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GULL LABS RECLASSIFIES EXTRAORDINARY INCOME TO EQUITY CONTRIBUTION; NO IMPACT ON EARNINGS FROM OPERATIONS

 SALT LAKE CITY, Aug. 16 /PRNewswire/ -- Gull Laboratories, Inc. (AMEX: GUL), announced today that it was reclassifying previously reported extraordinary income of $592,643 related to debt forgiveness to be reflected as a capital contribution.
 The restatement had no impact on the previously reported Gull and Biolab consolidated net income before extraordinary items. The net income of $60,485 or $.01 per share for the three months ended June 30 compared to a consolidated net loss of $(91,713) or $(.01) per share for the three months ended June 30, 1992. The reclassification also had no net effect on Gull's balance sheet.
 Michael B. Malan, Gull vice president of Finance, commented: "As part of the merger negotiations with Biolab we obtained forgiveness of debt totaling approximately $600,000 from the principal shareholder of Biolab. Our understanding, which we feel was initially supported by our auditors, was that the debt forgiveness would result in extraordinary income to offset losses incurred by Biolab. However, in the preparation of our quarterly report on Form 10-QSB, we were informed that the SEC requires that all debt forgiveness from a related party should be accounted for as an equity contribution instead of extraordinary income."
 Consolidated net income of Biolab and Gull for the six months ended June 30 was $123,251 or $.02 per share compared to consolidated net income of $162,944 or $.03 per share for the six months ended June 30, 1992. The net income of $123,251 for the six months ended June 30 includes a one-time charge of $111,437 to reflect the costs associated with a 17 percent reduction in Biolab's work force. Without the one- time charge for the reduction in force, net income for the six months ended June 30 would have been $234,688 or $.04 per share.
 Milton G. Adair, Gull president and CEO, stated: "Even though there is no change to the quarterly and six-month figures for net income before extraordinary items that we reported last week, we felt it necessary to immediately inform the public concerning the reclassification of the extraordinary income to shareholders' equity. This revision does not impact the ongoing business or future operational results and it does not alter our opinion of Gull's outlook for the future."
 Gull Laboratories, Inc., develops, manufactures and markets high- quality diagnostic test kits for the detection of infectious diseases. The company markets these products for use in hospitals and clinical laboratories around the world.
 GULL LABORATORIES, INC.
 CONSOLIDATED SUMMARY STATEMENT OF INCOME
 Restated(a)
 3 mos. ended 6/30/93 6/30/92
 (unaudited)
 Revenues $3,973,147 $3,764,052
 Income before taxes 197,951 365,148
 Provision for income taxes 137,466 251,500
 Discontinued operations --- (99,143)
 Net income (loss) 60,485 (91,713)
 Earnings per common
 equivalent share $ .01 $ (.01)
 Restated(a)
 6 mos. ended 6/30/93 6/30/92
 (unaudited)
 Revenues $7,919,417 $7,517,365
 Income before taxes 439,092 934,063
 Provision for income taxes 315,841 464,500
 Discontinued operations --- (306,619)
 Net income 123,251 162,944
 Earnings per common
 equivalent share $ .02 $ .03
 (a) Restated to include the Biolab operations as if the merger, which was accounted for as a pooling of interests, had occurred at Jan. 1, 1992.
 -0- 8/16/93
 /CONTACT: Michael B. Malan, vice president-Finance of Gull Laboratories, 801-263-3524, or Bill Roberts of Cameron Towey Central, 513-469-0202, for Gull Laboratories/
 (GUL)


CO: Gull Laboratories, Inc. ST: Utah IN: MTC SU: ERN

RA-SB -- AT007 -- 3253 08/16/93 16:35 EDT
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Date:Aug 16, 1993
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