NEW CASTLE, Pa., Aug. 12 /PRNewswire-FirstCall/ -- IPEC Holdings
Inc. ("IPEC" or the "Company") (OTC:IPEC) (BULLETIN BOARD: IPEC)
today announced its results for the second quarter ended June 30,
2005 and its intention to file a Form 15 with the Securities and
Exchange Commission to terminate its reporting obligations under
the Securities and Exchange Act of 1934 (Exchange Act). 2005 SECOND
QUARTER FINANCIAL HIGHLIGHTS: -- The Company reported net income of
$479,896 or $0.05 per diluted common share, compared to $590,287 or
$0.06 per diluted common share in the second quarter of 2004. The
decrease in net income of $110,391 is primarily attributable to
certain one-time pre-tax charges totaling $183,000 related to a raw
material adjustment at its fabrication division and the write-off
of certain capping equipment used by a foreign customer which is in
bankruptcy, combined with continued market pricing pressures.
Offsetting these charges were lower selling and interest expense.
-- Operating income for the second quarter of 2005 was $848,753;
which is $271,092 lower than the operating income of $1,119,845
recorded by the Company for the second quarter of 2004. -- Sales
increased to $6.5 million compared to $6.3 million for the
comparable 2004 quarter. -- The Company remains financially sound
with borrowing capacity plus cash on hand at over $3.6 million.
CAPITAL SPENDING Capital spending for continuing operations totaled
$0.2 million for the quarter ended June 30, 2005, as compared to
$0.6 million for the quarter ended June 30, 2004, when the Company
made significant expenditures related to a 30,000 square foot
warehouse addition to the Company's Alabama production facility.
The Company's second quarter 2005 capital spending consisted
primarily of additional plant machinery. For the remainder of
fiscal 2005, the Company projects maintenance-related capital
spending to be $0.4 million with an additional $0.5 million for
growth-related activities. Growth-related capital spending will
ultimately be driven based on the Company's assessment of available
market opportunities and their projected return on investment.
DEREGISTRATION On August 8, 2005, a Special Committee comprised of
members of the Company's Board of Directors voted unanimously to
approve deregistration of the Company's securities and terminate
its reporting obligations under the Securities and Exchange Act of
1934 (Exchange Act). In an effort to explain the implications of
this decision to its shareholders, the Company is providing the
following answers to some common questions that may arise. 1. What
are the requirements for deregistration? Generally, a Company can
elect to deregister each class of securities if it has i) fewer
than 300 holders of record or ii) fewer than 500 holders of record
and the Company's total assets have not exceeded $10 million on the
last day of each of the Company's three most recent fiscal years.
The Company currently has less than 50 holders of record. 2. What
process will the Company follow to complete its deregistration? The
Company anticipates filing a Form 15 this afternoon. Upon filing of
the Form 15, the Company's reporting obligations under Section
12(g) of the Exchange Act will be suspended. The suspension will
remain intact for 90 days, after which time the Company expects
deregistration to become effective. 3. Why did the Company elect to
deregister? The Company formed a Special Committee of its Board of
Directors to determine if deregistration was in the best interest
of its shareholders. Among the factors considered by the Special
Committee in rendering their decision were: -- The substantial
increase in costs that IPEC would incur in 2006 and thereafter to
remain in compliance with the reporting obligations of the Exchange
Act, including Section 404 of the Sarbanes-Oxley Act; -- The lack
of analyst coverage and minimal liquidity for the Company's common
stock; -- The additional need to use available resources on
strategic business initiatives to potentially increase shareholder
value rather than to comply with regulatory requirements; and -- In
light of the current financial position of the Company and the
existing capital market conditions, there exists no foreseeable
need for additional public equity. 4. What effect will
deregistration have on the trading of IPEC's common stock? After
the filing of the Form 15, IPEC will not be required to file
documents under the Exchange Act. Accordingly, its shareholders
will likely not have the same amount of information regarding IPEC
that they have access to currently. It remains uncertain what will
happen to the trading of IPEC stock. IPEC is traded in the Over the
Counter Bulletin Board (OTCBB) through certain market makers. Upon
deregistration, its stock will no longer be traded through the
OTCBB. If the brokers elect to do so, it is possible that IPEC will
still be traded by these same market makers in the future through
the Pink Sheets (http://www.pinksheets.com/). There can be no
assurance that any brokerage firms will continue to make a market
in IPEC's common stock after it ceases trading through the OTCBB.
COMPANY COMMENTS "After giving consideration to certain one-time
charges, the quarter results were consistent with those of the
previous year. Although we did not achieve a significant level of
sales growth this quarter, we are currently experiencing a more
active market in terms of sales opportunities and remain optimistic
on our long-term growth initiatives," commented Joseph Giordano,
Jr., the Company's President. "With respect to deregistration, we
gave careful consideration to all relevant factors. We took this
action because the disadvantages to our shareholders of continuing
as a public company far outweigh the advantages to remaining status
quo." EARNINGS PROJECTIONS The Company reaffirms its earnings
guidance for 2005. For the year, the Company expects earnings per
diluted common share to be in the range of $0.20 to $0.23 per
share, barring the occurrence of any unforeseen or unusual
conditions affecting the industry or IPEC. Given consideration to
various short-term factors including volatility in customer
ordering patterns, the Company believes that annual projections are
a more reliable indicator of projected financial results.
Accordingly, the Company does not issue quarterly earnings
projections. ABOUT IPEC HOLDINGS INC.: IPEC Holdings Inc.
manufactures and sells tamper evident plastic closures through its
wholly-owned operating subsidiary, International Plastics and
Equipment Corp. These closures are predominantly used in the
bottling of non- carbonated beverages including bottled water, milk
and fruit and sports drinks. The Company also designs and
manufactures equipment for the bottling industry. IPEC's customer
base primarily consists of dairy and bottled water manufacturers
both domestically and internationally. The Company's two principal
manufacturing facilities are located in Pennsylvania and Alabama.
FOR ADDITIONAL INFORMATION CONTACT: Shawn C. Fabry Chief Financial
Officer 185 Northgate Circle New Castle, PA 16105 Website:
http://www.ipec.biz/ Phone: (800) 377-4732 x235 Fax: (724) 658-3054
FORWARD-LOOKING STATEMENTS: This release may be deemed to contain
forward-looking statements, which are subject to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, among other things,
statements regarding future events and the future financial
performance of IPEC that involve risks and uncertainties. Any
statements that refer to the expectations or other
characterizations of future events or circumstances are
forward-looking statements. Readers are cautioned that these
forward-looking statements are only predictions and may differ
materially from actual future events or results due to a variety of
factors, including: volatile price or shortage of resin supply,
credit risk, consolidation in our customer accounts, lack of
synergies or perceived benefits in any future acquisitions,
uninsured operating conditions, adverse weather patterns, volatile
and low trading volume in Company stock, loss of key personnel,
debt service and compliance concerns, competitor or industry
technological developments, contamination or defects with our
products and other factors discussed in IPEC's most recent reports
on Form 10-KSB, 10-QSB and 8-K. The financial information contained
in this release should be read in conjunction with the consolidated
financial statements and notes thereto included in IPEC's most
recent reports on Form 10-KSB and Form 10-QSB, each as it may be
amended from time to time. Any projections in this release are
based on limited information currently available to IPEC, which is
subject to change. Although such projections and the factors
influencing them will likely change, IPEC will not necessarily
update the information, since IPEC will only provide guidance at
certain points during the year. Such information speaks only as of
the date of this release. IPEC HOLDINGS INC. UNAUDITED FINANCIAL
RESULTS Q2 05 Q2 04 YTD 05 YTD 04 Sales $6,445,176 $6,319,511
$11,762,585 $10,726,202 Operating expenses: Cost of goods sold
4,899,270 4,377,949 8,687,283 7,704,868 Selling 181,739 348,676
411,381 581,516 General and administrative 515,414 473,041
1,006,328 943,298 Operating expenses 5,596,423 5,199,666 10,104,992
9,229,682 Operating income 848,753 1,119,845 1,657,593 1,496,520
Non-operating expense: Interest expense 76,816 116,834 159,273
242,486 Other expense (income) (2,088) 18,967 (30,608) 17,141
Non-operating expense 74,728 135,801 128,665 259,627 Income before
taxes 774,025 984,044 1,528,928 1,263,893 Income taxes 294,129
393,757 580,992 494,757 Net income $479,896 $590,287 $947,936
$742,136 Average Shares of Common Stock - Basic 9,972,912 9,972,912
9,972,912 9,972,912 Average Shares of Common Stock - Diluted
10,644,659 10,098,205 10,580,671 10,156,354 Basic Income Per Share
$0.05 $0.06 $0.10 $0.07 Diluted Income Per Share $0.05 $0.06 $0.09
$0.07 Net Income Plus: Interest Expense 76,816 116,834 128,665
242,627 Income Taxes 294,129 393,757 580,992 494,757 Dep. &
amortization expense 448,509 422,896 889,454 876,886 EBITDA (a)(b)
$1,299,350 $1,523,774 $2,547,047 $2,356,406 EBITDA % (a)(b)(d) 20%
24% 22% 22% Adjustments to EBITDA: One-time charges (c) 183,000 -
183,000 - Adjusted EBITDA (a) (b) $1,483,350 $1,523,774 $2,730,047
$2,356,406 Adjusted EBITDA % (a) (b) (d) 23% 24% 23% 22% (a) EBITDA
represents, for any relevant period, income (loss) before income
taxes, depreciation of property, plant and equipment, interest
expense (including amortization of debt issuance costs) and
amortization of intangible assets. (b) EBITDA is not intended to
represent and should not be considered more meaningful than, or an
alternative to, net income (loss), cash flow or other measures of
performance in accordance with generally accepted accounting
principles. EBITDA data is included because the Company understands
that such information is used by certain investors and Company
analysts. (c) The one-time charges are comprised of two separate
components related to a raw material adjustment at the Company's
fabrication division and a write-off of certain capping equipment
for a foreign customer currently in bankruptcy. The Company does
not believe these charges to be indicative of ongoing operations in
its normal course of business activities. (d) Percentages are
calculated as a percentage of sales. This release was issued
through eReleases(TM). For more information, visit
http://www.ereleases.com/. DATASOURCE: IPEC Holdings Inc. CONTACT:
Shawn C. Fabry, Chief Financial Officer of IPEC Holdings,
+1-800-377-4732, x235, or fax, +1-724-658-3054 Web site:
http://www.ipec.biz/
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