Sales for the 4th quarter and the year were $7,326,000 and $23,197,000 higher than for the same periods in 1999, reflecting increased shipments to US and off-shore customers offset by a slight decline in Canadian shipments. Gross margin percentages slipped by 1% to approximately 25.6%. Selling, general and administration expenses as a percentage of sales were slightly higher due to increased variable selling expenses. Net earnings for the year to date were lower by $2,294,000 as a result of the higher selling and administration expenses and the provision for reorganization costs of $1.5 million (approximately .09 per share).

Cash flow used in operations was $717,000 mainly due to increased working capital requirements of $3,772,000. Accounts receivable were $7,583,000 higher than at December 31, 1999 primarily due to increased export business. Inventories also increased by $4,244,000. The impact of higher accounts receivable and inventories was partially offset by higher accounts payable of $6,621,000.

The Corporate re-organization was implemented on January 1, 2001. As a consequence, Hammond Power Solutions was created as a separate, publicly-traded company. HPS is a leading North American manufacturer of engineered electrical magnetics and trades under the symbol of HPS.A on the Toronto Stock Exchange.

Robert F. Hammond, Chairman and CEO
Tel: (519) 822.2960
Fax: (519) 822.8987
Email: [email protected]