KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS - UNAUDITED (In thousands, except per share data)
Three Months Ended $ %
December 31, December 31, Change Change
2003 2002 Inc/(Dec) Inc/(Dec)
Net sales $118,596 $110,634 $7,962 7.2%
Cost of goods sold 96,210 91,228 4,982 5.5%
Gross profit 22,386 19,406 2,980 15.4%
Selling, general
and administrative
expenses 14,145 17,017 (2,872) (16.9%)
Impairments of
long-lived assets 4,825 7,824 (2,999) (38.3%)
Severance,
restructuring and
related charges 2,320 3,588 (1,268) (35.3%)
Operating income
(loss) 1,096 (9,023) 10,119 112.1%
Equity in loss of
equity method
investment -- (311) 311 100.0%
Interest, net (1,436) (1,384) (52) (3.8%)
Other, net (1,642) (82) (1,560) (1902.4%)
Loss before
benefit (provision)
for income taxes (1,982) (10,800) 8,818 81.6%
Benefit (provision)
for income taxes 82 (6,380) 6,462 101.3%
Loss from continuing
operations before
distributions on
preferred interest
in subsidiary (1,900) (17,180) 15,280 88.9%
Distributions on
preferred interest
of subsidiary, net
of tax -- (609) 609 100.0%
Loss from
continuing
operations (1,900) (17,789) 15,889 89.3%
Loss from operations
of discontinued
businesses, net
of tax -- (9,033) 9,033 100.0%
Gain on sale of
discontinued
businesses, net
of tax -- 3,306 (3,306) (100.0%)
Loss before
cumulative effect
of a change in
accounting
principle (1,900) (23,516) 21,616 91.9%
Cumulative effect
of a change in
accounting principle,
net of tax -- 1,676 (1,676) (100.0%)
Net loss (1,900) (21,840) 19,940 91.3%
Payment in kind
dividends on
convertible preferred
stock (3,462) (3,284) (178) (5.4%)
Net loss
attributable to
common
stockholders $(5,362) $(25,124) $19,762 78.7%
Income (loss) per
share of common
stock - basic
and diluted:
Loss from continuing
operations $(0.24) $(2.13) $1.89 88.7%
Payment in kind
(PIK) dividends on
convertible preferred
stock (0.44) (0.39) (0.05) (12.8%)
Loss from
continuing
operations
attributable to
common stockholders (0.68) (2.52) 1.84 73.0%
Discontinued operations -- (0.68) 0.68 100.0%
Cumulative effect of
a change in
accounting principle -- 0.20 (0.20) N/M
Net loss
attributable to
common stockholders $(0.68) $(3.00) $2.32 77.3%
Weighted average
shares outstanding -
basic and diluted 7,940 8,362
Other Information
Working capital,
excluding current
maturities,
long-term debt $43,439 $35,206 $8,233 23.4%
Bank debt, including
portions classified
as current $39,663 $45,451 $(5,788) (12.7%)
Preferred interest
in subsidiary $-- $16,400 $(16,400) N/M
Stockholders' equity $102,292 $102,172 $120 0.1%
Capital expenditures $6,298 $1,886 $4,412 233.9%
KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS - UNAUDITED
(In thousands, except per share data)
Twelve Months Ended $ %
December 31, December 31, Change Change
2003 2002 Inc/(Dec) Inc/(Dec)
Net sales $436,410 $445,755 $(9,345) (2.1%)
Cost of goods sold 365,563 373,578 (8,015) (2.1%)
Gross profit 70,847 72,177 (1,330) (1.8%)
Selling, general and
administrative
expenses 59,740 63,657 (3,917) (6.2%)
Impairments of
long-lived assets 11,880 21,204 (9,324) (44.0%)
Severance,
restructuring and
related charges 8,132 19,155 (11,023) (57.5%)
Loss on SESCO
transaction -- 6,010 (6,010) (100.0%)
Operating loss (8,905) (37,849) 28,944 76.5%
Equity in (loss)
income of equity
method investment
(including impairment
charge of $5.5 million
in 2003) (5,689) 295 (5,984) (2028.5%)
Interest, net (6,137) (6,046) (91) (1.5%)
Other, net (1,234) (408) (826) (202.5%)
Loss before benefit
(provision) for
income taxes (21,965) (44,008) 22,043 50.1%
Benefit (provision)
for income taxes 3,158 (7,482) 10,640 142.2%
Loss from
continuing
operations before
distributions of
preferred interest
in subsidiary (18,807) (51,490) 32,683 63.5%
Distributions on
preferred interest
of subsidiary, net
of tax (80) (1,593) 1,513 95.0%
Loss from
continuing
operations (18,887) (53,083) 34,196 64.4%
Income (loss) from
operations of
discontinued
businesses, net
of tax 2,081 (4,458) 6,539 146.7%
Gain on sale of
discontinued
businesses, net
of tax 7,442 3,306 4,136 125.1%
Loss before
cumulative effect
of a change in
accounting principle (9,364) (54,235) 44,871 82.7%
Cumulative effect of
a change in
accounting principle,
net of tax -- (2,514) 2,514 100.0%
Net loss (9,364) (56,749) 47,385 83.5%
Gain on early
redemption of
preferred interest
of subsidiary 6,560 -- 6,560 N/M
Payment in kind
dividends on
convertible preferred
stock (12,811) (11,136) (1,675) (15.0%)
Net loss
attributable to
common
stockholders $(15,615) $(67,885) $52,270 77.0%
Income (loss) per
share of common
stock - basic
and diluted:
Loss from continuing
operations $(2.30) $(6.34) $4.04 63.7%
Gain on early
redemption of
preferred interest
of subsidiary 0.80 -- 0.80 N/M
Payment in kind
(PIK) dividends on
convertible preferred
stock (1.56) (1.33) (0.23) (17.3%)
Loss from
continuing operations
attributable to
common stockholders (3.06) (7.67) 4.61 60.1%
Discontinued operations 1.16 (0.14) 1.30 928.6%
Cumulative effect of
a change in
accounting principle -- (0.30) 0.30 100.0%
Net loss attributable
to common
stockholders $(1.90) $(8.11) $6.21 76.6%
Weighted average
shares outstanding -
basic and diluted 8,215 8,371
Other Information
Working capital,
excluding current
maturities, long-term
debt $43,439 $35,206 $8,233 23.4%
Bank debt, including
portions classified
as current $39,663 $45,451 $(5,788) (12.7%)
Preferred interest
in subsidiary $-- $16,400 $(16,400) N/M
Stockholders' equity $102,292 $102,172 $120 0.1%
Capital expenditures $13,435 $10,119 $3,316 32.8%
KATY INDUSTRIES, INC.
RECONCILIATIONS OF GAAP RESULTS UNAUDITED
TO RESULTS EXCLUDING CERTAIN UNUSUAL ITEMS
(In thousands, except per share data)
Three Months Ended
December 31, December 31,
2003 2002
Reconciliation of loss from continuing
operations to income (loss) from
continuing operations, as adjusted
Loss from continuing operations $(1,900) $(17,789)
Unusual items:
Impairments of long-lived assets 4,825 7,824
Severance, restructuring and related
charges 2,320 3,588
Net write off of receivables from
businesses disposed of prior to 2002
and gain on sale of real estate
(included in other, net) 977 --
Adjustment to reflect a more normalized
effective tax rate excluding unusual items (2,415) 6,147
Income (loss) from continuing operations,
as adjusted $3,807 $(230)
Income (loss) from continuing operations,
as adjusted per share
Loss from continuing operations per share $(0.24) $(2.13)
Unusual items per share 1.02 1.36
Adjustment to reflect a more normalized
effective tax rate excluding unusual
items per share (0.30) 0.74
Income (loss) from continuing operations,
as adjusted per share $0.48 $(0.03)
Weighted average shares outstanding -
basic and diluted 7,940 8,362
EBITDA, as adjusted:
Net loss $(1,900) $(21,840)
Interest, net 1,436 1,384
(Benefit) provision for income taxes (82) 6,380
Depreciation and amortization 5,423 3,863
EBITDA 4,877 (10,213)
Add back:
Distributions on preferred interest of
subsidiary, net of tax -- 609
Loss from operations of discontinued
businesses, net of tax -- 9,033
Gain on sale of discontinued businesses,
net of tax -- (3,306)
Cumulative effect of a change in accounting
principle, net of tax -- (1,676)
Impairments of long-lived assets 4,825 7,824
Severance, restructuring and related charges 2,320 3,588
Net write off of receivables from businesses
disposed of prior to 2002 and gain on sale of
real estate (included in other, net) 977 --
EBITDA, as adjusted $12,999 $5,859
EBITDA, as adjusted, as a % of sales 11.0% 5.3%
KATY INDUSTRIES, INC.
RECONCILIATIONS OF GAAP RESULTS UNAUDITED
TO RESULTS EXCLUDING CERTAIN UNUSUAL ITEMS
(In thousands, except per share data)
Twelve Months Ended
December 31, December 31,
2003 2002
Reconciliation of loss from continuing
operations to income (loss) from continuing
operations, as adjusted
Loss from continuing operations $(18,887) $(53,083)
Unusual items:
Impairments of long-lived assets 11,880 21,204
Severance, restructuring and related charges 8,132 19,155
Loss on SESCO transaction -- 6,010
Impairment of equity method investment 5,521 --
Net write off of receivables from businesses
disposed of prior to 2002 and net gain
on sale of real estate (included in
other, net) 208 --
Adjustment to reflect a more normalized
effective tax rate excluding unusual items (4,593) 6,585
Income (loss) from continuing operations,
as adjusted $2,261 $(129)
Income (loss) from continuing operations,
as adjusted per share
Loss from continuing operations per share $(2.30) $(6.34)
Unusual items per share 3.13 5.54
Adjustment to reflect a more normalized
effective tax rate excluding unusual items
per share (0.55) 0.78
Income (loss) from continuing operations,
as adjusted per share $0.28 $(0.02)
Weighted average shares outstanding -
basic and diluted 8,215 8,371
EBITDA, as adjusted:
Net loss $(9,364) $(56,749)
Interest, net 6,137 6,046
(Benefit) provision for income taxes (3,158) 7,482
Depreciation and amortization 21,954 19,259
EBITDA 15,569 (23,962)
Add back:
Distributions on preferred interest of
subsidiary, net of tax 80 1,593
Loss from operations of discontinued
businesses, net of tax (2,081) 4,458
Gain on sale of discontinued businesses,
net of tax (7,442) (3,306)
Cumulative effect of a change in
accounting principle, net of tax -- 2,514
Impairments of long-lived assets 11,880 21,204
Severance, restructuring and related charges 8,132 19,155
Loss on SESCO transaction -- 6,010
Impairment of equity method investment 5,521 --
Net write off of receivables from businesses
disposed of prior to 2002 and net gain on
sale of real estate (included in other, net) 208 --
EBITDA, as adjusted 31,867 27,666
EBITDA, as adjusted, as a % of sales 7.3% 6.2%
KATY INDUSTRIES, INC. BALANCE SHEETS - UNAUDITED
(In thousands)
$ %
Assets December 31, December 31, Change Change
Current assets: 2003 2002 (a) Inc/(Dec) Inc/(Dec)
Cash $6,748 $4,842 $1,906 39.4%
Accounts receivable,
net 65,197 58,463 6,734 11.5%
Inventory, net 53,545 56,806 (3,261) (5.7%)
Other current assets 1,658 1,775 (117) (6.6%)
Current assets of
discontinued
operations (b) -- 7,748 (7,748) (100.0%)
Total current assets 127,148 129,634 (2,486) (1.9%)
Other assets:
Goodwill 10,215 10,543 (328) (3.1%)
Intangibles, net 22,399 25,536 (3,137) (12.3%)
Other 10,352 19,601 (9,249) (47.2%)
Non-current assets
of discontinued
operations (b) -- 4,069 (4,069) (100.0%)
Total other assets 42,966 59,749 (16,783) (28.1%)
Property, plant and
equipment 149,634 158,900 (9,266) (5.8%)
Less: accumulated
depreciation (78,040) (72,306) (5,734) (7.9%)
Property, plant and
equipment, net 71,594 86,594 (15,000) (17.3%)
Total assets $241,708 $275,977 $(34,269) (12.4%)
Liabilities and
stockholders' equity
Current liabilities:
Accounts payable $37,259 $36,765 $494 1.3%
Accrued expenses 46,450 54,700 (8,250) (15.1%)
Current maturities,
long-term debt 2,857 700 2,157 308.1%
Revolving credit
agreement 36,000 44,751 (8,751) (19.6%)
Current liabilities
of discontinued
operations (b) -- 2,963 (2,963) (100.0%)
Total current
liabilities 122,566 139,879 (17,313) (12.4%)
Long-term debt,
less current
maturities 806 -- 806 N/M
Other liabilities 16,044 17,526 (1,482) (8.5%)
Total liabilities 139,416 157,405 (17,989) (11.4%)
Preferred interest
of subsidiary -- 16,400 (16,400) (100.0%)
Stockholders' equity
Convertible
preferred stock 93,507 80,696 12,811 15.9%
Common stock 9,822 9,822 -- 0.0%
Additional paid-in
capital 40,441 46,701 (6,260) (13.4%)
Accumulated other
comprehensive
income (loss) 2,387 (3,046) 5,433 178.4%
Accumulated deficit (21,137) (11,773) (9,364) (79.5%)
Treasury stock (22,728) (20,228) (2,500) (12.4%)
Total stockholders'
equity 102,292 102,172 120 0.1%
Total liabilities
and stockholders'
equity $241,708 $275,977 $(34,269) (12.4%)
(a) Certain amounts have been reclassified to conform with current year
presentation.
(b) Amounts include assets and liabilities of Hamilton Precision Metals,
L.P., GC/Waldom Electronics, Inc. and Duckback Products, Inc.
KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
For the twelve months ended $ %
December 31, December 31, Change Change
2003 2002 Inc/(Dec) Inc/(Dec)
Cash flows from
operating
activities:
Net loss $(9,364) $(56,749)
(Income) loss from
operations of
discontinued
businesses (9,523) 1,152
Loss from
continuing
operations (18,887) (55,597)
Cumulative effect
of a change in
accounting
principle -- 2,514
Depreciation and
amortization 21,954 19,259
Impairments of
long-lived assets 11,880 21,204
Write-off and
amortization of debt
issuance costs 2,981 1,605
(Gain) loss on sale
of assets (627) 160
Loss on SESCO
transaction -- 6,010
Equity in loss
(income) of equity
method investment
(including impairment
charge of
$5.5 million in 2003) 5,689 (295)
Deferred income taxes -- 8,889
22,990 3,749
Changes in operating
assets and
liabilities:
Accounts
receivable (3,869) 9,591
Inventory 5,504 (4,150)
Other assets 1,100 776
Accounts payable (727) 3,369
Accrued expenses (9,679) 6,640
Other, net (2,125) 4,997
(9,796) 21,223
Net cash provided
by continuing
operations 13,194 24,972
Net cash (used in)
provided by
discontinued
operations (5,159) 6,931
Net cash provided
by operating
activities 8,035 31,903 (23,868) (75%)
Cash flows from
investing activities:
Capital expenditures
of continuing
operations (13,324) (9,987)
Capital
expenditures of
discontinued
operations (111) (132)
Acquisition of
subsidiary, net of
cash acquired (1,161) --
Collections of notes
receivable from
sales of subsidiaries 1,035 820
Proceeds from sale of
subsidiaries, net 23,647 13,947
Proceeds from sale
of assets 2,839 249
Net cash provided
by investing
activities 12,925 4,897 8,028 164%
Cash flows from
financing activities:
Net repayments of
revolving loans (8,751) (12,249)
Net borrowings
(repayments) of
term loans 3,663 (26,393)
Direct costs
associated with
debt facilities (1,583) (720)
Redemption of
preferred interest
of subsidiary (9,840) --
Repayment of real
estate and chattel
mortgages (700) --
Repurchases of
common stock (2,520) --
Net cash used
in financing
activities (19,731) (39,362) 19,631 50%
Effect of exchange
rate changes on cash
and cash equivalents 677 (432)
Net increase (decrease)
in cash and cash
equivalents 1,906 (2,994)
Cash and cash
equivalents, beginning
of period 4,842 7,836
Cash and cash
equivalents, end of
period $6,748 $4,842 $1,906 39%
Free Cash Flow
Net cash provided
by operating
activities $8,035 $31,903
Capital expenditures
of continuing
operations (13,324) (9,987)
Capital expenditures
of discontinued
operations (111) (132)
$(5,400) $21,784