Printer Friendly

ULTRA PAC, INC. EXPECTS FOURTH QUARTER LOSS AND SHARP DECLINE IN FISCAL YEAR EARNINGS

 MINNEAPOLIS, March 12, /PRNewswire/ -- Ultra Pac, Inc. (NASDAQ: UPAC) announced today that, for the fiscal year ended Jan. 31, 1993, it expects earnings to be substantially below the $.41 per share recorded last year.
 Based on preliminary analysis, the company anticipates that it may record a fourth quarter net loss of approximately $800,000, or $0.21 per share compared to net earnings of $339,027, or $0.11 per share, during the fourth quarter, last year. As a result of the company's anticipated fourth quarter loss, its first quarterly loss since 1988, management anticipates that earnings for the year will be in the range of $0.08 to $0.10 per share. Final results are subject to completion of the year- end audit.
 For the fiscal year ended Jan. 31, 1993, Ultra Pac's net sales are expected to exceed $27 million, up approximately 48 percent from $18,254,222 reported for the prior year. Fourth quarter sales of more than $7 million are anticipated for the current period compared to fourth quarter sales of $4,569,790 reported one year ago. While sales for the fourth quarter and fiscal year ended Jan. 31, 1993 exceed sales estimates included in published analysts' reports, the anticipated fourth quarter net loss and reduced earnings for the fiscal year are lower than analysts' published earnings estimates, as revised downward during November 1992.
 On November 13, 1992, Ultra Pac reported that third quarter and fiscal year-end results would be below earlier analysts' projections. The company cited significant pressure on gross profits during the third quarter, resulting primarily from several factors. First, the company incurred increased raw material costs, primarily resulting from its second extrusion line which was generating insufficient output and higher than normal levels of scrap regrind. A certain amount of scrap regrind, in the form of excess trim from the extrusion and thermoforming processes, occurs routinely and is subsequently reprocessed internally for future use as a raw material. With decreasing output from the extrusion line and increasing product demand, the company was required to purchase additional extruded raw material from outside sources, at a significantly higher cost.
 Second, the company incurred additional labor and overhead costs in the areas of quality control, facilities, and equipment maintenance to support the increase in thermoforming lines, expansion of the product lines, and facilities. These costs increased at a faster rate than recent increases in net sales. Finally, to satisfy increasing customer demand for selected products, the company found it necessary to increase direct labor on certain thermoforming lines in order to increase output. While output increased on such production lines, the increases were not sufficient to offset the increased cost of additional direct labor. In the company's announcement on Nov. 13, 1992 and in a subsequent announcement that disclosed results of the third quarter, the company stated that, while programs had been implemented to correct those factors that had negatively impacted gross profit, the results of such remedial measures were not expected to show an impact until the next fiscal year.
 The unexpected fourth quarter loss occurred primarily for the following reasons: 1.) There was a continuing effect of those factors that had reduced gross profit during the third quarter. These conditions were aggravated by the company's continuing difficulty in extruding and, to a lesser extent, manufacturing, a particular combination of side-by-side (colored and clear) plastic used in certain products. Problems related to extruding and manufacturing this side-by- side material produced a high level of scrap regrind, adding substantially to inventory and resulting in a significant increase in material costs and direct labor. 2.) In March 1993, the company learned that a distributor of its products was insolvent. Management expects that customers previously serviced by this distributor will continue to purchase Ultra Pac's products through other distributors. Accordingly, the company has written off approximately $420,000 that represents an uncollectable receivable from this distributor. 3.) A $130,000 correction was made to inventory pricing. 4.) Overhead expense increased slightly from the third to the fourth quarter, despite the traditional decrease in fourth quarter net sales as compared to the third quarter. This decrease in fourth quarter net sales was approximately $500,000 when compared to the third quarter, and follows Ultra Pac's traditional quarterly sales pattern.
 Cal Krupa, Ultra Pac's CEO, stated, "Although the fourth quarter loss is very disappointing, the business fundamentals of the company are extremely strong. The recent hiring of an experienced director of operations who will join the company on March 15, 1993, plus the recent addition of a cost accountant, will focus significant attention toward operational issues and allow Ultra Pac to continue its growth. Although we expect an improving trend from the fourth quarter we anticipate a small loss in the first quarter."
 Ultra Pac, Inc., based in Rogers, Minnesota, designs, manufactures, and markets plastic food packaging products made primarily from polyethylene teraphthalate (PETE). The company also designs and manufactures packaging products made from recycled PETE that are marketed to both distributors of fruit and produce, as well as the floral industry. The company reported earnings of $0.41 per share on net sales of $18,254,222, $0.29 per share on net sales of $11,588,368, and $0.10 per share on net sales of $5,474,038 for the fiscal years ended Jan. 31, 1992, 1991, and 1990, respectively.
 -0- 3/12/93
 /CONTACT: Cal Krupa (CEO) or Brad Yopp (CFO), Ultra Pac, Inc., 612-428-8340; or Tom de Petra of de Petra & Associates, Inc., 612-338-7630 or 800-969-7630, for Ultra Pac, Inc./
 (UPAC)


CO: Ultra Pac, Inc. ST: Minnesota IN: SU: ERN

KH -- MN013 -- 5648 03/12/93 16:40 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Mar 12, 1993
Words:945
Previous Article:AMERICAN PACESETTER FILES CHAPTER 11
Next Article:CAMBRIDGE BIOTECH REPORTS 1992 RESULTS
Topics:


Related Articles
ULTRA PAC, INC. REPORTS CONTINUED SALES, EARNINGS GROWTH IN SECOND QUARTER
ULTRA PAC, INC. REPORTS FIRST QUARTER PROFITABILITY ON 56 PERCENT INCREASE IN NET SALES
ULTRA-PAC REPORTS SECOND QUARTER RESULTS
ULTRA PAC REPORTS THIRD QUARTER RESULTS
ULTRA-PAC ANTICIPATES FOURTH QUARTER LOSS
ULTRA-PAC REPORTS ANNUAL AND FOURTH QUARTER RESULTS
ULTRA PAC, INC. REPORTS THIRD QUARTER RESULTS
ULTRA PAC REPORTS STRONG IMPROVEMENT IN FISCAL 1995 RESULTS
ULTRA PAC REPORTS THIRD QUARTER RESULTS
Ultra Pac Reports Strong First Quarter Earnings

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters