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Archive for December, 1998

AEP INDUSTRIES INC. ANNOUNCES FISCAL FOURTH QUARTER AND YEAR 1998 EARNINGS

Thursday, December 17th, 1998

CONTACT: Paul Feeney
Executive Vice President and
Chief Financial Officer
(201) 807-2330
e-mail: feeneyp@aepinc.com

FOR IMMEDIATE RELEASE

SOUTH HACKENSACK, N.J., December 17, 1998 – AEP Industries Inc. (Nasdaq:AEPI) today announced the results for its fiscal year ended October 31, 1998.

Net sales for fiscal 1998 were $701,239,000 versus $759,123,000 in fiscal 1997. Income from continuing operations for fiscal 1998 was $3,167,000, or $0.43 per diluted share. The Company reported a net loss from discontinued operations during fiscal 1998 of $2,904,000, or $0.39 per diluted share, which included a loss of $125,000 resulting from the disposal of the Company’s Rigids businesses. Including the results from discontinued operations and the disposal of the Rigids businesses, net income for the 1998 fiscal year totaled $263,000, or $0.04 per diluted share, versus $8,571,000, or $1.15 per diluted share for fiscal 1997.

For the fiscal 1998 fourth quarter, net sales totaled $170,866,000 compared with $189,104,000 in the fourth quarter of fiscal 1997. Income from continuing operations during fourth fiscal quarter of 1998 amounted to $139,000, or $0.02 per diluted share. During the quarter, the Company reported a net loss from discontinued operations of $71,000, or $0.01 per diluted share, which included a gain of $71,000 due to income tax benefits resulting from the disposal of the Company’s Rigids businesses. Including the results from discontinued operations and the disposal of the Rigids businesses, the Company reported a net income for the quarter of $68,000 or $0.01 per diluted share, compared with net income of $310,000 or $0.04 per diluted share in the fiscal 1997 fourth quarter.

Commenting on the results of the quarter, Chairman & Chief Executive Officer Brendan Barba stated, “While our reported net income was lower than originally expected, the Company actually exceeded its forecast for cash flow generation, and reduced its total debt by $44,000,000. We ended the year with our new extrusion capacity additions in start – up phases, and we expect these projects to contribute to profits going forward. I am also pleased that we were able to complete the sale of all of our non-core businesses. The disposition of these operations is a major factor contributing to the over all reduction of debt. Looking forward we are poised to realize the benefits from the strategies we implemented in 1998.” The Company has reduced its employee level 21% to 3,300 from 4,200 a year ago, and expects to realize continuing benefits from new systems and other rationalizations in 1999.

The quarterly and fiscal results continue to be negatively affected by over capacity in the domestic oriented polypropylene market and the severe economic problems of Southeast Asia and Eastern Europe. While these situations are expected to continue through 1999, AEP’s management is committed to maintaining its market leadership as a worldwide provider of flexible packaging products. Volume from continuing operations increased nearly 4% for the year, with only marginal increases in the fourth quarter. Most of the increase is attributable to the Company’s North American Industrial Films business, the European Stretch Film business and volume growth in Australia. Management expects continued strength in these areas and anticipates improved profits in its worldwide PVC and its European polypropylene businesses in 1999.

New extrusion capacity projects in North America, Europe and Southeast Asia are in start – up phases and are expected to contribute to volume and profits in 1999. Additionally, new automatic packaging equipment for AEP’s domestic PVC division is expected to be fully operational in the second half of 1999.

In November, the Company announced the acquisition of Termofilm, Srl, an Italian manufacturer of PVC and Polyolefin shrink film. The addition of Termofilm’s technology is expected to complement AEP’s worldwide product lines. Despite continuing difficult market conditions, gross profit as a percentage of net sales for the fiscal fourth quarter of 1998 increased to 22.9% compared with 21.9% for the same period last year. For fiscal 1998 the gross profit margin increased to 22.4% from 21.0% for fiscal 1997.

AEP Industries Inc. manufactures, markets, and distributes an extensive range of plastic packaging products for the food/beverage, industrial and agricultural markets. The Company has operations in 11 countries throughout North America, Europe and Asia/Pacific.

Except for historical information contained herein, statements in the release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the Company’s actual results in future periods to differ materially from forecasted results. Those risks include, but are not limited to, risks associated with pricing, volume and conditions of markets. Those and other risks are described in the Company’s filings with the Securities and Exchange Commission (SEC) over the last 12 months, copies of which are available from the SEC or may be obtained upon request from the Company.