TORONTO, ONTARIO--Invesprint Corporation of Toronto today reported financial results for the third quarter ended January 31, 2003.
Sales for the third quarter of fiscal 2003 were $11.9 million compared to $14.7 million in the third quarter of fiscal 2002. For the nine months ended January 31, 2003, sales were $42.5 million compared to $48.1 million in the same period last year.
Jay Packaging's sales for the third quarter and for the first nine months of fiscal 2003 were 6.2% and 10.0% lower respectively, than in the same periods last year reflecting the continued softness in their markets. Third quarter sales for the Company's label divisions, Jonergin and Jonergin Pacific, were 29.7% lower than in the third quarter last year. On November 20, 2002, the Company disclosed that its largest customer in the label business had chosen two other suppliers for their label needs. Sales to this customer were $3.5 million lower in the third quarter this year compared to a year ago. Label sales for the first nine months of fiscal 2003 were $4.0 million lower than a year ago primarily as a result of the loss of this business. Kree's sales for the quarter and year-to-date were similar to last year.
The operating loss for the quarter was $1,291,000 compared to operating earnings of $349,000 in the third quarter last year. The decrease resulted from lower sales and reduced capacity utilization at the label divisions.
Consolidated selling, general and administrative expenses for the third quarter were 17.4% lower than in the third quarter last year and 7.7% lower year-to-date in line with the lower level of business and cost reduction initiatives. Lower interest expense for the quarter and year-to-date reflects lower interest rates and reduced borrowings.
As previously disclosed, the Company has a lease obligation on a manufacturing facility previously sublet to a company which became bankrupt in July 2001. The Company accrued $500,000 as at April 30, 2002 to provide for estimated future expenses. During fiscal 2003, ongoing expenses were charged to this accrual. The Company is currently negotiating a transaction which would result in the termination of the lease. During the third quarter $518,000 was charged to expense, primarily to cover the estimated lease termination costs. The after-tax cost was $337,000 ($0.06 per share).
On January 27, 2003, the Company announced that its President and Chief Executive Officer, Tony Wong, was retiring. Mr. Wong is entitled to receive a lump sum payment of $567,000 in exchange for 18 month non-solicitation and non-competition covenants. This amount was accrued and charged to expense in the third quarter. The after-tax cost of this non-recurring expense was $369,000 ($0.07 per share).
Net loss for the third quarter was $1,718,000 ($0.32 per share) compared to $270,000 ($0.05 per share) for the third quarter last year. For the nine months ended January 31, 2003, the net loss was $1,030,000 ($0.19 per share) compared to net earnings of $1,209,000 ($0.23 per share) in the same period last year.
During the third quarter, capital lease financing of $5.1 million was arranged for the major capital additions at Jonergin Pacific. On March 28, 2003, the Company's Jonergin Division completed capital lease financing of $1.4 million for recently acquired equipment.
"The loss of our largest customer in the label business adversely affected our financial results in the third quarter" stated Tony Wong, President and Chief Executive Officer. "We have new, experienced sales personnel at Jonergin and Jonergin Pacific. Sales and sales bookings for both divisions for February, March and April are strong. The third Sanjo press is operational at Jonergin Pacific and is already giving us a competitive edge on longer production runs. We expect Jonergin Pacific's sales in March to be an all-time record."
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