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MOD-PAC CORP. Reports Record Quarterly And Annual Product Sales In 2012

The conference call can be accessed by dialing (201) 689-8562. The listen-only audio webcast can be monitored at www.modpac.com.

The telephonic replay will be available from 1:30 p.m. ET the day of the call until Wednesday, February 13, 2013. To listen to the archived call, dial (858) 384-5517 and enter conference ID number 407402. An archive of the webcast will be available on the Company’s website at www.modpac.com, along with a transcript, once available.

About MOD-PAC CORP.

MOD-PAC CORP. is a leading designer and manufacturer of folding carton packaging employing high value-added services and on-demand delivery. MOD-PAC provides CUSTOM FOLDING CARTONS for branded and private label consumer products in the food and food service, healthcare, medical and automotive industries. The Company also offers a line of STOCK PACKAGING primarily to the retail confectionary industry. MOD-PAC also has a PERSONALIZED PRINT product line that offers a comprehensive line of products for consumer and corporate social occasions.

MOD-PAC’s strategy for growth is to leverage its capabilities to innovate and aggressively integrate technology into its production operations providing cost-effective solutions for its customers. Applying its lean manufacturing processes, coupled with state-of-the-art printing technologies, MOD-PAC is able to address short-run, highly variable content needs of its customers with quick turn-around times relative to industry standards.

Additional information on MOD-PAC can be found at its website: http://www.modpac.com.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. One can identify these forward-looking statements by the use of the words such as "expect," "anticipate," "plan," "may," "will," "estimate" or other similar expressions. Because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual results to differ materially. Important factors, which could cause actual results to differ materially, include market events, competitive pressures, changes in technology, customers preferences and choices, success at entering new markets, the execution of its strategy, marketing and sales plans, the rate of growth of internet related sales, the effectiveness of agreements with print distributors and other factors which are described in MOD-PAC’s annual report on Form 10K on file with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise .

FINANCIAL TABLES FOLLOW.
                                 
 

MOD-PAC CORP. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 
(in thousands, except per share data)
Three months ended Years ended
12/31/2012     12/31/2011   12/31/2012       12/31/2011  
Revenue
Product sales $ 16,520 $ 14,446 $ 58,890 $ 55,777
Rent   97           113       394           448    
Total Revenue 16,617 14,559 59,284 56,225
Cost of products sold   12,750           12,053       48,554           45,943    
Gross profit 3,867 2,506 10,730 10,282
Gross profit margin 23.3 % 17.2 % 18.1 % 18.3 %
Selling, general and administrative expense   2,236           1,927       7,939           7,488    
Income from operations 1,631 579 2,791 2,794
Operating margin 9.8 % 4.0 % 4.7 % 5.0 %
Interest expense, net 46 47 189 192
Other expense (income), net   16           (1 )     60           (146 )  
Income before taxes 1,569 533 2,542 2,748
Income tax expense   532        

123
 

 

853
 

 
   

877
 

 
Net income $ 1,037         $ 410     $ 1,689         $ 1,871    
 
Basic income per share: $ 0.32 $ 0.13 $ 0.52 $ 0.57
Diluted income per share: $ 0.31 $ 0.12 $ 0.51 $ 0.55
 
Weighted average diluted shares outstanding 3,332 3,337 3,318 3,416
 
 
                                                       
 

MOD-PAC CORP.

PRODUCT LINE SALES DATA

(unaudited)
 
($ in thousands)
Three Months Ended % Years Ended % 2012 % of
12/31/2012       12/31/2011         change 12/31/2012       12/31/2011         change Total
FOLDING CARTONS
Custom folding cartons $ 12,200 $ 10,295 18.5 % $ 45,982 $ 42,822 7.4 % 78.1 %
Stock packaging   3,654           3,491         4.7 %   10,195           10,077         1.2 % 17.3 %
Folding cartons subtotal 15,854 13,786 15.0 % 56,177 52,899 6.2 % 95.4 %
 
PERSONALIZED PRINT   666           660         0.9 %   2,713           2,878         (5.7 %) 4.6 %
Total product sales $ 16,520         $ 14,446         14.4 % $ 58,890         $ 55,777         5.6 % 100.0 %
 
 
               
 

MOD-PAC CORP. CONSOLIDATED BALANCE SHEETS
 
($ in thousands) (Unaudited)
    December 31, 2012

December 31, 2011
Current assets:
Cash and cash equivalents $ 3,641 $ 3,900
Accounts receivable 6,008 5,400
Allowance for doubtful accounts   (13 )   (20 )

Net accounts receivable
5,995 5,380
Inventories 6,782 7,023
Refundable income taxes - 219
Prepaid expenses   424       506  

Total current assets
16,842 17,028
   
Property, plant and equipment, at cost:
Land 1,224 1,192
Buildings and improvements 14,435 12,789
Machinery and equipment 53,125 50,566
Construction in progress   643     168  
69,427 64,715
Less accumulated depreciation   (53,928 )   (51,065 )

Net property, plant and equipment
15,499 13,650
Deferred income taxes 317 -
Other assets   481     466  
Total assets $ 33,139   $ 31,144  
 
Current liabilities:
Current maturities of long-term debt $ 20 $ 89
Accounts payable 1,884 2,151
Accrued expenses 1,223 1,171
Income taxes payable   180     -  

Total current liabilities
3,307 3,411
 
Long-term debt 1,800 1,820
Other liabilities 26 27
Deferred income taxes   -     87  
Total liabilities   5,133     5,345  
 
Shareholders' equity:

Common stock, $.01 par value, authorized 20,000,000 shares,

issued 3,712,156 in 2012, 3,623,945 in 2011
37 36

Class B common stock, $.01 par value, authorized 5,000,000

shares, issued 564,191 in 2012, 582,493 in 2011
6 6
Additional paid-in capital 4,288 3,771
Retained earnings 31,685 29,996
Treasury stock at cost, 998,809 shares in 2012 and 2011   (8,010 )   (8,010 )
Total shareholders' equity   28,006     25,799  
 
Total liabilities and shareholders' equity $ 33,139   $ 31,144  
 
 
           
 

MOD-PAC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)
           

 

Years Ended December 31
2012 2011

Cash flows from operating activities:

Net income
$ 1,689 $ 1,871

Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation and amortization 3,226 2,965
Adjustment to provision for doubtful accounts (11 ) (13 )
Stock option compensation expense 274 379
Deferred income taxes (404 ) 81
Loss (gain) on disposal of assets 63 (49 )
Cash flows from changes in operating assets and liabilities:
Accounts receivable (604 ) (460 )
Inventories 242 (1,789 )
Prepaid expenses 82 (66 )
Other liabilities (1 ) 3
Accounts payable (269 ) 850
Payable (refundable) income taxes 453 (259 )
Accrued expenses   52     232  
 
Net cash provided by operating activities   4,792     3,745  
 

Cash flows from investing activities:
Proceeds from the sale of assets - 49
Change in other assets (26 ) 7
Capital expenditures   (5,126 )   (2,332 )
 
Net cash used in investing activities   (5,152 )   (2,276 )
 

Cash flows from financing activities:
Principal payments on long-term debt (89 ) (159 )
Proceeds from issuance of stock 190 160
Purchase of stock for treasury   -     (1,010 )
 
Net cash provided by (used in) financing activities   101     (1,009 )
 

Net change in cash and cash equivalents
(259 ) 460
 

Cash and cash equivalents at beginning of year
  3,900     3,440  
 

Cash and cash equivalents at end of year
$ 3,641   $ 3,900  
 
 
                     
 

MOD-PAC CORP.

Reconciliation between Net Income and EBITDA
 
(in thousands) Three Months Ended Years Ended
  12/31/12             12/31/11   12/31/12             12/31/11
 
GAAP Net Income $ 1,037 $ 410 $ 1,689 $ 1,871
 
 
Interest 46 47 189 192
 
Taxes 532 123 853 877
 
Depreciation and amortization 849 770 3,226 2,965
 
Stock-based compensation   33   42   274   379
 
 
EBITDA $ 2,497 $ 1,392 $ 6,231 $ 6,284
 
 

EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation and amortization and option expense. EBITDA is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, MOD-PAC believes that providing non-GAAP information such as EBITDA is important for investors and other readers of MOD-PAC's financial statements, as it is used as an analytical indicator by MOD-PAC's management. Because EBITDA is a non-GAAP measure and is thus susceptible to varying calculations, EBITDA, as presented, may not be directly comparable to other similarly titled measures used by other companies.

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