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 user 2006-09-15 at 12:32:00 pm Views: 72
  • #16459

    Media Sciences Reports Record Revenues, Earnings and Cash Flow for Fiscal 2006
    N.J., Sept. 06 Media Sciences International, Inc. GFX, the leading
    independent manufacturer of color toner cartridges and solid ink sticks
    for business color printers, today announced its financial results for
    the year ended June 30, 2006, which included record revenues, earnings
    and cash flows. The Company will host a conference call Wednesday,
    September 13, 2006, at 8:45 a.m. ET to discuss its fiscal 2006 annual
    results, its strategic objectives for the current 2007 fiscal year, and
    the status of its patent litigation with Xerox.
    Financial highlights
    for the fiscal 2006 year include: — Net revenue increase of 18% year
    over year — Gross margin improvement of 900 bp over the prior year –
    Full year EPS of $0.19 per share basic and $0.18 per share diluted –
    4th Quarter EPS of $0.07 per share basic and $0.06 per share diluted –
    Effective tax rate reduction of 500 bp on continuing operations –
    EBITDA of $4.0 million, up $2.7 million or 203% over the prior year
    W. Levin, President and Chairman of Media Sciences International, Inc.
    commented on the year’s success, “We are very pleased with our 2006
    results. The execution by our recently expanded, exceptional team of
    professionals included strong product launches, significant
    manufacturing efficiencies and the implementation of processes and
    controls required to scale Media Sciences’ business. These efforts
    translated into significant margin enhancement and strong earnings and
    cash flow, and set the stage for our continued and accelerated growth
    and profitability.”

    Consolidated net sales for the
    fiscal year ended June 30, 2006 increased approximately $3.3 million,
    or 18 percent, to $21.3 million from $18.0 million in the prior year.
    The Company’s sales of color toner cartridges increased by
    approximately 39 percent over the same period in 2005 while sales of
    solid ink sticks increased approximately 18 percent. Sales of Media
    Sciences branded products increased by 500 bp to 55 percent of revenues
    and the Company’s international business increased by 200 bp to 18
    percent of revenuesConsolidated net sales for the quarter ended June
    30, 2006 increased approximately 25 percent to $5.96 million from $4.76
    million in the prior year.Overall, net revenue growth in fiscal 2006 is
    attributed to new product introductions, increased market share for
    some existing products, and growth in the installed base of color
    business printers for which Media Sciences manufactures supplies. The
    trend toward these lower-priced, faster color printers is expected to

    Gross Margin
    Consolidated gross profit for the year
    ended June 30, 2006 increased by $3.3 million or 45 percent to $10.8
    million from $7.5 million in the prior year. In 2006, the Company’s
    gross margin increased by 900 bp from 42 percent of net revenues in
    2005 to 51 percent in 2006.
    Media Sciences has benefited from margin
    expansion due to increased efficiencies in solid ink manufacturing and
    the mix of product sales. Favorable reductions in costs of goods sold
    were partially offset by increased prices of certain raw materials and
    their associated shipping costs. In fiscal 2007, the Company does not
    expect significant additional yield improvements in solid ink
    production or further product transitions that would reduce costs.
    Therefore, any further increases in raw material or inbound shipping
    costs may increase product costs, unless offset by other manufacturing

    Net income for the year ended June 30,
    2006 was $2.13 million or $0.19 per share basic and $0.18 per share
    diluted, as compared to a net loss of $0.08 million or $(0.01) per
    share (basic and diluted) for the year ended June 30, 2005.During the
    quarter ended June 30, 2005, the Company ceased all electronic
    pre-press system sales and service operations, which represented a
    majority of the operations of the Company’s Cadapult subsidiary. The
    results of operations for that line of business are classified as a
    discontinued operation and are reflected in the Company’s $0.08 million
    net loss in 2005.

    Effective Tax Rate
    For the years ended June
    30, 2006 and 2005, the Company’s effective tax rate was 34 percent and
    39 percent, respectively. The 500 bp decrease reflects the current year
    realization of the Company’s tax planning efforts and improved tax
    compliance processes to take advantage of all of the state and federal
    credits and income exemptions for which the Company is entitled. The
    Company expects its consolidated effective tax rate to remain at about
    35 percent through fiscal 2007.

    Cash Flow
    For the fiscal
    year, cash flows from operating activities were $3.4 million, a $3.24
    million increase over the prior year of $0.16 million. The $3.4 million
    of operating cash flows generated in 2006 resulted from $2.1 million of
    income from operations and the add-back of non-cash expenses totaling
    $1.3 million