Winpak Reports First Quarter 2005.WINNIPEG Winnipeg, city, Canada Winnipeg (wĭn`ĭpĕg), city (1991 pop. 616,790), provincial capital, SE Man., Canada, at the confluence of the Red and Assiniboine rivers. , Manitoba Manitoba (mănĭtō`bə), province (2001 pop. 1,119,583), 250,934 sq mi (650,930 sq km), including 39,215 sq mi (101,580 sq km) of water surface, W central Canada. -- Winpak Winpak is a company based in Winnipeg, Manitoba, Canada. The company manufactures and distributes packaging materials and products that are used to protect perishable foods, beverages, and in health care applications. Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :WPK WPK Workers' Party of Korea (Communist Party, North Korea) WPK WordPerfect Keyboard (File Name Extension) ) - The Board of Directors announces Winpak's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: results reported in US dollars for the first interim period of 2005, which ended on April 3, 2005.
April 3 March 28
For The Period Ended 2005 2004
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(thousands of US dollars, except per share amounts)
Sales 106,029 90,721
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Net earnings 5,307 4,825
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Minority interest (102) 192
Provision for income taxes 2,934 3,073
Interest 775 624
Depreciation and amortization 4,853 4,643
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EBITDA (1) 13,767 13,357
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Basic and fully diluted net earnings per share 0.82 0.74
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Caution: (1) 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 not a recognized measure under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Management believes that in addition to net earnings, this measure provides useful supplemental information to investors including an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Investors should be cautioned, however, that this measure should not be construed as an alternative to net earnings, determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP, as an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the Company's performance. The Company's method of calculating this measure may differ from other companies, and, accordingly, the results may not be comparable. The Company: Winpak Ltd. manufactures and distributes high-quality packaging materials and innovative packaging machines that are sold in combination with packaging materials. The Company's products are used primarily for the protection of perishable per·ish·a·ble adj. Subject to decay, spoilage, or destruction. n. Something, especially foodstuff, subject to decay or spoilage. Often used in the plural. foods, beverages, pharmaceuticals and in medical applications. 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 (presented in US dollars) 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. : Certain statements made in the following Management's Discussion and Analysis contain forward-looking statements including, but not limited to, statements concerning possible or assumed future results of operations of the Company. Forward-looking statements represent the Company's intentions, plans, expectations and beliefs, and are not guarantees of future performance. Such forward-looking statements represent our current views based on information as at the date of this report. They involve risks, uncertainties and assumptions and the Company's actual results could differ, which in some cases may be material, from those anticipated in these forward-looking statements. Unless otherwise required by applicable securities law, we disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. The Company cautions investors not to place undue reliance upon forward-looking statements. Results of Operations Net earnings of $0.82 per share were $0.08, or 10.8 percent, higher than in the first quarter of 2004. Organic growth added $0.11 per share to net earnings. Lower gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. , brought about mainly by the impact of continued raw material cost increases that exceeded selling price increases, reduced net earnings to the extent of $0.14 per share. Lower effective rates of income tax, a reduction in the amount of net earnings attributed to the minority shareholder and other factors together increased net earnings by $0.11 per share. Compared to the first quarter of 2004, total sales increased 16.9 percent, which included 10.2 percentage points of volume growth. Lidding sales in particular continued to show strength, while output of biaxially oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. nylon nylon, synthetic thermoplastic material characterized by strength, elasticity, resistance to abrasion and chemicals, low moisture absorbency, and capacity to be permanently set by heat. After 10 years of research E. I. film, modified atmosphere Modified atmosphere is a common technical definition that describes the practice of modifying the composition of the internal atmosphere of a package (commonly food packages, but this technique is also used for drugs) in order to improve the shelf life. packaging products and rigid This article is about mathematics. For the materials sense, see Stiffness. In mathematics, suppose C is a collection of mathematical objects (for instance sets or functions). containers were also buoyant Buoyant The term used to describe a commodities market where the prices generally rise with ease when there are considerable signals of strength. Notes: These types of markets can be very volatile as the prices are rapid to rise and fall with investor sentiment. . Selling prices were 5.0 percent higher than in the first quarter of 2004 and foreign exchange contributed the remainder of the sales increase. However, the price increases were insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. to recover raw material cost escalations, the net impact of which was to drive most of the 1.5 percentage point decline in gross profit margins. Raw material unit costs invoiced by suppliers for Winpak's eight primary raw materials jumped 11.0 percent in the first period of 2005 from the fourth quarter of 2004, or 29.8 percent when compared to the first three months of 2004. The full impact of these raw material cost increases was delayed while the purchased raw materials were held in inventory in the quarter. Therefore, margins are expected to remain under pressure well into the second quarter of 2005. The effective rate of income tax in the reported period was normal for the Company and represented a 2.0 percentage point decline compared to the prior comparative 2004 period, supplementing net earnings by $0.03 per share. Net earnings of a majority owned subsidiary, American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Biaxis Inc., were lower in the first period of 2005 and consequently the net earnings attributed by Winpak to the minority shareholder were lower to the extent of $0.05 per share. The subsidiary's new manufacturing equipment, commercialized in the fourth quarter of 2004, has taken longer than expected to perform to specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. standards. Consequently, additional pre-production expenses were incurred during the first quarter of 2005, which contributed to the subsidiary's lower net earnings. Despite the spike A burst of extra voltage in a power line that lasts only a few nanoseconds. See power surge, power swell, sag and surge suppression. (jargon) spike - To defeat a selection mechanism by introducing a (sometimes temporary) device that forces a specific result. in Winpak's preproduction pre·pro·duc·tion adj. 1. Taking place or existing before production: preproduction planning. 2. expenses, total 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. were lower in relation to sales than in the first quarter of 2004, which added net earnings to the extent of $0.03 per share. Capital Resources, Cash Flow and Liquidity In the first period of 2005, ending on April 3, the Company used cash amounting to $4.8 million for operating activities. This represented $8.2 million more than was used in the first quarter of 2004. Inventories increased during the first quarter, largely reflecting the normal seasonal buildup build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. and higher raw material unit costs. Accounts payable were lower due to additional payments including amounts for equipment and inventories purchased in the immediately preceding quarter. Financing activities included net debt reductions totaling $5 million. Cash used for operating and financing activities were funded from cash available as at December December: see month. 31, 2004 and the utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of available bank credit. Winpak is confident that sufficient resources are available to fund cash needs for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. Looking Forward Winpak continues to anticipate organic sales growth in excess of six percent. However, Winpak and other industry leaders in the flexible packaging industry continue to struggle with oil and natural gas based raw material cost increases and the attendant ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. ongoing efforts to pass them on to the customer base. Competition has impeded im·pede tr.v. im·ped·ed, im·ped·ing, im·pedes To retard or obstruct the progress of. See Synonyms at hinder1. [Latin imped these efforts and at this early point in the year, the Company is unwilling to predict that the escalations will be fully recovered during the current year. Under these circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , and assuming no other unforeseen events, the Company now anticipates a net earnings increase limited to the bottom end of previous guidance of between 9 and 15 percent.
Corporate Office
100 Saulteaux Crescent
Winnipeg, Manitoba
Canada R3J 3T3
Tel. (204) 889-1015
Fax (204) 888-7806
Internet: www.winpak.com
Winpak Ltd.
Interim Consolidated Financial Statements
Period ended: April 3, 2005
These interim consolidated financial statements have not been audited
or reviewed by the Company's independent external auditors,
PricewaterhouseCoopers LLP.
Winpak Ltd.
Consolidated Balance Sheets
(thousands of US dollars)
(2005 Unaudited)
April 3 December 31
2005 2004
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Assets
Current Assets:
Cash - 11,654
Accounts receivable 54,489 51,841
Inventories 68,853 63,802
Prepaid expenses 3,283 1,935
Future income taxes 2,258 2,234
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128,883 131,466
Property, plant and equipment (net) 200,336 200,870
Other assets 6,266 5,920
Intangible assets (net) 12,628 13,198
Goodwill 16,015 16,140
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364,128 367,594
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Liabilities and Shareholders' Equity
Current Liabilities:
Bank indebtedness 4,875 -
Accounts payable and accrued liabilities 30,102 36,348
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34,977 36,348
Long-term debt 54,000 59,000
Deferred credits 9,419 9,669
Future income taxes 29,746 28,704
Postretirement benefits 440 894
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128,582 134,615
Minority interest 10,868 10,971
Shareholders' Equity:
Share capital 29,195 29,195
Retained earnings 165,503 160,856
Cumulative currency translation
adjustments 29,980 31,957
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224,678 222,008
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364,128 367,594
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See accompanying notes to consolidated financial statements.
Winpak Ltd.
Consolidated Statements of Earnings
(thousands of US dollars, except per share amounts)
(Unaudited)
For The Period Ended
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April 3 March 28
2005 2004
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Sales 106,029 90,721
Cost of sales 77,850 65,247
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Gross profit 28,179 25,474
Expenses
Selling, general & administrative 16,474 14,915
Research and technical 1,974 1,786
Pre-production 817 59
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Earnings from operations 8,914 8,714
Interest 775 624
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Earnings before income taxes and minority interest 8,139 8,090
Provision for income taxes 2,934 3,073
Minority interest (102) 192
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Net earnings 5,307 4,825
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Basic and fully diluted earnings per share 0.82 0.74
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Average number of shares outstanding (000's) 6,500 6,500
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Consolidated Statements of Retained Earnings
(thousands of US dollars)
(Unaudited)
For The Period Ended
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April 3 March 28
2005 2004
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Retained earnings, beginning of period 160,856 137,435
Net earnings 5,307 4,825
Dividends declared (660) (650)
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Retained earnings, end of period 165,503 141,610
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See accompanying notes to consolidated financial statements.
Winpak Ltd.
Consolidated Statements of Cash Flows
(thousands of US dollars, except per share amounts)
(Unaudited)
For The Period Ended
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April 3 March 28
Cash provided by (used in): 2005 2004
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Operating activities:
Net earnings for the period 5,307 4,825
Items not involving cash:
Depreciation 4,284 4,133
Amortization - intangible assets 569 510
Pension plan and postretirement benefits 703 503
Future income taxes 1,292 722
Foreign exchange loss on long-term debt 489 546
Minority interest (102) 192
Other 191 4
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Cash flow from operating activities before
change in working capital 12,733 11,435
Change in working capital:
Accounts receivable (2,938) (3,378)
Inventories (5,597) (2,397)
Prepaid expenses (1,378) (790)
Accounts payable and accrued liabilities (6,023) (1,293)
Pension plan and postretirement benefits payments (1,633) (199)
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(4,836) 3,378
Investing activities:
Acquisition of property, plant and equipment (5,702) (5,416)
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(5,702) (5,416)
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Financing activities:
Proceeds from long-term debt 2,000 -
Repayments of long-term debt (7,000) -
Dividends paid (813) (756)
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(5,813) (756)
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Foreign exchange translation adjustment on cash (178) 4
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Change in cash/bank indebtedness (16,529) (2,790)
Cash, beginning of period 11,654 1,845
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Bank indebtedness, end of period (4,875) (945)
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Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense 1,343 1,206
Income tax expense 4,668 3,360
See accompanying notes to consolidated financial statements.
Winpak Ltd. Notes to Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge For the periods ended April 3, 2005 and March 28, 2004 (thousands of US dollars, unless otherwise indicated) (Unaudited) 1. Basis of Presentation: The unaudited consolidated interim financial statements have been prepared in accordance with 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 "GAAP". They have been prepared using the same accounting policies and methods of application as disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the Company's audited consolidated financial statements for the year ended December 31, 2004 except as disclosed in note 2 to the consolidated interim financial statements. These unaudited consolidated interim financial statements do not include all of the information and notes to the financial statements Notes to the financial statements A detailed set of notes immediately following the financial statements in an annual report that explain and expand on the information in the financial statements. required by GAAP for annual financial statements and therefore should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the audited consolidated financial statements and notes included in the Company's Annual Report for the year ended December 31, 2004 2. Fiscal year: Effective January January: see month. 1, 2005 the Company changed its fiscal year end from December 31 to the nearest Sunday Sunday: see Sabbath; week. to December 31. The Company's fiscal year will normally be 52 weeks in duration but will include a 53rd week every 5 to 6 years. The first quarter consolidated statements of earnings and retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and cash flows are for the periods January 1 to April 3, 2005 and January 1 to March 28, 2004, respectively. 3. Selling, general & administrative expenses: Included within selling, general & administrative expenses are the following amounts:
For The Period ended
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April 3 March 28
2005 2004
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Foreign exchange translation losses 264 331
Defined benefit pension plan expense 551 409
Foreign exchange translation losses represent the realized and unrealized foreign exchange differences recognized upon translation of monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. (including long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. ) and realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of cumulative currency translation adjustments. 4. Seasonality: The Company experiences seasonal variation in sales, with sales typically being the highest in the second and fourth quarters, and lowest in the first quarter. 5. Comparative Interim Amounts: Certain comparative interim amounts have also been reclassified to conform with the presentation in the current period. WINPAK LTD. (TSX:WPK) |
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