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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 27, 1998
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KYZEN CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
UTAH 0-26434 87-0475115
(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification
Incorporation) Number)
430 HARDING INDUSTRIAL DRIVE, NASHVILLE, TENNESSEE 37211
(Address of Principal Executive Offices) (Zip Code)
(615) 831-0888
(Registrant's Telephone Number, including Area Code)
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ITEM 5. OTHER EVENTS AND INFORMATION.
On January 27, 1998, Kyzen Corporation issued the press release
attached hereto as Exhibit 99.1 with respect to fourth quarter and year end 1997
financial results, adjustments to previous periods in 1997 and the resignation
of a corporate officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
Exhibit No. Description
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99.1 Press Release, dated January 27, 1998
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KYZEN CORPORATION
By: /s/ Thomas M. Forsythe
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Thomas M. Forsythe
Vice President and Treasurer
(Chief Financial Officer)
Date: January 28, 1998
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release, dated January 27, 1998
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KYZEN REPORTS FOURTH QUARTER, YEAR END RESULTS
Page 1-1-1
FOR RELEASE JANUARY 27, 1998
Contact: Jack Davis (investor relations) 501-376-0044
Owen Daley (media)
Allen & Caron 714/252-8440
KYZEN CORPORATION REPORTS
FOURTH QUARTER AND YEAR END RESULTS;
ADJUSTMENTS TO PREVIOUS PERIODS IN 1997;
RESIGNATION OF CORPORATE OFFICER
Nashville, TN (January 27, 1998) Kyzen Corporation (Nasdaq:KYZN), a leading
provider of CFC-free cleaning solutions and processes for technologically
advanced cleaning applications, today announced results for its fourth quarter
and year ended December 31, 1997. For the year 1997, overall revenue grew 10
percent to $5.5 million, compared to overall revenue for the year 1996 of $5.0
million. The net loss for 1997 narrowed approximately 24 percent to $572,008 or
a $0.11 loss per share compared to a loss of $756,620, or $0.15 loss per share
for 1996. The overall growth in revenue reflects the increase in higher-margin
chemical sales offset partially by the planned decrease in chemical processing
equipment sales in 1997 versus 1996. Revenue from the sale of chemicals, the
Company's main product line, for 1997 increased approximately 20 percent
compared to last year's chemical revenue.
Overall revenue for the fourth quarter of 1997 was flat at $1.4 million
compared to the fourth quarter of the prior year. The net loss for the fourth
quarter was $163,745 or a $0.03 loss per share, compared to a net loss of
$189,610 or a $0.04 loss per share for the fourth quarter of 1996. Quarterly
revenues from the sale of the Company's strategically important chemical
products grew by 21 percent over last year's fourth quarter. This increase in
chemical sales was mostly offset by much lower equipment revenue.
The Company also announced today of management's decision to restate
the previously announced first, second and third quarter 1997 earnings based on
adjustments identified in its year-end closing process. The total adjustment for
these three quarters was approximately $124,315 or $0.02 per share. According to
Kyzen
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KYZEN REPORTS FOURTH QUARTER, YEAR END RESULTS
Page 2-2-2
President and CEO Kyle J. Doyel, the adjustments consisted of multiple items
that individually would not be material, but in the aggregate necessitated
management's decision to restate the Company's earnings. The adjustments
involved clearing accounts, asset capitalization accounts, and other year-end
adjustments of expenses. The Company has taken steps to prevent the need for
such adjustments in the future.
As a result of these adjustments, the Company will amend its Forms 10-Q
to restate its results for the first quarter ended March 31, 1997, the second
quarter ended June 30, 1997 and the third quarter ended September 30, 1997. The
effects on quarterly net income are $28,238, $52,920, and $43,157, respectively,
for the first three quarters of 1997. No prior year results were effected.
Adjusted earnings per share for the first quarter of 1997 remain the same at a
net loss of $0.05 per share; the adjusted loss for the second quarter of 1997 is
$0.03 per share versus the previously stated loss of $0.02 per share; and for
the third quarter of 1997, the adjustments resulted in no earnings per share
versus previously reported net income of $0.01 per share.
Doyel commented, "The results of our continued focus on our profitable
chemical product lines have been successful, yielding a 20 percent increase in
that business for the year. Our lower revenues this year in equipment was
expected as we focus on building smaller, less expensive, more profitable
products such as our process control systems (PCS).
"Our focus has been, and continues to be, on becoming profitable,"
Doyel continued. "Overall we made some headway on bottom line improvement in
1997. We limited total expenses in 1997 to a modest increase over 1996, yet we
redirected expenditures to revenue enhancing activities, as demonstrated by our
double digit increase in sales and marketing expenses over last year.
Conversely, our annual expenses in R&D and G&A for 1997 decreased markedly from
fiscal year 1996," he said.
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KYZEN REPORTS FOURTH QUARTER, YEAR END RESULTS
Page 3-3-3
Doyel added, "Our chemicals segment continued to be the major profit
contributor during the year with gross profit margins remaining at strong
historical levels. Sales of our patented chemistry continue to grow, with most
of the increases this year coming from the existing core markets of electronics
and metal cleaning applications. The exciting part of where we are today is that
we have a number of major projects we expect to go on-line that we hope will be
large contributors of revenue in 1998. These projects have passed technical
qualification for production use, however, we continue to be slowed with our
sales until we get the final go-ahead from our customers."
The Company also announced that Benjamin D. Wolfley, 37, Vice
President-Finance, Treasurer and Secretary, has resigned his employment from the
Company effective January 26, 1998. Thomas M. Forsythe, 40, Vice President and
Director, was named by the Board of Directors to serve as Treasurer and Chief
Accounting Officer, and Thomas J. Herrmann, 40, Vice President, was named by the
Board to serve as Corporate Secretary of the Company.
The Company's balance sheet at December 31, 1997 remained strong with a
current ratio of 2.7:1, total assets of $3.2 million, working capital of $1.3
million, cash and equivalent $0.7 million and shareholders' equity of $2.4
million.
Kyzen Corporation is a specialty chemical company focused on CFC-
replacement chemistries and processes for electronic and other high technology
industries where precision cleaning processes are required.
The statements in this press release that relate to future plans, events or
performance are forward-looking statements that involve risks and uncertainties.
Among the factors that can could cause actual results to differ materially from
those projected are the following: business conditions and the general economy
as they affect interest rates; business conditions as they affect manufacturers
of chemical raw materials; the federal, state and local regulatory environment;
availability of debt and equity capital with favorable terms and conditions;
availability of new expansion and acquisition opportunities; changes in the
financial condition or corporate strategy of the Company's primary customers;
and the ability of the Company to develop new competitive product lines. Actual
results, events and performance may differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to release publicly the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
TABLE FOLLOWS
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KYZEN REPORTS FOURTH QUARTER, YEAR END RESULTS
Page 4-4-4
KYZEN CORPORATION
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
NET SALES $ 1,393,530 $ 1,391,869 $ 5,459,846 $ 4,959,002
Cost of sales 726,110 800,853 2,684,130 2,608,221
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Gross profit 667,420 591,016 2,775,716 2,350,781
OPERATING COSTS AND EXPENSES:
Selling, general and administrative expenses 741,831 687,036 2,961,009 2,640,983
Research and development expenses 109,145 129,467 461,470 576,308
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TOTAL OPERATING EXPENSES 850,976 816,503 3,422,479 3,217,291
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OPERATING INCOME (LOSS) (183,556) (225,487) (646,763) (866,510)
Other income (expense):
Interest income 20,123 36,179 83,222 126,481
Interest expense (312) (302) (8,467) (16,591)
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TOTAL OTHER INCOME (EXPENSE) 19,811 35,877 74,755 109,890
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NET INCOME (LOSS) ($ 163,745) ($ 189,610) ($ 572,008) ($ 756,620)
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Net income (loss) per Class A Common Share ($ 0.03) ($ 0.04) ($ 0.11) ($ 0.15)
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Weighted average shares outstanding 5,006,681 4,999,848 5,005,081 4,964,549
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</TABLE>
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