Ault Incorporated Reports Fourth Quarter and Fiscal Year 2005 Results and Restatement of Prior Periods.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- Company Results Adjusted to Reflect the Sale of Ault Ault as a personal name can refer to:
Ault Incorporated (Nasdaq:AULT) today reported results for the fourth quarter and fiscal year ended May 29, 2005 and restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior period results. These results reflect the sale of Ault Korea, the Company's Korean Korean, language of uncertain ancestry. It is thought by some scholars to be akin to Japanese, by others to be a member of the Altaic subfamily of the Ural-Altaic family of languages (see Uralic and Altaic languages), and by still others to be unrelated to any known subsidiary, in May 2005 and the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of the Korean subsidiary as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . In addition, the Company reported that it has restated financial results for fiscal year 2004 and the first three quarters of fiscal year 2005 following an investigation of accounting discrepancies related to its China subsidiary. Fourth Quarter and Fiscal Year 2005 Results The May 19, 2005 sale of Ault Korea to JEC Korea Co. Ltd., a Korean manufacturer of power supplies, required that this subsidiary's results be reclassified as a "discontinued operation". As such, the Company's previous financial statements have been adjusted to reflect this accounting treatment. For the fourth quarter of fiscal 2005, 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 were $9,714,000, compared to restated net sales of $9,562,000 in the fourth quarter of fiscal 2004. The Company reported sales of $37,216,000 for fiscal 2005, compared to restated sales of $35,361,000 for fiscal 2004, an increase of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5% year-over-year. For the fourth quarter of fiscal 2005, the Company had a net loss applicable to common stockholders of $(3,830,000) or $(0.80) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a restated net loss applicable to common stockholders of $(404,000), or $(0.09) per diluted share for the same period last fiscal year. For the twelve months ended May 29, 2005, the Company reported a net loss applicable to common stockholders of $(5,130,000), or $(1.08) per diluted share, compared to a restated net loss of $(5,546,000), or $(1.19) per share for fiscal 2004. The fourth quarter loss and fiscal year 2005 loss reflect a 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. in the previously reported loss on the sale of Ault Korea. In May, the Company reported that the loss from the sale of Ault Korea would be approximately $700,000. After considering the effects of inter-company transactions, the actual loss recognized was $2,442,000. The fiscal year 2005 loss also reflects a loss from the sale of the Company's Minneapolis headquarters building totaling $121,000. Restatement of Results Due to Accounting Errors In connection with the Company's year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. audit activity for fiscal year 2005, management became aware of certain accounting discrepancies related to its Xianghe, China operation. Based on an investigation of these discrepancies conducted at the direction of its audit committee, the Company determined that the discrepancies resulted primarily from erroneous erroneous adj. 1) in error, wrong. 2) not according to established law, particularly in a legal decision or court ruling. build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. and relief of inventory and inadequate reconciliation of inter-company accounts. To correct the accounting errors discovered in its investigation, the Company is restating its previously reported financial statements for the 2004 fiscal year ended May 30, 2004 and quarters ended August 29, 2004, November November: see month. 28, 2004 and February February: see month. 27, 2005 for fiscal year 2005. The Company will also amend appropriate filings with the SEC to include restated financial statements. Frederick Frederick, city, United States Frederick, city (1990 pop. 40,148), seat of Frederick co., NW Md.; settled 1745, inc. 1817. The processing center of a fertile farm and dairying area, it makes beer, household items, optical and glass products, leather goods, M. Green, Ault President and Chief Executive Officer commented: "We are, of course, disappointed that the errors leading to this restatement occurred. Once the errors were discovered, under the direction of the Audit Committee, a team was immediately sent in to investigate, calculate the financial impact and take appropriate corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or . We are also implementing improved controls and procedures related to the issues uncovered Uncovered may refer to:
Outlook Green also commented, "We have completed the strategic initiatives we had planned for fiscal 2005. These initiatives included: the transitioning of all U.S. manufacturing to our facility in Xianghe, China; the sale of our Korean subsidiary enabling the exit from a low-margin geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. market; the sale of our facility in Minneapolis; and other operating cost reductions. As a result of these initiatives, we entered fiscal 2006 with cash and cash equivalents of $2,191,000 and total debt of only $290,000. With our strong customer base and reduced cost structure, we are now positioned for a return to profitability in the 2006 fiscal year." For more information, please join the Ault conference call on Tuesday Tuesday: see week. , August 9, 2005 at 8:00 a.m. Central Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time. To join the conference call, please call 1-800-259-0251 and enter the pass code 78416205. Please call five to ten minutes before the designated start time. The live web cast of the call may be accessed online on StreetEvents at www.streetevents.com or on Ault's web site at www.aultinc.com. The call will be archived at StreetEvents and Ault's web site for 90 days. You may also listen to an encore recording of the conference call from 11:00 a.m. Central Daylight Time Tuesday, August 9 through 11:00 a.m. Central Daylight Time Tuesday, August 16, 2005 by dialing 1-888-286-8010 and then the confirmation code/pass code, 25070910. Ault designs, manufactures and markets power conversion products. The Company is a leading supplier to original equipment manufacturers of telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment, computer peripherals and medical equipment. Ault's power conversion products provide power at various levels from 1 to 1200 watts for a wide variety of applications. Statements regarding Ault's anticipated future performance are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and therefore involve risks and uncertainties that could cause results or developments to differ significantly from those indicated in the 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. . These include, but are not limited to: market conditions in the global electronics industry, buying patterns of major customers, competitive products and technologies, the ability to control expense growth, and other factors set forth in the Company's filings with the Securities and Exchange Commission.
AULT INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 29, 2005 AND MAY 30, 2004
(Stated in US Dollars)
As Restated
ASSETS May 29, 2005 May 30, 2004
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $2,191,422 $836,827
Trade receivables net of allowance for
doubtful accounts 5,766,027 5,902,849
Inventories 3,377,431 4,898,167
Note receivable from sale of Korean
operations - current portion 562,500 0
Prepaids and other expenses 741,142 946,131
Assets related to discontinued operations 0 6,401,010
------------ ------------
Total current assets 12,638,522 18,984,984
OTHER ASSETS: 105,694 145,913
NOTE RECEIVABLE FROM SALE OF KOREAN
OPERATIONS, LAST THREE OF FOUR INSTALLMENTS
DUE JUNE 30, 2006; DECEMBER 31, 2006; JUNE
30, 2007 1,687,500 0
PROPERTY, PLANT AND EQUIPMENT:
Land 0 728,827
Building and leasehold improvements 763,856 4,058,852
Machinery and equipment 5,313,815 5,585,855
Office furniture and equipment 344,406 402,713
Data processing equipment 1,629,681 1,450,937
------------ ------------
Total property, plant and equipment 8,051,758 12,227,184
Less accumulated depreciation 5,676,816 6,101,074
------------ ------------
Net property, plant and equipment 2,374,942 6,126,110
NON-CURRENT ASSETS RELATED TO DISCONTINUED
OPERATIONS 0 4,578,284
------------ ------------
TOTAL ASSETS $16,806,658 $29,835,291
AULT INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 29, 2005 AND MAY 30, 2004
(Stated in US Dollars)
As Restated
LIABILITIES AND EQUITY May 29, 2005 May 30, 2004
------------ ------------
CURRENT LIABILITIES:
Notes payable to bank $0 $1,965,464
Current maturities of long-term debt 289,628 459,969
Accounts payable 4,892,093 3,914,782
Accrued compensation 978,192 776,561
Accrued commissions 272,103 280,794
Other 350,317 486,981
Liabilities related to discontinued
operations 0 5,423,447
------------ ------------
Total current liabilities 6,782,333 13,307,998
LONG-TERM DEBT, less current maturities 0 2,312,892
NON-CURRENT LIABILITIES RELATED TO
DISCONTINUED OPERATIONS 0 203,465
REDEEMABLE CONVERTIBLE PREFERRED STOCK 2,074,000 2,074,000
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; authorized
1,000,000 shares; none issued 0 0
Common stock, no par value; authorized
10,000,000 shares; issued and outstanding
4,705,083 shares in 2004;
4,806,116 shares in 2005 21,390,135 21,172,717
Notes receivable-sale of common stock (44,227) (45,000)
Accumulated other comprehensive loss 55,378 (869,737)
Accumulated deficit (13,450,961) (8,321,044)
------------ ------------
Total stockholders' equity 7,950,325 11,936,936
------------ ------------
TOTAL LIABILITIES AND EQUITY $16,806,658 $29,835,291
AULT INCORPORATED AND
SUBSIDIARIES CONSOLIDATED STATEMENT
OF OPERATIONS
(Dollars in thousands except amounts per share)
Three Months Ended Twelve Months Ended
------------------- -------------------
May 29, May 30, May 29, May 30,
2005 2004 2005 2004
Restated Restated
--------- --------- --------- ---------
NET SALES $9,714 $9,562 $37,216 $35,361
COST OF GOODS SOLD 7,491 7,095 27,077 27,188
--------- --------- --------- ---------
Gross profit 2,223 2,467 10,139 8,173
OPERATING EXPENSES:
Marketing 753 919 3,366 3,360
Design engineering 688 729 2,995 3,056
General and administrative 1,919 1,115 5,642 4,769
Exit costs 0 0 0 2,064
--------- --------- --------- ---------
3,360 2,763 12,003 13,249
--------- --------- --------- ---------
OPERATING LOSS (1,137) (296) (1,864) (5,076)
OTHER INCOME (EXPENSE):
Interest expense (86) (95) (407) (412)
Other (125) (5) (111) (3)
--------- --------- --------- ---------
LOSS BEFORE INCOME TAXES (1,348) (396) (2,382) (5,491)
INCOME TAX EXPENSE (BENEFIT) (4) 60 8 60
--------- --------- --------- ---------
NET LOSS FROM CONTINUING
OPERATIONS (1,344) (456) (2,390) (5,551)
DISCONTINUED OPERATIONS:
Income (loss) from Korean
operations (7) 89 (153) 150
Loss from sale of Korean
operations (2,442) 0 (2,442) 0
--------- --------- --------- ---------
NET LOSS (3,793) (367) (4,985) (5,401)
REDEEMABLE CONVERTIBLE
PREFERRED STOCK DIVIDEND (37) (37) (145) (145)
NET LOSS APPLICABLE TO COMMON
STOCKHOLDERS ($3,830) ($404) ($5,130) ($5,546)
--------- --------- --------- ---------
NET LOSS PER COMMON SHARE:
Basic and Diluted:
Loss per common share ($0.80) ($0.09) ($1.08) ($1.19)
Weighted average common
shares outstanding:
Basic and Diluted 4,799 4,701 4,755 4,680
AULT INC. AND SUBSIDIARIES
RESTATED QUARTERLY RESULTS
OF OPERATIONS FOR YEARS
ENDED MAY 29, 2005 AND MAY 30, 2004
(Dollars in Thousands, Except Amounts Per Share)
Years Ended
May 30,
2004 May 29, 2005
-------- ---------------------------------------
Total 1st 2nd 3rd 4th Total
Year Quarter Quarter Quarter Quarter Year
-------- ------- ------- ------- ------- -------
As Originally
Reported:
Net Sales 45,109 13,139 11,047 12,141
Net Income (Loss)
Applicable to Common
Shareholders (4,953) 117 (534) (458)
Net Income (Loss) Per
Common Share (1.06) 0.02 (0.11) (0.10)
As Restated:
Net Sales 35,361 10,336 8,225 8,941 9,714 37,216
Net (Loss) Applicable
to Common
Shareholders (5,546) (119) (604) (577) (3,830) (5,130)
Net (Loss) Per Common
Share (1.19) (0.02) (0.13) (0.13) (0.80) (1.08)
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