Earl Scheib Announces Second-Quarter Fiscal Year 2001 Results

13 December 2000

Earl Scheib Announces Second-Quarter Fiscal Year 2001 Results

    BEVERLY HILLS, Calif.--Dec. 12, 2000--Earl Scheib Inc. (AMEX:ESH) reported its results for the second quarter and first six months of fiscal year 2001.
    Net sales for the second quarter of fiscal year 2001 were $14,788,000, a decrease of 5.4% from the second quarter of fiscal year 2000 net sales of $15,628,000. The company operated fourteen fewer shops by the end of the second quarter of the current fiscal year from the second quarter of the prior year, and same-shop sales decreased 4.0%.
    For the six months ended Oct. 31, 2000, net sales were $30,324,000, as compared to $31,387,000 for the comparable period in the prior fiscal year, a decrease of 3.4%, with same-shop sales decreasing 2.3% from the prior year.
    The operating loss for the second quarter of fiscal year 2001 was $188,000, as compared to operating income of $863,000 during the second quarter of fiscal year 2000. The deterioration in the second- quarter operating results was primarily due to the adverse effect of lower sales, generally higher production costs (including those pertaining to the start-up of the initial fleet and truck center, and the commercial coatings operations) and increased insurance requirements, partially offset by certain administrative cost reductions. Operating income for the six months ended Oct. 31, 2000, and 1999, was $358,000 and $1,539,000, respectively.
    During the six months ended Oct. 31, 2000, the company closed seven of its retail automotive paint and body shops, which included the sales of three parcels of real estate for a net gain of $231,000.
    The net loss for the second quarter of fiscal year 2001 was $317,000, or a $0.07 loss per diluted share, as compared to net income of $460,000, or $0.11 earnings per diluted share, during the second quarter of fiscal year 2000. For the six months ended Oct. 31, 2000, and 1999, net income was $289,000 and $805,000, or earnings of $0.07 and $0.18 per diluted share, respectively.
    During the first quarter of fiscal 2001, the company utilized a portion of its net operating loss carryforward available for financial statement purposes to offset federal income taxes otherwise payable. The company was unable to recognize any federal income tax benefit for its operating loss in the second quarter of fiscal year 2001.
    Chris Bement, chief executive officer and president, stated: "During the first quarter of the current fiscal year, the company opened its initial fleet and truck center in Los Angeles and increased efforts in the marketing of its high-quality, low VOC commercial coatings to industrial users.
    "These two new businesses are important to the future of the company, and we anticipate opening two additional fleet centers and enhancing the infrastructure of the commercial coatings business during the current fiscal year.
    "The quarterly results for the retail automotive paint and body shops were disappointing, as same-shop sales continued to decline. We continue to evaluate the way we do business in this sector to achieve the right formula for success and will report the results of our efforts to you as our strategy evolves."



                           EARL SCHEIB INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                      For The Quarter           For The Six Months
                      Ended October 31,         Ended October 31,   
                      2000         1999         2000          1999

Net Sales         $14,788,000  $15,628,000 $ 30,324,000  $ 31,387,000
Operating Income
 (Loss)              (188,000)     863,000      358,000     1,539,000
Gain On Sales of
 Real Property         45,000           --      231,000         6,000
Other Income
 (Expense)           (183,000)    (123,000)    (288,000)     (248,000)
Income (Loss)
 Before Tax          (326,000)     740,000      301,000     1,297,000
Tax Provision
 (Benefit)             (9,000)     280,000       12,000       492,000
Net Income (Loss) $  (317,000) $   460,000 $    289,000  $    805,000
Basic Earnings
 (Loss) Per Share $     (0.07) $      0.11 $       0.07  $       0.18
Diluted Earnings
 (Loss) Per Share $     (0.07) $      0.11 $       0.07  $       0.18

Weighted Average
 Shares Outstanding
 - Basic            4,359,000    4,359,000    4,359,000     4,359,000
Weighted Average
 Shares Outstanding
 - Diluted          4,359,000    4,359,000    4,359,000     4,359,000