Norwall Group Inc. reports results for the fourth quarter and year end
December 31, 2009
BRAMPTON, ON, April 30 /CNW/ - Norwall Group Inc. today reported a loss for the year ended December 31, 2009 of $8,158,000, or $1.14 per common share, compared to a consolidated net loss of $4,755,000, or $0.67 per common share.
For the fourth quarter ended December 31, 2009 the Company recorded a loss of $4,135,000 or $0.58 per common share, compared to a loss of $2,866,000 or $0.40 per common share, for the fourth quarter of 2008. These losses reflect the write down of its manufacturing equipment, severance, the negative impact of $962,000 in non-cash foreign exchange fluctuation and a 14.6% decline in revenues.
As a result of continued erosion of global wallcovering markets and the appreciation of the Canadian dollar it is no longer feasible for Norwall to profitably manufacture in Canada and sell its products largely denominated in US dollars. In response, the company's Board of Directors made the decision to reposition the business and outsource its manufacturing operations.
In early 2010 the Company concluded a product supply agreement with a South Korean company and has completed the sale of its manufacturing equipment to the same supplier. Manufacturing is expected to cease in Canada by the third quarter of 2010. Norwall subsequently entered into a conditional sales agreement for the sale of its manufacturing plant located in Brampton Ontario.
As an outcome of these transactions, in its 2009 results, the Company recognized a $2,826,000 non-cash write down of its manufacturing equipment and provided for a further $811,000 for anticipated 2010 severance and termination payments.
These non-cash charges totaling $3,637,000 together with a $1,988,000 year over year non-cash change in the translation of US denominated assets had a significant impact on the 2009 results. It should be noted that the operating loss before undernoted items declined from $4,748,000 to $1,804,000.
This decision has significantly impacted the employees of Norwall in Canada and the Company wishes to acknowledge their value and commitment during this extremely stressful time.
Norwall Group (TSX:NGI) manufactures quality residential wallpapers and borders and distributes them to thousands of home centres, specialty stores and mass merchants in Canada and through its wholly-owned operating subsidiary, Patton Wallcoverings, in the United States.
This Press Release contains forward-looking statements reflecting management's current expectations regarding future results of operations, economic performance, financial conditions, and achievements of the Company. Actual results may differ materially from those in such statements. The Company wishes to caution the reader that those important factors described elsewhere in the management's discussion and analysis of operations could affect the Company's actual results and could cause such results to materially differ from those expressed in any forward-looking statement made by, or on behalf of, the Company.
NORWALL GROUP INC.
Consolidated Balance Sheets
(In thousands of Canadian dollars, except per share amounts)
December 31, December 31,
2009 2008
$ $
Assets
Current assets
Cash and cash equivalents 3,343 2,294
Accounts receivable 3,765 6,035
Inventories 3,902 5,445
Merchandising supplies 161 657
Prepaid expenses and other 135 439
Assets held for sale 1,997 -
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13,303 14,870
Assets held for sale 6,647 -
Property, plant and equipment 1,168 14,082
Future income taxes 2,024 2,861
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23,142 31,813
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 3,274 3,410
Current portion of long-term debt 3,942 4,862
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7,216 8,272
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Shareholders' Equity
Share capital 33,134 33,134
Accumulated other comprehensive income (loss) 21 (522)
Deficit (17,229) (9,071)
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15,926 23,541
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23,142 31,813
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NORWALL GROUP INC.
Consolidated Statements of Operations
(In thousands of Canadian dollars, except per share amounts)
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
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December 31, December 31, December 31, December 31,
2009 2008 2009 2008
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Sales 4,937 5,783 23,558 29,094
Cost of goods sold 3,352 5,724 17,165 23,946
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Gross profit 1,585 59 6,393 5,148
Selling, general
and administrative
expenses 1,922 2,447 8,197 9,896
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Loss before the
undernoted (337) (2,388) (1,804) (4,748)
Restructuring and
other costs (3,659) (255) (4,708) (331)
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Loss from
operations
before the
following items (3,996) (2,643) (6,512) (5,079)
Foreign exchange
gain (loss) 86 1,105 (793) 1,714
Impairment of
goodwill - (1,693) - (1,693)
Interest expense (58) (54) (227) (225)
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Loss before
income taxes (3,968) (3,220) (7,532) (5,283)
Income taxes
(expense) recovery (167) 354 (626) (528)
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Net loss for the
period (4,135) (2,866) (8,158) (4,755)
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Basic and diluted
loss per common
share (0.58) (0.40) (1.14) (0.67)
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Weighted and
average number
of common shares
outstanding 7,135,032 7,135,032 7,135,032 7,135,032
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For further information: (905) 791-2700; James J. Patton, President and Chief Executive Officer, [email protected]; Edward Diochon, Vice President of Finance, [email protected]
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