MEI DIVERSIFIED REPORTS SECOND QUARTER
MEI DIVERSIFIED REPORTS SECOND QUARTER MINNEAPOLIS, Aug. 11 /PRNewswire/ -- MEI Diversified Inc.
(NYSE: MEI) reported a second quarter 1992 loss of $2,969,000 or $.16 per share compared with a 1991 second quarter loss of $2,089,000 or $.11 per share. Operating results of the snack food segment have been reclassified to discontinued operations reflecting the May 1992 asset sale of remaining snack food subsidiaries. The 1992 quarter includes a $1,534,000 gain resulting from the snack food asset sale. Accordingly, the net loss from continuing operations was $4,310,000 or $.23 per share for the 1992 quarter compared to a net loss of $1,286,000 or $.07 per share for the comparable 1991 period. Revenues for the 1992 quarter were $86,621,000 compared to $95,341,000 in the 1991 quarter. The six- month 1992 period had a net loss of $9,405,000 or $.50 per share compared to a net loss of $6,023,000 or $.32 per share for the comparable 1991 first six months. The 1992 six-month period also includes the $1,534,000 gain on the May 1992 sale of the snack food subsidiaries. Net loss from continuing operations was $10,481,000 or $.56 per share for the 1992 six-month period compared to a loss of $4,080,000 or $.22 per share for the comparable 1991 period. Revenues for the six months were $172,627,000 in 1992 and $189,694,000 in 1991.
Loss from operations was $2,290,000 for second quarter 1992 compared to $334,000 of operating income for second quarter 1991. The six-month 1992 operating loss was $7,068,000 compared to a $114,000 operating loss for the 1991 six months. Donald E. Benson, MEI Diversified president, stated, "The 1992 quarter and six-month 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' second quarter and year-to-date results continue to reflect failure to meet profit expectations on which the acquisition transaction and management agreement with Regis Corporation were based. In addition to lower than anticipated six-month salon revenues, we experienced rapidly escalating costs. We believe we have properly reacted to the cost increases and have implemented steps to contain such costs in the future. As announced in April 1992, a new management team was installed to replace Regis and we are pleased with the new direction and enthusiasm Gary Hollister and his team bring to MEI Salons. "We continue to incur one-time expenses in the form of consulting fees, legal fees, employment-related expenses and reorganizational expenses, much of which relates to the disengagement from Regis." One- time expenses for the 1992 six-month period were approximately $4,100,000. MEI announced on May 1, 1992 commencement of litigation against the former shareholders of Essanelle Salon Co. 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 lawsuit in which MEI seeks a substantial monetary recovery and other relief is being aggressively pursued. Litigation related to The Glemby Company acquisition against former Glemby shareholders, which has been pending for some time is now projected to commence in U.S. Federal Court in the fall of 1992. Two of three escrows established in the Glemby acquisition have been collected this year. Upon collection of the third escrow, which is anticipated in third quarter 1992, MEI will have recovered approximately $4,700,000 of the original purchase price. Benson also said, "The first half of 1992 consolidated operating results, while very disappointing, do reflect progress in the medical products segment. The increase in operating income in the 1992 quarter and year-to-date period 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. "In addition, we recently announced renegotiation of a new five-year distribution agreement with Baxter Healthcare Corporation, relative to electrodes, and the signing of several alternate care distributors including Redline Healthcare to distribute the ClearSite product to the domestic alternate care market. The signings will increase NDM revenues and profits in the current and future years." MEI also recently announced completion of the sale of its wholly owned subsidiaries, Los Angeles Nut House and Fairhope Nut Processing, Inc. The sale completes disposition of MEI's snack food segment and accordingly, results of operations of the snack food segment for the first half of 1992 and 1991 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. Some of these refinancing options include seeking strategic partners to provide significant equity capital for both of the company's operating segments. It is our desire to reduce the interest burden of our long-term debt in a meaningful way." MEI DIVERSIFIED INC. AND SUBSIDIARIES STATEMENT OF CONSOLIDATED OPERATIONS (In thousands, except per-share data) (Unaudited) Three Months Ended Six Months Ended 6/30/92 6/30/91 6/30/92 6/30/91 Revenues $86,621 $95,341 $172,627 $189,694 Costs and expenses Cost of sales 75,595 83,829 153,833 168,132 Operating expenses 11,477 9,322 22,199 17,912 Corporate general and administrative expenses 920 1,080 1,831 2,184 Amortization of intangible assets 919 776 1,832 1,580 Total costs and expenses 88,911 95,007 179,695 189,808 Operating income (loss) (2,290) 334 (7,068) (114) Interest expense (3,091) (3,013) (6,101) (6,438) Investment income 490 1,002 1,021 1,820 Gain on sales of current marketable securities -- 186 208 195 Other income, net 661 205 1,626 457 Loss before income taxes (4,230) (1,286) (10,314) (4,080) Provision for income taxes 80 -- 167 -- Loss from continuing operations (4,310) (1,286) (10,481) (4,080) Discontinued operations, net of income taxes: Gain on disposal of snack food segment 1,534 -- 1,534 -- Loss from operations of discontinued snack food segment (193) (803) (458) (1,943) Total discontinued operations 1,341 (803) 1,076 (1,943) Net loss $(2,969) $(2,089) $(9,405) $(6,023) Per common share(a): Loss from continuing operations $(.23) $(.07) $(.56) $(.22) Discontinued operations, net of income taxes: Gain on disposal of snack food segment .08 -- .08 -- Loss from operations of discontinued snack food segment (.01) (.04) (.02) (.10) Total discontinued operations .07 (.04) .06 (.10) Net loss $(.16) $(.11) $(.50) $(.32) (a) Based on weighted average common shares outstanding of 18,686,399 and 18,758,716 for the quarter 18,683,698 and 18,783,363 for the six-month period in 1992 and 1991, respectively. -0- 8/11/92 /CONTACT: James A. Cesario of MEI Diversified, 612-339-8853/ (MEI) CO: MEI Diversified Inc. ST: Minnesota IN: SU: ERN
KH -- MN003 -- 8884 08/11/92 10:32 EDT
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|Date:||Aug 11, 1992|
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