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Microcap & Penny Stocks : Pacer Technology (PTCH)

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To: Jim Reome who wrote (553)	8/20/1998 2:28:00 AM
From: David K.	Read Replies (1) of 726

Dan's summary of conference call from the Yahoo board: nteresting but somewhat usual conference call a few minutes after earnings release today. Highlights include: Fiscal 199 sales projected to be slightly under $50 million by Cavazos and Munn. Now have 55,000 distribution outlets.... Eckerd's was previously just a Cook Bates customer. Now buying Super Glue for 2,800 stores. Myer's in Michigan, previously a PTCH customer with 300 stores now has Cook Bates products. Rite Aid (4,000 stores) and Long Drug Stores are Cook Bates customers and presentations for Super Glue products are being made. Core business was flat in 1998-----lost K-Mart for 6 months. They are now back in K-Mart in the Home Improvement versus Autoparts section with even more sku's than before. They stopped doing business in 1998 with OfficeMax because of corporate policies that prevented them from making any money. Dollar General was a non-customer for 3-4 months in 1998 but new products are now back. PTCH has recently slipped through price increases and lowered costs by more aggressive buying. Earnings flat this quarter due to running two parallel operations. The two Cook Bates manufacturing plants in the Carolina's have been moved to California and Tennessee. The Cook Bates corporate office in Florida has been eliminated. PTCH produced enough inventory to carry them through the transition and manufactured enough to last till September based on previous historical sales at Cook Bates. THEY RAN OUT OF EVERYTHING AT THE END OF JULY!!! Munn said this was a nice problem to have. Halloween shipments were the highest in the company's history. X-Mas orders are also stronger than any previous year. Munn said PTCH sales goal for next 5 years remained 25% a year including acquisitions and net income growth even higher. Cook Bates margins are substantially lower than PTCH margins and are being addressed. Munn pointed out that when they acquired Super Glue 3 years ago, margins were 21% and now run 35-36%.... PTCH looking more to developing countries. It don't get much better than this. Using the rule of 72 and 25% sales increase a year factor, that's doubling revenues in three years at 24% compounded sales increases a year. That's a 100 million dollar company in three years. That should equate to at least 30 cents a share in earnings in three years. Looking at things in current terms, it is real apparent that Cook Bates at $20 million a year in sales at only about $3 million last quarter is a VERY cyclical business. They would have to do $5-6 million the remaining quarters and I suspect the last quarter of calendar 1998 is probably the biggest with gift pack and all. I think we will see $4-5 million this current quarter ending 9-30-98 and probably $6-8 million last quarter. That's when we might see earnings of 4-5 cents a share. I'm looking for 3-4 cents next quarter. Good luck to all. Dan in FW ÿ

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