Wire: ENEWS
DateStamp: 990505 08:03:59
Corporation: MOND INDUSTRIES INC.
Stock Symbol: MII
Dateline: MISSISSAUGA, ONTARIO
Headline: MOND ANNOUNCES 1998 FOURTH QUARTER AND YEAR END RESULTS
Text:
Mond Industries Inc. ("Mond") today announced its 1998 fourth
quarter and year end financial results for the periods ended
December 31, 1998. Mond established a new sales record in 1998,
surpassing $100 million in annual sales for the first time, but
inventory control problems and a one-time restructuring charge
negatively affected Company earnings.
As announced previously, (Release dated Dec. 16, 1998 -
"Trailmobile Acquires Mond Ownership Stake") Chicago-based
Trailmobile Corporation ("Trailmobile") acquired a majority
equity interest in Mond in the fourth quarter. As a result of its
business arrangement with Trailmobile, Mond is currently
undergoing a significant restructuring of its operations,
including the redesign of its Mississauga manufacturing facility,
to optimize the potential benefits of the Trailmobile/Mond
alliance and to position the Company for improved financial
performance.
For the three months ended December 31, 1998, revenue decreased
35% to $19.1 million, compared with $29.4 million in the fourth
quarter of 1997. During the quarter, the Company recorded a one
time $4.5 million restructuring provision, which reflects the
operational changes Mond is currently implementing as a result of
its business arrangement with Trailmobile. Mond also wrote down
the book value of its inventory by $2.5 million in the quarter,
due to an inventory shortfall, and recorded a $1.0 million
increase in warranty provisions. After accounting for these
items, Mond recorded a net loss for the quarter of $9.5 million
or ($0.27) per share compared with a loss of $6.1 million or
($0.18) per share in the same period a year ago.
During 1998, Mond continued to experience inventory control
problems, resulting in a $2.5 million shortfall. The Company is
now in the process of installing the same information systems
employed by Trailmobile in the United States. Mond will soon be
manufacturing a Trailmobile designed trailer with bills of
material and costing procedures that have been closely integrated
with the new information system.
For the 12 months ended December 31, 1998, revenue increased 19%
to $107.2 million, compared with $90.0 million in 1997. Demand
for Mond''s trailers remained strong in 1998, as the Company sold
3,924 units, a 10% increase over 1997. Gross profit also improved
considerably during the year, from a loss of $3.8 million in
1997, to a gross profit of $4.2 million in 1998. However, due to
the one-time charges and writedowns described above, the Company
recorded a net loss for the year of $7.9 million or ($0.22) per
share compared with $9.9 million or ($0.30) per share in 1997.
Revenue from Mond''s service and parts sales increased in 1998,
but the division remained unprofitable. After a comprehensive
business review following its agreement with Trailmobile, Mond''s
Board of Directors, including its five new appointees, decided to
close the money losing parts and service operation. In closing
this division, additional production floor space was freed up for
the new plant layout at the Company''s Mississauga facility.
"Nineteen ninety-eight was the most significant year in the
development of Mond Industries," said Pat DiLillo, President of
Mond. "It was our first full year of operations at our
Mississauga plant and we faced a number of challenges in
consolidating our operations. However, our productivity did
improve throughout the year, as evidenced by our record sales
levels. We still have some challenges to overcome, but we are
confident that our restructuring program, now underway, will lead
to improved operating performance. Our strategic alliance with
Trailmobile has created many new market opportunities for us and
we plan to make the most of them."
The redesign of Mond''s Mississauga plant, in addition to its new
systems implementation, restricted production throughput during
the first quarter of 1999, which will affect the Company''s first
quarter financial results. The target date for completion of the
plant redesign is May 1999. The Company plans to gradually
increase production as the year progresses and hopes to reach
designed production capacity towards the end of the year.
"We are in the process of positioning Mond for improved
performance," said Ed Wanandi, Mond''s new Chairman and CEO. "With
access to Trailmobile''s sales and distribution channels, internal
systems and controls, as well as the Trailmobile brand name, and
a renewed business strategy, the building blocks are now in
place."
In order to maximize the potential of its alliance with
Trailmobile Corporation, Mond will seek shareholder approval at
its Annual General Meeting on June 7, 1999, to change its
corporate name to Trailmobile Canada Limited.
About Mond
----------
Mond Industries Inc. ("Mond") manufactures dry freight trailers
for commercial trucking customers in Canada and the United
States. In December 1998, Chicago-based Trailmobile Corporation
acquired a majority equity interest in Mond. Together they form
North America''s third largest trailer manufacturer, with an
extensive sales and distribution network throughout North
America. Mond is listed on The Toronto Stock Exchange under the
symbol "MII". The Company''s head office is located in
Mississauga, Ontario.
- 30 -
A summary of the financial statements for the periods ended
December 31, 1998 and December 31, 1997 are attached.
FOR FURTHER INFORMATION PLEASE CONTACT:
Craig Armitage or Bruce Wigle
The Barnes Organization Inc.
(416) 367-5000
Denis Arsenault, Chief Financial Officer
Mond Industries Inc.
(905) 565-9500
MOND INDUSTRIES INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS) (Unaudited)
PERIOD ENDED DECEMBER 31 THREE MONTHS TWELVE MONTHS
1998 1997 1998 1997
--------------------------------------------------
Sales $19,125,110 $29,432,600 $107,223,903 $90,000,224
Cost of goods
sold 21,820,801 32,896,044 103,892,695 93,815,091
---------------------------------------------------------------
Profit (loss)
before sales,
administration,
amortization
and finance
charges (2,695,691) (3,463,444) 3,331,208 (3,814,867)
---------------------------------------------------------------
Sales and
administration
expenses 1,143,334 1,560,797 3,558,804 3,575,771
Amortization 348,968 179,265 1,101,779 877,260
Finance charges 510,565 357,469 1,768,996 1,089,497
---------------------------------------------------------------
2,002,867 2,097,531 6,429,579 5,542,528
---------------------------------------------------------------
Income (loss)
before
undernoted
items (4,698,558) (5,560,975) (3,098,371) (9,357,395)
Restructuring
charges 4,528,000 4,528,000
Income taxes
current 452,983 452,983
Income taxes
deferred 279,203 88,234 279,203 88,234
---------------------------------------------------------------
Net Income
(loss) for
the period ($9,505,761) ($6,102,192) ($7,905,574) ($9,898,612)
===============================================================
Net income
(loss) per
share - basic ($0.27) ($0.18) ($0.22) ($0.30)
Weighted average
number of
shares
outstanding 35,845,740 33,248,490 35,845,740 33,248,490
--------------------------------------------------
MOND INDUSTRIES INC.
CONSOLIDATED BALANCE SHEET (Unaudited)
DEC. 31, 1998 DEC. 31, 1997
ASSETS
CURRENT:
Accounts receivable $14,846,301 $23,080,768
Inventory 10,721,943 9,911,774
Deposit on land 300,000 0
Prepaid expenses 298,518 152,183
Deferred income taxes 0 279,203
---------------------------------------------------------------
26,166,762 33,423,928
---------------------------------------------------------------
CAPITAL ASSETS, NET 12,266,773 10,796,590
---------------------------------------------------------------
$38,433,535 $44,220,518
===============================================================
LIABILITIES
CURRENT:
Bank overdraft $181,203 $681,938
Due to Newcourt Financial Ltd. 14,001,471 16,956,120
Accounts payable and accrued
liabilities 19,707,226 22,589,719
Provision for restructuring costs 350,000
Current portion of obligations under
capital lease 113,296
Current portion of long term debt 458,750 102,732
---------------------------------------------------------------
34,811,946 40,330,509
---------------------------------------------------------------
LONG TERM LIABILITIES
Obligations under capital leases 283,598 0
Long term debt, net of current portion 10,787,985 3,439,989
---------------------------------------------------------------
11,071,583 3,439,989
---------------------------------------------------------------
SHAREHOLDERS'' EQUITY
Capital stock 7,364,625 7,359,065
Retained Earnings (deficit) (14,814,619) (6,909,045)
---------------------------------------------------------------
(7,449,994) 450,020
---------------------------------------------------------------
$38,433,535 $44,220,518
===============================================================
MOND INDUSTRIES INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(Unaudited)
TWELVE MONTHS TWELVE MONTHS
ENDED ENDED
DEC. 31, 1998 DEC. 31, 1997
------------- -------------
Cash was provided by (used in)
the following activities:
Operations:
Net income (loss) for the period ($7,905,574) ($9,898,611)
Amortization 1,101,779 877,260
Deferred taxes 279,203 88,234
---------------------------------------------------------------
Cash flow from operations (6,803,795) (9,021,351)
Changes in non-cash working capital
items 4,445,471 2,258,735
---------------------------------------------------------------
(2,079,121) (6,674,382)
---------------------------------------------------------------
Investments:
Purchase of capital assets (2,571,963) (4,566,236)
---------------------------------------------------------------
Financing:
Proceeds of capital lease financing 453,956
Repayment of obligations under capital
lease (57,062)
Capital stock issued net of share issue
costs 5,560 2,683,230
Proceeds of long term debt 7,812,265 2,145,540
Repayment of long term debt (108,251) (78,189)
---------------------------------------------------------------
8,106,468 4,750,581
---------------------------------------------------------------
Increase (decrease) in cash position 3,455,384 (6,490,037)
Bank overdraft, beginning of period (17,638,058) (11,148,021)
---------------------------------------------------------------
Bank overdraft, end of period ($14,182,674) ($17,638,058)
===============================================================
Bank overdraft 181,203 681,938
Due to Newcourt Financial Ltd. 14,001,471 16,956,120
---------------------------
$14,182,674 $17,638,058
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