EX-99.1 2 pressrelease.htm 10.27.05 PRESS RELEASE 10.28.05 Press Release
KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS - UNAUDITED
                  
(In thousands, except per share data)
                  
                   
 
  
Three Months Ended September 30, 
  
Nine Months Ended September 30, 
  
     
2005
 
 
2004
 
 
2005
 
 
2004
 
                           
Net sales
  
$
140,557
  
$
135,426
  
$
334,280
  
$
335,843
  
Cost of goods sold
    
122,896
   
117,569
   
295,310
   
288,095
 
Gross profit
    
17,661
   
17,857
   
38,970
   
47,748
 
Selling, general and administrative expenses
    
13,861
   
14,846
   
40,100
   
43,834
 
Stock option expense (non-cash)
    
-
   
-
   
1,953
   
-
 
Severance, restructuring and related charges
    
662
   
167
   
1,975
   
1,956
 
(Gain) loss on sale of assets
    
(187
)
  
3
   
(353
)
  
(546
)
Operating income (loss)
    
3,325
   
2,841
   
(4,705
)
  
2,504
 
Interest expense
    
(1,487
)
  
(1,017
)
  
(4,143
)
  
(2,814
)
Other, net
    
219
   
(30
)
  
209
   
(261
)
Income (loss) before provision for income taxes
    
2,057
   
1,794
   
(8,639
)
  
(571
)
Provision for income taxes
    
724
   
918
   
722
   
1,617
 
Net income (loss)
    
1,333
   
876
   
(9,361
)
  
(2,188
)
Payment-in-kind (PIK) dividends on convertible preferred stock
    
-
   
(3,822
)
  
-
   
(10,746
)
Net income (loss) attributable to common stockholders
  
$
1,333
  
$
(2,946
)
$
(9,361
)
$
(12,934
)
                           
Income (loss) per share of common stock - basic:
                          
                           
Net income (loss)
  
$
0.17
  
$
0.11
  
$
(1.18
)
$
(0.28
)
PIK dividends on convertible preferred stock
    
-
   
(0.48
)
  
-
   
(1.36
)
Net income (loss) attributable to common stockholders
  
$
0.17
  
$
(0.37
)
$
(1.18
)
$
(1.64
)
                           
Income (loss) per share of common stock - diluted:
                          
                           
Net income (loss)
  
$
0.05
  
$
0.11
  
$
(1.18
)
$
(0.28
)
PIK dividends on convertible preferred stock
    
-
   
(0.48
)
  
-
   
(1.36
)
Net income (loss) attributable to common stockholders
  
$
0.05
  
$
(0.37
)
$
(1.18
)
$
(1.64
)
                           
Weighted average common shares outstanding:
                          
Basic
    
7,951
   
7,870
   
7,948
   
7,875
 
Diluted
    
26,880
   
7,870
   
7,948
   
7,875
 
                           
 
                
September 30, 
    
September 30,
 
Other Information:
 
 
 
 
 
 
 
 
2005
 
 
2004
  
                           
Working capital
              
$
8,061
  
$
19,983
  
Working capital, exclusive of deferred tax assets and liabilities and debt
                          
classified as current
              
$
51,639
  
$
71,347
  
Long-term debt, including current maturities
              
$
58,128
  
$
67,078
  
Stockholders' equity
              
$
59,973
  
$
100,564
  
Capital expenditures
              
$
5,785
  
$
10,838
  
                           

 
 
 
KATY INDUSTRIES, INC. RECONCILIATIONS OF GAAP RESULTS TO RESULTS EXCLDING CERTAIN UNUSUAL ITEMS - UNAUDITED
                          
(In thousands, except percentages and per share data)
                          
   
Three Months Ended September 30, 
    
Nine Months Ended September 30,
  
     
2005
 
 
2004
 
 
2005
 
 
2004
  
                           
Reconciliation of net income (loss) to net income (loss), as adjusted
                          
Net income (loss)
  
$
1,333
  
$
876
  
$
(9,361
)
$
(2,188
)
Unusual items:
                          
Stock option expense (non-cash)
    
-
   
-
   
1,953
   
-
 
Severance, restructuring and related charges
    
662
   
167
   
1,975
   
1,956
 
Gain on sale of real estate
    
-
   
-
   
-
   
(549
)
Costs associated with abandoned financing (included in other, net)
    
-
   
-
   
-
   
435
 
Net write-off of amounts related to divested businesses (included in
                          
other, net)
    
-
   
29
   
-
   
(31
)
Adjustment to reflect a more normalized effective tax rate excluding
                          
unusual items
    
(309
)
  
162
   
2,512
   
1,146
 
Net income (loss), as adjusted
  
$
1,686
  
$
1,234
  
$
(2,921
)
$
769
  
                           
Net income (loss), as adjusted per share - basic:
                          
Net income (loss) per share
  
$
0.17
  
$
0.11
  
$
(1.18
)
$
(0.28
)
Unusual items per share
    
0.08
   
0.02
   
0.49
   
0.23
 
Adjustment to reflect a more normalized effective tax rate excluding
                          
unusual items per share
    
(0.04
)
  
0.03
   
0.32
   
0.15
 
Net income (loss), as adjusted per share
  
$
0.21
  
$
0.16
  
$
(0.37
)
$
0.10
  
                           
Net income (loss), as adjusted per share - diluted:
                          
Net income (loss) per share
  
$
0.05
  
$
0.11
  
$
(1.18
)
$
(0.28
)
Unusual items per share
    
0.02
   
0.02
   
0.49
   
0.23
 
Adjustment to reflect a more normalized effective tax rate excluding
                          
unusual items per share
    
(0.01
)
  
0.03
   
0.32
   
0.15
 
Net income (loss), as adjusted per share
  
$
0.06
  
$
0.16
  
$
(0.37
)
$
0.10
  
                           
Weighted average common shares outstanding:
                          
Basic
    
7,951
   
7,870
   
7,948
   
7,875
 
Diluted
    
26,880
   
7,870
   
7,948
   
7,875
 
                           
Operating income (loss), as adjusted:
                          
                           
Operating income (loss)
  
$
3,325
  
$
2,841
  
$
(4,705
)
$
2,504
  
Stock option expense (non-cash)
    
-
   
-
   
1,953
   
-
 
Gain on sale of real estate
    
-
   
-
   
-
   
(549
)
Severance, restructuring and related charges
    
662
   
167
   
1,975
   
1,956
 
Operating income (loss), as adjusted:
  
$
3,987
  
$
3,008
  
$
(777
)
$
3,911
  
Operating income (loss), as adjusted, as a % of sales
    
2.8
%
  
2.2
%
  
-0.2
%
  
1.2
%
                           
 
 
 
 

KATY INDUSTRIES, INC. SEGMENT INFORMATION - UNAUDITED
                          
(In thousands)
                          
                           
 
    
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 
 
 
 
2005
 
 
2004
 
 
2005
 
 
2004
  
Net sales:
                          
Maintenance Products Group
 
$
64,013
  
$
72,218
  
$
189,355
  
$
212,444
  
Electrical Products Group
   
76,544
   
63,208
   
144,925
   
123,399
 
   
$
140,557
  
$
135,426
  
$
334,280
  
$
335,843
  
                           
Operating income (loss), as adjusted:
                          
Maintenance Products Group
 
$
591
  
$
74
  
$
(3,937
)
$
1,121
  
Electrical Products Group
   
6,100
   
6,329
   
10,163
   
10,879
 
Unallocated corporate expense
   
(2,704
)
  
(3,395
)
  
(7,003
)
  
(8,089
)
   
$
3,987
  
$
3,008
  
$
(777
)
$
3,911
  
                           
 
 
 
 

KATY INDUSTRIES, INC. BALANCE SHEETS - UNAUDITED
                 
(In thousands)
                 
                  
Assets
  
 September 30,
  
 December 31,
  
 September 30,
  
Current assets:
  
 2005
 
 2004
 
 2004
 
Cash and cash equivalents
  
$
8,627
  
$
8,525
  
$
8,626
  
Accounts receivable, net
    
76,084
   
66,689
   
76,185
 
Inventories, net
    
60,536
   
65,674
   
72,928
 
Other current assets
    
4,534
   
4,233
   
2,980
 
Total current assets
    
149,781
   
145,121
   
160,719
 
                     
Other assets:
                    
Goodwill
    
2,239
   
2,239
   
10,215
 
Intangibles, net
    
7,814
   
7,428
   
21,280
 
Other
    
9,036
   
9,946
   
10,244
 
Total other assets
    
19,089
   
19,613
   
41,739
 
                     
Property and equipment, net
    
57,166
   
59,730
   
68,244
 
                     
Total assets
  
$
226,036
  
$
224,464
  
$
270,702
  
                     
                     
Liabilities and stockholders' equity
                    
Current liabilities:
                    
Accounts payable
  
$
51,284
  
$
39,079
  
$
42,917
  
Accrued expenses
    
45,879
   
45,208
   
46,455
 
Current maturities of long-term debt
    
2,857
   
2,857
   
2,857
 
Revolving credit agreement
    
41,700
   
40,166
   
48,507
 
Total current liabilities
    
141,720
   
127,310
   
140,736
 
                     
Long-term debt, less current maturities
    
13,571
   
15,714
   
15,714
 
Other liabilities
    
10,772
   
12,855
   
13,688
 
Total liabilities
    
166,063
   
155,879
   
170,138
 
                     
Stockholders' equity
                    
Convertible preferred stock
    
108,256
   
108,256
   
104,253
 
Common stock
    
9,822
   
9,822
   
9,822
 
Additional paid-in capital
    
27,016
   
25,111
   
29,686
 
Accumulated other comprehensive income
    
3,338
   
4,564
   
2,913
 
Accumulated deficit
    
(66,619
)
  
(57,258
)
  
(23,325
)
Treasury stock
    
(21,840
)
  
(21,910
)
  
(22,785
)
Total stockholders' equity
    
59,973
   
68,585
   
100,564
 
                     
Total liabilities and stockholders' equity
  
$
226,036
  
$
224,464
  
$
270,702
  
                     
 

 
 
 
 
KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS - UNAUDITED
          
(In thousands)
              
   
Nine Months Ended September 30,
  
     
2005
 
 
2004
  
Cash flows from operating activities:
              
Net loss 
  
$
(9,361
)
$
(2,188
)
Depreciation and amortization 
    
8,606
   
11,102
 
Amortization of debt issuance costs 
    
844
   
804
 
Stock option expense (non-cash) 
    
1,953
   
-
 
Gain on sale of assets 
    
(353
)
  
(546
)
     
1,689
   
9,172
 
Changes in operating assets and liabilities: 
              
 Accounts receivable
    
(9,596
)
  
(10,637
)
 Inventories
    
5,019
   
(19,072
)
 Other assets
    
(471
)
  
(1,136
)
 Accounts payable
    
12,456
   
5,546
 
 Accrued expenses
    
677
   
(125
)
 Other, net
    
(2,090
)
  
(2,404
)
     
5,995
   
(27,828
)
               
Net cash provided by (used in) operating activities 
    
7,684
   
(18,656
)
               
Cash flows from investing activities:
              
Capital expenditures 
    
(5,785
)
  
(10,838
)
Acquisition of business 
    
(1,658
)
  
-
 
Collections of note receivable from sale of subsidiary 
    
106
   
14
 
Proceeds from sale of assets 
    
931
   
5,545
 
Net cash used in investing activities 
    
(6,406
)
  
(5,279
)
               
Cash flows from financing activities:
              
Net borrowings on revolving loans 
    
1,045
   
12,536
 
Proceeds of term loans 
    
-
   
18,152
 
Repayments of term loans 
    
(2,143
)
  
(3,244
)
Direct costs associated with debt facilities 
    
(244
)
  
(1,439
)
Repurchases of common stock 
    
-
   
(75
)
Net cash (used in) provided by financing activities 
    
(1,342
)
  
25,930
 
               
Effect of exchange rate changes on cash and cash equivalents
    
166
   
(117
)
Net increase in cash and cash equivalents
    
102
   
1,878
 
Cash and cash equivalents, beginning of period
    
8,525
   
6,748
 
Cash and cash equivalents, end of period
  
$
8,627
  
$
8,626
  
               
Reconciliation of free cash flow to GAAP Results:
              
               
Net cash provided by (used in) operating activities 
  
$
7,684
  
$
(18,656
)
Capital expenditures 
    
(5,785
)
  
(10,838
)
Free cash flow 
  
$
1,899
  
$
(29,494
)