Virtek reiterates support for Gerber Scientific offer
Virtek Vision International Inc. has announced the receipt of a letter from Jaguar Financial Corporation ("Jaguar") indicating Jaguar is contemplating an offer to acquire all Virtek common shares not already owned by Jaguar for cash consideration of $1.05 per share plus additional consideration in an amount to be determined subject to a satisfactory due diligence examination (the "Jaguar Expression of Interest").
After an extensive sale process, Virtek entered into a support agreement dated September 2, 2008 between Virtek, Gerber Scientific Canada Inc. and Gerber Scientific, Inc. (the "Support Agreement"). Under the support agreement, Virtek is not permitted to provide confidential information to a third party unless the third party has submitted a proposal that could reasonably be likely to constitute a "Superior Proposal" as defined in the agreement.
In reviewing the limited information provided in the letter, and in consultation with its financial advisor and its legal counsel, the Board of Directors of Virtek has determined that the Jaguar Expression of Interest could not reasonably be likely to constitute a "Superior Proposal" as defined in the Support Agreement and responded accordingly in a letter to Jaguar on September 12, 2008.
Virtek reiterates its support for the offer from Gerber Scientific for all of Virtek's Common Shares at a price of $1.05 in cash per share (the "Gerber Offer") and unanimously recommends that shareholders accept the Gerber Offer. The Virtek Board of Directors further believes that the Gerber Offer being mailed to shareholders later today remains in the best interests of Virtek and is fair to its shareholders. The Board of Directors of Virtek believes the fully-financed Gerber Offer has a high probability of being completed and asks that inquiries concerning the offer be directed to Gerber's information agent: Kingsdale Shareholder Services Inc., toll free at 1-800-775-1986.
Second quarter results announced
Virtek Vision International Inc. announced on Sept. 11th its financial results for the second quarter ended July 31, 2008.
Sales for the second quarter of fiscal 2009 for Virtek rose 16% to $13.7 million from $11.8 million in the corresponding quarter of fiscal 2008. Net income, excluding special charges related to the takeover defense and review of alternative transactions, amounted to $0.8 million or $0.02 per share in the quarter compared to a loss from continuing operations of $1.4 million ($0.04 per share) in the prior year second quarter.
The special charges include the fees of legal, financial and investment advisors utilized by the Special Committee of the Board of Directors to evaluate the unsolicited bid and to consider alternative transactions. Overall, the net loss was $479,000 ($0.01 per share), compared to a net loss of $2.1 million ($0.06 per share) in the quarter ended July 31, 2007.
"We have achieved two quarters of improved operational results. Our positive operating results and strong balance sheet in the first six months of this fiscal year demonstrate that our business is on track for profitable growth. During the second half of this year we expect economic conditions in North America to remain challenging. We will continue to explore opportunities in Europe and Asia. In the Marking & Engraving business, improvements based on our efforts include the fiscal 2009 second quarter delivery of a North American production unit of our FOBA "G" series deep engraving machines, built on schedule in our Waterloo facility," said Stephen J. Sorocky, Virtek's President and Chief Executive Officer.
In the first six months of fiscal 2009 sales were $25.9 million, slightly higher than $25.2 in the first half of fiscal 2008. Net income for the first six months of this fiscal year amounted to $1.3 million before special charges. Net income including special charges was $2,000 ($0.00 per share) compared to a loss of $2.1 million ($0.06 per share) in the six months ended July 31, 2007.
The fiscal 2009 sales increase was due to improvement in both operating segments: Imaging & Templating, and Marking & Engraving. Imaging & Templating sales rose to $6.2 million in the fiscal 2009 second quarter from $5.6 million in the same period last year.
Increases in transportation and imaging revenues were offset by a continued decline in demand for prefabricated construction products. Marking & Engraving sales climbed to $7.5 million in the three months ended July 31, 2008 from $6.2 million in the same period last year.
Gross margin held steady at 54%. Operating expenses fell $200,000, primarily due to lower general and administrative costs. EBITDA rose to $115,000 in the fiscal 2009 second quarter, an improvement of $1.2 million, from a loss of $1.1 million in the prior year period.
"The hostile takeover bid for Virtek launched in May 2008 led to a review and consideration of various alternative transactions in order to maximize shareholder value. Our most recent news release, dated September 5, 2008, describes the $1.05 per share offer from Gerber Scientific for all of Virtek's issued and outstanding shares at a significant premium to the share price earlier this year," said Mr. Sorocky. "From an operational standpoint, we have focused throughout this period on implementing successful business strategies and enhancing Virtek's performance. I am proud of the focus and dedication of our staff and partners during this time. Our operational results clearly show our progress in delivering consistent profitability."