E&B MARINE INC. REPORTS ANOTHER RECORD QUARTER
/REPEATING DUE TO GARBLE/ EDISON, N.J., Oct. 27 /PRNewswire/ -- E&B Marine Inc. announced
today record third-quarter net income of $3,707,000, an increase of $2,915,000 or 368.1 percent over the 1992 net income of $792,000. Earnings per share for the quarter increased from $.05 in 1992 to $.22 in 1993. For the nine months ended Sept. 25, 1993, net income was $6,458,000, an increase of $3,658,000, or 130.6 percent over the reported 1992 net income of $2,800,000. On a year-to-date basis, earnings per share were $.39 in 1993 compared with $.19 in 1992.
For the 1993 periods, $2,000,000 of the reported net income represents a credit to income tax expense reflecting recognition of tax benefits relating to Financial Accounting Standard No. 109, "Accounting For Income Taxes". The 1992 periods each had extraordinary items offsetting the income tax expenses. Income before income taxes and extraordinary items increased from $792,000 in the third quarter of 1992 to $1,707,000, an increase of 115.5 percent. Earnings before income taxes and extraordinary items for the nine months were up 59.2 percent to $4,458,000 in 1993 compared with $2,800,000 for the comparable period in 1992. Revenues for the quarter were $24,591,000, a 5.4 percent increase over the third quarter 1992. For the nine months ended Sept. 23, 1993, sales of $77,067,000 represented an increase of $3,961,000 or 5.4 percent over the comparable prior period. Selling, general and administrative expenses, as a percentage of sales, were 22.1 percent for the three months ended Sept. 25, 1993, compared with 24.8 percent for the three months ended Sept. 26, 1992. On a year-to-date basis, selling, general and administrative expenses were 21.0 percent of sales as compared with 22.8 percent in 1992, a result of the company's program of cost containment. Kenneth G. Peskin, the company's chairman and chief executive officer, said: "We are pleased to report another record quarter for E&B Marine and are committed to continued improved earnings. Our past summer season was very successful and resulted in a further strengthening of our balance sheet. We are poised for expansion in the months and years ahead. The company recently opened a store in Charleston, S.C., and will open two stores in the fourth quarter including a location in Savannah, Ga., and targeted to open six more in 1994. We anticipate opening these stores without a meaningful increase to the home office overhead." E&B Marine Inc. is one of the nation's largest direct-mail merchandisers and specialty retailers of marine supplies and accessories with 47 retail outlets and a catalog operation. E&B MARINE INC. AND SUBSIDIARIES SUMMARY OF OPERATING RESULTS Three Months Ended Nine Months Ended Sept. 25, Sept. 26, Sept. 25, Sept. 26, 1993 1992 1993 1992 Net sales $24,591,000 $23,334,000 $77,067,000 $73,106,000 Gross profit 7,692,000 7,206,000 22,465,000 21,505,000 Selling, general and administrative expenses 5,442,000 5,785,000 16,184,000 16,641,000 Depreciation and amortization 389,000 415,000 1,186,000 1,265,000 Interest expense-net 154,000 214,000 637,000 799,000 Income before income taxes and extraordinary item 1,707,000 792,000 4,458,000 2,800,000 Income tax expense (benefit) (1) (2,000,000) 237,000 (2,000,000) 840,000 Income before extraordinary item 3,707,000 555,000 6,458,000 1,960,000 Extraordinary item -- 237,000 -- 840,000 Net income $ 3,707,000 $ 792,000 $ 6,458,000 $ 2,800,000 Income per common share (2): Before extraordinary item $ 0.22 $ 0.04 $ 0.39 $ 0.13 Extraordinary item 0.00 0.01 0.00 0.06 Net income $ 0.22 $ 0.05 $ 0.39 $ 0.19 Weighted average common shares outstanding 14,865,000 14,810,000 14,846,000 14,793,000 Notes: 1) The company accounts for income taxes under Financial Accounting Standard No. 109, "Accounting For Income Taxes" (SFAS 109). Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of the event that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance has been established reserving against the possibility of non-realization of deferred tax assets. The components of deferred taxes at Sept. 25, 1993, are as follows: Net deferred tax asset: Inventory $ 835,000 Employee benefit accruals 338,000 Intangible asset, basis difference 240,000 Accounts and notes receivable, principally due to allowance for doubtful accounts 414,000 Restructuring reserves 317,000 Net operating loss carryforwards 3,990,000 Other 225,000 Valuation allowance (3,978,000) Net deferred tax asset $2,381,000 Deferred tax liability - excess of tax over financial statement depreciation ( 381,000) Net deferred tax asset $2,000,000 During the third quarter of 1993, the company reduced its valuation allowance by $2,000,000 attributable to the company's strong operating performance during the recently concluded peak selling season, and a positive outlook for earnings in the near term, resulting in a credit to income tax expense. Accordingly, included in current and non-current other assets at Sept. 25, 1993, is $2,000,000, cumulative, of net deferred tax asset. In order to fully realize the net deferred tax asset, the company will need to generate future taxable income of approximately $5,000,000. In 1992, income for tax purposes of approximated pretax income for financial reporting purposes. A portion of the net deferred tax asset is attributable to net operating loss carryforwards ("NOLs") which for federal purposes expire during the years 2003 through 2006. Management believes it is more likely than not that the company will realize the benefit of the NOLs before they begin to expire. There can be no assurance, however, that the company will generate any earnings or any specific level of continuing earnings. 2) The company has computed income per common share for the nine months ended Sept. 25, 1993, and for the three months ended Sept. 25, 1993, on the basis of the weighted average number of common shares and common equivalent shares outstanding during the period, in accordance with the modified treasury stock method. This method assumes that common stock equivalents (options and warrants) are exercised and treasury shares are assumed to be purchased (not to exceed 20% of the weighted average number of common shares outstanding) from the proceeds using the average market price for the period. Any excess proceeds not utilized for the purchase of treasury shares are assumed to reduce outstanding debt with an appropriate reduction of interest expense. Proceeds which exceed outstanding debt are assumed to be invested in government securities. Under such assumptions, for the nine months ended Sept. 25, 1993, and for the three months ended Sept. 25, 1993, 3,114,000 and 2,959,000 incremental common shares, respectively, have been added to the weighted average number of shares outstanding and net interest has been adjusted by approximately $600,000 and $177,000, respectively. The income per common share for the nine months ended Sept. 26, 1992, and three months ended Sept. 26, 1992, is based on the weighted average number of common shares outstanding during such period. Common stock equivalents are not considered in the computation, as their inclusion (utilizing the modified treasury stock method), would be anti- dilutive on the per share amount. No fully diluted per share amounts are shown in 1993 and 1992 since the closing market price is less than the average market price for the period. -0- 10/27/93 R /CONTACT: Walfrido A. Martinez, Senior Vice President and Chief Financial Officer of E&B Marine Inc., 908-819-7400
CO: E&B Marine Inc. ST: New Jersey IN: REA SU: ERN
LG -- NY091R -- 7427 10/27/93 14:45 EDT