998; during 1997, selling, general and administrative expenses were also 26% of sales.
Financial Position
At June 30, 1998, Pacer reported total assets of $27,798,925, stockholders' equity of $10,631,965, long-term debt of $9,535,889 and working capital of $14,504,365. Almost all of this long-term debt was incurred in fiscal year 1998 in order to fund both the California Chemical and Cook Bates acquisitions.
Integration of Cook Bates Acquisition on Track, Enhances Future Revenue and Earnings Stream
In March 1998, Pacer Technology acquired Cook Bates, a manufacturer of manicure implements. Cook Bates, a 102-year-old company, has a wide, well established product line. The acquisition has given Pacer more products to distribute through its existing retail channels; moreover, Cook Bates provides Pacer with additional shelf space in key retail locations. The Cook Bates acquisition is anticipated to grow the company in terms of sales by adding significant new revenue during fiscal year 1999, and contribute positively to earnings going forward.
According to company management, as Cook Bates operations are absorbed into Pacer facilities, cost reductions will reflect themselves in the company's financial results, with the full effect taking place by the end of this calendar year. In addition to synergies in administrative, marketing and support systems, the company expects additional economies of scale in the areas of manufacturing and distribution.
Except for historical information contained herein, the matters set forth in this news release are forward looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth herein in the forward looking statements, including such factors, among others, as significant fluctuations in operating results, uncertain market acceptance of the company's products and intense competition.
Pacer Technology is a manufacturer and worldwide marketer of advanced technology adhesives, sealants and related products for a variety of consumer and industrial applications, as well as manicure implements for consumer markets. It is the provider of SUPER GLUE, ZAP(R), PRO SEAL(R), Cook Bates(R), Diamond Deb(R)/Kurlash(R) and Gem(R), and other well known branded products.
For more information about Pacer Technology via facsimile simply call 800/PRO-INFO and dial client code "PTCH." -0- *T
PACER TECHNOLOGY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, June 30, 1998 1997 ASSETS
Current Assets: Cash $ 277,370 $ 294,298 Trade Receivables 8,591,327 4,719,970 Notes and Other Receivables 334,941 447,075 Inventories 10,974,578 4,347,497 Prepaid Expenses 810,451 390,331 Deferred Income Tax - Current 1,146,769 621,804
Total Current Assets $ 22,135,436 $ 10,820,976
Equipment and Leasehold Improvements, Net 1,819,783 1,444,631
Deferred Income Tax Asset 124,065 60,222 Cost In Excess of Net Assets Acquired 3,689,516 1,690,878 Other Assets 30,125 9,344
Total Assets $ 27,798,925 $ 14,026,051
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: Bank Loan 0 792,000 Accounts Payable 4,135,472 2,367,245 Other Accrued Expenses 3,162,266 1,620,391 Current Installment
of Long-Term Debt 333,333 262,866
Total Current Liabilities 7,631,071 5,042,502
Long-Term Liabilities: Long-Term Debt, Excluding
Current Installments 9,535,889 221,202
Total Liabilities 17,166,960 5,263,704
Stockholders' Equity: Notes Receivable From Directors (265,257) (571,030) Common Stock 8,270,633 8,260,973 Retained Earnings 2,613,453 1,072,404 Foreign Currency Translation
Adjustment 13,136
Total Stockholders' Equity 10,631,965 8,762,347
Total Liabilities and Equity $ 27,798,925 $ 14,026,051
Working Capital 14,504,365 5,778,474
Current Ratio 2.90 2.15
PACER TECHNOLOGY AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
Three Months Ended 12 Months Ended
June 30, June 30,
1998 1997 1998 1997
Net Sales $ 9,968,812 $ 6,498,765 $ 31,938,514 $ 25,677,840 Cost of Sales 6,602,629 4,178,156 20,592,723 16,520,294
Gross Profit on Sales 3,366,183 2,320,609 11,345,791 9,157,546
Selling, General and Administrative Expenses 2,801,612 1,649,513 8,373,526 6,595,513
Operating Income 564,571 671,096 2,972,265 2,562,033
Interest Expense and Other (38,428) (21,263) 309,333 75,752
Income Before Taxes 602,999 692,359 2,662,932 2,486,281
Income Taxes 216,686 310,258 1,121,883 1,268,879
Net Income $ 386,313 $ 382,101 $ 1,541,049 $ 1,217,402
Weighted Average Shares 15,859,975 15,825,975 15,852,475 15,549,392
Basic Earnings Per Share $ 0.02 $ 0.02 $ 0.10 $ 0.08
Adjusted Weighted Average Shares 18,068,296 16,750,293 17,554,113 16,484,119
Diluted Earnings Per Share $ 0.02 $ 0.02 $ 0.09 $ 0.07
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CONTACT:
Pacer Technology, Rancho Cucamonga
Roberto J. Cavazos, Jr., 909/987-0550
or
The Financial Relations Board
Karen Taylor (general information)
Moira Conlon (investor/analyst contact)
310/442-0599
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