Constar International Inc. Announces 2002 Fourth Quarter and Year End Results.Business Editors PHILADELPHIA--(BUSINESS WIRE)--March 4, 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 fourth quarter and fiscal year ended December December: see month. 31, 2002. Twelve-Month Results For the twelve months ended December 31, 2002, gross profit grew 46 percent to $59.2 million on $704.3 million of 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 compared to the prior year's $40.6 million on $745.8 million of net sales. The improvement in gross profit reflects increased capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. , enhanced product mix, which was achieved through increased shipments of custom products and water bottles and reduced shipments of lower margin conventional products, as well as improved operating efficiencies attributable to ongoing cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. practices. The decline in sales was attributable to lower shipments of carbonated car·bon·ate tr.v. car·bon·at·ed, car·bon·at·ing, car·bon·ates 1. To charge (a beverage, for example) with carbon dioxide gas. 2. To burn to carbon; carbonize. 3. To change into a carbonate. soft drink container units as well as 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 reduced 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. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
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. If the Company's 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. had occurred on January January: see month. 1, 2002 rather than November November: see month. 20, 2002, the Company believes it would have achieved higher EBITDA during 2002 for two reasons. First, as noted in the Company's IPO prospectus, there were savings to the Company as a result of its former parent, Crown Cork The crown cork (also known as a crown cap or just a crown), the first form of bottle cap, was invented by William Painter in 1891 in Baltimore. The company making it was originally called the Bottle Seal Company, it changed its name with the almost immediate success & Seal Company, Inc., retaining the liabilities for certain participants in the Company's pension plan. The Company estimates that these savings would have increased 2002 EBITDA by approximately $2.5 million if the IPO had occurred on January 1, 2002. Second, the Company's former parent, charged the Company for research and technology expenses based on a flat percentage of the Company's sales and allocated costs to the Company for management charges. The Company believes that if the IPO had occurred on January 1, 2002, the its total expenses for these two costs during 2002 would have been $2.3 million lower, with savings from the abandonment of the research and technology charge being offset by an increase in the Company's internal management costs over the amount allocated by the Company's former parent. Adjusted for these two factors, EBITDA for 2002 would have been $92.7 million. Michael J. Hoffman, President and Chief Executive Officer, commented, "We are extremely pleased with the Company's successes in 2002 from both operational and financial perspectives. Despite soft sales of carbonated conventional bottles in December, we executed well for the year by achieving improved utilization on our equipment and growing our custom and water bottle businesses." 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, and research and technology expense) for the year 2002 were $26.6 million which included $3.6 million of management charges and $ 9.8 million of research and technology charges from the Company's former parent. Both of these charges ceased as of the closing of the Company's IPO. This compares to $40.8 million in operating expenses in the prior year period including $12.2 million in goodwill amortization, and a $2.0 million provision for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and asset 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. , or $26.6 million in operating expenses excluding these charges. The Company defines operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. as earnings before interest, taxes, minority interest and cumulative effect of change in accounting for goodwill. 2002 operating profit grew to $32.0 million compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $0.9 million in 2001 (or an operating profit of $13.3 million excluding goodwill amortization and provision for restructuring and asset impairment) resulting from the improved gross profit. Interest expense (net) for the fiscal year 2002 was $7.0 million, 33 percent lower than the $10.4 million in interest expense (net) for the prior year period. The reduced interest charges for 2002 reflect lower average 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. with the Company's former parent. The Company reported a net loss for the year of $35.4 million, or $2.95 per share. Excluding the $50.1 million 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. for the cumulative effect of a change in accounting for goodwill (which was effective January 1, 2002 due to the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142) the Company had net income of $14.7 million, or $1.22 per share. This compares to the $13.6 million net loss, or $1.13 per share, in 2001. Fourth Quarter Results For the fourth quarter of 2002, the Company's gross profit improved by 77 percent to $9.0 million on $154.1 million of net sales, compared to the prior year's gross profit of $5.1 million on $165.0 million of net sales. The improvement in gross profit reflects increased capacity utilization, enhanced product mix and increased operating efficiencies attributable to ongoing cost containment practices. The 2002 fourth quarter net sales reflected lower shipments of carbonated soft drink container units and custom units in the later portion of the period as well as a pass-through of reduced resin prices compared to the 2001 fourth quarter. EBITDA rose to $16.2 million, a 28 percent increase over the $12.7 million in the prior year's same period. The EBITDA growth was attributable to increased gross profit and continued spending controls. As noted earlier, 2002 financial results include allocated charges from the Company's former parent. If the Company's IPO had occurred on January 1, 2002 rather than November 20, 2002, the Company believes it would have achieved higher EBITDA during 2002 for two reasons. First, as noted in the Company's IPO prospectus, there were savings to the Company as a result of its former parent retaining the liabilities for certain participants in the Company's pension plan. The Company estimates that these savings would have increased 2002 EBITDA by approximately $0.4 million if the IPO had occurred on January 1, 2002. Second, the Company's former parent charged the Company for research and technology expenses based on a flat percentage of the Company's sales and allocated costs to the Company for management charges. The Company believes that if the IPO had occurred on January 1, 2002, the Company's total expenses for these two costs during 2002 would have been $0.7 million lower, with savings from the abandonment of the research and technology charge being offset by an increase in the Company's internal management costs over the amount allocated by the Company's former parent. Adjusted for these two factors, EBITDA for the fourth quarter of 2002 would have been $17.3 million. Reported fourth quarter operating expenses (selling and administrative expenses, management charges, and research and technology expense) were $6.7 million, which included $0.7 million of management charges and $1.2 million of research and technology charges from the Company's former parent. These charges covered the period from October 1, 2002 through the closing of the IPO. Both of these charges ceased as of the closing of the IPO. The Company's 2001 fourth quarter operating expenses were $9.2 million (including $3.0 million of goodwill amortization and $1.1 million in terminated management charges), or 37 percent above the 2002 same period level. Operating profit in the fourth quarter grew to $1.9 million compared to an operating loss of $4.6 million in the 2001 fourth quarter (or a $1.5 million loss excluding goodwill amortization). This improvement resulted from increased gross profit as well as reduced operating expenses. Interest expense (net) in the fourth quarter was $5.3 million, a 279 percent increase over the $1.4 million in interest expense (net) in the same period last year. The increase reflects borrowing to pay for the costs associated with the IPO and the amortization of associated financing fees. The Company reported a fourth quarter net loss of $2.4 million, or $0.20 per share, compared to the $5.1 million net loss, or $0.43 per share, in the 2001 fourth quarter. The Company ended the year with $55.0 million borrowed on its $100 million senior 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. and $20.9 million in cash on hand. Conference Call The Company will hold a conference call tomorrow March 5, 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 800-361-0912 (domestic callers) or 913-981-5559 (international callers). A replay of the broadcast will be available from 2:00 p.m. on March 5, 2003 through March 12, 2003. The rebroadcast can be accessed via telephone by dialing 888-203-1112 (domestic callers) or 719-457-0820 (international callers) and entering passcode 165415, 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; 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. In addition, the pro forma information presented in this press release is unaudited and should not be considered indicative of actual results that would have been achieved had the IPO been completed as of the date indicated and do not purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to indicate the Company's balance sheet data or results of operations as of any future date or for any future period. 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. For more information, contact: James C. Cook, Executive Vice President and Chief Financial Officer, (215) 698-5392 Ed Bisno, Edelman Ed·el·man , Gerald Maurice Born 1929. American biochemist. He shared a 1972 Nobel Prize for research on the chemical structure and nature of antibodies. Financial, (212) 704-8212
CONSTAR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS COMPARISON
(in thousands, except per share
data)
For the Year ended
December 31, Fourth Quarter
-----------------------------------
2002 2001 2002 2001
-----------------------------------
Net customer sales 700,490 742,772 153,705 164,298
Net affiliate sales 3,838 3,055 357 745
-----------------------------------
Net sales 704,328 745,827 154,062 165,043
Cost of products sold, excluding
depreciation 589,259 648,717 130,729 145,749
Depreciation 55,863 56,468 14,304 14,210
-----------------------------------
Gross profit 59,206 40,642 9,029 5,084
Amortization of goodwill - 12,162 - 3,039
Selling and administrative expense 10,809 9,058 3,616 2,048
Management charges 3,648 4,382 669 1,104
Research and technology expense 12,129 13,213 2,427 2,963
Provision for restructuring and
asset impairment - 2,015 - -
Interest expense, net 7,037 10,433 5,292 1,446
Other expense, net 550 152 596 274
Foreign exchange adjustments 74 537 (157) 224
-----------------------------------
Income / (loss) before income taxes
and cumulative effect of a change
in accounting for goodwill 24,959 (11,310) (3,414) (6,014)
Provision for income taxes (10,170) (2,527) 969 837
Minority interests (118) 258 53 30
-----------------------------------
Income / (loss) before cumulative
effect of a change in accounting
for goodwill 14,671 (13,579) (2,392) (5,147)
Cumulative effect of a change in
accounting for goodwill (50,059) - - -
-----------------------------------
Net loss (35,388) (13,579) (2,392) (5,147)
===================================
----------------------------------------------------------------------
Net loss per share of common stock:
Basic $(2.95) $(1.13) $(0.20) $(0.43)
Diluted $(2.95) $(1.13) $(0.20) $(0.43)
Weighted average number of shares
outstanding:
Basic 12,002 12,000 12,007 12,000
Diluted 12,002 12,000 12,007 12,000
-----------------------------------
SELECTED FINANCIAL DATA:
-----------------------------------
Earnings before interest, taxes,
depreciation and amortization,
minority interest and the
cumulative effect of a change in
accounting ("EBITDA") 87,859 67,753 16,182 12,681
Cash and cash equivalents 20,913 3,754
Debt:
Senior Revolving Credit ($100
million facility) 55,000 n/a
Term B Loan 149,625 n/a
Senior Subordinated Debt 172,422 n/a
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