Pacer Technology Announces Significant Earnings Improvements In the Third Quarter and Nine Months Ended March 31, 2001

Apr 26, 2001, 01:00 ET from Pacer Technology

    RANCHO CUCAMONGA, Calif., April 26 /PRNewswire/ -- Pacer Technology
 (Nasdaq:   PTCH), today reported significant improvements in earnings for the
 quarter and nine months ended March 31, 2001.  Net income totaled $389,000, or
 $0.12 per share, for the third quarter, and $1,416,000, or $0.43 per share,
 for the nine months ended March 31, 2001.  By comparison, Pacer sustained net
 losses of ($1,607,000), or ($0.48) per share, for the three months ended March
 31, 2000 and ($558,000) or ($0.17) per share for nine months ended March 31,
 2000.  Those losses were primarily attributable to programs, first implemented
 in the third quarter of 2000 and continued during this year, that were
 designed to restructure and streamline operations and reduce costs, but
 necessitated one-time pre-tax charges totaling approximately $3,081,000 in the
 third quarter of 2000.  However, the improved operating results achieved in
 the current fiscal year are largely attributable to operating efficiencies and
 cost cutting measures that were commenced in that quarter but which have been
 more fully implemented and extended to other aspects of our operations during
 the current fiscal year.
     Pro forma net income, which excludes non-cash charges for depreciation and
 amortization of goodwill was $522,000, or $0.16 per share, and $1,802,000, or
 $0.55 per share, respectively, for the three and nine month periods ended
 March 31, 2001.  By comparison, for the three and nine month periods ended
 March 31, 2000, after excluding such non cash charges, Pacer would have had
 net losses of ($1,492,000), or ($0.45) per share, and ($182,000), or ($0.05)
 per share, respectively.
     During the three and nine month periods ended March 31, 2001, net sales
 declined by 4.7% and 3.3%, respectively, as compared to the corresponding
 periods of the prior year.  Those declines were due to reductions in orders
 from major retail customers, as they adjusted their inventories in response to
 the growing weakness in the economy.  However, the effects of the sales
 decline on income, were more than offset by cost reductions we have achieved
 during the three and nine month periods ended March 31, 2001.
     Rick Kay, the Company's new Chairman of the Board, had the following
 comments:  "We are pleased with the earnings improvement that was achieved in
 our third quarter and we are optimistic about the future for Pacer.  Our
 primary goal is to increase shareholder value by focusing on return on capital
 and cash flow.  In the near term, we are concentrating on asset and supply
 chain management.  In addition we are taking measures to reduce outstanding
 receivables and inventories in order to reduce costs and at the same time
 improve our cash flow.  Furthermore, we have recently negotiated several new
 contracts with global sources, which we expect, when combined with planned
 inventory reductions, will have a positive impact on future financial
 statements, but only after we sell our current inventories.  We also are
 improving the scheduling of our purchases in order to deliver our products to
 the market more efficiently, to benefit both our inventory turnover and retail
 customers.  In addition, we are inaugurating a new practice of presenting
 additional selected operating data, which excludes non-cash charges for
 depreciation and amortization of goodwill, so that our shareholders can better
 appreciate the impact of our operations and business strategies on Pacer's
 cash flow, which we believe is of importance in assessing Pacer's ability to
 react to changing market conditions and to exploit opportunities for growth
 and expansion."
     Kay added, "At the same time we are implementing programs that are
 designed to increase our sales.  We plan to introduce new products for
 current, as well as potential new customers and explore opportunities for
 acquisitions that will enable us to broaden our product offerings.  We may,
 however, also decide to dispose of certain product lines, which do not fit
 into our longer term plans or do not meet desired return on capital
 objectives.  In the past, we have discussed with our shareholders our efforts
 to develop a poultry adhesive/sealant product and a cyanoacrylate formulation
 for use in the medical field as a new topical skin closure device.  Those
 efforts were "put on the back burner" while we focused on implementing
 programs to improve the profitability of our core businesses.  While we still
 believe those products present a desirable opportunity to expand Pacer's
 business, we have concluded that it would be prudent to seek out partners that
 have the technical and marketing expertise that is needed to enable us to turn
 these formulations into commercially viable products and to navigate through
 the complex and lengthy regulatory process required to obtain the government
 approvals needed to bring those products to market."
     Kay also commented on other recent developments, namely: (1) a decision to
 change the way we will do business in Europe.  "Because the lease for our
 office in the United Kingdom will expire on June 30, it will be closed.  The
 managing director will continue as an employee and focus his attention on
 sales and customer service.  While we may lose some customers, who do not want
 to deal directly with our international office in California, we will realize
 savings in overhead and working capital requirements;" and (2) the final
 agreement for our bank line of credit has been signed.  "The agreement now
 provides for total credit facilities of $16.6 million."
 
     Forward-Looking Statements
     Statements contained in this press release that are not historical facts
 or that discuss our expectations or beliefs regarding our future financial
 performance constitute "forward-looking statements" as defined in the Private
 Securities Litigation Reform Act of 1995.  Forward-looking statements are
 estimates of future performance that are based upon current information and
 that are subject to a number of risks and uncertainties that could cause
 actual operating results during future periods, including the balance of the
 current fiscal year, to differ significantly from those expected at the
 current time.  Those risks and uncertainties are set forth in detail in
 Pacer's Annual Report on Form 10-K for its fiscal year ended June 30, 2000
 filed with the Securities and Exchange Commission on September 28, 2000 and
 include the following:
 
     Dependence on Major Customers.  Even though no single customer represents
 more than 10% percent of our total sales volume, our customers include several
 large national mass merchandisers and national and regional food and drug
 store chains, the loss of business from one or more of which could result in
 unexpected reductions in sales and earnings.
 
     Uncertainties Relating to Restructuring Program and New Product
 Initiatives.  Although we believe that the restructuring and new product
 development programs that we are implementing will result in improvements in
 our operating results, there are a number of factors outside our control that
 could prevent us from achieving improved results, including adverse changes in
 prevailing economic conditions and increases in competition from other
 adhesive and nail care product manufacturers and suppliers.  Additionally, if
 we decide to dispose of or discontinue the manufacture of less profitable
 products to enhance the profitability of our future operations, we may have to
 write down the carrying value of related assets that would cause our operating
 results to decline on a near term basis, similar to what occurred in the third
 quarter of the fiscal year ended March 31, 2000.
 
     Risks of Foreign Operations.  Our operating results could decline as a
 result of foreign currency fluctuations and changes in the value of the U.S.
 Dollar in relation to foreign currencies in the countries in Europe, Asia and
 Latin America where we sell our products and where we obtain some of our raw
 materials.
 
     Recent Changes in Economic Conditions.  According to government and other
 public reports the quarter ended March 31, 2001 was characterized by a slowing
 of consumer demand and confidence in the United States.  We believe that like
 other manufacturers of retail products, our sales during that quarter were
 adversely impacted by these conditions.  A continued slowing of consumer
 demand could cause our sales to decline at least during the balance of fiscal
 2001.
 
     The forward looking statements contained in this press release are made
 only as of this date and Pacer undertakes no obligation to update or revise
 forward looking statements, whether as a result of new information, future
 events or developments or otherwise.
 
     Pacer Technology (Nasdaq:   PTCH) is a manufacturing, packaging and
 distribution company engaged in marketing advanced technology adhesives,
 sealants, and other related products, as well as manicure implements for
 consumer markets on a worldwide basis.  It is the provider of SUPER GLUE,
 ZAP(R), PRO SEAL(R), Cook Bates(R), Diamond Deb(R)/Kurlash(R) and Gem(R), and
 other well known branded products.
 
 
     Pacer Technology Summary Results:
 
 
                       PACER TECHNOLOGY AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)
 
                                 Three Months Ended        Nine Months Ended
                                   March 31,                  March 31,
                              2001          2000         2001          2000
 
     Net sales              $10,592       $11,119      $34,575       $35,756
     Cost of sales            6,966         8,681       22,626        24,976
 
     Gross profit on sales    3,626         2,438       11,949        10,780
 
     Selling, general and
      administrative expenses 2,617         4,641        8,892        10,757
     Restructuring charges       --           315           --           315
 
       Operating income
       (loss)                 1,009        (2,518)       3,057          (292)
 
     Interest and other
      expenses, net             341           227          687           644
     Income (loss) before
      income taxes              668        (2,745)       2,370          (936)
     Income tax expense
      (benefit)                 279        (1,138)         954          (378)
 
     Net income (loss)         $389       $(1,607)      $1,416         $(558)
 
     Net income (loss) per share
       Basic and Diluted      $0.12        $(0.48)       $0.43        $(0.17)
     Weighted average shares
      outstanding
       Basic and Diluted      3,256         3,333        3,285         3,352
 
     Selected Pro Forma Operating Data(1)
       Pro forma net income
        (loss)                 $522       $(1,492)      $1,802         $(182)
       Pro forma net income
        (loss) per share
       Basic and Diluted      $0.16        $(0.45)       $0.55        $(0.05)
     Weighted average shares
      outstanding
       Basic and Diluted      3,256         3,333        3,285         3,352
 
     (1) Selected pro forma operating data for the three and nine month periods
         ended March 31, 2001 and 2000 are presented solely for informational
         purposes and have not been prepared in accordance with generally
         accepted accounting principles.  These data are intended to present
         Pacer's net income (loss), by excluding non-cash charges for
         depreciation and amortization of goodwill, which totaled $222,000 and
         $191,000, respectively, for the three month periods ended March 31,
         2001 and 2000 and $645,000 and $626,0000, for the nine month periods
         ended March 31, 2001 and 2000, respectively, and by assuming a
         combined federal and state tax income tax rate of 40% in computing the
         income tax provisions for the three and nine month periods ended March
         31, 2001 and the income tax benefit for the three and nine month
         periods ended March 31, 2000.
 
 
                       PACER TECHNOLOGY AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
 
                                                       March 31,     June 30,
                                                         2001           2000
     ASSETS                                          (unaudited)     (audited)
 
     Current Assets:
       Cash                                              $164           $451
       Trade receivables                               10,479          8,947
       Notes and other receivables                        300          1,089
       Inventories                                     10,127         11,991
       Prepaid expenses                                   280            451
       Deferred income taxes-current                    1,379          1,379
         Total Current Assets                          22,729         24,308
     Equipment and leasehold improvements, net          1,679          1,724
     Deferred income tax assets                            16             16
     Cost in excess of net assets acquired              3,294          3,546
     Other assets                                          22             24
         Total Assets                                 $27,740        $29,618
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current Liabilities:
       Current portion of bank line of credit              $0        $10,312
       Accounts payable                                 3,424          3,276
       Other accrued expenses                             936          1,391
       Current portion of long-term debt                1,038          1,062
         Total Current Liabilities                      5,398         16,041
 
     Long-Term Liabilities:
       Long-term portion of bank line of credit         8,530             --
       Long-term debt, excluding current portion          192            878
         Total Liabilities                             14,120         16,919
 
     Stockholders' Equity:
       Common stock                                     8,298          8,576
       Retained earnings                                5,618          4,202
       Accumulated other comprehensive loss             (296)           (79)
         Total Stockholders' Equity                    13,620         12,699
 
         Total Liabilities and Equity                 $27,740        $29,618
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X74888303
 
 

SOURCE Pacer Technology
    RANCHO CUCAMONGA, Calif., April 26 /PRNewswire/ -- Pacer Technology
 (Nasdaq:   PTCH), today reported significant improvements in earnings for the
 quarter and nine months ended March 31, 2001.  Net income totaled $389,000, or
 $0.12 per share, for the third quarter, and $1,416,000, or $0.43 per share,
 for the nine months ended March 31, 2001.  By comparison, Pacer sustained net
 losses of ($1,607,000), or ($0.48) per share, for the three months ended March
 31, 2000 and ($558,000) or ($0.17) per share for nine months ended March 31,
 2000.  Those losses were primarily attributable to programs, first implemented
 in the third quarter of 2000 and continued during this year, that were
 designed to restructure and streamline operations and reduce costs, but
 necessitated one-time pre-tax charges totaling approximately $3,081,000 in the
 third quarter of 2000.  However, the improved operating results achieved in
 the current fiscal year are largely attributable to operating efficiencies and
 cost cutting measures that were commenced in that quarter but which have been
 more fully implemented and extended to other aspects of our operations during
 the current fiscal year.
     Pro forma net income, which excludes non-cash charges for depreciation and
 amortization of goodwill was $522,000, or $0.16 per share, and $1,802,000, or
 $0.55 per share, respectively, for the three and nine month periods ended
 March 31, 2001.  By comparison, for the three and nine month periods ended
 March 31, 2000, after excluding such non cash charges, Pacer would have had
 net losses of ($1,492,000), or ($0.45) per share, and ($182,000), or ($0.05)
 per share, respectively.
     During the three and nine month periods ended March 31, 2001, net sales
 declined by 4.7% and 3.3%, respectively, as compared to the corresponding
 periods of the prior year.  Those declines were due to reductions in orders
 from major retail customers, as they adjusted their inventories in response to
 the growing weakness in the economy.  However, the effects of the sales
 decline on income, were more than offset by cost reductions we have achieved
 during the three and nine month periods ended March 31, 2001.
     Rick Kay, the Company's new Chairman of the Board, had the following
 comments:  "We are pleased with the earnings improvement that was achieved in
 our third quarter and we are optimistic about the future for Pacer.  Our
 primary goal is to increase shareholder value by focusing on return on capital
 and cash flow.  In the near term, we are concentrating on asset and supply
 chain management.  In addition we are taking measures to reduce outstanding
 receivables and inventories in order to reduce costs and at the same time
 improve our cash flow.  Furthermore, we have recently negotiated several new
 contracts with global sources, which we expect, when combined with planned
 inventory reductions, will have a positive impact on future financial
 statements, but only after we sell our current inventories.  We also are
 improving the scheduling of our purchases in order to deliver our products to
 the market more efficiently, to benefit both our inventory turnover and retail
 customers.  In addition, we are inaugurating a new practice of presenting
 additional selected operating data, which excludes non-cash charges for
 depreciation and amortization of goodwill, so that our shareholders can better
 appreciate the impact of our operations and business strategies on Pacer's
 cash flow, which we believe is of importance in assessing Pacer's ability to
 react to changing market conditions and to exploit opportunities for growth
 and expansion."
     Kay added, "At the same time we are implementing programs that are
 designed to increase our sales.  We plan to introduce new products for
 current, as well as potential new customers and explore opportunities for
 acquisitions that will enable us to broaden our product offerings.  We may,
 however, also decide to dispose of certain product lines, which do not fit
 into our longer term plans or do not meet desired return on capital
 objectives.  In the past, we have discussed with our shareholders our efforts
 to develop a poultry adhesive/sealant product and a cyanoacrylate formulation
 for use in the medical field as a new topical skin closure device.  Those
 efforts were "put on the back burner" while we focused on implementing
 programs to improve the profitability of our core businesses.  While we still
 believe those products present a desirable opportunity to expand Pacer's
 business, we have concluded that it would be prudent to seek out partners that
 have the technical and marketing expertise that is needed to enable us to turn
 these formulations into commercially viable products and to navigate through
 the complex and lengthy regulatory process required to obtain the government
 approvals needed to bring those products to market."
     Kay also commented on other recent developments, namely: (1) a decision to
 change the way we will do business in Europe.  "Because the lease for our
 office in the United Kingdom will expire on June 30, it will be closed.  The
 managing director will continue as an employee and focus his attention on
 sales and customer service.  While we may lose some customers, who do not want
 to deal directly with our international office in California, we will realize
 savings in overhead and working capital requirements;" and (2) the final
 agreement for our bank line of credit has been signed.  "The agreement now
 provides for total credit facilities of $16.6 million."
 
     Forward-Looking Statements
     Statements contained in this press release that are not historical facts
 or that discuss our expectations or beliefs regarding our future financial
 performance constitute "forward-looking statements" as defined in the Private
 Securities Litigation Reform Act of 1995.  Forward-looking statements are
 estimates of future performance that are based upon current information and
 that are subject to a number of risks and uncertainties that could cause
 actual operating results during future periods, including the balance of the
 current fiscal year, to differ significantly from those expected at the
 current time.  Those risks and uncertainties are set forth in detail in
 Pacer's Annual Report on Form 10-K for its fiscal year ended June 30, 2000
 filed with the Securities and Exchange Commission on September 28, 2000 and
 include the following:
 
     Dependence on Major Customers.  Even though no single customer represents
 more than 10% percent of our total sales volume, our customers include several
 large national mass merchandisers and national and regional food and drug
 store chains, the loss of business from one or more of which could result in
 unexpected reductions in sales and earnings.
 
     Uncertainties Relating to Restructuring Program and New Product
 Initiatives.  Although we believe that the restructuring and new product
 development programs that we are implementing will result in improvements in
 our operating results, there are a number of factors outside our control that
 could prevent us from achieving improved results, including adverse changes in
 prevailing economic conditions and increases in competition from other
 adhesive and nail care product manufacturers and suppliers.  Additionally, if
 we decide to dispose of or discontinue the manufacture of less profitable
 products to enhance the profitability of our future operations, we may have to
 write down the carrying value of related assets that would cause our operating
 results to decline on a near term basis, similar to what occurred in the third
 quarter of the fiscal year ended March 31, 2000.
 
     Risks of Foreign Operations.  Our operating results could decline as a
 result of foreign currency fluctuations and changes in the value of the U.S.
 Dollar in relation to foreign currencies in the countries in Europe, Asia and
 Latin America where we sell our products and where we obtain some of our raw
 materials.
 
     Recent Changes in Economic Conditions.  According to government and other
 public reports the quarter ended March 31, 2001 was characterized by a slowing
 of consumer demand and confidence in the United States.  We believe that like
 other manufacturers of retail products, our sales during that quarter were
 adversely impacted by these conditions.  A continued slowing of consumer
 demand could cause our sales to decline at least during the balance of fiscal
 2001.
 
     The forward looking statements contained in this press release are made
 only as of this date and Pacer undertakes no obligation to update or revise
 forward looking statements, whether as a result of new information, future
 events or developments or otherwise.
 
     Pacer Technology (Nasdaq:   PTCH) is a manufacturing, packaging and
 distribution company engaged in marketing advanced technology adhesives,
 sealants, and other related products, as well as manicure implements for
 consumer markets on a worldwide basis.  It is the provider of SUPER GLUE,
 ZAP(R), PRO SEAL(R), Cook Bates(R), Diamond Deb(R)/Kurlash(R) and Gem(R), and
 other well known branded products.
 
 
     Pacer Technology Summary Results:
 
 
                       PACER TECHNOLOGY AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)
 
                                 Three Months Ended        Nine Months Ended
                                   March 31,                  March 31,
                              2001          2000         2001          2000
 
     Net sales              $10,592       $11,119      $34,575       $35,756
     Cost of sales            6,966         8,681       22,626        24,976
 
     Gross profit on sales    3,626         2,438       11,949        10,780
 
     Selling, general and
      administrative expenses 2,617         4,641        8,892        10,757
     Restructuring charges       --           315           --           315
 
       Operating income
       (loss)                 1,009        (2,518)       3,057          (292)
 
     Interest and other
      expenses, net             341           227          687           644
     Income (loss) before
      income taxes              668        (2,745)       2,370          (936)
     Income tax expense
      (benefit)                 279        (1,138)         954          (378)
 
     Net income (loss)         $389       $(1,607)      $1,416         $(558)
 
     Net income (loss) per share
       Basic and Diluted      $0.12        $(0.48)       $0.43        $(0.17)
     Weighted average shares
      outstanding
       Basic and Diluted      3,256         3,333        3,285         3,352
 
     Selected Pro Forma Operating Data(1)
       Pro forma net income
        (loss)                 $522       $(1,492)      $1,802         $(182)
       Pro forma net income
        (loss) per share
       Basic and Diluted      $0.16        $(0.45)       $0.55        $(0.05)
     Weighted average shares
      outstanding
       Basic and Diluted      3,256         3,333        3,285         3,352
 
     (1) Selected pro forma operating data for the three and nine month periods
         ended March 31, 2001 and 2000 are presented solely for informational
         purposes and have not been prepared in accordance with generally
         accepted accounting principles.  These data are intended to present
         Pacer's net income (loss), by excluding non-cash charges for
         depreciation and amortization of goodwill, which totaled $222,000 and
         $191,000, respectively, for the three month periods ended March 31,
         2001 and 2000 and $645,000 and $626,0000, for the nine month periods
         ended March 31, 2001 and 2000, respectively, and by assuming a
         combined federal and state tax income tax rate of 40% in computing the
         income tax provisions for the three and nine month periods ended March
         31, 2001 and the income tax benefit for the three and nine month
         periods ended March 31, 2000.
 
 
                       PACER TECHNOLOGY AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
 
                                                       March 31,     June 30,
                                                         2001           2000
     ASSETS                                          (unaudited)     (audited)
 
     Current Assets:
       Cash                                              $164           $451
       Trade receivables                               10,479          8,947
       Notes and other receivables                        300          1,089
       Inventories                                     10,127         11,991
       Prepaid expenses                                   280            451
       Deferred income taxes-current                    1,379          1,379
         Total Current Assets                          22,729         24,308
     Equipment and leasehold improvements, net          1,679          1,724
     Deferred income tax assets                            16             16
     Cost in excess of net assets acquired              3,294          3,546
     Other assets                                          22             24
         Total Assets                                 $27,740        $29,618
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current Liabilities:
       Current portion of bank line of credit              $0        $10,312
       Accounts payable                                 3,424          3,276
       Other accrued expenses                             936          1,391
       Current portion of long-term debt                1,038          1,062
         Total Current Liabilities                      5,398         16,041
 
     Long-Term Liabilities:
       Long-term portion of bank line of credit         8,530             --
       Long-term debt, excluding current portion          192            878
         Total Liabilities                             14,120         16,919
 
     Stockholders' Equity:
       Common stock                                     8,298          8,576
       Retained earnings                                5,618          4,202
       Accumulated other comprehensive loss             (296)           (79)
         Total Stockholders' Equity                    13,620         12,699
 
         Total Liabilities and Equity                 $27,740        $29,618
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X74888303
 
 SOURCE  Pacer Technology