-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VNAg0ioAxPOBFkMlpLjvScGy/vBWp64F2fT71BdWs/CuIx9WW/AhXkqpVgipx3WD GC6Ui0xj+tIkR4xtAwKjPQ== 0001169232-05-002157.txt : 20050418 0001169232-05-002157.hdr.sgml : 20050418 20050418095319 ACCESSION NUMBER: 0001169232-05-002157 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050414 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050418 DATE AS OF CHANGE: 20050418 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KATY INDUSTRIES INC CENTRAL INDEX KEY: 0000054681 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 751277589 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05558 FILM NUMBER: 05755494 BUSINESS ADDRESS: STREET 1: 765 STRAITS TURNPIKE STREET 2: SUITE 2000 CITY: MIDDLEBURY STATE: CT ZIP: 06762 BUSINESS PHONE: 2035980397 MAIL ADDRESS: STREET 1: 765 STRAITS TURNPIKE STREET 2: SUITE 2000 CITY: MIDDLEBURY STATE: CT ZIP: 06762 8-K 1 d63372_8-k.txt CURRENT REPORT ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 8-K --------------- CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 14, 2005 KATY INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 001-05558 75--1277589 (State of Incorporation) (Commission File Number) (IRS Employer Identification No.) 765 Straits Turnpike Middlebury, Connecticut 06762 (Address of principal executive offices) (Zip Code) (203) 598-0397 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act ================================================================================ Item 2.02 Results of Operations and Financial Condition. On April 14, 2005, Katy Industries, Inc. issued a press release regarding its results of operations for the fourth quarter of 2004. The release and accompanying schedules are being furnished as Exhibit 99.1 to this Current Report on Form 8-K. In accordance with General Instruction B.2. of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. Exhibit 99.1 Press release issued by Katy Industries, Inc. on April 14, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. KATY INDUSTRIES, INC. (Registrant) By: /s/ Amir Rosenthal ---------------------------------------- Amir Rosenthal Vice President, Chief Financial Officer, General Counsel and Secretary Date: April 18, 2005 Exhibits Exhibit No. Description - ----------- ----------- 99.1 Press release issued by Katy Industries, Inc. on April 14, 2005. EX-99.1 2 d63372_ex99-1.txt PRESS RELEASE Exhibit 99.1 KATY NEWS ------------------------ FOR IMMEDIATE RELEASE KATY INDUSTRIES, INC. REPORTS 2004 FOURTH QUARTER RESULTS MIDDLEBURY, CT - April 14, 2005 - Katy Industries, Inc. (NYSE: KT) today reported a loss from continuing operations in the fourth quarter of 2004 of ($0.9) million [($0.11) per share], versus income from continuing operations of $4.2 million [$0.53 per share], in the fourth quarter of 2003, as adjusted to exclude impairments, restructuring and other non-recurring or unusual items, which are discussed below. Including these items and payment-in-kind dividends on convertible preferred stock, Katy reported a net loss attributable to common shareholders of ($37.9) million [($4.80) per share], in the fourth quarter of 2004, versus a net loss attributable to common shareholders of ($5.4) million [($0.68) per share], in the same period of 2003. Operating loss, as adjusted to exclude all impairments, restructuring and other non-recurring or unusual items, was ($0.2) million [(0.1%) of net sales] in the fourth quarter of 2004, compared to operating income, as adjusted of $8.2 million [6.9% of net sales] in the same period in 2003. (Loss) income from continuing operations, as adjusted, and operating (loss) income, as adjusted, are non-GAAP financial measures and are further discussed below. Katy also reported a loss from continuing operations for the year ended December 31, 2004 of ($0.1) million [($0.01) per share], versus income from continuing operations of $3.4 million [$0.41 per share], for the year ended December 31, 2003, as adjusted to exclude impairments, restructuring and other non-recurring or unusual items, which are discussed below. Including these items, discontinued operations, the early redemption of the preferred interest of a subsidiary and payment-in-kind dividends on convertible preferred stock, Katy reported a net loss attributable to common shareholders of ($50.9) million [($6.45) per share], for the year ended December 31, 2004, versus a net loss attributable to common shareholders of ($15.6) million [($1.90) per share], in the same period of 2003. Net sales during the year ended December 31, 2004 were $457.6 million, up 4.9% compared to the same period in 2003. Operating income, as adjusted to exclude all impairments, restructuring and other non-recurring or unusual items, was $3.8 million [0.8% of net sales] in the year ended December 31, 2004, compared to $11.1 million [2.5% of net sales] in the same period in 2003. During the fourth quarter of 2004, Katy reported restructuring and other non-recurring or unusual items of ($33.3) million pre-tax [($4.21) per share], related to impairments of long-lived assets of ($30.8) million, severance, restructuring and related charges of ($1.5) million, the net write-off of amounts related to divested businesses of ($0.8) million, and costs associated with a proposed financing which Katy chose not to pursue of ($0.1) million. Also, during the fourth quarter of 2004, Katy recorded the impact of payment-in-kind dividends earned on its convertible preferred stock of ($4.0) million [($0.51) per share]. During the fourth quarter of 2003, Katy reported restructuring and other non-recurring or unusual items of ($8.8) million pre-tax [($1.11) per share], including impairments of long-lived assets of ($4.8) million, severance, restructuring and related costs of ($2.3) million, the net write-off of amounts related to divested businesses of ($1.0) million and the write-off of unamortized debt costs related to the reduction in our Term Loan of ($0.7) million. Also, during the fourth quarter of 2003, Katy recorded the impact of payment-in-kind dividends earned on its convertible preferred stock of ($3.5) million [($0.44) per share]. Details regarding these items are provided in the "Reconciliations of GAAP Results to Results Excluding Certain Unusual Items" accompanying this press release. For the year ended December 31, 2004, Katy reported restructuring and other non-recurring or unusual items of ($35.1) million pre-tax [($4.45) per share], including impairments of long-lived assets of ($30.8) million, severance, restructuring and related charges of ($3.5) million, the net write-off of amounts related to divested businesses of ($0.8) million, and costs associated with a proposed financing which Katy chose not to pursue of ($0.5) million, offset by a gain on the sale of real estate of $0.5 million. Also, during the year ended December 31, 2004, Katy recorded the impact of payment-in-kind dividends earned on its convertible preferred stock of ($14.8) million [($1.87) per share]. During the year ended December 31, 2003, Katy reported restructuring and other non-recurring or unusual items of ($27.6) million pre-tax [($3.36) per share], including impairments of long-lived assets of ($11.9) million, severance, restructuring and related costs of ($8.1) million, a write down of its equity investment in Sahlman Holding Company, Inc. of ($5.5) million, the write-off of unamortized debt costs related to the refinancing of debt in February 2003 and a reduction in our Term Loan of ($1.8) million, and the net write-off of amounts related to divested businesses of ($0.7) million, offset by a net gain on the sale of real estate of $0.5 million. Also, during the year ended December 31, 2003, Katy reported income from discontinued operations of $9.5 million, net of tax [$1.16 per share], a gain on the early redemption of a preferred interest in a subsidiary of $6.6 million [$0.80 per share] and the impact of payment-in-kind dividends earned on its convertible preferred stock of ($12.8) million [($1.56) per share]. Details regarding these items are provided in the "Reconciliations of GAAP Results to Results Excluding Certain Unusual Items" accompanying this press release. Financial highlights for the fourth quarter of 2004, as compared to the same period in the prior year, included: o Net sales in the fourth quarter of 2004 were $121.8 million, up $3.2 million compared to the same period in 2003 primarily due to stronger sales in the Electrical Products Group, partially offset by weaker sales in the Maintenance Products Group. Overall, the increase of 3% resulted from higher pricing of 5% and favorable currency translation of 2%, partially offset by a volume decrease of 4%. o Gross margins were 10.9% in the fourth quarter of 2004, versus 18.9% in the fourth quarter of 2003. Margins were negatively impacted by accelerating raw material costs, a significant portion of which could not be passed on through price increases (mostly in the Maintenance Products Group), and higher operating costs in our Abrasives business unit due to manufacturing inefficiencies resulting from i) the delayed consolidation of the Abrasives facilities and ii) a fire at our Wrens, Georgia facility early in the fourth quarter of 2004. These items were only partially offset by the favorable impact of restructuring, cost containment and lower depreciation. o Selling, general and administrative expenses were $0.7 million lower than the fourth quarter of 2003. These costs represented 11.0% of sales in the fourth quarter of 2004, a decrease from 11.9% of sales for the same period of 2003. o Impairments of long-lived assets in the fourth quarter of 2004 primarily relate to the write-down of goodwill, intangible assets and machinery and equipment supporting Katy's plastics operations in the United States. In the fourth quarter of 2004, the profitability of the Consumer Plastics business unit in the Maintenance Products Group declined sharply as this business has been unable to realize sufficient selling price increases to combat the increasing cost of resin (a key raw material used in the manufacture of plastic products). Future earnings and cash flow could be negatively impacted to the extent further increases in resin and other raw materials costs cannot be offset or recovered through higher selling prices. o Debt at December 31, 2004 was $58.7 million [46% of total capitalization], versus $39.7 million [28% of total capitalization] at December 31, 2003. Cash on hand at December 31, 2004 was $8.5 million, versus $6.7 million at December 31, 2003. o Katy used free cash flow of $21.8 million during the year ended December 31, 2004 versus the $5.4 million of free cash flow used during the year ended December 31, 2003. The increased use of free cash flow during 2004 versus 2003 was primarily attributable to: o Higher inventories in 2004 due to higher material costs, and increased levels to support higher volumes in the Electrical Products Group and provide higher levels of customer service; and o Lower operating income, as adjusted, of $7.4 million. Katy expects these liquidity trends to reverse in 2005. Free cash flow, a non-GAAP financial measure, is discussed further below. o Katy expects to substantially complete its restructuring program in 2005. The remaining capital expenditures, and severance, restructuring and related costs for these initiatives (mostly related to the consolidation of our abrasives facilities) are expected to be in the range of $1.5 million to $2.5 million. "In 2004, we experienced $24 million of cost increases in our primary raw materials, packaging materials, utilities and freight compared to 2003; these extraordinary cost increases have continued in the first quarter of 2005, and if sustained throughout 2005, would amount to an increase of over $50 million compared to 2003. Margins in several of our businesses have been squeezed as our price increases and cost reductions cannot keep pace with the unrelenting surge in these costs. We constantly review financial performance of our product lines and have decided to exit some lines in our Consumer Plastics business and impair assets related to this business," said C. Michael Jacobi, Katy's President and Chief Executive Officer. "We are announcing additional price increases in 2005 as raw material prices have continued to increase and we will exit some other Consumer Plastics products where we cannot make a reasonable profit. Capital expenditures will be lower in 2005, inventory is being reduced and other elements of working capital are being managed to improve free cash flow," added Mr. Jacobi. Mr. Jacobi also noted that Katy's financial results also suffered as a result of operational difficulties in one of its abrasives factories that delayed the consolidation of the three abrasives factories and caused some customer service issues. He also added that new management and technical expertise have been added to the abrasives operations to resolve these issues. As of December 31, 2004, Katy was in compliance with the applicable financial covenants of its credit agreement with Bank of America Business Capital (Bank of America Credit Agreement). However, Katy determined that due to declining profitability in the fourth quarter of 2004, potentially lower profitability in the first half of 2005 and the timing of certain restructuring payments, it would not meet its Fixed Charge Coverage Ratio (as defined in the Bank of America Credit Agreement) and could potentially exceed its maximum Consolidated Leverage Ratio (also as defined in the Bank of America Credit Agreement) as of the end of the first, second and third quarters of 2005. On March 29, 2005, in anticipation of not achieving the minimum Fixed Charge Coverage Ratio or exceeding the maximum Consolidated Leverage Ratio, Katy obtained an amendment to the Bank of America Credit Agreement (the Second Amendment). The Second Amendment applied only to the first three quarters of 2005 and the covenants would have returned to their original levels for the fourth quarter of 2005. Specifically, the Second Amendment eliminated the Fixed Charge Coverage Ratio, increased the maximum Consolidated Leverage Ratio, established a Minimum Consolidated EBITDA (on a latest twelve months basis) for each of the periods and also established a Minimum Availability (the eligible collateral base less outstanding borrowings and letters of credit) on each day within the nine-month period. Subsequent to the Second Amendment's effective date, Katy determined that it would likely not meet its amended financial covenants. On April 13, 2005, Katy obtained a further amendment to the Bank of America Credit Agreement (the Third Amendment). The Third Amendment eliminates the maximum Consolidated Leverage Ratio and the Minimum Consolidated EBITDA as established by the Second Amendment and adjusts the Minimum Availability such that Katy's eligible collateral must exceed the sum of its outstanding borrowings and letters of credit under the Revolving Credit Facility by at least $5 million from the effective date of the Third Amendment through September 29, 2005 and by at least $7.5 million from September 30, 2005 until the date Katy delivers its financial statements for the first quarter of 2006 to the lenders. Subsequent to the delivery of the financial statements for the first quarter of 2006, the Third Amendment reestablishes the minimum Fixed Charge Coverage Ratio as originally set forth in the Bank of America Credit Agreement. The Third Amendment also reduces the maximum allowable capital expenditures for 2005 from $15 million to $10 million, and increases the interest rate margins on all of Katy's outstanding borrowings and letters of credit to the largest margins set forth in the Bank of America Credit Agreement. Interest rate margins will return to levels set forth in the Bank of America Credit Agreement subsequent to the delivery of Katy's financial statements for the first quarter of 2006 to the lenders. If Katy is unable to comply with the terms of the amended covenants, it could seek to obtain further amendments and pursue increased liquidity through additional debt financing and/or the sale of assets. Katy believes that given its strong working capital base, additional liquidity could be obtained through additional debt financing, if necessary. However, there is no guarantee that such financing could be obtained. In addition, Katy is continually evaluating alternatives relating to the sale of excess assets and divestitures of certain of its business units. Asset sales and business divestitures present opportunities to provide additional liquidity by de-leveraging our financial position. Katy completed the sales of its non-core businesses, Duckback Products, Inc. on September 16, 2003 and GC/Waldom Electronics, Inc. on April 2, 2003. The results of these businesses have been classified as discontinued operations for the year ended December 31, 2003. There was no discontinued operations activity for the year ended December 31, 2004 or the three months ended December 31, 2003. Payment-in-kind dividends on convertible preferred stock ended in December 2004. Non-GAAP Financial Measures To provide transparency about measures of Katy's financial performance which management considers most relevant, we supplement the reporting of Katy's consolidated financial information under GAAP with certain non-GAAP financial measures, including income (loss) from continuing operations, as adjusted; operating income (loss), as adjusted; and free cash flow. Details regarding these measures and reconciliations of these non-GAAP measures to comparable GAAP measures are provided in the "Reconciliations of GAAP Results to Results Excluding Certain Unusual Items" and "Statements of Cash Flows" accompanying this press release. These measures should not be considered in isolation or as an alternative to measures determined in accordance with GAAP. Katy believes the presentation of these measures is nonetheless useful to investors for the following reasons: Income (Loss) from Continuing Operations, as adjusted. Income (loss) from continuing operations, as adjusted, is income (loss) from Katy's continuing operations that excludes restructuring and other non-recurring and unusual items. Operating income (loss), as adjusted is the Company's operating income (loss) that excludes restructuring and other non-recurring and unusual items. Katy believes that its presentation of these measures provides useful information to management and investors regarding certain financial and business trends relating to its results of operations. Free Cash Flow. Free cash flow is defined by Katy as cash flow from operations less capital expenditures and cash dividends paid. Katy believes that free cash flow is useful to management and investors in measuring cash generated that is available for repayment of debt obligations, investment in growth through acquisitions, new business development and stock repurchases. This press release may contain various forward-looking statements. The forward-looking statements are based on the beliefs of Katy's management, as well as assumptions made by, and information currently available to, the company's management. Additionally, the forward-looking statements are based on Katy's current expectations and projections about future events and trends affecting the financial condition of its business. The forward-looking statements are subject to risks and uncertainties, detailed from time to time in Katy's filings with the SEC, that may lead to results that differ materially from those expressed in any forward-looking statement made by the company or on its behalf. Katy undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Katy Industries, Inc. is a diversified corporation with interests primarily in Maintenance Products and Electrical Products. Company contact: Katy Industries, Inc. Amir Rosenthal (203) 598-0397 KATY INDUSTRIES, INC. SUMMARY OF OPERATIONS - UNAUDITED (In thousands, except per share data)
Three Months Ended December 31, Year Ended December 31, ------------------------------- ------------------------------ 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Net sales $ 121,799 $ 118,596 $ 457,642 $ 436,410 Cost of goods sold 108,513 96,210 396,608 365,563 ------------- ------------- ------------- ------------- Gross profit 13,286 22,386 61,034 70,847 Selling, general and administrative expenses 13,449 14,145 57,283 59,740 Impairments of long-lived assets 30,831 4,825 30,831 11,880 Severance, restructuring and related charges 1,549 2,320 3,505 8,132 ------------- ------------- ------------- ------------- Operating (loss) income (32,543) 1,096 (30,585) (8,905) Equity in loss of equity method investment (net of impairment charge of $5.5 million in 2003) -- -- -- (5,689) (Loss) gain on sale of assets (268) 54 278 627 Interest expense (1,154) (1,427) (3,968) (6,193) Other, net (702) (1,705) (963) (1,805) ------------- ------------- ------------- ------------- Loss before (provision) benefit for income taxes (34,667) (1,982) (35,238) (21,965) (Provision) benefit for income taxes 734 82 (883) 3,158 ------------- ------------- ------------- ------------- Loss from continuing operations before distributions on preferred interest of subsidiary (33,933) (1,900) (36,121) (18,807) Distributions on preferred interest of subsidiary (net of tax) -- -- -- (80) ------------- ------------- ------------- ------------- Loss from continuing operations (33,933) (1,900) (36,121) (18,887) Income from operations of discontinued businesses (net of tax) -- -- -- 2,081 Gain on sale of discontinued businesses (net of tax) -- -- -- 7,442 ------------- ------------- ------------- ------------- Net loss (33,933) (1,900) (36,121) (9,364) Gain on early redemption of preferred interest of subsidiary -- -- -- 6,560 Payment-in-kind (PIK) dividends on convertible preferred stock (4,003) (3,462) (14,749) (12,811) ------------- ------------- ------------- ------------- Net loss attributable to common stockholders $ (37,936) $ (5,362) $ (50,870) $ (15,615) ============= ============= ============= ============= (Loss) income per share of common stock - basic and diluted: Loss from continuing operations $ (4.29) $ (0.24) $ (4.58) $ (2.30) Gain on early redemption of preferred interest of subsidiary -- -- -- 0.80 Payment-in-kind (PIK) dividends on convertible preferred stock (0.51) (0.44) (1.87) (1.56) ------------- ------------- ------------- ------------- Loss from continuing operations attributable to common stockholders (4.80) (0.68) (6.45) (3.06) Discontinued operations (net of tax) -- -- -- 1.16 ------------- ------------- ------------- ------------- Net loss attributable to common stockholders $ (4.80) $ (0.68) $ (6.45) $ (1.90) ============= ============= ============= ============= Weighted average common shares outstanding - basic and diluted 7,909 7,940 7,883 8,215 ============= ============= ============= ============= Other Information: Working capital, exclusive of deferred tax assets and liabilities and debt classified as current $ 59,855 $ 43,439 ============= ============= Long-term debt, including current maturities $ 58,737 $ 39,663 ============= ============= Stockholders' equity $ 68,585 $ 102,292 ============= ============= Capital expenditures $ 13,876 $ 13,435 ============= =============
KATY INDUSTRIES, INC. RECONCILIATIONS OF GAAP RESULTS TO RESULTS EXCLUDING CERTAIN UNUSUAL ITEMS - UNAUDITED (In thousands, except percentages and per share data)
Three Months Ended December 31, Year Ended December 31, ------------------------------- -------------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Reconciliation of loss from continuing operations to income (loss) from continuing operations, as adjusted: Loss from continuing operations $ (33,933) $ (1,900) $ (36,121) $ (18,887) Unusual items: Impairments of long-lived assets 30,831 4,825 30,831 11,880 Severance, restructuring and related charges 1,549 2,320 3,505 8,132 Impairment of equity method investment -- -- -- 5,521 Write-off of unamortized debt costs (included in interest expense) -- 674 -- 1,846 Costs associated with abandoned financing (included in other, net) 53 -- 488 -- Net write-off of amounts related to divested businesses (included in other, net) 845 988 814 739 Gain on sale of real estate -- (11) (549) (531) Adjustment to reflect a more normalized effective tax rate excluding unusual items (206) (2,671) 940 (5,294) ------------- ------------- ------------- ------------- (Loss) income from continuing operations, as adjusted $ (861) $ 4,225 $ (92) $ 3,406 ============= ============= ============= ============= (Loss) income from continuing operations, as adjusted per share: Loss from continuing operations per share $ (4.29) $ (0.24) $ (4.58) $ (2.30) Unusual items per share 4.21 1.11 4.45 3.36 Adjustment to reflect a more normalized effective tax rate excluding unusual items per share (0.03) (0.34) 0.12 (0.65) ------------- ------------- ------------- ------------- (Loss) income from continuing operations, as adjusted per share $ (0.11) $ 0.53 $ (0.01) $ 0.41 ============= ============= ============= ============= Weighted average shares outstanding - basic and diluted 7,909 7,940 7,883 8,215 ============= ============= ============= ============= Operating (loss) income, as adjusted: Operating (loss) income $ (32,543) $ 1,096 $ (30,585) $ (8,905) Impairments of long-lived assets 30,831 4,825 30,831 11,880 Severance, restructuring and related charges 1,549 2,320 3,505 8,132 ------------- ------------- ------------- ------------- Operating (loss) income, as adjusted: $ (163) $ 8,241 $ 3,751 $ 11,107 ============= ============= ============= ============= Operating (loss) income, as adjusted, as a % of sales -0.1% 6.9% 0.8% 2.5% ============= ============= ============= =============
KATY INDUSTRIES, INC. SEGMENT INFORMATION - UNAUDITED (In thousands)
Three Months Ended December 31, Year Ended December 31, ------------------------------- ------------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Net sales: Maintenance Products Group $ 66,444 $ 71,780 $ 278,888 $ 285,289 Electrical Products Group 55,355 46,816 178,754 151,121 ------------- ------------- ------------- ------------- $ 121,799 $ 118,596 $ 457,642 $ 436,410 ============= ============= ============= ============= Operating (loss) income, as adjusted: Maintenance Products Group $ (3,841) $ 4,557 $ (2,717) $ 9,339 Electrical Products Group 5,930 7,744 16,809 15,557 Unallocated corporate expense (2,252) (4,060) (10,341) (13,789) ------------- ------------- ------------- ------------- $ (163) $ 8,241 $ 3,751 $ 11,107 ============= ============= ============= =============
KATY INDUSTRIES, INC. BALANCE SHEETS - UNAUDITED (In thousands)
Assets December 31, ------------------------------- Current assets: 2004 2003 ------------- ------------- Cash and cash equivalents $ 8,525 $ 6,748 Accounts receivable, net 66,689 65,197 Inventories, net 65,674 53,545 Other current assets 4,233 1,658 ------------- ------------- Total current assets 145,121 127,148 ------------- ------------- Other assets: Goodwill 2,239 10,215 Intangibles, net 7,428 22,399 Other 9,946 10,352 ------------- ------------- Total other assets 19,613 42,966 ------------- ------------- Property and equipment 148,259 149,634 Less: accumulated depreciation (88,529) (78,040) ------------- ------------- Property and equipment, net 59,730 71,594 ------------- ------------- Total assets $ 224,464 $ 241,708 ============= ============= Liabilities and stockholders' equity Current liabilities: Accounts payable $ 39,079 $ 37,259 Accrued expenses 45,208 46,450 Current maturities of long-term debt 2,857 2,857 Revolving credit agreement 40,166 36,000 ------------- ------------- Total current liabilities 127,310 122,566 Long-term debt, less current maturities 15,714 806 Other liabilities 12,855 16,044 ------------- ------------- Total liabilities 155,879 139,416 ------------- ------------- Stockholders' equity Convertible preferred stock 108,256 93,507 Common stock 9,822 9,822 Additional paid-in capital 25,111 40,441 Accumulated other comprehensive income 4,564 2,387 Accumulated deficit (57,258) (21,137) Treasury stock (21,910) (22,728) ------------- ------------- Total stockholders' equity 68,585 102,292 ------------- ------------- Total liabilities and stockholders' equity $ 224,464 $ 241,708 ============= =============
KATY INDUSTRIES, INC. STATEMENTS OF CASH FLOWS - UNAUDITED (In thousands)
Year Ended December 31, ------------------------------- 2004 2003 ------------- ------------- Cash flows from operating activities: Net loss $ (36,121) $ (9,364) Income from discontinued operations -- (9,523) ------------- ------------- Loss from continuing operations (36,121) (18,887) Depreciation and amortization 14,266 21,954 Impairment of long-lived assets 30,831 11,880 Write-off and amortization of debt issuance costs 1,076 2,981 Gain on sale of assets (278) (627) Equity in loss of equity method investment -- 5,689 Deferred income taxes (1,228) ------------- ------------- 8,546 22,990 ------------- ------------- Changes in operating assets and liabilities: Accounts receivable (177) (3,869) Inventories (11,146) 5,504 Other assets (1,313) 1,100 Accounts payable 918 (727) Accrued expenses (1,662) (9,679) Other, net (3,137) (2,125) ------------- ------------- (16,517) (9,796) ------------- ------------- Net cash (used in) provided by continuing operations (7,971) 13,194 Net cash used in discontinued operations -- (5,159) ------------- ------------- Net cash (used in) provided by operating activities (7,971) 8,035 ------------- ------------- Cash flows from investing activities: Capital expenditures of continuing operations (13,876) (13,324) Capital expenditures of discontinued operations -- (111) Acquisition of subsidiary, net of cash acquired -- (1,161) Collections of notes receivable from sales of subsidiaries 43 1,035 Proceeds from sale of subsidiaries, net -- 23,647 Proceeds from sale of assets 5,778 2,839 ------------- ------------- Net cash (used in) provided by investing activities (8,055) 12,925 ------------- ------------- Cash flows from financing activities: Net borrowings on revolving loans 4,037 (8,751) Proceeds of term loans 18,152 20,000 Repayments of term loans (3,244) (16,337) Direct costs associated with debt facilities (1,485) (1,583) Redemption of preferred interest of subsidiary -- (9,840) Repayment of real estate mortgage -- (700) Repurchases of common stock (75) (2,520) Proceeds from the exercise of stock options 304 ------------- ------------- Net cash provided by (used in) financing activities 17,689 (19,731) ------------- ------------- Effect of exchange rate changes on cash and cash equivalents 114 677 ------------- ------------- Net increase in cash and cash equivalents 1,777 1,906 Cash and cash equivalents, beginning of period 6,748 4,842 ------------- ------------- Cash and cash equivalents, end of period $ 8,525 $ 6,748 ============= ============= Reconciliation of free cash flow to GAAP Results: Net cash (used in) provided by operating activities $ (7,971) $ 8,035 Capital expenditures of continuing operations (13,876) (13,324) Capital expenditures of discontinued operations -- (111) ------------- ------------- Free cash flow $ (21,847) $ (5,400) ============= =============
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