Zuni Holdings Reports 2010 Second Quarter Results
Zuni Holdings Inc., formerly MTI Global Inc. (TSX VENTURE: ZNI.H) (the "Company"), today reported its financial results for the three month period ended June 30, 2010. The full text of the Company's Interim Financial Statements for the Six Month Period Ended June 30, 2010 and Management's Discussion and Analysis for the Six Month Period Ended June 30, 2010 can be found at www.sedar.com (http://www.sedar.com) .
Q2 Highlights -- On April 16, 2010, the Company completed the sale of assets of its Milton, Florida business to Bellofram Corporation for cash consideration of approximately US$1,700,000 before transaction costs and reserves for potential obligations in connection with the sale. -- On June 11, 2010, the Company completed the sale of MTI Polyfab Inc. and other aerospace assets to 3M Canada Holdings Ltd. for cash consideration of $25,502,400, subject to certain pre- and post-closing adjustments. The following events took place subsequent to the close of the second quarter, 2010: -- On August 4, 2010, the Company completed a special cash distribution by way of return of capital in the amount of $0.26 per share, payable to shareholders of record as of July 21, 2010. -- The common shares of the Company were delisted from the Toronto Stock Exchange as of the close of business on August 4, 2010, and were listed for trading on the NEX Board of the TSX Venture Exchange under the symbol "ZNI.H" as of August 5, 2010.
Sales for the three month period ended June 30, 2010 were $5.8 million and included sales of $5.2 million by Polyfab, $240,000 of sales from the remaining Leewood operations to June 11, 2010 and sales of $321,000 by N.A. Silicone (Milton) to April 16, 2010, when these operations were sold.
The majority of the total sales decline of $3.2 million compared to the same period in 2009 was a result of a full three months of sales included in the comparative period. The decrease in sales also includes approximately $0.8 million due to the impact of currency fluctuations.
Income (loss) from operations, net of tax
Polyfab's 2010 loss from operations for the three months ended June 30, 2010 was $950,000 compared to $162,000 of income in the prior year. The decrease in income was due to changes in product mix, foreign exchange fluctuations, and increased costs associated with domestic manufacturing, materials, and the outsourcing of its Aerospace manufacturing to Mexico.
N.A. Silicones's loss from operations of $1.3 million was $846,000 greater than the loss in the prior year primarily due to declining gross margins, a $241,000 loss on sale of Milton assets, and lease expense of $750,000 recorded in the second quarter of 2010 when the Company sold the operations of Milton and ceased to use the leased premises.
Increased sales in Leewood in the second quarter of 2010 resulted in a reduction in the losses from operating activity compared to the prior year. The reduction in operating losses and the gain on sale of assets in the second quarter of 2010 resulted in income of $1.0 million for the three months ended June 30, 2010.
Corporate costs for the three months ended June 30, 2010 were offset by the gain on sale of subsidiary to 3M of $2,566,000 resulting in net income of $1,693,000 compared to a loss of $1,375,000 in the same period last year.