FERNDALE, Wash., Dec. 16 /PRNewswire-FirstCall/ -- International
Absorbents Inc. (NYSE Euronext: IAX), a leading developer and
producer of environmentally friendly pet care and industrial
products, today reported financial results for the third quarter
and nine months ended October 31, 2009. Sales for the third quarter
of fiscal year 2010 were down at $8,358,000 versus $9,603,000 for
the third quarter of fiscal year 2009. Sales for the first nine
months of fiscal year 2010 were $26,094,000versus $27,362,000 for
the first nine months of fiscal year 2009. Gross profit for the
third quarter of fiscal year 2010 was $2,784,000 compared to
$3,251,000 for the comparable quarter in fiscal year 2009, a
decrease of 14%. Gross profit for the first nine months of fiscal
year 2010 was $9,280,000 compared to $8,563,000 for the comparable
period in fiscal year 2009, an increase of 8%. Net income for the
third quarter of fiscal year 2010 was $36,000 a decrease of 96%,
versus a net income of $836,000 for the third quarter of fiscal
year 2009. Net income for the first nine months of fiscal year 2010
was $1,369,000 versus $1,741,000 for the comparable period in
fiscal year 2009. As more fully described in our Current Report on
Form 8-K filed on December 15, 2009, on December 14, 2009, the
Company entered into an Arrangement Agreement (the "Arrangement
Agreement") with IAX Acquisition Corporation, a Delaware
corporation ("Parent"), and IAX Canada Acquisition Company Inc., a
corporation incorporated under the laws of the Province of British
Columbia and a wholly owned subsidiary of Parent. The Arrangement
Agreement provides that, upon the terms and subject to the
conditions set forth in the Arrangement Agreement, Parent, through
its wholly-owned subsidiary, will acquire all of the outstanding
common shares in the capital of the Company for $4.75 per Company
common share, with the Company continuing as the surviving
corporation (the "Arrangement"). As a result of the Arrangement,
the Company will become a wholly-owned subsidiary of Parent. During
the third quarter of fiscal year 2010, our selling, general and
administrative expenses increased by 19% as compared to the same
period in fiscal year 2009. During the first nine months of fiscal
year 2010 our selling, general and administrative costs increased
by 18% as compared to the same period in fiscal year 2009. A
significant contributor to this expense increase during the third
quarter of fiscal year 2010 was approximately $470,000 in expenses
related to the proposed Arrangement. Gordon L. Ellis, Chairman of
International Absorbents Inc., commented, "Like most other
retailers, we continue to be impacted by the ongoing economic
conditions, and our decrease in net sales for the third quarter
reflects the current retail environment. We believe that the
majority of our customers have also experienced some decrease in
their own sales. Although our gross margin was down for the third
quarter as compared to the same period last year, we did experience
an improvement in our gross margin for the first nine months of
fiscal year 2010 as compared to the same period in the prior fiscal
year, primarily as the result of manufacturing materials costs
being lower, energy prices being lower and sales prices being
higher than during the first six months of the same period of the
prior year. Despite challenging economic conditions and a slight
decrease in sales, we were able to maintain gross margin. However,
due to one-time expenses related to the arrangement agreement there
was a significant increase in selling, general and administrative
expenses which eroded short term profitability In addition, while
we believe that we will continue to incur costs and expenses
related to the Arrangement, certain of the expenses incurred during
the third quarter are one-time expenses and will not continue
beyond the fourth quarter of the current fiscal year. Moreover, our
decrease in net income over the prior fiscal year was primarily
caused by the one-time increases in selling, general and
administrative costs, and we believe does not fully reflect our
ongoing operating performance. We believe that if we continue to
implement those key components of our business plan that focus on
improving production efficiencies and controlling production costs,
we should remain profitable during the remainder of fiscal year
2010 even if our sales continue to decrease." Additional
Information and Where to Find It As more fully described in the
Company's Current Report on Form 8-K filed December 15, 2009, the
Company plans to file with the US Securities and Exchange
Commission (the "SEC"), and furnish to its shareholders a proxy
statement in connection with the proposed arrangement. The proxy
statement will contain important information about the proposed
arrangement and related matters. INVESTORS AND SHAREHOLDERS ARE
URGED TO READ THE PROXY STATEMENT CAREFULLY WHEN IT BECOMES
AVAILABLE. Investors and shareholders will be able to obtain free
copies of the proxy statement and other documents filed with the
SEC by IAX through the web site maintained by the SEC at
http://www.sec.gov/. In addition, investors and shareholders will
be able to obtain free copies of the proxy statement from IAX by
contacting David Thompson, Corporate Secretary, by telephone at
(604) 681-6181, or by mail at International Absorbents Inc.,
Investor Relations, 1569 Dempsey Road, North Vancouver, British
Columbia V7K 1S8 Canada. IAX and its directors and executive
officers may be deemed to be participants in the solicitation of
proxies from IAX shareholders in connection with the proposed
arrangement. Information regarding the interests of these directors
and executive officers in the transaction will be included in the
proxy statement described above. Additional information regarding
these directors and executive officers is also included in IAX's
proxy statement for its 2009 Annual Meeting of Shareholders, which
was filed with the SEC on May 18, 2009. This document is available
free of charge at the SEC's web site at http://www.sec.gov/, and
from IAX by contacting David Thompson, Corporate Secretary, by
telephone at (604) 681-6181, or by mail at International Absorbents
Inc., Investor Relations, 1569 Dempsey Road, North Vancouver,
British Columbia V7K 1S8 Canada, or by going to IAX's Proxy
Materials page on its corporate web site at
http://www.absorbent.com/. About International Absorbents
International Absorbents Inc. develops, manufactures and markets
patented and proprietary, cost effective consumer and commercial
products derived from recycled, renewable materials. These
environmentally safe products outperform conventional products used
in a broad range of consumer and industrial applications, including
retail/commercial pet bedding and litter, oil and hazardous liquid
spill cleanup and control, oil/water filtration, and packaging.
Further information is available at http://www.absorbent.com/.
FINANCIAL HIGHLIGHTS 3 Months Ended 9 Months Ended Oct. 31, Oct.
31, 2009 2008 2009 2008 ---- ---- ---- ---- Sales, net $8,358,000
$9,603,000 $26,094,000 $27,362,000 Gross profit 2,784,000 3,251,000
9,280,000 8,563,000 Net income before taxes 363,000 1,197,000
2,496,000 2,751,000 Net income 36,000 836,000 1,369,000 1,741,000
Basic earnings per share 0.01 0.13 0.21 0.27 Weighted average
shares (basic) 6,410,000 6,410,000 6,410,000 6,410,000 As at As at
Oct. 31, Jan. 31, 2009 2009 ---- ---- Total assets $32,631,000
$31,281,000 Stockholders' equity 22,068,000 20,386,000 Contact:
Charles (Chuck) Tait International Absorbents Inc. Toll Free:
866-514-6559 or 604-681-6181 Cautionary Statement Regarding
Forward-Looking Statements A number of the matters discussed in
this press release that are not historical or current facts that
deal with potential future circumstances and developments,
including, without limitation, statements referring to the
potential impact on the Company of the economic downturn; the
Company's ability to reduce costs, increase efficiencies, improve
profitability and execute on its future growth strategies;
potential financial results; forecasted benefits from
infrastructure improvements; the Company's competitiveness and
profitability as a result of new sales and marketing programs; and
the Company's ability to consummate the proposed Arrangement, are
forward-looking statements. The words "believe," "expect,"
"intend," "estimate," "assume" and "anticipate," variations of such
words and similar expressions identify forward-looking statements,
but their absence does not mean that a statement is not
forward-looking. The discussion of such matters is qualified by the
inherent risks and uncertainties surrounding future expectations
generally, and it is important to note that actual results could
differ materially from those projected due to various risk factors.
Those risks include, but are not limited to, the effect on the
Company of the ongoing global economic downturn, any potential
decrease or change in consumer spending, the potential impact on
the Company of any increases in energy and transportation costs,
the performance of the Company's manufacturing facilities,
competitor reactions and their ability to market and price their
products, the availability of sources of raw materials to meet
demand rates necessary to sustain growth, and the risk that the
Arrangement does not close or that the closing is delayed.
Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking
statements is contained from time to time in the Company's reports
filed with the SEC, including, but not limited to, the Company's
annual report on Form 10-K for the fiscal year ended January 31,
2009 and its quarterly reports on Form 10-Q. This press release
speaks only as of its date, and the Company disclaims any duty to
update the information herein. DATASOURCE: International Absorbents
Inc. CONTACT: Charles (Chuck) Tait, International Absorbents Inc.,
Toll Free:1-866-514-6559 or +1-604-681-6181, Web Site:
http://www.internationalabsorbents.com/
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