Northern Technologies International Corporation Reports Record Sales for Fiscal 2012

Northern Technologies International Corporation Reports Record Sales for
Fiscal 2012

MINNEAPOLIS, Nov. 20, 2012 (GLOBE NEWSWIRE) -- Northern Technologies
International Corporation (Nasdaq:NTIC) today reported its financial results
for fiscal 2012. Highlights of NTIC's financial and operating results include:

  *NTIC's consolidated net sales increased 16.7% during the fiscal 2012
    compared to fiscal 2011. This increase was primarily a result of increased
    sales made by Zerust Brazil and increased sales of Natur-Tec^® products
    and ZERUST^® rust and corrosion inhibiting packaging products and
    services.
    
  *Net sales of Natur-Tec^® products increased 84.0% during fiscal 2012
    compared to fiscal 2011.
    
  *NTIC's consolidated net sales for fiscal 2012 included $4,543,982 of sales
    made by Zerust Brazil, and of those sales, $2,466,000 in sales were made
    to the oil and gas industry sector in Brazil. 
    
  *During fiscal 2010, Zerust Brazil received a Phase 1 contract for an
    initial implementation of $1.4 million (BRL$ 2.5 million) in ZERUST^®
    products which was delivered in fiscal 2010 and fiscal 2011.During fiscal
    2011, Zerust Brazil signed a Phase 2 contract with Petroleo Brasileiro
    S.A. (Petrobras) to supply $2.4 million (BRL$ 4.21 million) in ZERUST®
    products.During fiscal 2012, Petrobras expanded this Phase 2 contract to
    supply an additional $657,000 (BRL$ 1.15 million) in ZERUST® products,
    bringing the total Phase 2 contract value to $3.1 million (BRL$ 5.36
    million) in ZERUST® products.During early fiscal 2013, Zerust Brazil
    signed a Phase 3 contract with Petrobras to supply $3.7 million (BRL$ 7.5
    million) in ZERUST^® products.
    
  *Income provided by NTIC's joint venture operations decreased 13.1% or
    $1,523,515 to $10,142,707 for fiscal 2012, compared to $11,666,222 for the
    same respective prior fiscal year periods.These decreases were due in
    part to a 6.2% decrease in total net sales of NTIC's joint ventures to
    $111,830,961 during fiscal 2012 compared to $119,276,553 for fiscal 2011
    and a $452,500 loss associated with the disposal of the Polymer Energy
    facility in India.
    
  *Net income attributable to NTIC decreased 11.6% to $3,448,196, or $0.78
    per diluted common share, for fiscal 2012 compared to $3,900,120, or $0.89
    per diluted common share, for fiscal 2011.

"The March 2012 delivery of over $3 million in ZERUST^® products to Petrobras
represented the single largest delivery to a customer in NTIC's history, and
given the $3.7 million Phase 3 contract entered into in October 2013 we are
confident of the expansion of ZERUST^® technologies at Petrobras in the
future. Furthermore, in addition to this continued success in Brazil, after
winning two technology innovation awards from NACE, we are seeing increased
interest in our storage tank protection and long-term preservation solutions
in the United States. At the same time, we are pleased with the healthy sales
growth of ZERUST^® products in North America during fiscal 2012 compared to
fiscal 2011.Strong sales and earnings growth of industrial ZERUST^® products
from other regions, however, have eluded us as the ongoing sovereign debt
crises in various European countries have adversely affected the European
economies and the value of the EURO and the currency values of other key
supplier countries like China and India. We are being exceptionally cautious
as we watch for firm signs of industrial recovery in Europe and worldwide."
said G. Patrick Lynch, President and Chief Executive Officer of NTIC.

During fiscal 2012, 92% of NTIC's consolidated net sales were derived from
sales of ZERUST^® products and services, which increased 13.1% to $20,971,275
during fiscal 2012 compared to $18,542,523 during fiscal 2011 due to increased
demand from existing customers and the addition of new customers.

7.9% of NTIC's consolidated net sales were derived from sales of Natur-Tec^®
products compared to 5.0% during fiscal 2011.Net sales of Natur-Tec^®
products increased 84.0% during fiscal 2012 compared to fiscal 2011.This
increase was due to increased sales to Natur-Tec^® distributors in the United
States.

"We have continued to see tremendous opportunities for finished bioplastic
products and have continued to strengthen and expand our North American
distribution network for finished Natur-Tec® bioplastic products. At the same
time, an iconic U.S. brand has continued to expand the implementation of
Natur-Tec® bioplastic packaging across more segments of their supply chain as
they source finished products from India and other countries in south Asia.
Furthermore, while the Italian government has delayed the broader enforcement
of its ban on non-biodegradable plastic supermarket bags until the end of
2012, based upon recent market feedback and the receipt of an initial volume
order, we remain optimistic about this region and still expect sales to this
region to increase starting in second quarter of fiscal 2013," said G. Patrick
Lynch, President and Chief Executive Officer of NTIC. 

NTIC's equity in income of joint ventures decreased 0.3% to $5,519,795 during
fiscal 2012 compared to $5,536,243 during fiscal 2011. During fiscal 2012, the
shareholders of NTIC's joint venture in India, Harita NTI Limited, waived past
due fees for services from both fiscal 2011 and fiscal 2012 in the aggregate
amount of $985,204.Since the waiver of fees was taken by all shareholders
mutually, such action did not directly impact the earnings of either NTIC or
HNTI.However, as a result of such action, NTIC recognized a reversal of fees
for services provided to joint ventures of $492,602 and a corresponding
increase in equity in income of joint ventures during fiscal 2012.The primary
purpose of the waiver of fees was to strengthen HNTI's working capital going
forward.In addition, in fiscal 2012, HNTI experienced write downs of an
aggregate of $905,000 related to the write down to market value of a Polymer
Energy unit that HNTI was previously attempting to sell.As a result, during
fiscal 2012, NTIC absorbed 50% of this loss and, accordingly, recognized a
decrease in equity in income of $452,500 during fiscal 2012.

NTIC recognized a 24.6% decrease in fees for services provided to joint
ventures during fiscal 2012 compared to fiscal 2011.This decrease was
primarily a result of the waiver of fees by the shareholders of HNTI as
described previously and a 6.2% decrease in total net sales of NTIC's joint
ventures to $111,830,961 during fiscal 2012 compared to $119,276,553 for
fiscal 2011.Total net sales of NTIC's joint ventures were adversely affected
in part by the European sovereign debt crises, which NTIC believes adversely
affected the net sales of NTIC's European joint ventures as well as certain of
NTIC's other non-European joint ventures, and the weakening of the EURO and
other currencies compared to the U.S. dollar.

NTIC's total operating expenses increased slightly 0.2% or $27,134 to
$13,825,806 during fiscal 2012 compared to $13,798,672 for fiscal 2011
primarily as a result of an increase in selling expenses, general and
administrative expenses and expenses incurred in support of joint ventures,
partially offset by decreases in research and development expenses, and
reflected NTIC's efforts to hold expenses stable given the uncertainties in
the global economy.

NTIC expenses all costs related to product research and development as
incurred. NTIC incurred $3,875,581 and $4,364,109 of expense during fiscal
2012 and 2011, respectively, in connection with its research and development
activities. These represent net amounts after being reduced by reimbursements
related to certain research and development contracts.Such reimbursements
totaled $365,940 and $219,175 for fiscal 2012 and fiscal 2011,
respectively.NTIC anticipates that it will spend between $3,500,000 and
$3,800,000 in total during fiscal 2013 on research and development activities
related to its new technologies.This estimate is a net range after being
reduced by anticipated reimbursements related to certain research and
development contracts.

Net income attributable to NTIC decreased 11.6% to $3,448,196, or $0.78 per
diluted common share, for fiscal 2012 compared to $3,900,120, or $0.89 per
diluted common share, for fiscal 2011.This decrease was primarily the result
of a decrease in income from NTIC's joint ventures, partially offset by
increased sales and earnings of NTIC's North American businesses as well as an
increase in sales and earnings of NTIC's subsidiary in Brazil .NTIC
anticipates that its quarterly net income will remain subject to significant
volatility primarily due to the financial performance of its joint ventures
and sales of its ZERUST^® products and services into the oil and gas industry
and Natur-Tec^® bioplastics products, which sales fluctuate more on a
quarterly basis than the traditional ZERUST^® business

NTIC's working capital was $10,546,163 as of August 31, 2012, including
$4,137,547 in cash and cash equivalents compared to $9,085,748 as of August
31, 2011, including $3,266,362 in cash and cash equivalents.With respect to
NTIC's joint venture operations, dividends received from joint ventures are
reflected in NTIC's cash flows from investing activities and not cash flows
from operating activities.Accordingly, NTIC's cash flows from investing
activities are typically positive while its cash flows from operating
activities are typically negative.Of the $1,351,468 of net cash provided by
investing activities during fiscal 2012, $3,060,545 was from dividends
received from joint ventures.

Outlook

For the fiscal year ending August 31, 2013, NTIC expects its net sales to
range between $27.0 million and $28 million, inclusive of sales made by NTIC's
majority-owned subsidiary in Brazil, and expects net income of between $4.4
million to $4.7 million, or between $1.00 and $1.05 per diluted share.

Conference Call and Webcast

NTIC will host a conference call today at 8:00 a.m. Central Standard Time to
review its results of operations for fiscal 2012 and future outlook, followed
by a question and answer session. The conference call will be available to
interested parties through a live audio webcast available through NTIC's
website at www.ntic.com or http://ir.ntic.com/events.cfm where the webcast
will be archived and accessible for at least 12 months.The dial-in number for
the conference call is (877) 670-9779 and the confirmation code is 70267468.

About Northern Technologies International Corporation

Northern Technologies International Corporation develops and markets
proprietary environmentally beneficial products and services in over 55
countries either directly or via a network of joint ventures, independent
distributors and agents.NTIC's primary business is corrosion prevention
marketed primarily under the ZERUST® brand. NTIC has been selling its
proprietary ZERUST® rust and corrosion inhibiting products and services to the
automotive, electronics, electrical, mechanical, military and retail consumer
markets, for over 35 years, and in recent years has targeted and expanded into
the oil and gas industry. NTIC offers worldwide on-site technical consulting
for rust and corrosion prevention issues.NTIC's technical service consultants
work directly with the end users of NTIC's products to analyze their specific
needs and develop systems to meet their technical requirements. NTIC also
markets and sells a portfolio of bio-based and biodegradable polymer resin
compounds and finished products marketed under the Natur-Tec® brand.

The Northern Technologies International Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5481

Forward-Looking Statements

Statements contained in this press release that are not historical information
are forward-looking statements as defined within the Private Securities
Litigation Reform Act of 1995. Such statements include NTIC's expectations
regarding its future financial performance and other statements that can be
identified by words such as "believes," "anticipates," "expects," "intends,"
"continue," "potential," "outlook," "will," "would," "should" or words of
similar meaning, the use of future date and any other statements that are not
historical facts. Such forward-looking statements are based upon the current
beliefs and expectations of NTIC's management and are inherently subject to
risks and uncertainties that could cause actual results to differ materially
from those projected or implied.Such potential risks and uncertainties
include, but are not limited to, in no particular order: NTIC's dependence on
the success of its joint ventures and fees and dividend distributions that
NTIC receives from them; NTIC's relationships with its joint ventures and its
ability to maintain those relationships; risks related to the European
sovereign debt crisis and the related economic and political unrest in Europe;
risks associated with NTIC's international operations; exposure to
fluctuations in foreign currency exchange rates; the health of the U.S. and
worldwide economies, including in particular the U.S. automotive industry; the
level of growth in NTIC's markets; NTIC's investments in research and
development efforts; acceptance of existing and new products; increased
competition; the costs and effects of complying with changes in tax, fiscal,
government and other regulatory policies, including rules relating to
environmental, health and safety matters; and NTIC's reliance on its
intellectual property rights and the absence of infringement of the
intellectual property rights of others. More detailed information on these and
additional factors which could affect NTIC's operating and financial results
is described in the company's filings with the Securities and Exchange
Commission, including its most recent annual report on Form 10-K and
subsequent quarterly reports on Form 10-Q. NTIC urges all interested parties
to read these reports to gain a better understanding of the many business and
other risks that the company faces. Additionally, NTIC undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements, which may be made to reflect events or
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - AUGUST 31, 2012 AND 2011

                                              August 31, 2012 August 31, 2011
ASSETS                                                        
CURRENT ASSETS:                                               
Cash and cash equivalents                      $ 4,137,547     $ 3,266,362
Receivables:                                                  
Trade excluding joint ventures, less allowance
for doubtful accounts of $20,000 at August 31, 2,516,961       2,515,316
2012 and 2011
Trade joint ventures                           734,543         1,149,666
Fees for services provided to joint ventures   1,316,933       2,129,911
Income taxes                                   58,129          0--
Inventories                                    4,151,197       3,842,854
Prepaid expenses                               548,331         364,805
Deferred income taxes                          596,085         221,600
Total current assets                           14,059,726      13,490,514
                                                             
PROPERTY AND EQUIPMENT, net                    4,288,618       3,636,335
                                                             
OTHER ASSETS:                                                 
Investments in joint ventures                  21,461,492      20,559,509
Deferred income taxes                          1,030,610       1,410,700
Patents and trademarks, net                    961,181         903,038
Other                                          76,000          39,646
Total other assets                             23,529,283      22,912,893
Total assets                                   $ 41,877,627    $ 40,039,742
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY                          
CURRENT LIABILITIES:                                          
Current portion of note payable                $ 76,120        $ 76,119
Accounts payable                               1,818,309       2,032,614
Income tax payable                             --              195,762
Accrued liabilities:                                          
Payroll and related benefits                   1,565,866       1,629,355
Deferred joint venture royalties               288,000         288,000
Other                                          251,350         182,916
Total current liabilities                      3,999,645       4,404,766
                                                             
NOTE PAYABLE, NET OF CURRENT PORTION           933,413         1,009,533

COMMITMENTS AND CONTINGENCIES                                 

EQUITY:                                                       
Preferred stock, no par value; authorized      —               —
10,000 shares; none issued and outstanding
Common stock, $0.02 par value per share;
authorized 10,000,000shares; issued and       88,073          87,061
outstanding 4,403,656 and 4,353,058 ,
respectively
Additional paid-in capital                     11,130,966      10,137,809
Retained earnings                              25,260,034      21,811,838
Accumulated other comprehensive income         277,583         2,496,940
Stockholders' equity                           36,756,656      34,533,648
Non-controlling interests                      187,913         91,795
Total equity                                   36,944,569      34,625,443
Total liabilities and equity                   $ 41,877,627    $ 40,039,742
See notes to consolidated financial                           
statements.


NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, 2012 AND 2011

                                                   2012         2011
NET SALES:                                                      
Net sales, excluding joint ventures                 $20,227,719 $16,594,004
Net sales, to joint ventures                       2,553,934    2,932,523
Total net sales                                     22,781,653   19,526,527
                                                               
Cost of goods sold                                  14,528,785   12,768,640
Gross profit                                        8,252,868    6,757,887
                                                               
JOINT VENTURE OPERATIONS:                                       
Equity in income of joint ventures                  5,519,795    5,536,243
Fees for services provided to joint ventures        4,622,912    6,129,979
ToTotal joint venture operations                   10,142,707   11,666,222
                                                               
OPERATING EXPENSES:                                             
Selling expenses                                    4,585,901    4,090,704
General and administrative expenses                 4,309,410    4,343,283
Expenses incurred in support of joint ventures      1,054,914    1,000,576
Research and development expenses                   3,875,581    4,364,109
Total operating expenses                            13,825,806   13,798,672
                                                               
OPERATING INCOME                                    4,569,769    4,625,437
                                                               
INTEREST INCOME                                     54,652       108,692
INTEREST EXPENSE                                    (29,388)     (59,541)
OTHER INCOME                                        21,613       27,300
                                                               
INCOME BEFORE INCOME TAX EXPENSE                    4,616,646    4,701,888
                                                               
INCOME TAX EXPENSE                                  1,041,000    706,000
                                                               
NET INCOME                                          3,575,646   3,995,888
                                                               
NET INCOME ATTRIBUTABLE TO NON CONTROLLING INTEREST 127,450     95,768
                                                               
NET INCOME ATTRIBUTABLE TO NTIC                     $3,448,196  $3,900,120
                                                               
NET INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE:               
Basic                                               $0.79       $0.90
Diluted                                             $0.78       $0.89
                                                               
WEIGHTED AVERAGE COMMON SHARES                                  
ASSUMED OUTSTANDING:                                            
Basic                                               4,391,424    4,325,863
Diluted                                             4,451,594    4,404,100


NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED AUGUST 31, 2012 and 2011
                                                      2012        2011
CASH FLOWS FROM OPERATING ACTIVITIES:                             
Net income                                             $3,575,646 $3,995,888
Adjustments to reconcile net income to net cash used              
in operating activities:
Expensing of fair value of stock options vested        288,396     177,937
Change in allowance for doubtful accounts              —           —
Depreciation expense                                   351,118     335,877
Amortization expense                                   128,921     157,728
Loss on disposal of assets                             870         (52,425)
Equity in income from joint ventures                   (5,519,795) (5,536,243)
Deferred income taxes                                 5,605       321,600
Receivables:                                                      
Trade, excluding joint ventures                        (156,979)   (287,547)
Trade, joint ventures                                  415,123     66,415
Fees for services receivables, joint ventures          812,978     (829,097)
Income taxes                                           (61,144)    —
Inventories                                           (365,800)   (203,685)
Prepaid expenses and other                            (220,837)   (242,237)
Accounts payable                                      (123,512)   311,377
Income tax payable                                    (165,308)   21,260
Accrued liabilities                                   646,024     626,929
Net cash used in operating activities                  (388,693)   (1,136,223)
                                                                 
CASH FLOWS FROM INVESTING ACTIVITIES:                             
Investment in joint ventures                           (484,545)   (38,217)
Dividends received from joint ventures                 3,060,545   2,838,437
Additions to property and equipment                    (1,037,468) (567,257)
Proceeds from sale of property and equipment           —           100,000
Additions to patents                                   (187,064)   (148,048)
Net cash provided by investing activities              1,351,468   2,184,915
                                                                 
CASH FLOWS FROM FINANCING ACTIVITIES:                             
Repayment of note payable                              (76,119)    (59,270)
Dividend paid to non-controlling interest              —           (33,173)
Proceeds from employee stock purchase plan             55,410      36,726
Proceeds from exercise of stock options                34,530      464,436
Net cash provided by financing activities             13,821      408,719
                                                                 
EFFECT OF EXCHANGE RATE CHANGES ON CASH:               (105,411)   32,789
                                                                 
NET INCREASE IN CASH AND CASH EQUIVALENTS              871,185     1,490,200
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR         3,266,362   1,776,162
                                                                 
CASH AND CASH EQUIVALENTS AT END OF YEAR               $4,137,547 $3,266,362
                                                                 

CONTACT: Investor and Media Contacts:
         Matthew Wolsfeld, CFO
         NTIC
         (763) 225-6600

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