Constar International Announces 2003 First Quarter Results.Business Editors PHILADELPHIA--(BUSINESS WIRE)--April 28, 2003 Constar International Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CNST CNST Clinical Negligence Scheme for Trusts (UK) CNST Certified Network Systems Technician ) today announced its results for the first quarter ended March 31, 2003. The company reported a first quarter net loss of $1.8 million, or $(0.15) 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 a 2002 first quarter net loss of $45.8 million or $(3.82) per diluted share. The net loss for the first quarter of 2002 included a $50.1 million charge for the cumulative effect of a change in accounting for goodwill. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter increased 0.4 percent to $168.8 million compared to the prior-year period of $168.1 million. This reflects increased shipments of custom products and the pass-through pass-through n. 1. An opening between two rooms, especially a shelved space between a kitchen and dining room that is used for passing food. 2. A route through which something is permitted to pass. 3. of increased resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing prices, offset by reduced shipments of conventional containers and price concessions tied to contract extensions. Total PET unit volume for the first quarter was down 0.7% compared to the prior year period. "In line with our previous communications, first quarter results were impacted by softer volumes resulting from a slower ramp-up of new customer contracts as well as the unseasonably cold weather experienced in many of the domestic regions we serve," commented Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. Hoffman, President and Chief Executive Officer. "However, during the quarter we continued to execute on our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategy by containing our costs, growing our custom volume, signing new customer contracts and extending relationships with existing customers." For the first quarter of 2003, the company reported a gross profit of $12.1 million compared to 2002 first quarter gross profit of $13.9 million, representing a decline of 12.9 percent. The reduction in gross profit is attributable to the decline in conventional volume, and the implementation of price reductions mostly granted to extend long-term contracts and increase volumes. In addition, the company experienced an increase in warehousing costs as it built inventory in anticipation of the traditionally busy summer months. 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. (selling and administrative expenses, management charges, research and technology expense, foreign exchange adjustments, and other expense, net) for the first quarter were $6.3 million, compared to operating expenses of $6.0 million in the first quarter of 2002. This increase includes a rise in stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. associated with being an independent company which were mostly offset by a discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of management charges and research and technology charges from our former parent as a result of our November November: see month. 2002 initial public offering. Interest expense was $8.3 million in the first quarter compared to $0.9 million in the same period of 2002. The increase of $7.4 million was a result of the debt incurred in conjunction with the company's November 2002 IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. . Income/(loss) before taxes and cumulative effect of change in accounting for goodwill was a loss of $2.5 million in the quarter compared to income of $ 7.0 million in the same period of 2002. The primary contributors to this decline were the previously noted reduction in gross profit and the increase in interest expense. Adding interest, depreciation and amortization, and minority interest to income/(loss) before taxes and cumulative effect of a change in accounting for goodwill yields an 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 for the quarter of $19.8 million, down from the prior year's quarter of $21.4 million. The decrease was driven by the reduced shipments of conventional containers and the previously mentioned price reductions. EBITDA may not be comparable to EBITDA as defined by other companies. Although EBITDA is a non-GAAP measurement, the Company believes it is a useful measure of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. prior to debt service. It is also a key financial measure used to determine the company's compliance with certain financial covenants in the company's senior secured credit agreement. The company ended the quarter with $50.0 million borrowed on its $100 million revolving credit agreement Revolving credit agreement A legal commitment in which a bank promises to lend a customer up to a specified maximum amount during a specified period. revolving credit agreement See line of credit. , a reduction of $5.0 million from 2002 year end. Largely due to this decrease in debt, the company's cash and cash equivalents at the end of the quarter were $14.6 million compared to $20.9 million at year-end 2002 Conference Call The company will hold a conference call on April 29, 2003, at 10:00 am (ET) to discuss this news release and the Company's business outlook. Forward looking and other material information will be discussed on this conference call. The dial-in numbers for the conference call are (800) 589-4298 (domestic callers) or (719) 457-0349 (international callers). A replay of the broadcast will be available from 2:00 p.m. on April 29, 2003 through midnight on May 7, 2003. The rebroadcast can be accessed via telephone by dialing (888) 203-1112 (domestic callers) or (719) 457-0820 (international callers) and entering passcode 647395, or via the web at http://www.constar.net. Cautionary Note Regarding 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. This press release includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Statements that include the words "expect," "believe," "intend," "plan," "anticipate," "project," "will," "may," "could," "should," "pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma ," "continues," "estimates," "potential," "predicts," "goal," "objective" and similar statements of a future nature identify forward-looking statements. These forward-looking statements and forecasts are subject to risks, uncertainties and assumptions, including, among other things, continued conversion from metal, glass and other materials for packaging to plastic packaging; increasing demand for packaging requiring our proprietary technologies and know-how; our ability to protect our existing technologies and to develop new technologies; our ability to control costs; our ability to achieve improved utilization on our equipment; the terms upon which we acquire resin and our ability to reflect those terms in our sales; our debt levels and our ability to obtain financing and service debt; our ability to comply with restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. contained in the instruments governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. our 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. ; legal and regulatory proceedings and developments; general economic and political conditions; weather conditions; our ability to identify trends in our markets and to offer new solutions that address the changing needs of these markets; our ability to successfully execute our business model and enhance our product mix; our ability to compete successfully against competitors; and the other risks identified from time to time in our SEC filings. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur and the forecasts included in this press release may not be accurate. We do not intend to review or revise any particular forward-looking statement or forecast in light of future events. About Constar Philadelphia-based Constar is a leading global producer of PET (polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n terephthalate Ter`eph´tha`late n. 1. (Chem.) A salt of terephthalic acid. ) plastic containers for food, soft drinks and water. The company provides full-service packaging solutions, from product design and engineering to ongoing customer support. Its customers include many of the world's leading branded consumer products companies.
CONSTAR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS COMPARISON
(in thousands, except per share data)
First First
Quarter Quarter
2003 2002
--------- ---------
Net customer sales $168,433 $166,842
Net sales to affiliates 358 1,306
--------- ---------
Net sales 168,791 168,148
Cost of products sold, excluding depreciation 142,732 140,661
Depreciation 14,002 13,580
--------- ---------
Gross profit 12,057 13,907
- -
Selling and administrative expense 4,759 2,216
Management charges - 996
Research and technology expense 1,419 2,966
Interest expense, net 8,283 850
Foreign exchange adjustments 47 (70)
Other expense/(income), net 63 (66)
--------- ---------
Income/ (loss) before taxes and cumulative effect
of change in accounting for goodwill (2,514) 7,015
Provision for income taxes (610) 2,711
Minority interest (73) 87
--------- ---------
Income (loss) before cumulative effect of change
in accounting for goodwill (1,831) 4,217
Cumulative effect of change in accounting for
goodwill - (50,059)
--------- ---------
Net loss ($1,831) ($45,842)
========= =========
Net loss per share of common stock:
Basic: ($0.15) ($3.82)
Diluted: ($0.15) ($3.82)
Weighted average shares outstanding:
Basic: 12,000 12,000
Diluted: 12,015 12,000
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SELECTED FINANCIAL DATA
---------------------------------------------------
Earnings before interest, taxes, depreciation and
amortization, minority
interest and the cumulative effect of a change in
accounting ("EBITDA") $19,771 $21,445
March December
31, 31,
2003 2002
--------- ---------
Cash and cash equivalents 14,599 20,913
Debt:
Senior Revolving Credit ($100 million
facility) 50,000 55,000
Term B Loan 149,250 149,625
Senior Subordinated Debt 172,484 172,392
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