KML Carmel Container Sys

Carmel Container Systems Ltd. Reports Results for the Year Ended December 31, 2003 TEL-AVIV, Israel, March 18 /PRNewswire-FirstCall/ -- Carmel Container Systems Ltd. ("Carmel" or the "Company"), a leading Israeli designer, manufacturer and marketer of containers, packaging materials and related products, reported today its consolidated financial results for the year ended December 31, 2003. Carmel's Ordinary Shares are traded on the American Stock Exchange . The financial results for the fiscal year ended December 31, 2003 were primarily influenced by the following factors: -- The recession in the Israeli economy, continuing since September 2000, caused a significant decrease in many economy activities is Israel, which in turn adversely affected the Company's business, financial condition and results of operations. Such economic activities include: * The decrease in local demands for consumer goods and private consumptions during most of the year 2003. * A decrease in exports of industrial goods, (also attributed to a decrease in the economic activities in export markets such as U.S.A. and Europe). * A decrease in citrus exports by 8% during the 2002/2003 season. -- As a result of the continued economic slowdown in Israel, the price of packaging products during the year 2003 remained about at the same low level as at the end of the year 2002. This tendency started to change at the last quarter of the year 2003. -- The export from Israel of high-tech goods decreased as a result of global slowdown in this sector and adversely affected the financial condition and results of operations of one of our subsidiaries. Carmel's results of operations for the year 2003, as compared to the results of operations for the year 2002, were affected by the low sale prices which remained at about the same level as the end of the year 2002. The low prices are primarily a result of the continued recession in the local Israeli market, together with the ongoing difficult political situation in Israel. During the second six months of the year 2002 the price of raw materials increased slightly and remained at the same level during the firstsix months of the year 2003. During the second quarter of the year 2003, the price of the raw materials decreased slightly and as a result operating income increased slightly. The New Israeli Shekel ("NIS") revaluated by 7.6% against the Dollar duringthe year 2003, as compared to devaluation of 7.3% during the year 2002. Rate of inflation in Israel in the year 2003 was -1.9%, as compared to a rate of inflation of 6.5% during the year 2002. As a result, the Company's recorded financial expenses decreased during the year 2003. All amounts set forth herein in NIS have been adjusted to reflect changes in the Israeli Consumer Price Index through December 31, 2003. The translation of NIS amounts into U.S. dollars is at rate of exchange of NIS 4.379 to $1 (which was the rate of exchange at December 31, 2003). As a result, the amounts presented in U.S. dollars in for the year 2002 are different from the U.S. dollar amounts previously published by the Company with respect to such period. Revenues in the year 2003 were NIS 350.0 million ($79.9 million), as compared to NIS 337.7 million, ($77.1 million) for the year 2002. Revenues in the fourth quarter of 2003 were NIS 89 million ($20.3 million), as compared to NIS 86 million ($19.7 million) in thefourth quarter of the year 2002. The increase in sales in the year 2003, as compared to the year 2002, resulted primarily from a slight increase in the volume of sales and a very slight increase of the average selling prices. Gross profit for the year 2003 was NIS 35.7 million ($8.1 million), representing 10.2% of sales, as compared to NIS 26.4 million ($6.0 million), representing 7.8% of sales, for the year 2002. Gross profit in the fourth quarter of the year 2003 was NIS 11.7 million ($2.7 million), representing 13.2% of sales, as compared to NIS 7.1 million ($1.6 million), representing 8.3% of sales in the fourth quarter of the year 2002. Operating income before financial expenses were NIS 0.6 million ($0.1 million) representing 0.2% of sales for 2003, as compared to operating loss of NIS 8.1 million ($1.8 million), representing 2.4% of sales for the year 2002. Operating income before financial expenses in the fourth quarter of the year 2003 was NIS 2.7 million ($0.6 million), representing3.0% of sales, as compared to operating loss before financial expenses of NIS -1.6 million ($-0.4 million) representing 1.8% of sales in the fourth quarter of the year 2002. Financial expenses net for the year 2003 were NIS 5.2 million ($1.18 million), representing 1.5% of sales, as compared to NIS 6.1 million ($1.4 million), representing 1.8% of sales, for the year 2002. Financial expenses, net for the fourth quarter of the year 2003 were NIS 1.5 million ($0.3 million), representing 1.7% of sales,as compared to expenses of NIS 1.5 million ($0.3 million), representing 1.8% of sales for the fourth quarter of the year 2002. The increase in actual financial expenses in the fourth quarter of the year 2003, as compared to the first nine months of the year 2003, reflects a devaluation of the NIS against the Dollar of 1.3%, as compared to 6.2% in the first nine months of the year 2003 and deflation of -0.4% in this period, as compared to deflation of -1.5% in the first nine months of the year 2003. Other income, net for the year 2003 was NIS 940 thousand ($21.9 thousand), as compared to net expenses of NIS 1.2 million ($0.3 million) during the year 2002. The net expenses in the year 2002 include NIS 0.8 million ($0.2 million) that the company committed in the second quarter and the third quarter of the year 2002 for a project which was designed to increase the efficiency in the Company's operating and production systems and to reduce the costs of the operating system. Loss before taxes for the year 2003 was NIS 4.5 million ($1.0 million), representing 1.3% of sales, as compared to loss before taxes of NIS 15.3 million ($3.5 million) for the year 2002, representing 4.5% of sales during that period. The income before taxes on income in the fourth quarter of the year 2003 was NIS 1.2 million ($0.3 million), representing 1.3% of sales, as compared to loss before taxes of NIS 3.6 million ($0.8 million) representing 4.1% of sales in the fourth quarter of the year 2002. Tax benefit on income for the year 2003 was NIS 2.6 million ($0.6 million), as compared with a tax benefit on income of NIS 5.9 million ($1.3 million) for the year 2002. The tax benefit on income for the fourth quarter of the year 2003 was NIS 0.6 million ($0.1 million), as compared to a tax benefit of NIS 1.8 million ($0.4 million) in the fourth quarter of the year 2002. Net loss for the year 2003 was NIS 1.8 million ($0.4 million), representing 0.1% of sales, as compared to a net loss of NIS 8.6 million ($2.0 million), representing 2.5% of sales for 2002. The net loss in the fourth quarter of the year 2003 was NIS 1.7 million ($0.2 million), representing 2.0% of sales, as compared to a net loss of NIS 1.6 million ($0.4 million), representing 1.8% of sales in the fourth quarter of the year 2002. Loss per share for 2003 was NIS 0.77 ($0.18), as compared to net loss per share of NIS 3.56 ($0.81) for 2002. The income per share in the fourth quarter of the year 2003 totaled NIS 0.72 ($0.16), as compared to loss per share of NIS 0.64 ($0.15) for the fourth quarter of the year 2002. The Company's positive cash flow for the year 2003 from operating activities was NIS 3.2 million ($0.7 million), as compared to a positive cash flow from operating activities of NIS 17.7million ($4.0 million) of the year 2002. Depreciation and amortization in the year 2003 was NIS 23.8 million ($5.4 million), as compared to NIS 25.6 million ($5.8 million) in the year 2002. During 2003, the company increased its net debt to banks in amount of NIS 5.1 million ($1.2 million). The positive net cash flow in the year 2003 and the increase of NIS 0.9 million ($0.2 million), in long and short term debt, financed the Company's acquisition of NIS 4.4 million ($1.1 million) of fixed assets. In the fourth quarter of the year 2003, the company's positive cash flow from operating activities was NIS 2.1 million ($0.5 million), as compared to a positive cash flow of NIS 10.2 million ($2.3 million) for the fourth quarter of the year 2002. The positive net cash flow for the fourth quarter of the year 2003 was used primarily for repayment of NIS 1.1 million ($0.25 million) in net long-term company's debt and short-term debts to banks and for finance the company's acquisition of NIS 1.0 million($0.2 million) in fixed assets. The positive net cash flow for the fourth quarter of the year 2002 was used primarily for repayment of NIS 9.5 million ($2.2 million) in debts to banks, and for finance the company's acquisition of NIS 0.7 million ($0.2million) in fixed assets. In view of the crucial impact of the political and economical situation in Israel on the Company's financial results, the Company's management continues to take significant measures to reduce costs in all areas in order to improve the financial results. Forward-looking statements with respect to the Company's business, financial condition and results of operations contained in this release are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements, including, but not limited to, fluctuations in product demand, the impact of competitive pricing as well as certain other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Carmel Containers Systems Ltd. Consolidated Unaudited Statement of Income Year Ended December 31, 2003 Adjusted NIS* U.S. Dollars In million, except per share data In million Dec. 31, 2002 Dec. 31, 2003 Dec. 31, 2003 Net sales NIS 337.8 NIS 350.0 $ 79.9 Gross profit 26.4 35.7 8.0 Operating income (loss) (8.1) 0.6 0.1 Net income (loss) (8.6) (1.8) (0.4) Weighted average shares outstanding 2,400,000 2,400,000 2,400,000 Net income (loss) per 1,000 shares NIS (3.56) NIS (0.77) $ (0.18) * All amounts presented in adjusted NIS. ** Translation of NIS to US Dollars is at the exchange rate of NIS 4.379 to U.S.$ 1.00, reflecting such exchange rate at December 31, 2003. DATASOURCE: Carmel Container Systems Ltd. CONTACT: Doron Kempler of Carmel Container Systems Ltd., +972-6-623-9360, or David P. Stone of Weil, Gotshal & Manges, +1-212-310-8403, for Carmel Container Systems Ltd. Web site: http://www.carmelccs.com/

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