Cragar Industries, Inc. Reports Earnings for Q2 1997
29 July 1997
Cragar Industries, Inc. Reports Increased Earnings for Second Quarter 1997
PHOENIX, July 29 -- Cragar Industries, Inc.
today reported a 70% increase in net earnings to $273,734 for the second
quarter ended June 30, 1997 from net earnings of $160,970 for the same quarter
ended June 30, 1996. Net sales for the second quarter was $6.3 million, a 7%
increase over $5.9 million for the comparable quarter in 1996. Earnings per
share for the quarter was reported at $.12 comparable to $.14 for the second
quarter 1996. The weighted average number of common shares outstanding was
2,368,601 million for the quarter.
The Company attributed the second quarter's increase in earnings and sales
to the introduction of several new styles of wheels, higher margins on new
products shipped during the second quarter and a continued focus on decreasing
manufacturing costs. In addition, with reduced debt, interest costs were
down.
Net earnings for the first six months of fiscal 1997 was $282,322, down
41% from $479,710 during the same period a year ago. For the first half of
fiscal 1997, Cragar reported net sales of $10.9 million as compared to the
first half fiscal 1996 amount of $12.5 million, a decrease of 13%. Earnings
per share declined from $.43 for the first six months of 1996 to $.12 for the
same period in 1997.
The six month sales figure reflected Cragar's decision to withdraw from a
low margin relationship with a customer and the reduction of sales of wire
wheels. Selling, general and administrative expenses increased due to costs
associated with public company responsibilities, including reporting
requirements and investor relations, and the added costs of newly introduced
selling and marketing initiatives of the Company. Combined, the reduction in
sales and increase in costs led to the decrease in net earnings for the six
months period ending June 30, 1997 versus the same period in 1996.
"We are pleased with the Company's continued performance as we implement
strategies that we believe will enable us to become the industry's leader in
wheel sales and marketing," commented Michael L. Hartzmark, President and CEO
of Cragar. "With a highly skilled executive management team now in place,
newly introduced product lines and a focus on continuing to achieve the goals
we set for the Company in our IPO, we are positioned for the next phase of
accomplishments."
During the quarter, the Company made several key hiring decisions to
complete the executive management team. Robert L. Prescott was hired as Chief
Financial Officer. Rob brings over 17 years of expertise from related
financial positions with a concentrated emphasis on re-engineering projects
that decreased operating expenses while increasing production. Also, the
Company hired Michael G. Burroughs as Executive Vice President, Marketing.
Michael has over 20 years in the industry, most notably as former President
and CEO of Burroughs & Associates, a marketing and advertising firm
specializing in the automotive aftermarket business.
Several beneficial strategic alliances were also formed during the
quarter. The Company formed an alliance with OE Enterprises, a design and
engineering firm in Rochester Hills, MI, to develop, design and engineer an
exclusive product line of upscale, higher margin wheels targeted at a new, and
future potential, customer base. Also, Larry Shinoda was retained to design
the new "retro-looking" Cragar S/S wheel to appeal to today's, and the
future's, automotive enthusiast.
Cragar Industries, Inc. is an international manufacturer and marketer of
automotive wheels and wheel accessories for cars, trucks and racing vehicles.
For additional information, contact Lynn A. Howe, Investor Relations, 602-
247-1300. Internet address: http://www.prnewswire.com/cnoc. To obtain
additional hard copies, call Fax-On-Demand at 800-758-5804, ext. 122432.
In the content of this release, we may make forward-looking statements
regarding future events or the future financial performance of the Company.
Please refer to the Risk Factors in the Company's filings with the Securities
and Exchange Commission which identify some important factors that could cause
the actual results to differ materially from those contained in our forward-
looking statements. These factors include product availability, market
conditions and competitive factors, as well as general economic conditions.
CRAGAR INDUSTRIES, INC.
Condensed Balance Sheets
June 30, 1997 and December 31, 1996
Unaudited
Assets
June 30 December 31
1997 1996
Current Assets:
Cash and cash equivalents $0 863,049
Accounts receivable, less allowance for
doubtful accounts of $24,514 as of 6/30/97
and $28,475 as of 12/31/96 7,349,260 3,562,358
Inventories, net 6,010,861 6,302,612
Prepaid expenses 339,219 38,498
Total current assets 13,699,340 10,766,517
Property and equipment, net 1,062,861 825,505
Other assets, net 102,927 163,122
$14,865,128 11,755,144
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,887,976 2,509,473
Accrued expenses 1,747,944 1,439,627
Accrued interest 74,137 123,352
Current installments of capital lease
obligations 138,053 69,219
Current installments of long-term debt 7,897 7,999
Total current liabilities 4,856,007 4,149,670
Notes payable 5,553,142 2,957,392
Capital lease obligations, less current
installments 6,166 108,123
Long-term debt, less current installments 0 3,736
Excess of fair value of assets acquired
over cost 368,734 737,468
Total liabilities 10,784,049 7,956,389
Stockholders' equity:
Preferred stock, par value $.01; authorized
200,000 shares, no shares issued and outstanding 0 0
Common stock, par value $.01; authorized
5,000,000 shares, 2,210,305 shares issued
and outstanding at 6/30/97 22,103 22,103
Additional paid-in capital 11,335,142 11,335,141
Accumulated deficit (7,276,166) (7,558,489)
Total stockholders' equity 4,081,079 3,798,755
$14,865,128 11,755,144
CRAGAR INDUSTRIES, INC.
Condensed Statements of Operations
Three months and six months ended June 30, 1997 and 1996
Unaudited
Three Months Ended Six Months Ended
June 30 June 30 June 30 June 30
1997 1996 1997 1996
Net sales 6,275,309 5,873,838 10,919,830 12,527,683
Cost of goods sold 5,036,555 5,077,714 8,899,651 10,694,672
Gross profit 1,238,754 796,124 2,020,179 1,833,011
Selling, general and
administrative expenses 981,624 616,311 1,811,703 1,269,409
Amortization of excess of
fair value of assets
acquired over cost (184,367) (184,367) (368,734) (368,734)
Income from operations 441,497 364,180 577,210 932,336
Non-operating expenses, net
Interest expense, net 142,323 285,349 253,044 523,000
Other, net 25,440 16,690 41,844 28,455
Total non-operating
expenses 167,763 302,039 294,888 551,455
Income before income taxes 273,734 62,141 282,322 380,881
Income taxes 0 31,171 0 31,171
Income
(before extraordinary item) 273,734 30,970 282,322 349,710
Extraordinary item:
Gain on sale of assets 0 (130,000) 0 (130,000)
Net earnings 273,734 160,970 282,322 479,710
Earnings per common
equivalent share 0.12 0.14 0.12 0.43
Shares used in computation 2,368,601 1,115,556 2,368,601 1,115,556
SOURCE Cragar Industries, Inc.