CoActive Marketing Group, Inc. Reports Fiscal 2006 Financial Results.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- CoActive co·ac·tion n. 1. An impelling or restraining force; a compulsion. 2. Joint action. 3. Ecology Any of the reciprocal actions or effects, such as symbiosis, that can occur in a community. Marketing Group, Inc. (Nasdaq: CMKG), an independent marketing, sales promotion and interactive services company, in its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. recently filed with the Securities and Exchange Commission, reported financial results for its fiscal fourth quarter and year ended March 31, 2006. Fiscal Year Performance Net loss for fiscal 2006 was ($1,031,000), or ($.16) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $1,152,000, or $.18 per diluted share for fiscal 2005. Fiscal 2006 results include aggregate pre-tax charges in excess of $3.0 million that are not expected to recur in fiscal 2007. These charges include approximately $900,000 of lease termination and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal associated with our former office in Great Neck, New York Great Neck is a village in Nassau County, New York, in the U.S., on the North Shore of Long Island. As of the United States 2000 Census, the village population was 9,538. The Village of Great Neck is in the Town of North Hempstead. ; $1.1 million of operating costs operating costs npl → gastos mpl operacionales associated with non-revenue producing sales and administrative personnel that have been terminated; an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $626,000 to write off of the goodwill associated with our Optimum subsidiary; a non-cash operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. charge of $218,000 related to the Company's accounting for the lease of one of its offices; and additional bad debt provisions of $200,000. Sales for fiscal 2006 were $98,038,000, compared to $83,951,000 for fiscal 2005, and included reimbursable re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. costs and expenses of $38,338,000 and $29,999,000, respectively. At March 31, 2006, excluding MarketVision as well as reimbursable costs and expenses, the Company's sales backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. was approximately $22,781,000, compared to sales backlog of approximately $18,529,000 at March 31, 2005. At March 31, 2006, the Company's bank debt had been reduced to $3,000,000 from $4,584,500 at March 31, 2005, a decrease of $1,584,500. In addition, at March 31, 2006, the Company had $3,000,000 of unused borrowing capacity under its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Fourth Quarter Performance Net loss for the quarter ended March 31, 2006 was ($845,000) or ($0.13) per diluted share, compared to a net loss of ($154,000), or ($0.02) per diluted share, for the quarter ended March 31, 2005. The net loss for the fourth quarter of fiscal 2006 includes pre-tax non-recurring charges, amounting to approximately $1,280,000. Such charges consisted of: an impairment charge of $626,000 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the write off of the goodwill associated with the Company's Optimum subsidiary; severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and other employee termination costs of $300,000; a non-cash operating expense charge of $218,000 related to the Company's accounting for the lease of one of its offices; and an additional bad debt provision for a specific client of $137,000. Sales for the quarter ended March 31, 2006 were $23,502,000 compared to $20,120,000 for the quarter ended March 31, 2005. Sales for the quarter ended March 31, 2006 and March 31, 2005 included $10,765,000 and $7,078,000 of reimbursable costs and expenses, respectively. Fiscal 2007 Outlook Marc Particelli, CoActive's interim President and Chief Executive Officer commented, "Fiscal 2006 was a disappointing year for us. However, we are taking active steps to both reduce costs and increase sales going forward and are confident in our ability to return to profitability and deliver improved financial results as a result of our actions, as well as our current backlog. The Company's continuing efforts to manage and control operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. have resulted in the Company entering Fiscal 2007 with what it believes to be a cost structure better aligned to its projected revenues." Mr. Particelli concluded, "Notwithstanding our operating results in Fiscal 2006, we were able to reduce bank debt by almost $1.6 million during the year, which together with our subsequent sale of MarketVision for $1.1 million in cash, has strengthened our balance sheet." CoActive Marketing Group, Inc. is a marketing, sales promotion, and interactive services company that develops and manages integrated marketing, sales and promotional programs at both national and local levels for consumer product companies. The programs are geared towards growing incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales and profits by identifying and addressing key trade, sales and consumer trends. Web site: www.coactivemarketing.com This press release includes statements, which constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provision of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements reflect the current views of the Company with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in those forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2006 under "Risk Factors," including but not limited to "Outstanding Indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. ; Security Interest," "Recent Losses," "Dependence on Key Personnel," "Customers," "Unpredictable Revenue Patterns," "Competition," "Risks Associated with Acquisitions," "Expansion Risk," and "Control by Executive Officers and Directors." The Form 10-K may be obtained by accessing the database maintained by the Securities and Exchange Commission at http://www.sec.gov
CoActive Marketing Group, Inc.
Consolidated Statements of Operations
Three and Twelve Months Ended
(unaudited)
Three Months Ended Twelve Months Ended
------------------ -------------------
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
----------------- ------------ ------------ ------------ ------------
Sales $23,502,362 $20,120,296 $98,038,354 $83,950,561
----------------- ------------ ------------ ------------ ------------
Operating (Loss)
Income (1,292,800) 196,242 (1,143,759) 2,972,824
----------------- ------------ ------------ ------------ ------------
(Loss) Income
before (Benefit)
Provision for
Income Taxes and
Minority
Interest in Net
Income of
Consolidated
Subsidiary (1,334,453) 146,952 (1,362,521) 2,746,341
----------------- ------------ ------------ ------------ ------------
(Benefit)
Provision for
Income Taxes (470,559) 186,380 (409,150) 1,100,555
----------------- ------------ ------------ ------------ ------------
Net (Loss) Income
before Minority
Interest in Net
Income of
Consolidated
Subsidiary (863,894) (39,428) (953,371) 1,645,786
----------------- ------------ ------------ ------------ ------------
Minority Interest
in Net Loss
(Income) of
Consolidated
Subsidiary 18,413 (114,908) (77,856) (494,165)
----------------- ------------ ------------ ------------ ------------
Net (Loss) Income $(845,481) $(154,336) $(1,031,227) $1,151,621
----------------- ------------ ------------ ------------ ------------
Net (Loss) Income
per Common
Share:
----------------- ------------ ------------ ------------ ------------
Basic $(0.13) $(0.02) $(0.16) $0.19
----------------- ------------ ------------ ------------ ------------
Diluted $(0.13) $(0.02) $(0.16) $0.18
----------------- ------------ ------------ ------------ ------------
Weighted Average
Shares
Outstanding:
----------------- ------------ ------------ ------------ ------------
Basic 6,618,951 6,192,823 6,452,847 6,004,948
----------------- ------------ ------------ ------------ ------------
Diluted 6,618,951 6,192,823 6,452,847 6,391,435
----------------- ------------ ------------ ------------ ------------
Consolidated Balance Sheet
March 31, 2006 March 31, 2005
Total Assets $41,981,180 $34,932,341
Current Debt 1,000,000 1,000,000
Long-Term Debt 2,000,000 3,584,500
Total Liabilities 32,403,015 24,924,499
Stockholders' Equity 9,578,165 10,007,842
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