Insty-Prints Parent Reports Net Income, Print Solidly Profitable
Wednesday, October 10, 2001
MINNEAPOLIS--Oct. 9, 2001--IPI, Inc. the parent company of Insty-Prints, Inc., franchisor of Insty-Prints fast-turnaround business printing centers, and Change of Mind Learning Systems, Inc., a franchisor of learning centers, announced today a net income of $5,359,000 or $1.10 per-share for the quarter ended August 31, 2001. This compares to net income of $151,000 for the same quarter a year ago or 3 cents per share. Net income for the third quarter of 2001 included an after tax gain of $5,704,000 on the sale of securities, compared to a $277,000 after tax gain on the sale of securities for the same period a year ago. Net income for the nine months ended August 31, 2001 was $9,618,000 or $1.98 per share compared to $872,000 or 18 cents per share for the same period a year ago. The net income for the first nine months of 2001, includes an after-tax gain of approximately $10,043,000 on its investment portfolio, as previously reported. Bob Sutter, Chairman and President of IPI, Inc. commented: "It has been a very rewarding period in being able to realize substantial gains on the investment portfolio, as the pre-tax and after-tax gains for the nine months ended August 31, 2001 exceeded $16.7 and $10 million, respectively. For the three months and nine months ended August 31, 2001 we experienced operating losses of $639,000 and $809,000. This compares to operating income of $175,000 and $619,000 for the three and nine-month periods ended August 31, 2000. The 2001 period results are primarily affected by the additional costs related to the development of the Change of Mind Learning Systems, which included the write-off of goodwill of $602,000 in the third quarter of 2001. Based on the current state of progress and the more immediate future prospects for the business, it was determined the write-off of goodwill was appropriate. Our Insty-Prints business remains solidly profitable." In August 2001 the Company purchased, for investment purposes only, 2,081,800 shares of Clarent Corporation common stock at a cost of $12,485,030, as previously announced. Clarent Corporation is a California based internet protocol service provider. IPI made its investment based on its review of Clarent's most recent 10-Q for the quarter ended June 30, 2001, filed August 14, 2001, which reported Working Capital of over $6.08 per share and Net Book Value of over $10.60 per share. Further, in its July 18, 2001 Conference Call, Clarent officials commented on positive trends in its business, projected it would break even in 2002 and stated it had approximately $200 million in cash ($5.00 per share) in early July 2001. IPI's average basis in the Clarent stock is just under $6.00 per share. In a September 4, 2001 press release, Clarent announced that its' first and second quarter revenue may have been overstated and operating losses understated and that it is conducting an investigation of this matter. Consequently, trading in the stock was halted. We are hopeful that this situation will be resolved in the near future. As of October 8, 2001 the Company has repurchased 279,400 of its shares at an average cost of $3.91 per share, related to a previously announced plan of repurchasing up to approximately 500,000 shares of its common stock. This plan was put in place to support IPI shareholders ability for liquidity in light of the tragic terrorist events of September 11, 2001. One final item, we are pleased to announce that Mr. Rodney P. Burwell was appointed to the IPI Board of Directors replacing Mr. Rick Zona who had resigned due to other business commitments. Mr. Burwell, the founder of Xerxes Corporation, also sits on the Boards of TCF Financial, is Chairman of the Board of Fairview Health Services and is a member of the Board of Trustees of the Blake School. IPI, Inc. is the parent company of Insty-Prints, Inc. and Change of Mind Learning Systems, Inc. Insty-Prints is a leading franchisor of approximately 211 fast turnaround business printing operations and had total 2000 system sales of approximately $124 million. Change of Mind Learning Systems, Inc. is a franchisor of learning centers that is in its early stage of development with two operating locations. From time to time, the Company has invested and may invest in other businesses or companies other than its core business of franchising and operating business printing and learning centers. Although the Company has invested in other businesses or companies, the Company does not intend to become an investment company.