– March 21, 2007 – Katy Industries, Inc. (NYSE: KT) today reported a net loss in the fourth quarter of 2006 of ($0.4) million [($0.06) per
diluted
share], versus a net loss of ($0.2) million [($0.03) per
diluted
share], in the fourth quarter of 2005, as adjusted to exclude restructuring and other non-recurring or unusual items, which are discussed below.
Including these items, Katy reported a net loss in
the fourth quarter of 2006 of ($2.5) million [($0.31) per diluted share],
versus a net loss of ($3.8) million [($0.48) per diluted share], in the same
period of 2005. The operating income, as adjusted to exclude all restructuring
and
other
non-recurring
or
unusual
items
was
$1.3
million
[1.2%
of
net
sales]
in
the
fourth
quarter
of
2006,
compared
to
operating
income,as
adjusted
,
of
$1.2
million
[1.0%
of
net
sales]
in
the
same
period
of
2005. Net income (loss), as adjusted, and operating
income
(loss),
as
adjusted,
are
non-GAAP
financial
measures.
Details regarding
these items are provided in the “Reconciliations of GAAP Results to Results
Excluding Certain Unusual Items” accompanying this press release.
.
Katy
also
reported
a
net
loss
for
the
year
ended
December
31,
2006
of
($1.7)
million
[($0.21)
per
diluted
share],
versus
a
net
loss
of
($2.9)
million
[($0.36)
per
diluted
share],
for
the
year
ended
December
31,
2005,
as
adjusted
to
exclude
restructuring
and
other
non-recurring
or
unusual
items,
which
are
discussed
below.
Including
these
items,
Katy
reported
a
net
loss
for
the
year
ended
December
31,
2006
of
($12.0)
million
[($1.50)
per
diluted
share],
versus
a
net
loss
of
($13.2)
million
[($1.66)
per
diluted
share],
in
the
same
period
of
2005.
The
operating
income,
as
adjusted
to
exclude
all
restructuring
and
other
non-recurring
or
unusual
items,
was
$4.1
million
[1.0%
of
net
sales]
for
the
year
ended
December
31,
2006,
compared
to
operating
income,
as
adjusted,
of
$0.7
million
[0.2%
of
net
sales]
in
the
same
period
in
2005.
Net
income
(loss),
as
adjusted,
and
operating
income
(loss),
as
adjusted,
are
non-GAAP
financial
measures.
Details
regarding
these
items
are
provided
in
the
“Reconciliations
of
GAAP
Results
to
Results
Excluding
Certain
Unusual
Items”
accompanying
this
press
release.
During
the
fourth
quarter
of
2006,
Katy
reported
restructuring
and
other
non-recurring
or
unusual
items
of
($0.7)
million
pre-tax
[($0.08)
per
diluted
share],
including
a
loss
from
discontinued
operations
of
($2.4)
million
offset
by
the
reversal
of
certain
severance,
restructuring
and
related
costs
of
$1.7
million
recognized
in
prior
periods.
During
the
fourth
quarter
of
2005,
Katy
reported
restructuring
and
other
non-recurring
or
unusual
items
of
($2.6)
million
pre-tax
[($0.32)
per
diluted
share],
including
the
impairment
of
long-lived
assets
of
($2.1)
million,
loss
from
discontinued
operations
of
($0.9)
million
and
severance,
restructuring
and
related
costs
of
($0.2)
million.
These
charges
were
offset
by
Katy
recording
income
of
$0.6
million
from
its
equity
investment
in
Sahlman
Holding
Company,
Inc.
For
the
year
ended
December
31,
2006,
Katy
reported
restructuring
and
other
non-recurring
or
unusual
items
of
($7.0)
million
pre-tax
[($0.88)
per
diluted
share],
including
costs
of
($0.8)
million
related
to
the
cumulative
effect
of
a
change
in
accounting
principle
for
the
implementation
of
SFAS
No.
123R,
Accounting
for
Stock-Based
Compensation,
and
loss
from
discontinued
operations
of
($6.3)
million
offset
by
the
reversal
of
certain
severance,
restructuring
and
related
costs
of
$0.1
million
recognized
in
prior
periods.
For
the
year
ended
December
31,
2005,
Katy
reported
restructuring
and
other
non-recurring
or
unusual
items
of
($6.9)
million
pre-tax
[($0.87)
per
diluted
share],
including
the
loss
from
discontinued
operations
of
($2.3)
million,
impairment
of
long-lived
assets
of
($2.1)
million,
non-cash
stock
option
expense
related
to
the
acceleration
of
vesting
of
options
of
($2.0)
million
and
severance,
restructuring
and
related
costs
of
($1.1)
million.
These
charges
were
offset
by
Katy
recording
income
of
$0.6
million
from
its
equity
investment
in
Sahlman
Holding
Company,
Inc.
Financial
highlights
for
the
fourth
quarter
of
2006,
as
compared
to
the
same
period
in
the
prior
year,
included:
·
Net
sales
in
the
fourth
quarter
of
2006
were
$110.5
million,
down
$3.2
million
compared
to
the
same
period
in
2005
primarily
due
to
weaker
sales
in
the
Maintenance
Products
Group.
Overall,
the
decrease
of
3%
resulted
from
lower
volumes
of
17%
offset
by
higher
pricing
of
13%
and
favorable
currency
translation
of
1%.
Lower
net
sales
in
the
Maintenance
Products
Group
resulted
from
our
decision
to
exit
certain
unprofitable
business
lines
within
our
United
States
consumer
plastics
business
unit.
Net
sales
in
our
Electrical
Products
Group
was
comparable
to
the
prior
year
as
volume
reductions
were
nearly
offset
by
price
increases
implemented
throughout
2006.
·
Gross
margins
were
11.1%
in
the
fourth
quarter
of
2006,
versus
12.7%
in
the
fourth
quarter
of
2005.
Our
margin
performance
was
negatively
impacted
by
higher
product
costs,
primarily
in
the
Electrical
Products
Group,
many
of
which
were
not
passed
on
through
price
increases.
However,
our
margins
were
positively
impacted
by
continued
production
efficiencies
gained
in
our
Abrasives
unit
over
the
past
twelve
months
as
well
as
the
liquidation
of
inventory,
valued
at
last-in
first-out.
·
Selling,
general
and
administrative
expenses
were
$2.6
million
lower
in
the
fourth
quarter
of
2006.
These
costs
represented
9.6%
of
net
sales
in
the
fourth
