Concert Provides CCAA Update and Announces Third Quarter Results.GATINEAU, Quebec -- Concert Industries Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CNG CNG Compressed Natural Gas CNG Calling (Tone) CNG Comfort Noise Generation CNG Cryptography Next Generation (Microsoft Windows Vista) CNG Centre National de Génotypage ) today provided a CCAA CCAA Comunidades Autónomas CCAA China Center of Adoption Affairs CCAA Companies' Creditors Arrangement Act (Canada) CCAA California Collegiate Athletic Association CCAA Commercial Collection Agency Association update and announced its financial results for the third quarter ended September 30, 2004. CCAA Update On August 5, 2003, the Company and certain of its North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. subsidiaries obtained an order from the Quebec Superior Court Quebec Superior Court is the highest trial Court in the Province of Quebec, Canada. It consists of 144 judges who are appointed by the federal government following the recommendation of the Premier of Quebec. of Justice providing creditor protection under Companies' Creditors Arrangement Act ("CCAA"). The Company's European operations were excluded from the CCAA proceedings. On November 4, 2004, Concert Fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. Ltee, Concert Airlaid Ltee and Advanced Airlaid Technologies Inc. (the "Canadian operating subsidiaries") under the CCAA proceedings filed a motion to order a meeting of their creditors to consider and vote on a final plan of compromise and arrangement. The Superior Court for the District of Montreal Of Montreal is an American indie pop band formed in Athens, Georgia, fronted by Kevin Barnes. It was among the second wave of groups to emerge from The Elephant 6 Recording Company. on Monday, November 8, 2004, ordered the Canadian operating subsidiaries to call and hold a meeting on December 10, 2004 and that during the interim period, creditors will submit proof of their claims against the Canadian operating subsidiaries. Concert's Board of Director's have unanimously approved this plan as the best alternative available to the Company, providing the greatest value to the stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. and maintaining the ongoing operations of the Canadian operating subsidiaries. The Canadian operating subsidiaries' plan would entail a significant restructuring of Concert's Canadian operations. The Company's European operations will continue to be unaffected by the plan, as they are excluded from the CCAA proceedings. The plan is part of a comprehensive reorganization of the business and affairs of Concert's Canadian operating subsidiaries and is designed to enable them to be restructured and repositioned on a long-term basis as a viable business in the development and manufacture of specialty pulp based absorbent absorbent /ab·sor·bent/ (-sor´bent) 1. able to take in, or suck up and incorporate. 2. a tissue structure involved in absorption. 3. a substance that absorbs or promotes absorption. latex, thermal and multi-bonded airlaid fabrics. The Canadian operating subsidiaries have developed the plan, which they believe is in the best interest of all stakeholders including creditors, suppliers and employees. As announced in the press release of September 27, 2004, Tricap Restructuring Fund ("Tricap") acquired the senior secured debt, and these Canadian operating subsidiaries have since been involved in ongoing discussions concerning the plan and the restructuring of their operations with the support of this senior lender. Certain other major creditors that are affected by the plan have agreed to vote in favour of and support the plan. Shareholders and creditors of the legal entity Concert Industries Ltd. will not be entitled to vote on, or participate in, the plan of the Canadian operating subsidiaries. If the creditors of the Canadian operating subsidiaries accept the plan of arrangement and the resultant implementation of the plan, Concert Industries Ltd. will no longer have ownership or control of any of its operating companies operating company A business that engages in transactions with outsiders. . Shareholders and unsecured creditors Unsecured Creditor An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because they have nothing to fall back on should the borrower default on the loan. A debenture holder is an unsecured creditor. of Concert Industries Ltd. should not expect to receive any value following this transaction. The implementation of the plan is likely to result in the delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. of Concert's shares from the TSX. The entire text of the motion and the plan of arrangement is available through the Company's website at www.concert.ca, or through the website of the Monitor, PricewaterhouseCoopers Inc., at www.pwc.com/brs-concertgroup. Third Quarter Results Results for the third quarter of 2004 showed a net loss of $ 4.8 million (or $ 0.15 per share) compared to a net loss of $ 30.8 million (or $ 0.92 per share) for the same period last year. For continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , the Company recorded a net loss of $ 4.8 million (or $ 0.15 per share) compared to a net loss of $ 28.8 million (or $ 0.86 per share) in the prior year. Included in the net loss for the third quarter of 2004 are $ 1.6 million of reorganizing expenses, incurred as a result of the CCAA Proceedings and primarily consisting of professional fees, compared to $ 6.9 million for the same period last year for reorganizing expenses, refinancing expenses, write-down of deferred costs and write-down of goodwill. Revenues increased by $ 3.3 million to $ 46.1 million or 7.7 % compared to the third quarter in 2003, due to higher volumes in the European segment, partially offset by competitive pricing pressures in the over supplied North American segment and a weakened United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. dollar. Gross margin was down $ 0.4 million to $ 6.9 million. This decrease in gross margin was a result of lower operating efficiencies in the North American segment combined with a weakened United States dollar, partially offset by increased volumes and improved throughput in the European segment. As a percentage of revenue, the gross margin declined to 14.9 % from 17.1 %, compared to the third quarter of 2003. 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. , excluding amortization and interest, were $ 5.1 million, down 5.6 % compared to the third quarter last year. Cost reductions in the areas of administration, selling and marketing reflect the effects of the Turnaround Plan that included the relocation of the corporate office and reduction in overhead at the Gatineau facility. Selected Financial Information --------------------------------------------------------------------- Unaudited Three months ended Nine months ended (in millions of September 30 September 30 Canadian dollars) 2004 2003 2004 2003 --------------------------------------------------------------------- --------------------------------------------------------------------- Revenue $46.1 $42.8 $134.2 $118.2 Gross margin 6.9 7.3 25.4 20.3 Operating expenses (5.1) (5.4) (14.8) (17.8) --------------------------------------------------------------------- EBITDA (i) 1.8 1.9 10.6 2.5 --------------------------------------------------------------------- Amortization (1.6) (2.4) (4.2) (8.6) Interest (2.7) (2.9) (8.5) (8.0) Reorganizing expenses (1.6) (1.2) (4.0) (1.2) Refinancing expenses - (1.2) - (1.2) Write-down of deferred costs - (1.4) - (1.4) Write-down of goodwill - (3.1) - (3.1) Income tax expense (0.7) (18.5) (1.6) (15.3) --------------------------------------------------------------------- Loss from continuing operations (4.8) (28.8) (7.7) (36.3) --------------------------------------------------------------------- Loss from discontinued operations - (2.0) - (3.0) --------------------------------------------------------------------- --------------------------------------------------------------------- Net loss $(4.8) $(30.8) $(7.7) $(39.3) --------------------------------------------------------------------- --------------------------------------------------------------------- EPS - basic and diluted (in dollars) Continuing operations $(0.15) $(0.86) $(0.27) $(1.10) Discontinued operations - (0.06) - (0.09) --------------------------------------------------------------------- Total (0.15) (0.92) (0.27) (1.19) --------------------------------------------------------------------- For financial presentation purposes, Concert ACI Inc. has been treated as discontinued operations. (i) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become is defined as earnings before provisions for amortization, interest expense, reorganizing expenses, write-down of property, plant and equipment, deferred cost and goodwill, income taxes, and discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . EBITDA is not a measure of performance under Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ; however, management uses this performance measure to assess the operating performance of its assets. Cash Flow/Financial Position Cash from operating activities exceeded cash used in investing activities by $ 3.8 million during the quarter. As at September 30, 2004, the Company had net borrowings under the DIP financing of $ 7.5 million and had drawn $ 0.6 million under its German bank line of credit. Additional information Additional information is contained in the Company's interim financial statements and management's discussion and analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial , which are available on the Company's web site, www.concert.ca, and on the SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review web site, www.sedar.com. Concert Industries Ltd. is a company specializing in the manufacture of cellulose fiber-based non-woven fabrics using airlaid manufacturing technology. Concert's products have superior absorbency ab·sor·bent adj. Capable of absorbing: absorbent cotton. n. A substance that is capable of absorbing. ab·sor capability and are key components in a wide range of personal care consumer products, including feminine hygiene Feminine hygiene is a general term used to describe products used by women during menstruation, vaginal discharge, and other bodily functions related to the vulva. Sanitary Towels (also known as maxi-pads or napkins), pantiliners, tampons, and feminine wipes are the major and adult incontinence products. Other applications include pre-moistened baby wipes, disposable medical and filtration applications and tabletop products. The Company has manufacturing facilities in Canada, in Gatineau and Thurso, Quebec Thurso is a city in the Papineau Regional County Municipality in the Outaouais region of western Quebec. It is located on the Ottawa River, and is within Canada's National Capital Region. Its 2001 population was 2436. , and in Germany, in Falkenhagen, Falkenhagen-Prignitz. Forward Looking Statements Statements contained in this press release that are not historical facts are forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Such factors include among others: competition, reliance on new products, management of growth and expansion, product obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. , reliance on major customers and suppliers, start-up of new manufacturing facilities, foreign currency, government regulation and intellectual property rights. Certain information contained in this press release includes forward-looking statements regarding the Company's expectations and beliefs with respect to current and future events and financial performance. These forward-looking statements are, and will be, subject to many risks and uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's operations and business environment that may cause actual results of the Company to differ materially from those expressed or implied in such forward-looking statements. Such factors include, but are not limited to, the following: the potential adverse impact on the Company's liquidity of being under creditor protection; the Company's ability to continue as a going concern; the potential effects of the extended duration the Company remains under CCAA protection, the Company's ability to operate pursuant to the debtor-in-possession financing Debtor-in-possession financing New debt obtained by a firm during the Chapter 11 bankruptcy process, Federal Bankruptcy Rule 4001 (c)(1). This financing is unique because it is secured, that is, it has priority over existing debt, equity and other claims. facility; the Company's ability to implement a restructuring plan; the outcome of the meeting of the Company's creditors on December 10, 2004; the Company's ability to retain key employees; the Company's ability to obtain and maintain appropriate terms with suppliers; the Company's ability to attract and retain customers; and the cost and availability of financing. These are some of the known factors that could have an adverse effect on the Company's results of operations. A further discussion on the risks and uncertainties that could cause actual results to differ from those projected, anticipated, or implied can be found in Concert's securities filings, including the fiscal 2003 Management's Discussion and Analysis. Concert does not undertake to update forward-looking statements. CONCERT INDUSTRIES LTD. (TSX:CNG) |
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