Outlook Group Reports Year-End Results, Net loss of $567,000
Press release from the issuing company
NEENAH, Wis.--July 17, 2003-- Outlook Group Corp. today reported net sales of $14,100,000 for the fourth quarter ended May 31, 2003, compared to sales of $15,694,000 for the same period in the prior year. The company reported a net loss of $835,000 or $(0.25) per diluted share for the fourth quarter of fiscal 2003, compared to earnings of $511,000 or $0.15 per diluted share for the same period in the prior year. Results for the fourth quarter of fiscal 2003 include an after-tax impairment charge of $243,000 or $(0.07) per diluted share for the write-off of technology related to the company's acquisition of Paragon Direct in June 2002. The results also include direct start-up costs of approximately $650,000 related to a new client. The net earnings for the fourth quarter of fiscal 2002 include after-tax recovery of legal settlement expenses of $83,000 or $0.02 per diluted share.
For fiscal 2003, Outlook Group reported net sales of $61,014,000, compared to sales of $67,207,000 for the prior year. The company reported a net loss of $567,000 or $(0.17) per diluted share for fiscal 2003, compared to a profit of $663,000 or $0.19 per diluted share in the prior year. In addition to the items discussed above, the results for fiscal 2003 include a cumulative effect after-tax charge of $236,000 or $(0.07) per diluted share related to the impairment of goodwill as a result of the adoption of SFAS 142. The results for fiscal 2002 include net after-tax facility and legal settlement expenses of $550,000 or $(0.16) per diluted share.
Joseph J. Baksha, president and chief operating officer of Outlook Group, said the lower fourth quarter results were due to start-up expenses for three new long-term contracts and significant reductions in sales to three other major customers during the quarter.
"We are continuing to pursue our strategy to differentiate Outlook Group in the market by focusing on long-term contracts for complete supply chain management services. The foundation of this strategy is the bundling of our printing, packaging, mailing list development and direct mail services into an integrated package that provides a complete turnkey solution for our customers. We have added three major contracts for these services within the past four months," said Baksha.
Baksha said Outlook Group's fourth quarter sales were impacted by significantly reduced direct marketing activities of two major customers. In addition, a third major customer moved an operation to a new facility, which curtailed production during the transition. This operation is now back in production and Outlook Group sales to this customer have also resumed.
"In the fourth quarter of fiscal 2003, we made significant investments in training current and new employees to service the new major accounts, without the benefit of corresponding increases in sales to help offset them. These are investments in the future of Outlook Group. The printing industry continues to be adversely affected by the slow economy, overcapacity and intense pricing pressures. As a result, printing has become a commodity. We believe our expertise in complete supply chain management services adds value to our client relationships and provides opportunities to improve sales and profitability over the long term," said Baksha.
Baksha said the start-up costs for the new long-term contracts will continue into the first quarter of fiscal 2004. New contracts with International Masters Publishers, Premium Standard Farms and Service Graphics are expected to provide over $14 million in sales in fiscal 2004, subject to changes in customers' indications and other developments.
"In fiscal 2003, we initiated quarterly cash dividend payments for the first time in our history. We have a solid balance sheet, existing long-term contracts that accounted for over 40% of our fiscal 2003 sales, and major new contracts that begin in fiscal 2004. This solid base helps to provide stability in a challenging industry environment, as well as potential for future long-term growth," said Richard C. Fischer, chairman and chief executive officer.
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