PAMECO
CORP
CONTACT:
Van Negris / Philip J. Denning
Kehoe, White, Van Negris & Company, Inc.
(212) 396-0606
FOR IMMEDIATE RELEASE
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PAMECO REPORTS PRELIMINARY FISCAL FOURTH QUARTER, YEAR-END OUTLOOK
NORCROSS, GA - FEBRUARY 23, 1999 - Pameco Corporation (NYSE: PCN)
today announced that, as a result of the initial findings of an
internal operating review initiated since the change of senior
management announced on January 11th, the Company preliminarily
expects to report an operating loss for the fiscal 1999 fourth quarter
to end February 28th that is significantly larger than previously
anticipated.
The widened operating loss for the quarter stems principally from
slower than anticipated sales volumes, increased interest expense
associated with higher levels of inventory, increased operating
expense and other operating inefficiencies principally related to the
effect at all levels of the Company of continuing problems with
implementation of the Company's new enterprise-wide management
information system (MIS).
For the full fiscal year to end February 28, 1999, the Company expects
to report a profit from operations.
The Company also announced that it expects to take a one-time charge
to fiscal 1999 earnings consisting of: (i) the write-off of certain
capitalized training and software costs relating to implementation of
the new MIS; (ii) a significant increase in the Company's allowance
for losses on Accounts Receivable relating to the increase in aging of
such receivables because of billing statement delays and other
inefficiencies associated with the transition to the new MIS; (iii)
the write-down of inventories associated with certain discontinued
product lines; (iv) other charges for damaged equipment in inventory,
stemming from an accounting policy change; (v) costs relating to the
closing or combining of branch offices and to reorganization of the
Company's distribution system across the country; and (vi) anticipated
severance payments to the Company's former president and chief
executive officer, a former executive vice president and its former
chief information officer.
More specific operating data for the 1999 fiscal year will not be
available until after the close of the fiscal year on February 28th.
Similarly, the scope and amount of the costs associated with each
category of the expected one-time charge cannot yet be determined. As
such, the Company stated that it intends to report to shareholders bi-
weekly beginning with the week of March 15th through press releases
updating the status of the Company's operating results. To further
insure strict compliance with the disclosure policy, neither the
Company nor any officer or director of the Company will comment on the
status of operations outside the content of the bi-weekly releases
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Pameco Corporation
Page Two
February 23, 1999
until after the final audited results for the fiscal year are
published and filed with the SEC in a Form 10-K report.
James R. Balkcom, Chairman, President & Chief Executive Officer,
stated: "At the time of the change in our senior management in early
January, I promised to provide our shareholders with a broad overview
and strategic perspective on the system transition and the overall
business within a reasonable time after the close of the fiscal year.
In the interim six weeks, the preliminary findings of our ongoing
operations review suggested that the probable adverse impact on our
financial results will be more serious than we anticipated. We are
working very hard to quantify and resolve the underlying issues. As a
consequence of our findings to date, we have issued this release and
determined to issue bi-weekly updates until the filing of our annual
report on Form 10-K. As part of the Form 10-K for the fiscal year,
which is required to be filed within 90 days of the close of the
fiscal year, the Company will report on the status and outlook for the
business, and I will then be free to comment openly on its content."
Pameco Corporation has established a leading position in the
consolidating distribution segment of the climate control industry,
building a centralized, and national distribution network. Pameco's
products include a complete range of heating, air conditioning and
refrigeration equipment, parts and supplies ("HVAC/R") for the light
commercial and residential HVAC markets and commercial refrigeration
market. The products sold by Pameco are used principally for the
repair and replacement of existing HVAC/R and for new construction.
The Company has 361 branches and 6 distribution centers in 47 states
and in 95 of the top 100 population centers in the United States.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Certain statements and other information contained in
this press release are "forward-looking" statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties including, without limitation, the Company's
plans for future business development activities, product mix, margin
enhancements, the timely review of the Company's MIS and the
successful implementation of the MIS and any additional enterprise
wide software required to enhance the functionality thereof, eventual
improvements to the Company's logistics and delivery system through
the MIS, the Company's ability to operate acquired companies in a
profitable manner, and other risks and uncertainties described in the
Company's reports and filings with the Securities and Exchange
Commission. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance, involve risks and
uncertainties, and that actual results may differ materially from
those contemplated by such forward-looking statements. The
projections contained herein speak only to the Company's expectations
as of the date of this press release. The Company expressly disclaims
any obligation or undertaking to release publicly any updates or
revisions to any such statement to reflect any change in the Company's
expectations or any change in events, conditions or circumstances on
which any such statement is based.
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