Eagle Pacific Industries Reports Record Sales and Earnings

Business Wire, Feb 16, 2000

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 16, 2000

Company Also Releases Pro Forma Financial

Information for PWPipe Acquisition

Eagle Pacific Industries, Inc. (Nasdaq:EPII) today reported record sales and earnings for the fourth quarter and year ended December 31, 1999. Eagle Pacific also reported pro forma financial information assuming that its previously announced acquisition of Pacific Western Extruded Plastics Company (PWPipe) took place on January 1, 1998. A summary of the results for the three-month period and year ending December 31, 1999 and 1998 is set forth in the following table:

Income Statement Information
(In thousands, except for per share amounts)

                           Three Months Ended            Year Ended
                              December 31,               December 31,
                             1999     1998              1999     1998
                             ----     ----              ----     ----
Net sales                 $73,754  $14,343          $153,950  $74,007
Net income available to
  Common stockholders      $6,303   $(260)           $13,161     $329
Basic earnings per share     $.87   $(.04)             $1.88     $.05
Diluted earnings per share   $.63   $(.04)             $1.48     $.05

The net income available to common stockholders for the three months and for the year ended December 31,1999 was approximately $1.4 million and $7.1 million, respectively, higher than it would have been if the Company had recorded its income tax provision at 38%, which is the expected overall tax rate to be recorded in future periods. This difference is principally the result of the accounting for the Company's net operating loss carryforwards in 1999.

The pro forma financial information below assumes that the acquisition of PWPipe took place on January 1, 1998 and includes certain adjustments to reflect what the Company will experience on an ongoing basis, including a 38% income tax provision. A summary of the pro forma financial information for the year ended December 31, 1999 is set forth in the following table:

Pro Forma Income Statement Information
(In thousands, except for per share amounts)

                                           Year Ended
                                       December 31, 1999
                                       -----------------
Net sales                                       $303,249
Net income                                       $17,756
Basic earnings per share                           $2.43
Diluted earnings per share                         $1.82

Included in the pro forma financial information for the year ended December 31, 1999 are certain non-recurring charges. These non-recurring items reduce the pro forma income before taxes by approximately $3.6 million for the year. Absent these non-recurring charges, pro forma basic and diluted earnings per share would be $2.74 and $2.05 for the year ended December 31, 1999, respectively.

William H. Spell, CEO, stated, &uot;We are very pleased to report another record quarter and a record year. We are also very happy to report that the transition to the new operating management team in Eugene, Oregon and the integration of the businesses of Eagle Pacific and PWPipe into a single business has proceeded very smoothly and quickly and are essentially finished.

&uot;There are several reasons for our success. We have focused on reducing our costs and have made the capital expenditures necessary to remain a very efficient producer. That effort and expense is now clearly visible in our results. In addition, conditions in the industry are very positive at the moment. The supply of PVC resin, our main raw material, is very tight, thereby restraining increases in capacity. At the same time the demand for PVC pipe remains very high despite increases in prices resulting from higher PVC raw material costs and limited supplies. We expect these favorable industry conditions to continue for the foreseeable future absent a disruption in the general economy or in the supply of PVC resin. Last but not least, our operating management and employees have worked hard to make the integration of the Eagle Pacific and PWPipe businesses as seamless as possible to our customers and suppliers, all while they have been setting records for pounds produced and sold.

Spell continued, &uot;The combination of our management team and employees, our efficient facilities, our loyal customers and suppliers, and our financial lenders positions us well to continue to pursue our goal of being a significant player in the United States plastic pipe and tubing industry and to continue to grow both internally and through acquisition.&uot;

Eagle Pacific Industries, Inc. is a leading manufacturer of PVC pipe and fittings and polyethylene tubing. The Company operates nine manufacturing facilities in the midwestern and western United States. Eagle Pacific Industries' stock is traded on the Nasdaq SmallCap Market under the symbol &uot;EPII.&uot;

The Chief Executive Officer's statement regarding the Company's expectation that favorable industry conditions will continue for the foreseeable future and the Company's plan to grow internally and through acquisition are &uot;forward looking statements&uot; made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve risks and uncertainties may cause actual results to differ materially from those expected from the forward looking statements. Such risks and uncertainties include a slowdown in the construction industry and overall economy, disruptions in the supply of raw materials and other known and unknown risks.