Hammond Manufacturing Company Limited

Hammond Manufacturing Company Limited

October 26, 2006 15:53 ET

Hammond Manufacturing Company Limited Announces Financial Results for the Third Quarter Ending September 29, 2006

GUELPH, ONTARIO--(CCNMatthews - Oct. 26, 2006) - Hammond Manufacturing Company Limited (TSX:HMM.A) -

Nine months ending: Three months ending:

9/29/06 9/30/05 9/29/06 9/30/05

Net sales 53,910,000 49,877,000 17,201,000 16,847,000
Earnings (loss) from
operations 1,995,000 432,000 391,000 (250,000)
Net earnings (loss) 800,000 (114,000) 207,000 (294,000)
Earnings (loss) per Share $ 0.07 ($0.01) $ 0.02 ($0.03)

Shares outstanding 11,314,300 11,307,300
Net book value per share $ 1.88 $ 1.83

We are pleased to report continued growth in sales volume, and positive earnings for the third quarter of 2006. Net sales, which are now reported net of certain selling expenses related to the accounting change described below, increased 2.1% for the quarter and 8.1% year-to-date 2006 over the comparable periods for 2005.

Although volume growth moderated in the third quarter, overall margins improved 1.7%, driven by cost reductions and selected price increases. Selling and administrative expenses were reduced by 5.3%, compared to the third quarter in 2005. This has resulted in the continued improvement in earnings from operations and net earnings reported in 2006 from the prior year.

Cash provided by operations, including change in working capital, totaled $781,000 for the quarter, $2,467,000 year-to-date. Total funded debt has been reduced by $1,490,000 in the first nine months of 2006. The balance sheet remains strong.

The change in reporting related to net sales is to comply with the requirements of the Canadian Institute of Chartered Accountants Emerging Issues Committee Abstract ("EIC") 156 which is effective for fiscal years beginning on or after January 1, 2006. In this abstract, the Committee reached a consensus that certain cash or other consideration given by a vendor to a customer is presumed to be a reduction of the selling prices of the vendor's products or services and, therefore, should be classified as a reduction of revenue rather than as a selling expense. The Company makes certain payments or allowances to customers which meet the requirements for this reclassification, primarily related to the inclusion of our products in various customers' catalogues.

The Company is required to restate its prior period results for comparative purposes. Earnings from operations and net earnings are not affected by this accounting change, as the reduction in revenue is offset by an equal reduction in selling expenses. The adjustment due to implementation of EIC 156 reduced sales and expenses equally by the following amounts for the current and prior year periods being reported:

EIC 156: Reduction in Revenues and Expenses
2006 (Current year) 2005 (Prior year)
Q1 Q2 Q3 YTD Q1 Q2 Q3 YTD
126,000 155,000 139,000 420,000 103,000 120,000 115,000 338,000

Hammond Manufacturing Company Limited manufactures a broad range of products for the electronic and electrical products industry, including metallic and non-metallic enclosures, racks, small cases, outlet strips, surge suppressors and electronic transformers.

Contact Information

  • Hammond Manufacturing Company Limited
    Robert F. Hammond
    Chairman and CEO
    (519) 822-2960
    (519) 822-7289 (FAX)
    Email: ir@hammfg.com