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MEI DIVERSIFIED REPORTS FIRST QUARTER EARNINGS

 MEI DIVERSIFIED REPORTS FIRST QUARTER EARNINGS
 MINNEAPOLIS, May 4 /PRNewswire/ -- MEI Diversified Inc. (NYSE: MEI)


reported a first quarter 1992 loss of $6,436,000 or $.34 per share compared with a 1991 first quarter loss of $3,934,000 or $.21 per share. The results of operations of the company's Snack Food Segment have been reclassified to discontinued operations reflecting the proposed sale of the assets of the company's remaining snack food subsidiaries scheduled to close in second quarter 1992. Accordingly, the net loss from continuing operations was $6,171,000 or $.33 per share for the 1992 quarter compared to a net loss of $2,794,000 or $.15 per share for the 1991 period. Revenues for the 1992 quarter were $86,006,000 compared to $94,353,000 in the 1991 quarter.
 Loss from operations was $4,778,000 for the first quarter 1992 compared to a $448,000 operating loss for the first quarter 1991.
 Donald E. Benson, MEI Diversified Inc. president, stated, "The 1992 loss from operations includes a positive contribution from the medical products segment but an operating loss from the professional beauty salon segment, MEI Salons." Benson also stated, "Our professional beauty salon business first quarter results reflect the failure to meet profit expectations projected within the Management Agreement with Regis Corporation. In addition to lower than anticipated first quarter salon revenues, we experienced rapidly escalating health insurance and other costs. We believe we have properly reacted to the cost increases and have implemented a plan to contain these costs in the future. As recently announced, a new management team has been installed to operate MEI Salons. We are excited by the new direction and enthusiasm Gary Hollister and his management team brings to MEI Salons, however, we incurred substantial one-time expenses in the first quarter in the form of consulting fees, legal fees, employment related expenses and reorganizational expenses relative to the disengagement from the Regis relationship."
 Benson also said, "MEI announced on May 1, 1992, commencement of litigation against the former shareholders of Essanelle Salon Corp. and Maxim's Beauty Salons, Inc., namely Regis Corporation and its affiliates including several officers of Regis Corporation. The lawsuit, which was filed in District Court for the State of Minnesota, alleges common law fraud, breach of contract, negligent misrepresentation and violations of securities and racketeering laws. The company seeks a substantial monetary recovery and other relief.
 "Litigation related to The Glemby Company acquisition against the former Glemby shareholders has been pending for some time and arbitration is planned for second quarter 1992."
 Benson also said, "The first quarter 1992 consolidated operating results, while very disappointing, do reflect progress in the medical products segment. The increase in operating income in the 1992 quarter compared to 1991 combined with the recent announcement of additional signings of exclusive distribution agreements for ClearSite(R), NDM's recently launched wound and burn dressing product line, makes for an exciting future for our medical products segment."
 MEI also announced that the proposed sale of its wholly owned subsidiaries, Los Angeles Nut House and Fairhope Nut Processing, Inc. to Jimbo's Jumbos, Incorporated of Edenton, N.C. is still pending. The sale, when consummated, will complete the disposition of MEI's Snack Food Segment and accordingly the results of operations of the Snack Food Segment for the first quarter of 1991 and 1990 have been reclassified as a discontinued operation in the accompanying financial statements.
 Benson also stated, "Because of the need for cash with which to grow our business segments and to service our long-term debt interest burden, we continue to discuss refinancing options with several investment bankers. It is our desire to reduce the interest burden of our long- term debt in 1992 in a meaningful way."
 MEI DIVERSIFIED INC. AND SUBSIDIARIES
 STATEMENT OF CONSOLIDATED OPERATIONS
 (In thousands, except per-share data)
 (Unaudited)
 Three Months Ended
 3/31/92 3/31/91
 Revenues $86,006 $94,353
 Costs and expenses:
 Cost of sales 78,238 84,303
 Operating expenses 10,722 8,590
 Corporate general and
 administrative expenses 911 1,104
 Amortization of intangible assets 913 804
 Total costs and expenses 90,784 94,801
 Operating loss (4,778) (448)
 Interest expense (3,010) (3,425)
 Investment income 531 818
 Gain of sale of current
 marketable securities 208 9
 Other income, net 965 252
 Loss before income taxes (6,084) (2,794)
 Provision for income taxes 87 --
 Net loss from continuing operations (6,171) (2,794)
 Loss of discontinued snack food segment (265) (1,140)
 Net loss $(6,436) $(3,934)
 Per common share (a):
 Continuing operations $(.33) $(.15)
 Discontinued operations (.01) (.06)
 Net loss per common share $(.34) $(.21)
 (a) Based on weighted average common shares outstanding of 18,680,997 and 18,808,011 in 1992 and 1991, respectively.
 -0- 5/4/92
 /CONTACT: James A. Cesario of MEI Diversified, 612-339-8853/
 (MEI) CO: MEI Diversified Inc. ST: Minnesota IN: SU: ERN


AL -- MN016 -- 6283 05/04/92 18:12 EDT
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