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ARCA REPORTS FOURTH QUARTER AND FULL-YEAR 1995 RESULTS

MINNEAPOLIS, March 7 /PRNewswire/ -- Due primarily to an $800,000 ($1.3 million pre-tax) restructuring charge related to loss on impaired assets and other non-cash items that supported its electric utility business, Appliance Recycling Centers of America, Inc. (Nasdaq-NNM: ARCI) today reported a fourth quarter 1995 net loss of $1,045,000 or $.25 per share, compared to net income of $833,000 or $.20 per share in the year-earlier quarter. Net revenues in the fourth quarter declined to $4,021,000, compared to $7,106,000 in the year- earlier period.

For 1995, the Company reported a net loss of $943,000 or $.22 per share, compared to earnings of $877,000 or $.20 per share in 1994. Net revenues for the current year decreased to $16,241,000 from $20,327,000 in 1994. The Company's net loss from operations for the year, excluding the one-time restructuring charge, amounted to $.03 per share.

Edward R. (Jack) Cameron, president and chief executive officer, said the fourth quarter restructuring charge was taken after it became fully apparent recently that the outlook for utility-sponsored demand- side energy conservation programs was becoming increasingly negative. The Company had expected some rebound in this market over the next few years with the clarification of regulatory uncertainties. However, the decision to take the charge at this time was prompted by clear indications from growing numbers of utilities that funding for demand- side energy conservation programs in the foreseeable future is increasingly doubtful. As a result, the Company will focus its resources and management attention primarily on its emerging Encore appliance reuse business going forward.

The Company's reduced level of utility business resulted in the year's lower net revenues in comparison to 1994. The Company said its near-breakeven operating results before the one-time restructuring charge are encouraging in view of this revenue decline and heavy start- up investments in the new Encore business.

The Company anticipates lower revenues and a pre-tax loss in the range of $.33 to $.35 per share in the first quarter of 1996, reflecting reduced volumes of utility business, high Encore conversion expenses and normal seasonal factors that affect retailing during the winter months following the holiday season. Cameron said, "As we've previously stated, the Company plans to absorb the majority of the expenses related to converting our recycling facilities to support appliance reconditioning and retailing during the first quarter of 1996. We fully expect lower losses in the second quarter, with a return to profitability in the second half of the year. Our Encore store openings are proceeding on plan and store sales are ramping up in line with our expectations." The Company expects that approximately 22 stores will be open by the end of March and 35 to 45 stores will be in operation by year-end.

Statements regarding the Company's anticipated results for 1996 are forward-looking and therefore involve such risks and uncertainties as the timely opening of new Encore stores, the speed in which stores attain profitability, higher than planned Encore-related expenses and other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-Q for the quarter ended September 30, 1995.

ARCA, the nation's largest recycler of major household appliances, provides an integrated range of collection, reuse and recycling services.

CHART:
 APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
 CONSOLIDATED STATEMENT OF INCOME
 TWELVE MONTHS ENDED DECEMBER 30, 1995
 Three Months Ended
 12/30/95 12/31/94
 Net Revenues $4,021,000 $7,106,000
 Cost of Revenues $3,037,000 $3,590,000
 Gross Profit $984,000 $3,516,000


Selling, General, and
 Administrative Expenses $1,377,000 $2,019,000


Loss on Impaired Assets
 and Non-Recurring Charges $1,316,000 --


Operating Income
 (Loss) ($1,709,000) $1,497,000
 Other Income (Expense) $22,000 $66,000
 Interest Income $70,000 $25,000
 Interest Expense ($92,000) ($126,000)


Income (Loss) Before Provision
 for Income Taxes ($1,709,000) ($1,462,000)


Provision For (Benefit of)
 Income Taxes ($664,000) $629,000
 Net Income (Loss) ($1,045,000) $833,000
 Earnings (Loss) per Share ($.25) $0.20


Weighted Average Number
 of Shares 4,227,000 4,250,000
 Twelve Months Ended
 12/30/95 12/31/94
 Net Revenues $16,241,000 $20,327,000
 Cost of Revenues $10,611,000 $11,967,000
 Gross Profit $5,630,000 $8,360,000


Selling, General, and
 Administrative Expenses $5,852,000 $6,607,000


Loss on Impaired Assets
 and Non-Recurring Charges $1,316,000 --


Operating Income
 (Loss) ($1,538,000) $1,753,000
 Other Income (Expense) $65,000 $66,000
 Interest Income $230,000 $43,000
 Interest Expense ($290,000) ($320,000)


Income (Loss) Before Provision
 for Income Taxes ($1,533,000) ($1,542,000)


Provision For (Benefit of)
 Income Taxes ($590,000) ($665,000)
 Net Income (Loss) ($943,000) $877,000
 Earnings (Loss) per Share ($0.22) $0.20


Weighted Average Number
 of Shares 4,210,000 4,282,000
 -0- 3/7/96


/CONTACT: Kent S. McCoy of ARCA, 612-930-9000/

(ARCI)

CO: Appliance Recycling Centers of America, Inc. ST: Minnesota IN: ENV HOU SU: ERN

KW-KG -- MNTH025 -- 1399 03/07/96 18:43 EST
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