CFM International Inc. announces first quarter results and rationalization of production capacity.MISSISSAUGA, Ontario--(BUSINESS WIRE)--Feb. 14, 1996--CFM INTERNATIONAL INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. .(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). : CFM ) CFM International Inc. is releasing its results for the first quarter ended December 31, 1995. In addition, as part of the ongoing program of integration that was developed with the acquisition of The Majestic Products Company ("Majestic"), the Company is today announcing significant steps taken to rationalize production capacity that includes, closure of the Austin, Texas manufacturing facility, ratification of contract amendments with the hourly union employees at the Huntington, Indiana Huntington is a city in Huntington County, Indiana, United States. The population was 17,450 at the 2000 census. The city is the county seat of Huntington CountyGR6. facility and expansion of this facility by approximately 60,000 to 70,000 square feet. First Quarter Results --------------------- CFM International Inc. announced today that the Company continued to make excellent progress during the quarter. Earnings for the quarter ended December 31, 1995 include the results of operations of Majestic which was acquired on September 29, 1995. Declining economic conditions in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and weak consumer demand resulted in lower than expected unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. across the industry. However, with the acquisition of Majestic, the Company is able to report first quarter results that represent year-over-year growth in all key financial categories. Consolidated net income for the three month period ended December 31, 1995 increased to $4.5 million or 30 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared to $3.4 million or 23 cents per share for the three month period ended December 31, 1994. (earnings per share adjusted for 2,500,000 special warrants outstanding at December 31, 1995 is 26 cents.) Sales for the first three months of fiscal 1996 were $38.7 million, up 172 percent compared to $14.2 million in the prior period. This substantial increase includes Majestic's sales of $25.2 million for the quarter. Integration of Majestic ----------------------- The acquisition of The Majestic Products Company offers the best opportunity for the Company to exploit the accelerating growth in the gas fireplace products market with a combined company that is North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. in scope. As part of the acquisition, the Company developed a program of integration identifying the key factor that will influence its future performance addressing competition, market and technology issues. The objectives of this program are to reinforce CFM's position as the dominant force in the North American fireplace industry and to ensure the Company is positioned for continued growth in sales, earnings and cash flow in 1996 and onward. Rationalization of Production Capacity -------------------------------------- The program of integration included a thorough study of the manufacturing facilities of the Company addressing cost effectiveness, product quality and deliverability. This study revealed that there were significant cost reduction opportunities. The Company is announcing significant steps taken to rationalize production capacity aimed at reducing the Company's cost of manufacturing and improving customer service. (a) Plant closure The Company is today announcing the closure of its' Austin, Texas manufacturing facility. It is estimated that the annual pre-tax savings in duplicate administration, manufacturing overhead and freight cost will exceed US$2.5 million. The production of the Austin, Texas facility will be moved to the more cost effective Huntington, Indiana and Mississauga, Ontario For the First Nation, see . Mississauga (pronounced: [ˌmɪsɪˈsɑgə] listen facilities. In addition to the cost savings, these facilities will achieve reductions in per unit overhead costs overhead costs see fixed costs. as a result of higher volumes. It is estimated that the pre-tax charge net of proceeds on the sale of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → including land and building associated with the rationalization of production capacity described above will be approximately US$4.5 million. Of this amount, US$3.5 million is a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. , which represents the sale of certain fixed assets at the Austin facility at amounts less than originally assigned on acquisition at September 29, 1995. Only US$1 million is a pre-tax cash charge, which represents employee severance and plant moving costs and based upon the estimated savings described above will have a very rapid payback period Payback Period The length of time required to recover the cost of an investment. Calculated as: . (b) Union contract amendments The hourly employees at Majestic's Huntington, Indiana facility are unionized and are represented by Local 204 of the Sheet Metal Workers International Association. In anticipation of the rationalization of production capacity and closure of the Austin facility, management undertook to negotiate amendments to the existing collective agreement with the hourly employees at the Huntington facility and to extend the duration of the contract. Management presented the membership with an offer that included the following: - an extension of the expiry date expiry date expire n → date f d'expiration; (on label) → à utiliser avant ... expiry date expire n → Ablauftermin m from May, 1995 to May, 2001, - 7 percent salary increase throughout this term, - flexibility in hiring new employees at tier 2 wage rates which are about 20 percent less than tier 1 rates paid to existing employees, - greater flexibility in scheduling of work and workers, - participation in Majestic's profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of plan. The Company announced today that the membership ratified the amendments as described above. This will be extremely beneficial to the Company in ensuring uninterrupted production at the Huntington facility through to May, 2001. In addition, increased flexibility in scheduling of work and workers will enable this facility to achieve higher levels of labor efficiency. Profit sharing effectively integrates the interests of these employees with those of our shareholders. (c) Plant expansion The Company today announced that it will use the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). on the sale of the Austin, Texas facility estimated to be about US$2.5 million to expand the Huntington, Indiana facility by approximately 60,000 to 70,000 square feet on adjacent property already owned by Majestic. The expansion of this facility is necessary to accommodate the transfer of production from Austin, Texas. The Economic Development Commission of the City of Huntington passed a favorable recommendation on to the City Council to grant a 10 year tax abatement on property and business taxes relating to the addition. The Company is one of the largest manufacturers of gas and woodburning fireplaces and related components in North America. The Company designs, engineers and manufactures a full line of innovative fireplace products and conducts ongoing research and development aimed at improving the design and efficiency of its fireplaces. The Company's market position is due primarily to continual product development together with an ability to effectively market its products to a wide range of consumers through strategic relationships with gas utilities, strong regional distributors and local dealers in Canada and through an extensive network of distributors in the United States. CONTACT: CFM International Inc. Colin M. Adamson President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. 905/670-7777 905/670-7915 (Fax) or CFM International Inc. Rick Blum Vice President & CFO See Chief Financial Officer. 905/670-7777 905/670-7915 (Fax) |
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