Cereplast Announces Third Quarter 2012 Financial Results EL SEGUNDO, Calif., Nov. 14, 2012 (GLOBE NEWSWIRE) -- Cereplast, Inc. (Nasdaq:CERP), a leading manufacturer of proprietary biobased, sustainable bioplastics, today announced its financial results for the third quarter ended September 30, 2012. Mr. Frederic Scheer, Chairman and Chief Executive Officer of Cereplast, stated, "Thus far in 2012 we have focused on several areas which have resulted in the achievement of key milestones, new product launches and important strategic relationships. Since the opening of our offices with a dedicated team in India, we have begun selling our Cereplast Hybrid Resins® product line in this emerging marketplace, which is the world's third largest consumer of polymers. The Cereplast Hybrid Resins® products are being tested with a large polymer converter for other applications and are part of the unsold inventory we recouped from our European clients. We continue to move our relationship with A.R.M.Y. forward, which has resulted in the introduction of key strategic relationships including the engineering and marketing team of Tirumala Thirupathi Devastanam, an independent trust to the largest shrine in the world. Our Cereplast Compostables® resins are being tested on 25,000 bags for their expected use by millions of annual visitors to their shrine. Lastly, the Italian government has moved toward reinstating legislation to ban non-compostable resins. Several large supermarket chains have expressed an interest in testing our products, while multiple product lines are currently in progress. As we work diligently towards transforming these opportunities into revenue, we will continue managing our cash flow accordingly." Mr. Scheer continued, "Heading into 2013 we are refining our strategy to ensure we give ourselves the greatest opportunity for revenue growth. The experience we have gained through our recent history of operating within the bioplastics industry has allowed us to understand what the market demands; we therefore find it more important to target specific applications rather than the broader approach we have taken in the past. We believe that by tailoring our offerings specifically for the customer's product application, the adoption of our product will become greater. With the plan I just described I want to reassure our shareholders that Cereplast's management team is focused and working very hard every day to ensure that we will prevail over our challenging environment." Operational Highlights: oCereplast has begun to sell its first Cereplast Hybrid Resins® application in India. This milestone follows the Company's opening of a corporate office in India to service its partners in South Asia and the appointment of a Technical Services Engineer to provide on-site services. Management visited India several times to assist with the marketing launch of our resin. oThe same Cereplast Hybrid Resins® grade utilized for the safety helmet application was qualified by a large converter of S-B Polymers to make bioplastic buckets. This potential customer is one of three dedicated converters who manufacture buckets for a large consumer products company in India. This relationship has a projected demand of several thousand tons per month. oEach of these opportunities in India would allow us to monetize the inventory recouped from our European customers. oA.R.M.Y. made a formal presentation of Cereplast's Compostable 3002 resin to the engineering and marketing departments of "Tirumala Thirupathi Devastanam," an independent trust which manages the Tirumala Venkateswara Temple, the largest shrine in the world. The presentation resulted in the commercial test of 25,000 bags over a 60 day period to test strength and reception of the product. oThe Italian government has reinstated legislation calling for the ban of non-compostable resins. Management believes this legislation will be implemented by the end of 2012. oSeveral large supermarket chains have expressed an interest in Cereplast Compostables® resins for bags and orders have been made to test the product. oCereplast successfully tested their Hybrid 101 product for fruit and vegetable shipping baskets. The addressable market for this application is several thousand tons per month. oCereplast Hybrid 651D wins MATERIALICA Design + Technology 2012 silver award for outstanding innovation in the "Material" category. 2012 Third Quarter and First Nine Months Financial Results: Net sales for the three months ended September 30, 2012 were approximately $477,000, compared to $5.4 million for the same period in 2011. Net sales for the first nine months of 2012 were approximately $0.8 million, compared to $20.2 million in the same period in 2011. The decrease in sales was due to transitioning significant resources and efforts toward recovery of past due accounts receivables from customers and minimizing any additional exposure to our accounts receivable credit risk. Our current period sales were primarily prepaid shipments of sample materials and nominal shipments to established existing customers with low risk credit limits. Cost of sales for the three months ended September 30, 2012 were approximately $910,000, compared to $4.5 million for the same period in 2011. Costs of sales for the first nine months of 2012 were approximately $2.1 million, compared to $17.7 million for the same period in 2011. The decline in cost of sales is due to our lower variable manufacturing costs from our reduced sales volumes and reduction in manufacturing overhead through reduced supplies and headcount. Research and development expenses for the three months ended September 30, 2012 were approximately $115,000, compared to $280,000 for the same period in 2011.Research and development expenses for the first nine months of 2012 were $0.4 million, compared to approximately $0.8 million for the same period in 2011. Our decrease in research and development expenses was primarily attributable to lower outside services costs related to our current projects. Selling, general and administrative expenses for the three months ended September 30, 2012 were approximately $6.4 million, compared to $3.7 million for the same period in 2011.Selling, general and administrative expenses for the first nine months of 2012 were $9.3 million, compared to $8.5 million for the same period in 2011.Our increase in sales, general and administrative expenses was primarily due to an increase in our allowance for doubtful accounts of $4.8 million during the third quarter of 2012, offset by reduced headcount and variable sales and marketing expenses due to lower sales volume in the current year. Other income and expense, net for the three months ended September 30, 2012 was approximately 3.0 million, compared to $0.5 million for the same period in 2011.Other income and expense, net for the first nine months of 2012 was $5.2 million, as compared to $1.0 million in the same period in 2011. The increase was primarily related to additional interest expense related to the issuance of our convertible debentures in May 2011, the impact from our Forbearance and Exchange Agreement with certain holders of our convertible debentures and the change in our derivative liability related to our warrants. On the balance sheet, the Company had approximately $237,000 in cash and $7.3 million in accounts receivable, net of allowance for doubtful accounts.Current assets and total assets were $14.1 million and $25.5 million respectively.Current liabilities and total liabilities were $9.0 million and $22.1 million respectively. Total shareholders' equity was $3.3 million as of September 30, 2012, with approximately 29 million shares of common stock issued and outstanding. Conference Call Details: Date: Wednesday, November 14, 2012 Time: 4:30 p.m. EST Dial-In: (877) 312-5508 International Dial-In: (253) 237-1135 Live Webcast: http://investor.cereplast.com/events.cfm A live webcast and archive of the call will also be available on the Investor Relations section of Cereplast's website at www.cereplast.com. If you are unable to participate on the call at this time, a telephonic replay will be available for three days starting two hours after the conclusion of the call. To access the telephonic replay, dial 855-859-2056, international callers dial 404-537-3406, and enter the Conference ID 64671679. About Cereplast, Inc. Cereplast, Inc. (Nasdaq:CERP) designs and manufactures proprietary biobased, sustainable bioplastics which are used as substitutes for traditional plastics in all major converting processes−such as injection molding, thermoforming, blow molding and extrusions−at a pricing structure that is competitive with traditional plastics. On the cutting-edge of biobased plastic material development, Cereplast now offers resins to meet a variety of customer demands. Cereplast Compostables® resins are ideally suited for single-use applications where high biobased content and compostability are advantageous, especially in the food service industry. Cereplast Sustainables® resins combine high biobased content with the durability and endurance of traditional plastic, making them ideal for applications in industries such as automotive, consumer electronics and packaging. Learn more at www.cereplast.com. You may also visit the Cereplast social networking pages at Facebook.com/Cereplast, Twitter.com/Cereplast and Youtube.com/Cereplastinc. The Cereplast, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9567 Safe Harbor Statement Matters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, product, and distributor performance, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company. CEREPLAST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data) Three Months Ended Nine Months Ended September September September September 30,2012 30,2011 30,2012 30,2011 Gross Product Sales $481 $5,414 $786 $20,849 Sales Discounts, Returns and (4) (45) (16) (628) Allowances Net Sales 477 5,369 770 20,221 Cost of Goods Sold 910 4,475 2,093 17,701 Gross Profit (Loss) (433) 894 (1,323) 2,520 Operating Expenses: Research and Development 115 280 371 789 Selling, General and 6,410 3,689 9,286 8,457 Administrative Total Operating Expenses 6,525 3,969 9,657 9,246 Operating Loss (6,958) (3,075) (10,980) (6,726) Debt Extinguishment Costs — — (427) — Loss on Derivative Liability 47 — (52) — Interest and Other Income — — 18 — Interest Expense (3,057) (513) (4,834) (999) Loss Before Provision for Income (9,968) (3,588) (16,275) (7,725) Taxes Provision for Income Taxes — — — — Net Loss $(9,968) $(3,588) $(16,275) $(7,725) Net Loss Per Share—Basic and $(0.40) $(0.23) $(0.77) $(0.50) Diluted Weighted Average Common Shares 24,739,449 15,777,793 21,242,115 15,470,324 Outstanding—Basic and Diluted CEREPLAST, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except shares data) September 30,2012 December31,2011 (Unaudited) ASSETS Current Assets Cash $237 $3,940 Accounts Receivable, Net 7,293 14,744 Inventory, Net 5,424 4,406 Prepaid Expenses and Other Current 1,136 966 Assets Total Current Assets 14,090 24,056 Property and Equipment Property and Equipment 13,836 13,752 Accumulated Depreciation and (3,668) (3,151) Amortization Property and Equipment, Net 10,168 10,601 Other Assets Restricted Cash 43 43 Deferred Loan Costs 867 1,321 Intangible Assets, Net 248 183 Deposits 47 47 Total Other Assets 1,205 1,594 Total Assets $25,463 $36,251 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $1,134 $1,813 Accrued Expenses 3,049 2,760 Capital Leases, Current Portion 77 73 Loan Payable, Current Portion 4,023 1,855 Convertible Subordinated Notes, Current 357 — Portion Derivative Liability 344 — Total Current Liabilities 8,984 6,501 Long-Term Liabilities Loan Payable 4,423 7,307 Convertible Subordinated Notes 8,532 12,500 Capital Leases, Long-Term 191 245 Total Long-Term Liabilities 13,146 20,052 Total Liabilities 22,130 26,553 Shareholders' Equity Preferred Stock, $0.001 par value; 5,000,000 shares authorized; 73 and 0 shares issued and outstanding at — — September 30, 2012 and December 31, 2011, respectively Common Stock, $0.001 par value; 495,000,000 shares authorized; 28,989,829 and 18,933,139 shares issued and 29 19 outstanding at September30, 2012 and December31, 2011, respectively Additional Paid in Capital 76,398 66,524 Accumulated Deficit (73,210) (56,935) Accumulated Other Comprehensive Income 112 86 3,329 9,694 Noncontrolling Interests 4 4 Total Equity 3,333 9,698 Total Liabilities and Shareholders' $25,463 $36,251 Equity CEREPLAST, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands, except shares data) Nine Months Ended September 30,2012 September 30,2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(16,275) $(7,725) Adjustment to Reconcile Net Loss to Net Cash Used in Operating Activities Depreciation and Amortization 536 694 Allowance for Doubtful Accounts 5,082 1,780 Common Stock Issued for Services, 160 874 Salaries and Wages Amortization of Loan Discount 3,223 57 Impairment of Intangible Assets — 64 Extinguishment of Convertible Debt 368 — Loss on Derivative Liability 52 — Changes in Operating Assets and Liabilities Accounts Receivable 537 (15,609) Deferred Loan Costs 458 223 Inventory 814 (2,095) Deposits — (35) Prepaid Expenses (171) (1,514) Accounts Payable 659 269 Accrued Expenses 288 864 NET CASH USED IN OPERATING ACTIVITIES (4,269) (22,153) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Property and Equipment, (180) (1,290) and Intangibles Proceeds from Sale of Equipment 15 — NET CASH USED IN INVESTING ACTIVITIES (165) (1,290 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on Capital Leases (50) (13) Proceeds from Capital Leases — 96 Noncontrolling Interest Activities — 4 Payments made on Notes Payable (603) — Proceeds from Loan Payable, Net of — 2,500 Loan Costs Proceeds from Convertible Notes, Net 600 11,225 of Issuance Costs Proceeds from Issuance of Common Stock and Subscriptions, Net of Issuance 400 11,363 Costs Proceeds from Issuance of Preferred 400 — Stock, Net of Issuance Costs NET CASH (USED) PROVIDED BY FINANCING 747 25,175 ACTIVITIES FOREIGN CURRENCY TRANSLATION (15) (93) NET INCREASE (DECREASE) IN CASH (3,702) 1,639 CASH, BEGINNING OF PERIOD 3,940 2,391 CASH, END OF PERIOD $237 $4,030 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash Paid During the Year For: Interest $460 $417 Income Taxes $— $— SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS CONTACT: Cereplast, Inc. Public Relations Nicole Robertson (310) 615-1900 x154 firstname.lastname@example.org Investor Relations: Alliance Advisors, LLC Alan Sheinwald 914-669-0222 email@example.com www.AllianceAdvisors.net Cereplast, Inc. Logo
Cereplast Announces Third Quarter 2012 Financial Results
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