OWINGS MILLS, Md., Feb. 13 /PRNewswire-FirstCall/ -- Universal Security Instruments, Inc. today announced results for its third quarter ended December 31, 2007.
The Owings Mills, MD-based designer and marketer of safety and security equipment reported a net loss of $1,635,789, or $0.66 per basic and diluted share on net sales of $9,120,408 compared with net earnings of $1,712,883 or $0.71 per basic share ($0.68 per diluted share) on net sales of $8,620,893 last year. Included in the current quarter's results were two non-recurring items. The first was the previously announced impairment of goodwill as required by SFAS No 142 in the amount of $1,926,696 by the Company's majority- owned Canadian subsidiary, International Conduits, Ltd. (Icon), an Ontario based manufacturer of steel electrical conduit. The second item was a bad debt charge of $170,814 for an account receivable not insured by the Company's factor.
For the nine months ended December 31, 2007, sales were $35,754,833 versus $24,655,342 for the same period last year. The Company reported a net loss of $526,647 or $0.21 per basic and diluted share versus net earnings of $4,699,262 or $1.97 per basic share ($1.88 per diluted share) last year. Included in the three and nine month results was Icon's loss of $2,415,996 and $3,316,763 respectively.
In other developments, Icon has now ceased operations. A receiver was appointed for Icon on February 11, 2008, by CIT Financial, Ltd., Icon's secured lender, to manage the disposition of assets in settlement of the indebtedness owed by Icon to CIT Canada. This process is in the initial stage and the Company is currently unable to determine the net realizable value of the assets of Icon or the extent of additional losses that may be recorded as a result of the settlement of the obligations of the Canadian subsidiary.
The Company said that the losses at its Canadian operations, reduced revenues at its Hong Kong Joint Venture, continued softening in the residential housing market, and the inability to import GFCI units, were the primary reasons for the financial results. "Clearly, we are not pleased with the results for our third quarter and year to date", said Harvey Grossblatt, President and Chief Executive Officer of Universal. "However, during this difficult period we will continue to focus on our long term strategy of growing shareholder value by increasing sales of our core safety and security products and adding new products, while eliminating unprofitable segments of our operations."
UNIVERSAL SECURITY INSTRUMENTS, INC. is a U.S.-based manufacturer (through its Hong Kong Joint Venture) and distributor of safety and security devices. Founded in 1969, the Company has a 38-year heritage of developing innovative and easy-to-install products, including smoke, fire and carbon monoxide alarms. For more information on Universal Security Instruments, visit our website at http://www.universalsecurity.com/.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the federal securities laws that inherently include certain risks and uncertainties. Actual results could differ materially from those projected in or contemplated by the forward- looking statements due to a number of factors, including, among other items, our and our Hong Kong Joint Venture's respective ability to maintain operating profitability, currency fluctuations, the impact of current and future laws and governmental regulations affecting us and our Hong Kong Joint Venture and other factors which may be identified from time to time in our Securities and Exchange Commission filings and other public announcements. We do not undertake and specifically disclaim any obligation to update any forward- looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements. We will revise our outlook from time to time and frequently will not disclose such revisions publicly.
UNIVERSAL SECURITY INSTRUMENTS, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Three Months Ended December 31, 2007 2006 Sales $ 9,120,408 $ 8,620,893 Net (loss) income (1,635,789) 1,712,883 (Loss) income per share Basic $(0.66) $0.71 Diluted $(0.66) $0.68 Weighted average number of common shares outstanding Basic 2,489,132 2,417,972 Diluted 2,489,132 2,514,536 (UNAUDITED) Nine Months Ended December 31, 2007 2006 Sales $35,754,833 $24,655,342 Net (loss) income (526,647) 4,699,262 (Loss) income per share Basic $(0.21) $1.97 Diluted $(0.21) $1.88 Weighted average number of common shares outstanding Basic 2,484,254 2,380,163 Diluted 2,484,254 2,499,175 CONSOLIDATED BALANCE SHEET ASSETS December 31, 2007 2006 Cash $ 4,278,484 $ 533,882 Accounts receivable and amount due from factor 7,887,844 6,400,511 Inventory 9,063,823 9,854,960 Prepaid expenses 320,098 383,026 TOTAL CURRENT ASSETS 21,550,249 17,172,379 INVESTMENT IN HONG KONG JOINT VENTURE 10,627,300 9,031,410 PROPERTY AND EQUIPMENT - NET 4,721,565 2,679,077 OTHER ASSETS AND DEFERRED TAX ASSET 652,907 964,421 GOODWILL - 1,508,718 TOTAL ASSETS $37,552,021 $31,356,005 LIABILITIES AND SHAREHOLDERS' EQUITY Notes and lease obligation payable $ 5,164,246 $ 2,129,604 Accounts payable and accrued expenses 6,519,077 3,620,956 Accrued liabilities 1,408,650 2,149,165 TOTAL CURRENT LIABILITIES 13,091,973 7,899,725 LONG TERM OBLIGATIONS 182,740 55,810 MINORITY INTEREST - - SHAREHOLDERS' EQUITY - - Common stock, $.01 par value per share; authorized 20,000,000 shares; issued and outstanding 2,489,132 and 2,420,573 shares at December 31,2007 and December 31, 2006, respectively 24,912 18, 181 Additional paid-in capital 13,454,967 12,767,187 Retained earnings 11,036,884 10,711,308 Other comprehensive income (loss) (239,435) (96,206) TOTAL SHAREHOLDERS' EQUITY 24,277,328 23,400,470 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $37,552,021 $31,356,005 All shares have been adjusted to reflect the 4-for-3 stock split paid on October 16, 2006.
