Sames Corporation Reports Net Income Gains
12 July 1999
Sames Corporation Reports Net Income Gains; Continues To Explore Potential Sale Of Company
FRANKLIN PARK, Ill., July 9 -- Sames Corporation (Amex: BIN)
today reported its results for the second quarter of fiscal 1999 ended May 31,
1999. Income from continuing operations in the second quarter was $.3
million, or $.11 per share, compared to a net loss from continuing operations
of $4.8 million, or $1.61 per share, a year ago. For the six months, net
income from continuing operations was $.9 million, or $.31 per share, compared
to a net loss of $4.7 million, or $1.58 per share, in the comparable period a
year ago.
Net sales for the second quarter were $22.9 million, or 19% below the
$28.4 million for the comparable 1998 period. This represents an improvement
over the first quarter 1999 when net sales decreased approximately 44% from
1998. The decline in sales for the six-month period was primarily
attributable to decreased net sales of higher volume, lower margin, large
automotive installations by the Company's French subsidiary.
In the six months ended May 31, 1999 and May 31, 1998, gross profit was
$16.0 million and $17.2 million, respectively. As a percentage of sales,
gross margin increased to approximately 39.2% from 28.5% over the respective
periods, an indication of improved sales mix and higher margin standard
products and spare parts. The 1998 net loss included a second quarter after
tax charge to earnings of approximately $5.5 million related to the settlement
of a patent infringement lawsuit, while 1999 includes a $.5 million second
quarter charge to earnings for nonrecurring charges in France.
Arnold H. Dratt, President and Chief Executive Officer of Sames
Corporation and Sames, S.A., the Company's French subsidiary, said,
"Automotive systems bookings were very strong in the second quarter, and we
expect that Sames Corporation will achieve 1999 pretax operating income before
litigation expense at least 25% higher than the $5.3 million reported in 1998.
The Company's developing book of business, as well as quotations in both
automotive and general industry systems business, are up sharply for late 1999
and 2000 deliveries, particularly in Europe and in China, where the Company
has a newly formed joint venture. Our current backlog as of May 31, 1999 is
approximately $33 million, compared to $12 million at November 30, 1998.
"Coupled with the aggressive supplier reduction and cost cutting moves
initiated by the new managing director in France and his very capable
management team, the Company's gross margins should begin to show continued
marked improvement notwithstanding product mix fluctuations," Dratt noted.
Dratt also reported that the Company is continuing its discussions with
Illinois Tool Works Inc. (ITW) to resolve the amount of the purchase price
adjustment associated with its sale to ITW, effective September 30, 1998, of
certain assets, operations and subsidiaries that included specific standard,
or non-electrostatic, products that are referred to as the "Binks" business.
ITW has withdrawn its lawsuit filed March 24, 1999 that sought a preliminary
injunction to, among other things, prevent the Company from making any
material changes to its business.
In the first quarter, the Company announced its intentions to explore
strategic alternatives that would be beneficial to the future growth of the
Company. On April 20, 1999, the Company entered into a multi-year strategic
alliance with FANUC Robotics North America, a world leader in robotic and
automation solutions and a long time business associate of the Company. That
alliance is integrating the technology of both partners, and streamlining and
coordinating joint sales and marketing efforts in and outside North and South
America, as well as resulting in the upgrade of Sames' demonstration
facilities in Grenoble, France and Livonia, Michigan.
On March 29, 1999, the Company announced that it had retained William
Blair & Company, which assisted in the sale of the Binks business to ITW, to
explore strategic alternatives to enhance shareholder value, including the
sale of all or a part of the Company. According to Chairman of the Board
Wayne F. Edwards, "The Company has received a number of non-binding letters of
intent regarding a proposed purchase of the Company, and the process is
ongoing."
Concurrent with its name change to Sames Corporation on April 28, 1999,
the Company launched its web site at http://www.samescorp.com . The site
contains an interactive overview of the Company's products, together with
historical financial data. E-commerce is part of the Company's strategy for
the site.
Sames Corporation is engaged in the design, manufacture and sale of high-
quality spray finishing and coating application equipment. Sames is noted for
its global leadership position in electrostatic finishing equipment for the
automotive finishing market and for the general industrial finishing market.
(Statements regarding the Company's potential and pending strategic
alliances, discussions with William Blair & Company, exploration of strategic
alternatives for the Company, including a sale of all or a part of the
Company, discussions with ITW and future plans, strategies and expectations of
the Company constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are subject to the safe
harbor created thereby. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations reflected in such forward-looking statements
will prove to be correct. Important factors that could cause actual results to
differ materially from the Company's expectations include, without limitation,
general economic and market conditions, the ability of the Company to identify
potential strategic partners and negotiate definitive agreements with such
potential strategic partners, the effectiveness of the Company's Year 2000
compliance, transition issues related to the euro and the outcome of legal
proceedings involving ITW. No assurance can be given that the forward-looking
statements will prove to be correct.)
Sames Corporation and Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended May 31, 1999 and May 31, 1998
(Unaudited)
For the three For the six
months ended months ended
May 31, May 31, May 31, May 31,
1999 1998 1999 1998
($000 omitted) ($000 omitted)
Net sales $22,900 28,410 40,676 60,364
Cost of goods sold 15,033 18,905 24,715 43,136
Gross profit 7,867 9,505 15,961 17,228
Selling, general and
administrative expenses 7,163 7,069 13,851 13,587
Research and development
costs 1,022 940 2,016 1,880
Litigation settlement
costs - 9,550 - 9,550
Operating income (loss) (318) (8,054) 94 (7,789)
Other expense (income):
Interest expense 172 162 523 312
Other expense (income),
net (640) 233 (1,170) 392
(468) 395 (647) 704
Income (loss) from
continuing operations
before income taxes 150 (8,449) 741 (8,493)
Income tax benefit 177 3,673 190 3,796
Income (loss) from
continuing operations,
net of tax 327 (4,776) 931 (4,697)
Loss from discontinued
operations, net of tax (472) (4,153) (1,662) (7,891)
Net loss $(145) (8,929) (731) (12,588)
Income (loss) per share
-- basic
Continuing operations $.11 (1.61) .31 (1.58)
Discontinued operations (.16) (1.40) (.56) (2.66)
Net loss $(.05) (3.01) (.25) (4.24)
Income (loss) per share
-- diluted
Continuing operations $.11 (1.61) .31 (1.58)
Discontinued operations (.16) (1.40) (.56) (2.66)
Net loss $(.05) (3.01) (.25) (4.24)
Weighted average shares:
Basic 2,965 2,964 2,965 2,964
Effect of stock options 9 - 7 -
Diluted 2,974 2,964 2,972 2,964