Invesprint Announces Year End Results; No Profit Until 2005
Press release from the issuing company
TORONTO, ONTARIO--Invesprint Corporation today reported financial results for the year ended April 30, 2003.
Immediately before and after the Company's fiscal 2003 year-end, Invesprint completed transactions that dramatically changed the composition of its operating assets. On April 30, 2003, the Company sold its 50.1% interest in Kree Technologies Inc. On June 11, 2003, subsequent to the fiscal 2003 year-end, the Company sold its 65% interest in Jay Packaging Group, Inc. In the financial statements for fiscal 2003, both Kree and Jay are treated as discontinued operations. These divestitures were part of the company's ongoing plan of strategic realignment and focus.
As a result, our continuing operations are Jonergin, based in Montreal and Jonergin Pacific located in Napa, California. These business units manufacture prime labels for customers in the wine & spirits, pharmaceutical, healthcare and petrochemical markets. Comparative figures have been restated to conform to this presentation.
Sales for the combined label operations for the year ended April 30, 2003 were $29.2 million compared to $33.6 million in the previous year, a decrease of 13%. On November 20, 2002, the Company announced that its largest label customer had chosen two other suppliers for its label needs. The decrease in sales is largely attributable to this loss of business. Gross profit margin was 14.4% of sales compared to 28.2% last year. Lower sales, combined with increased capacity at Jonergin Pacific, which came on-stream during fiscal 2003 and was not fully utilized, adversely impacted margins. The year-over-year decrease in selling, general and administrative expenses was $200,000. Included in the fiscal 2003 numbers are reorganization expenses of $400,000, not explicitly broken out in the financial statements.
In April 2003, the Company completed a transaction which terminated lease obligations on an unused manufacturing facility in Mississauga, Ontario, thereby eliminating ongoing annual expenses of approximately $500,000. The net cost to settle this obligation was $475,000. There are no further liabilities or guarantees associated with this lease. In fiscal 2002, an expense of $758,000 was recorded in connection with this lease.
On January 27, 2003, the Company announced that its President and Chief Executive Officer, Tony Wong was retiring. Mr. Wong was entitled to receive a lump sum payment of $567,200 in exchange for 18 month non-solicitation and non-competition covenants. The amount was accrued and charged to expense in fiscal 2003. Payment was made in July 2003.
The loss from continuing operations before income taxes recoverable was $4,919,000. Results were adversely impacted by the severance and the lease obligations noted above which totaled $1,442,000.
The loss from continuing operations for the year was $3,056,000 ($0.57 per share) compared to a loss of $26,000 ($0.00 per share) last year The net loss for the year was $2,790,000 ($0.52 per share) compared to net earnings of $426,000 ($0.08 per share) last year.
"Fiscal 2003 was a difficult and challenging year for the Company" stated Vince Hockett, President and Chief Executive Officer. "The loss of business from our largest customer midway through the year adversely affected both sales and margins.While we have been successful in replacing much of this lost business we still have significant work ahead of us. We have been successful in winning new business from a broader base of winery customers and correspondingly, the Company has reduced its reliance on one large customer. Significant operational issues are being addressed at Jonergin Pacific. Jonergin Montreal is operating profitably and has ongoing cost reduction programs in place. The corporate office in Toronto will close on August 31, 2003 resulting in annual savings of approximately $350,000."
Hockett also stated, "The last two years have been very difficult for Invesprint, our shareholders, and our employees. Our revenue generating strategies and cost cutting programs have put us on track to recovery. While we will see significant operating improvements in Fiscal 2004, I do not expect annual profitability to return until Fiscal 2005."
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.