KML Carmel Container Sys

Carmel Container Systems Ltd. Reports Results for The Quarter Ended March 31, 2004 TEL-AVIV, Israel, May 10 /PRNewswire-FirstCall/ -- Carmel Container Systems Ltd. ("Carmel" or the "Company"), a leading Israeli designer, manufacturer and marketer of containers, packaging materials and related products, reported today its consolidated financial results for the first quarter of 2004. Carmel's Ordinary Shares are traded on the American Stock Exchange . The financial results for the first three months of 2004 were primarily influenced by the following factors: -- The recession tendency that characterized the Israeli economy, since September 2000, caused a significant decrease in many economy activities, has changed slightly by the end of the year, which in turn positively affected the Company's business, financial condition and results of operations. Such economic activities include: -- Moderate improvement in the volumes of the local demands for customer's goods and private consumption in the first quarter. -- Slight increase in the volumes of the industrial export to the U.S.A. and Europe. -- Some good indexes were published by the end of the last quarter. -- Still due to the continued economic slowdown, the price of packaging products during the first three months of 2004 remained at about the same low level as at the end of 2003. -- In the first quarter of 2004 there has been a slight growth in the volume of the Hi-Tech export, which contributed to stop the withdrawal of the industry's productivity. Carmel's results for the first quarter of 2004 were improved as compared to the results of the first quarter of 2003, that improvement was achieved mainly by increased sales, which caused an improvement in other parameters, including gross profit and net profit. All this happened in spite of low sale prices, which remained at about the same level as at the end of 2003. The economic improvement has not yet affected the selling prices level, that remains relatively low as a result of the continued recession in the local Israeli market in previous years. During the second six months of 2002 the price of raw materials increased slightly and remained at the same level during the first half of 2003. During the second half of 2003 and the first three months of 2004, the price of raw materials decreased slightly and as a result operating income increased slightly. The New Israeli Shekel ("NIS") devaluated by 3.4% against the Dollar during the first quarter of 2004, as compared to revaluation of 1.1% during the same period of 2003. As a result, the Company's recorded financial expenses increase during the first quarter of 2004. The translation of the amounts from NIS into U.S. dollars is at a rate of exchange of NIS 4.528 to $1 (which was the rate of exchange at March 31, 2004). As a result, the amounts presented in U.S. dollars for the year 2003 are different from the U.S. dollar amounts previously published by the Company with respect to such period. Revenues in the first quarter of 2004 were NIS 101.6 million ($ 22.4 million), as compared to NIS 91.4 million ($ 20.2 million), for the first quarter of 2003. The increase in sales in 2004, as compared to 2003, resulted primarily from an increase in the volume of sales and a very slight increase of the average selling prices. Gross profit for the first quarter of 2004 was NIS 15.7 million ($3.5million), representing 15.5% of sales, as compared to NIS 8.8 million ($ 1.9 million), representing 9.7% of sales, for the first quarter of 2003. Operating income before financial expenses were NIS 6.4 million ($1.4 million) representing 6.3% of sales for the first quarter 2004, as compared to operating income of NIS 37.0 thousand ($8.2 thousand), representing 0.0% of sales for the same period of 2003. Financial expenses net for the first quarter of 2004 were NIS 2.4 million ($0.5 million), representing 2.3% of sales, as compared to NIS 1.3 million ($0.3 million), representing 1.5% of sales, for the same period of 2003. The increase in actual financial expenses in the first quarter of 2004, as compared to the first quarter of 2003, reflects a devaluation of the NIS against the Dollar of 3.4%, as compared to a rate of revaluation of 1.1% in the same period of 2003. Other income, net for the first quarter of 2004 was NIS 4.0 thousand ($0.9 thousand), as compared to net expenses of NIS 39.0 thousand ($8.6 thousand) during the same period of 2003. Income before taxes for the first quarter of 2004 was NIS 4.0 million ($0.9 million), representing 3.9% of sales, as compared to a loss before taxes of NIS 1.3 million ($0.3 million) for the first quarter of 2003, representing 1.4% of sales during that period. Tax on income for the first quarter of 2004 was NIS -1.2 million (-$0.3 million), as compared with a tax on income of NIS 0.5 million ($0.1 million) for the same period of 2003. Net income for the first quarter of 2004 was NIS 2.8 millions ($0.6 millions), representing 2.7% of sales, as compared to a net loss of NIS 0.5 millions ($0.1 millions), representing 0.6% of sales for the first quarter of 2003. Income per share for the first quarter of 2004 was NIS 1.16 ($0.26), as compared to net loss per share of NIS 0.22 ($0.04) for the same period of 2003. The Company's positive cash flow for the first quarter of 2004 from operating activities was NIS 7.8 million ($1.7 million), as compared to a negative cash flow from operating activities of NIS 9.3 million ($2.0 million) for the same period of 2003. Depreciation and amortization in the first quarter of 2004 was NIS 4.8 million ($1.1 million), as compared to NIS 6.1 million ($1.3 million) in 2003. During the first quarter of 2004, the company reduced its net debt to banks in an amount of NIS 6.8 millions ($1.5 million). The positive net cash flow in 2004, financed the Company's acquisition of NIS 1.1 million ($0.2 million) of fixed assets and the Company's various activities and the decrease in long and short financial debt. Forward-looking statements with respect to the Company's business, financial condition and results of operations contained in this release are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements, including, but not limited to, fluctuations in product demand, the impact of competitive pricing as well as certain other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Carmel Containers Systems Ltd. Consolidated Unaudited Statement of Income Three Months Ended March 31, 2004 NIS U.S. Dollars In millions, except per In millions share data March 31, March 31, March 31, 2004 2003 2004 Net sales NIS 91.4 NIS 101.6 $22.4 Gross profit 8.8 15.7 3.5 Operating income (loss) 0.0 6.4 1.4 Net income (loss) (0.5) 2.8 0.6 Weighted average shares 2,400,000 2,400,000 2,400,000 Net income (loss) per 1,000 shares NIS (0.22) NIS 1.16 $0.26 Translation of NIS to US Dollars is at the exchange rate of NIS 4.528 to U.S.$ 1.00, reflecting such exchange rate at March 31, 2004. DATASOURCE: Carmel Container Systems Ltd. CONTACT: Doron Kempler of Carmel Container Systems Ltd., +972-6-623-9360; or David P. Stone at Weil, Gotshal & Manges, +1-212-310-8403, for Carmel Container Systems Web site: http://www.carmelccs.com/

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