Applied Extrusion Technologies, Inc. Announces Fiscal 2003 Second Quarter Results.Business Editors NEW CASTLE, Del.--(BUSINESS WIRE)--April 28, 2003 Applied Extrusion Technologies, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NMS See NetWare Management System. :AETC AETC Air Education & Training Command (US Air Force) AETC Air Education and Training Command AETC AIDS Education and Training Centers AETC Alabama Educational Technology Conference AETC Advanced Engineering Technology Conference ) today announced financial results for its second fiscal quarter ended March 31, 2003. SECOND QUARTER 2003 RESULTS Sales for the second quarter of fiscal 2003 of $62,850,000 were $713,000, or 1.1 percent, lower than the comparable quarter in fiscal 2002. A 5.7 percent decline in volume was partially offset by a 4.8 percent increase in average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. . The higher average selling price was due both to price increases and an improved mix of products sold. Gross profit of $12,719,000 was $771,000, or 6.5 percent higher, than the same period of last year. Gross margin was 20.2 percent versus 18.8 percent in the same period of last year. Raw material costs for the quarter were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4,700,000, or 23 percent higher than the same quarter of last year. Nevertheless, the Company was able to deliver higher gross margin and higher absolute gross profit due to higher average selling prices and an improved mix of products sold. In addition to an improved gross margin, ongoing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were approximately $1,000,000 lower in the current quarter as a result of the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiated in September September: see month. 2002. These cost reductions were partially offset by $420,000 in restructuring transition expenses. Transition expenses include duplicative du·pli·cate adj. 1. Identically copied from an original. 2. Existing or growing in two corresponding parts; double. 3. headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. , travel, and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. expenses specific to the implementation of the restructuring program. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the second quarter of fiscal 2003 was $4,605,000 or 42 percent higher compared with operating profit of $3,239,000 for the second quarter of fiscal 2002. For the three months ended March 31, 2003, the Company generated earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Interest expense of $7,715,000 was $625,000 higher than the second quarter of fiscal 2002. This was primarily due to increased borrowings on our 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 and less capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. as compared to the same period in the prior year. Net loss for the second quarter of fiscal 2003 was $3,110,000, or $.24 per share compared with a net loss of $3,851,000, or $.31 per share for the second quarter of fiscal 2002. SIX MONTHS 2003 RESULTS Sales for the first six months of fiscal 2003 of $122,211,000 were $3,171,000, or 2.7 percent higher than the comparable period in fiscal 2002. A 1.3 percent decline in volume was more than offset by a 4.1 percent increase in average selling price. The higher average selling price was due both to price increases and an improved mix of products sold. Gross profit of $24,900,000 was $2,626,000, or 11.8 percent higher than the same period of last year. Gross margin was 20.4 percent versus 18.7 percent in the same period of last year. Raw material costs for the first six months were approximately $7,000,000, or 17 percent higher than the same period of last year. Nevertheless, the Company was able to deliver higher gross margin and higher absolute gross profit due to lower manufacturing costs, higher selling prices, and an improved mix of products sold. In addition to an improved gross margin, ongoing operating expenses were approximately $1,500,000 lower in the current six months as a result of the restructuring initiated in September 2002. These cost reductions were partially offset by $884,000 in restructuring transition expenses. Transition expenses include duplicative headcount, travel, and relocation expenses specific to the implementation of the restructuring program. Operating profit for the first six months of fiscal 2003 was $8,625,000 or 60 percent higher compared with operating profit of $5,391,000 for the same period of last year. For the six months ended March 31, 2003, the Company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $20,163,000, an increase of 33 percent compared with EBITDA of $15,170,000 for the same period of the prior year. Interest expense of $14,994,000 was $1,012,000 higher than the first six months of fiscal 2002. This was primarily due to increased borrowings on our revolving credit facility and less capitalized interest as compared to the same period in the prior year. Net loss for the first six months of fiscal 2003 was $6,369,000, or $.50 per share, compared with a net loss of $8,591,000, or $.68 per share for the same period of the prior year. BALANCE SHEET, CASH FLOW AND LIQUIDITY The Company recently announced that it had completed the syndication See syndication format. of its 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. and restated $50,000,000 revolving credit facility. At March 31, 2003 the Company had borrowings outstanding of $10,097,000 in addition to $6,231,000 of letters of credit. Unused availability under the credit facility was approximately $21,000,000 at March 31, 2003. Net Debt (total debt less cash) at March 31, 2003 was $286,761,000, representing 88 percent of total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. . COMPANY COMMENTS "Fiscal 2003 continues to be extremely challenging," commented Amin AMIN Arabic Media Internet Network J. Khoury Khoury (occasionally Khouri or Coury; Arabic: خوري) is an Arabic surname that is unique to Arab Christians. The term Khoury means "priest" in Arabic. , Chairman and Chief Executive Officer. We have led three price increases in the past year and recently instituted a $.04 surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. on all film shipped in an effort to keep up with rapidly escalating raw material costs, which were approximately $7,000,000 higher in the first six months of this year versus the prior year. Raw material costs are continuing to increase and will be significantly higher in the third fiscal quarter. We will carefully control capital expenditures and continuously re-evaluate our cost structure as we progress through the year. Our focus is on executing a successful turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in fiscal 2003 and laying the foundation for solid financial returns beginning in fiscal 2004," concluded Mr. Khoury. CONFERENCE CALL As previously announced, the Company will hold a conference call at 10:00 AM Eastern Time on April 29, 2003 to discuss the results. To listen live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of AET's website at http://www.aetfilms.com. To access the conference call by phone, dial 1-888-423-3280 and reference access code "AET AET Aetna, Inc. AET After Extra Time AET Actual Evapotranspiration AET Alliance for Environmental Technology AET Alpha-Ethyltryptamine AET Applied Extrusion Technologies, Inc. Call". A taped replay of the conference call will also be available from approximately 12:30 PM Eastern Time on April 29, 2003 until midnight on May 6, 2003. To listen to the replay, dial 1-800-475-6701 from within the U.S. or 320-365-3844 from outside the U.S. and enter access code 682545. Applied Extrusion Technologies, Inc. is a leading North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. developer and manufacturer of specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. polypropylene polypropylene (pŏl'ēprō`pəlēn), plastic noted for its light weight, being less dense than water; it is a polymer of propylene. It resists moisture, oils, and solvents. (OPP OPP Opposite OPP Opportunity/Opportunities OPP Office of Pesticide Programs OPP Ontario Provincial Police (Ontario, Canada) OPP Office of Polar Programs (National Science Foundation) ) films used primarily in consumer products labeling and flexible packaging applications. Except for the historical information contained herein, the matters discussed in this report 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. that involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including those risks related to the ability to implement price increases and related volume losses, the timely development and acceptance of new products, fluctuations in raw materials and other production costs, the ability to satisfy our debt service requirements, the loss of one or more significant customers, the impact of competitive products and pricing, the timely completion of capital projects, the success of the Company's efforts to access capital markets on satisfactory terms, and to acquire, integrate, and operate new businesses and expand into new markets, as well as other risks detailed in Exhibit 99.1 of the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended September 30, 2002 and from time to time in the Company's other reports filed with the Securities and Exchange mission.
APPLIED EXTRUSION TECHNOLOGIES, INC.
Balance Sheets
(In thousands, except per share data)
(Unaudited)
March September
31, 30, 2002
2003
-------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 1,419 $ 17,558
Accounts receivable 40,500 40,010
Inventory 48,849 32,531
Prepaid expenses 2,936 2,365
--------- ----------
Total current assets 93,704 92,464
Property, plant and equipment, net 278,840 276,916
Goodwill 9,874 9,874
Other intanbible assets 10,738 11,043
Other assets 15,338 14,765
--------- ----------
$408,494 $ 405,062
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,371 $ 10,701
Accrued interest 7,456 7,428
Accrued expenses and other current
liabilities 23,606 33,348
Borrowings under line of credit 10,097
--------- ----------
Total current liabilities 58,530 51,477
Long-term debt 278,083 277,876
Long-term liabilities 34,437 36,948
Stockholders' equity:
Preferred stock - -
Common stock 130 130
Additional paid-in-capital 103,250 103,250
Accumulated deficit (63,158) (56,789)
Accumulated comprehensive loss (525) (5,577)
--------- ----------
39,697 41,014
Treasury stock (2,253) (2,253)
--------- ----------
Total stockholders' equity 37,444 38,761
--------- ----------
$408,494 $ 405,062
========= ==========
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
March 31, March 31,
2003 2002
-------- ---------
As
Restated
---------
Sales $62,850 $ 63,563
Cost of sales 50,131 51,615
-------- ----------
Gross profit 12,719 11,948
Operating expenses:
Selling, general and administrative 6,090 7,042
Research and development 2,024 1,667
-------- ----------
8,114 8,709
Operating profit 4,605 3,239
Non operating expenses:
Interest expense, net 7,715 7,090
-------- ----------
Net loss $(3,110) $ (3,851)
======== ==========
Loss per common share $ (0.24) $ (0.31)
======== ==========
Average common shares outstanding 12,718 12,423
======== ==========
EBITDA (Operating Profit Reconcilation)
Operating profit $ 4,605 $ 3,239
Depreciation and Amortization 6,153 5,224
Less amortization included in interest expense (469) (335)
Other 92 10
-------- ----------
EBITDA $10,381 $ 8,138
======== ==========
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Income
(In thousands, except per share data)
(Unaudited)
Six Months Ended
-------------------
March 31, March 31,
2003 2002
--------- ---------
As
Restated
---------
Sales $122,211 $ 119,040
Cost of sales 97,311 96,766
--------- ----------
Gross profit 24,900 22,274
Operating expenses:
Selling, general and administrative 12,310 13,717
Research and development 3,965 3,166
--------- ----------
16,275 16,883
Operating profit 8,625 5,391
Non operating expenses:
Interest expense, net 14,994 13,982
--------- ----------
Net loss $ (6,369) $ (8,591)
========= ==========
Loss per common share $ (0.50) $ (0.68)
========= ==========
Average common shares outstanding 12,697 12,660
========= ==========
EBITDA (Operating Profit Reconcilation)
Operating profit $ 8,625 $ 5,391
Depreciation and Amortization 12,343 10,464
Less amortization included in interest
expense (898) (695)
Other 92 10
--------- ----------
EBITDA $ 20,163 $ 15,170
========= ==========
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Cash Flows
(In thousands, except per share data)
(Unaudited)
March March
31, 31,
2003 2002
-------- --------
OPERATING ACTIVITIES:
Net
loss $ (6,369) $ (8,591)
Adjustments to reconcile net loss to net cash
from operating activities:
Provision for doubtful accounts 300 300
Depreciation and amortization 12,343 10,464
Amortization of sale-leaseback gains (2,475) (2,248)
Stock issued for retirement plans, share
incentive plan and other compensation - 425
Changes in assets and liabilities:
Accounts receivable (418) (2,623)
Inventory (15,994) (580)
Prepaid expenses and other current assets (1,732) (2,198)
Accounts payable and accrued expenses (2,483) (2,708)
Other (382) 4,038
--------- ---------
Net cash from operating activities (17,210) (3,721)
INVESTING ACTIVITIES:
Additions to property, plant and equipment (9,569) (14,230)
Proceeds from sale of property, plant, and
equipment 1,220 350
Repurchase of leased assets - (17,156)
Collection of receivable from sale of division - 23,212
Proceeds from sale-leaseback transactions - 18,225
-------- ---------
Net cash from investing activities (8,349) 10,401
FINANCING ACTIVITIES:
Borrowings under line of credit agreement, net 10,097 -
Debt Issuance costs (673) -
Proceeds from issuance of stock, net - 696
--------- ---------
Net cash from financing activities 9,424 696
Effect of exchange rate changes on cash (4) (4)
--------- ---------
Increase in cash and cash equivalents, net (16,139) 7,372
Cash and cash equivalents, beginning 17,558 22,176
--------- ---------
Cash and cash equivalents, ending $ 1,419 $ 29,548
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest during the period for:
Interest, including capitalized interest $ 15,078 $ 16,271
Income taxes - -
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