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Brampton Brick Announces Write-Down of Goodwill
(Market Wire Via Thomson Dialog NewsEdge) BRAMPTON, ONTARIO, February 14 / MARKET WIRE/ --
Brampton Brick Limited (TSX: BBL.A) announced today that for the fourth quarter and year ended December 31, 2007 it will record a non-cash charge of $13.5 million to write-down the carrying value of goodwill. This determination was made following completion of the annual test for impairment as required under Canadian generally accepted accounting principles.
The impact on consolidated net income is estimated to be approximately $13.1 million, or $1.21 per share, which is the net amount after taking into account a reduction in the provision for income taxes of approximately $0.4 million. The weighted average number of Class A Subordinate Voting shares and Class B Multiple Voting shares outstanding was approximately 10,836,000 for the quarter and 10,823,000 for the year.
The goodwill carried on the Company's consolidated financial statements relates to the Oaks Concrete Products operations which were acquired in 2002 and include the concrete products manufacturing plants located in Markham and Milton, Ontario and Wixom, Michigan.
Operating results in these business operations declined in 2007 compared to 2006 with substantially all of the decline occurring in the fourth quarter. The impact of unfavourable weather conditions and reduced demand in Ontario, combined with negative economic conditions in Michigan resulted in a decline in sales volumes in 2007. The U.S. operations based in Wixom, Michigan were particularly affected.
Today, the outlook for economic conditions in 2008 remains uncertain, particularly in the U.S. markets. Consequently, the Company considered it prudent to write-down the carrying value of goodwill at this time.
"Clearly, operating results of these business units have not been satisfactory", said Jeffrey G. Kerbel, President and Chief Executive Officer. "However, with the new management and operating structure put into place in 2007, new executive personnel, a stronger product base supported by a number of new products introduced over the last few months and innovative marketing programs, we remain confident of the future success of these operations. In many respects, 2007 was a year of transformation, as the Company has systematically revised its going-forward business model to reflect the marketing and operational synergies available through the total Brampton Brick infrastructure and market profile".
As noted above, Brampton Brick purchased an initial 63% interest in Oaks Concrete Products in 2002 and acquired an additional 7% in 2004. With the acquisition of the remaining 30% minority interest in December, 2006, the Company amalgamated these operations into Brampton Brick as of January 1, 2007, along with certain manufacturing assets acquired from Richvale York Block Inc. in April 2006. As a result of the realignment of the operating and management structure of the former clay brick and concrete products operations, new operating business segments are now structured under product lines, namely, Masonry Products and Landscape Products.
Throughout 2007, the Company undertook a number of initiatives to integrate personnel and operating procedures, rationalize manufacturing operations and facilities and develop new products and marketing programs.
The new products, most of which were introduced in the latter part of 2007, include stone veneer, window sills and concrete brick. To date, market reception has been positive. Unfortunately, sales in 2007 were limited due to the lead time required to fully develop and introduce these products to the market in sufficient time to generate sales to construction projects which had already commenced. The Company anticipates good growth from these new products beginning in 2008.
Similarly, the positive impacts of many of the other initiatives undertaken in 2007, such as new marketing programs to lever sales of both masonry and landscape products, are expected to be realized in 2008 and subsequent years.
Complete results for the fourth quarter and year ended December 31, 2007 are scheduled to be released on March 4, 2008 following the meeting of the Company's Board of Directors.
Certain statements contained herein constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors, including, but not limited to, those identified under "Risks and Uncertainties" in the Company's 2006 Annual Report, which may cause actual results, performance or achievements of the Company to be materially different from any future result, performance or achievements expressed or implied by such forward-looking statements.
Brampton Brick is Canada's second largest manufacturer of clay brick and manufactures concrete paving stones, retaining walls and enviro products in Canada and the U.S. under the Oaks Concrete Products trade name. Products are used for residential construction and for industrial, commercial, and institutional building projects. Da Vinci Stone Craft Ltd., a 75% owned subsidiary, manufactures fireplace surrounds and accessory products. The Company also holds 50% joint-venture interests in Sharpsmart Canada Limited, which provides a proprietary reusable sharps containment system to hospitals in Ontario, and in Universal Resource Recovery Inc., which is constructing a waste composting and material recycling facility in Welland, Ontario. Operations at this facility are expected to commence in the second half of 2008.
Contacts:
Brampton Brick Limited
Jeffrey G. Kerbel
President and Chief Executive Office
(905) 840-1011
(905) 840-1535 (FAX)
Brampton Brick Limited
Kenneth J. Mondor
Vice-President, Finance and Chief Financial Officer
(905) 840-1011
(905) 840-1535 (FAX)
Email: Investor.relations@bramptonbrick.com
Copyright ? 2008 Market Wire, Incorporated
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