Advanced Glassfiber Yarns LLC Announces Second Quarter 2002 Results.Business Editors AIKEN Aiken, city (1990 pop. 19,872), seat of Aiken co., W S.C.; inc. 1835. A resort and polo center and a training area for Thoroughbreds, Aiken has apparel, printing and publishing, drug, and chemical industries. , S.C.--(BUSINESS WIRE)--Aug. 15, 2002 Advanced Glassfiber Yarns LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control announced today that net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight decreased $7.2 million, or 13.1%, to $47.9 million in the three months ended June June: see month. 30, 2002 from $55.1 million in the three months ended June 30, 2001. This decline reflects primarily the on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" impact of a severe downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the global electronics industry that began during the second quarter of 2001. The Company's sales to the electronics market declined by 33.0% in the three months ended June 30, 2002 compared to the three months ended June 30, 2001. The slight recovery in volumes compared to the first quarter of 2002 was offset by additional price erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. and an adverse change in the mix of the products sold to the electronics market. Given the length and complexity of the supply chain in the electronics industry, the Company has little visibility as to when and to what extent demand may recover. However, sales to the non-electronics markets continued to trend upwards slightly as compared to the first quarter of this year. Gross profit decreased $9.5 million to $5.6 million, or 11.7% of net sales, for the three months ended June 30, 2002 versus $15.1 million, or 27.4% of net sales, for the three months ended June 30, 2001. This decline primarily reflects a sharp reduction in revenues and a lower capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. , offset, in part, by the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of continued manufacturing improvements associated with operating cost reduction programs implemented as a response to the adverse market conditions during the previous twelve month period. Since December December: see month. 31, 2001, the Company made significant efforts to deplete de·plete v. 1. To use up something, such as a nutrient. 2. To empty something out, as the body of electrolytes. inventory and improve its cash position. Reduced production schedules resulted in an $8.8 million decrease in inventory this quarter, and $14.1 million for the first six months, but negatively impacted gross profit as a result of the under-absorption of fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). . Selling, general and administrative expenses were $3.8 million for the three months ended June 30, 2002 as compared to $3.3 million for the three months ended June 30, 2001. If the Company had not incurred a charge of $0.7 million associated with the refinancing Refinancing An extension and/or increase in amount of existing debt. of the Company during the most recent quarter and excluding the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of the accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. for profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of and bonuses of $0.5 million for the period ended June 30, 2001, selling, general and administrative expenses would have been $0.7 million lower than last year, reflecting the reduction in workforce and other cost savings initiatives implemented since the June 30, 2001. The Company adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142 effective January January: see month. 1, 2002 and amortization of goodwill ceased on the effective date. As a result, amortization expense decreased $2.2 million to $0.7 million in the three months ended June 30, 2002, from $2.9 million for the same period ended June 30, 2001. As a result of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. factors, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. decreased $8.0 million to $0.9 million, or 1.9% of net sales, for the three months ended June 30, 2002 from $8.9 million, or 16.2% of net sales, for the three months ended June 30, 2001. Interest expense increased $0.2 million to $8.6 million in the three months ended June 30, 2002 from $8.4 million in the three months ended June 30, 2001. The increase was a result of a 100 basis point increase in interest rates on the Company's amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. senior credit facility that was effective in December 2001, partially offset by lower interest rates on its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility as a result of market conditions. As a result of the aforementioned factors, net results decreased $8.2 million to a loss of $7.6 million in the three months ended June 30, 2002, from $0.7 million in income for the three months ended June 30, 2001. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the quarter ended June 30, 2002 decreased $8.4 million, or 53.5%, to $7.3 million from $15.7 million for the quarter ended June 30, 2001. As previously discussed, the Company adopted SFAS No. 142 effective January 1, 2002 and completed its transitional goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. test in the second quarter of 2002. The Company determined that recorded goodwill exceeded its implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. fair value. Accordingly, the Company restated its first quarter results to reflect a non-cash impairment charge of $188.4 million, which is recognized as the cumulative effect of a change in accounting principle charge as of January 1, 2002. Further, the first quarter results were restated to reflect the correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. of understatement of amortization expense in the amount of $0.7 million. Advanced Glassfiber Yarns, headquartered in Aiken, SC, is one of the largest global suppliers of glass yarns, which are a critical material used in a variety of electronic, industrial, construction and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. applications. Prior to and including September September: see month. 30, 1998, the Company was the glass yarns and specialty materials business of Owens Corning Owens Corning Corporation is the world's largest manufacturer of fiberglass and related products. It was formed in 1935 as a partnership between two major American glassworks, Corning Glass Works and Owens-Illinois. The company was spun off as a separate entity November 1, 1938. . Since September 30, 1998, Advanced Glassfiber Yarns has been a joint venture between Porcher Industries, S.A. and Owens Corning. Certain matters discussed in this press release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the federal securities laws. These statements are distinguished by use of the words "will," "expect," "intends" and words of similar meaning. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from the Company's current expectations include general economic conditions, conditions in the market for electronics products, changes in the cost of materials and labor used in manufacturing, and the other risks detailed in the Company's periodic reports and registration statements filed from time to time with the SEC.
ADVANCED GLASSFIBER YARNS LLC
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, December 31,
2002 2001
-------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,189 $ 100
Trade accounts receivable less
allowance of $1,538 and $1,102
respectively 14,292 13,392
Inventories 29,741 43,847
Other current assets 3,477 3,188
--------- ---------
Total current assets 49,699 60,527
--------- ---------
Net property, plant and equipment 137,698 142,191
Intangible assets, net 18,855 209,622
Other non-current assets -- 145
--------- ---------
Total assets $ 206,252 $ 412,485
========= =========
LIABILITIES AND MEMBERS' INTEREST (DEFICIT)
Current liabilities:
Accounts payable $ 11,863 $ 16,205
Accrued liabilities 24,858 24,201
Current portion of long-term debt,
net of discount of $2,278 and
$2,392, respectively 328,213 330,441
--------- ---------
Total current liabilities 364,934 370,847
--------- ---------
Deferred distribution 12,765 11,435
Pension and other employee
benefit plans 27,243 25,753
Other non-current liabilities -- 413
--------- ---------
Total liabilities 404,942 408,448
--------- ---------
Commitments and contingencies -- --
Members' interest (deficit) (198,690) 4,037
--------- ---------
Total liabilities and members'
interest (deficit) $ 206,252 $ 412,485
========= =========
ADVANCED GLASSFIBER YARNS LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
---------------------------------------------------
2002 2001 2002 2001
------------------------- -------------------------
(unaudited) (unaudited)
Net sales $ 47,908 $ 55,118 $ 92,629 $ 123,965
Cost of goods sold 42,314 40,026 79,877 87,293
--------- --------- --------- ---------
Gross profit 5,594 15,092 12,752 36,672
Selling, general and
administrative
expenses 3,777 3,278 6,820 7,913
Restructuring 223 -- 223 --
Amortization 733 2,900 1,465 5,960
--------- --------- --------- ---------
Operating income 861 8,914 4,244 22,799
Interest expense 8,601 8,356 17,239 16,602
Other income, net (186) (193) (360) (586)
--------- --------- --------- ---------
Income (loss)
before income
taxes and
adoption of an
accounting
principle (7,554) 751 (12,635) 6,783
Income tax expense 20 80 22 92
--------- --------- --------- ---------
Income (loss)
before adoption
of an accounting
principle (7,574) 671 (12,657) 6,691
Cumulative effect
of adoption of an
accounting principle -- -- (188,418) --
--------- --------- --------- ---------
Net income (loss) $ (7,574) $ 671 $(201,075) $ 6,691
========= ========= ========= =========
Other data:
Adjusted EBITDA
(Note 1) $ 7,297 $ 15,685 $ 15,267 $ 36,512
Note 1: Adjusted EBITDA is defined as net income before interest
expense, income taxes, depreciation, amortization expense and
non-recurring, non-cash charges.
ADVANCED GLASSFIBER YARNS LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
For the Six Months
Ended June 30,
-------------------------
2002 2001
-------------------------
(unaudited)
Cash flows from operating activities:
Net income (loss) $(201,075) $ 6,691
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 7,325 7,167
Amortization of debt issuance costs 941 874
Amortization of goodwill and other
intangibles 1,465 5,960
Amortization of discount on notes 115 109
Alloy usage 370 894
Cumulative effect of adoption of an
accounting principle 188,418 --
Changes in assets and liabilities:
Trade accounts receivable, net (801) 8,405
Inventories 14,106 (13,899)
Other assets (140) 4,195
Accounts payable (3,823) (9,550)
Accrued liabilities (187) (1,835)
Pension and post-retirement 1,490 1,363
--------- ---------
Net cash provided by operating
activities 8,204 10,374
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment (3,737) (10,067)
Other (21) (43)
--------- ---------
Net cash used in investing
activities (3,758) (10,110)
--------- ---------
Cash flows from financing activities:
Proceeds from revolving credit facility 21,800 47,200
Payments on revolving credit facility (12,200) (36,200)
Payments on capital lease (54) (50)
Payments on term loans (11,888) (8,786)
Proceeds from interest rate swap -- 1,118
Distribution to Owens Corning -- (4,033)
Deferred financing costs (27) --
--------- ---------
Net cash used in financing
activities (2,369) (751)
--------- ---------
Effect of exchange rate on cash 12 (48)
--------- ---------
Net decrease in cash and cash equivalents 2,089 (535)
--------- ---------
Cash and cash equivalents, beginning of period 100 4,054
--------- ---------
Cash and cash equivalents, end of period $ 2,189 $ 3,519
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 15,608 $ 15,290
========= =========
Supplemental disclosure of non-cash
financing/investing activities:
Decrease in property and equipment
financed in accrueds $ (538) $ (3,027)
========= =========
Increase/(decrease) in fair value of
interest rate swaps and derivatives $ 56 $ (931)
========= =========
Deferred distribution - Porcher $ 911 $ 3,979
========= =========
Current distribution - Owens Corning $ 876 $ --
========= =========
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