WASHINGTON SCIENTIFIC REPORTS FISCAL 1991 LOSS;
CEASES DIVIDEND PAYMENTS
MINNEAPOLIS, Nov. 5 /PRNewswire/ -- Washington Scientific Industries, Inc. (NASDAQ: WSCI) today reported a net loss of $4,770,000, or $2.00 a share, for its fiscal year ended Aug. 25, 1991. This compares with net earnings of $56,000, or two cents per share for fiscal 1991. Net sales for fiscal 1991 were $62,742,000, a decline from $73,627,000 in fiscal 1990.
Approximately $4.2 million, or $1.58 of the company's 1991 loss, is directly related to a restructuring of its Advanced Custom Molders (ACM) subsidiary, and includes write-offs for intangible items such as goodwill and other expenses associated with the acquisition of ACM. In addition, ACM's financial performance was affected by reduced customer demand during the year.
The company's Contract Manufacturing Division was affected during the year by lower than anticipated demand on existing products, as well as start-up costs and other expenses related to bringing new machining business up to full production levels. These costs were largely from non-computer projects, but also included expenses relating to production start-up on several important new small computer components.
Clifford W. Dinsmore, president and CEO, said, "Our restructuring of ACM was necessary to bring that business back to profitability. we are closing one of our two plants at Georgetown, Texas, reorganizing the company with significant management staff reductions and, at the same time, increasing in-house technical and engineering expertise. We have re-focused ACM's marketing efforts toward high precision molding for customers requiring full service support and stringent quality standards. While this approach may temporarily lower ACM's sales, it will assist in improving margins.
"Costs relating to new machining customers and the prolonged integration of ACM have been high, but we remain firmly convinced that we will not realize more consistent financial results until we achieve our diversification objective. We see continued demand for the services we offer, with many opportunities for profitable new business. However, we also recognize that the present condition of the economy has hurt us, and we are managing our business on the premise that a dramatic improvement in the economy, and the computer peripherals industry in particular, will not be forthcoming in the near future.
"Our objective for the next year is to return Washington Scientific to profitability based on our present level of sales, focusing on cash flow and the repayment of debt, as well as the continuation of our drive toward the diversification of our market and customer base. However, we are presently experiencing further customer delays on some of our major contract manufacturing projects, as well as greater than expected costs on some of our other new machining projects, and we expect that this will result in losses in the first and possibly the second quarters of fiscal 1992.
"As the result of our fiscal 1991 losses and the continuation of difficult conditions into fiscal 1992, the board of directors has determined that it would be prudent to cease paying the company's dividend. This matter will be periodically reviewed as we return the company to profitability, and we intend to reinstate the dividend at the earliest practical time. In that regard, I wish to emphasize once again that we will not hesitate to take any action that will improve overall manufacturing efficiency and position the company for more consistent financial performance."
Washington Scientific Industries is a Minnesota-based provider of high precision manufacturing services for a variety of industries. The company's Contract Manufacturing Division produces machined metal components and subassemblies in three plants located in Minnesota and California, and its Advanced Custom Molders subsidiary produces thermoplastic injection molded components in two Texas locations.
WASHINGTON SCIENTIFIC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(In thousands except per share data)
12 weeks ended 52 weeks ended
8/25/91 8/26/90 8/25/91 8/26/90
Net sales $14,625 $15,308 $62,742 $73,627
Cost of products sold 13,774 14,792 56,622 66,151
Gross margin 851 516 6,120 7,476
Selling and administrative
expense 1,485 1,530 6,129 6,083
Provision for costs related
to restructuring and
plant closing 4,205 -- 4,205 --
Interest and other income (46) (32) (104) (344)
Interest expense 337 333 1,456 1,475
Earnings (loss) before
income taxes (5,130) (1,315) (5,566) 262
Income taxes (benefit) (720) (457) (796) 206
Net earnings (loss) $(4,410) $ (858) $(4,770) $ 56
Net earnings (loss)
per share $ (1.85) $ (.36) $ (2.00) $ .02
Weighted average number
of common shares
outstanding 2,380,401 2,380,401 2,380,401 2,378,942
/CONTACT: Jack Falker of Swenson/Falker Associates Inc., 612-371-0000, for Washington Scientific; or Bill Lucke of Washington Scientific Industries, 612-473-1271/ CO: Washington Scientific Industries, Inc. ST: Minnesota IN: SU: ERN JS-KH -- MN011 -- 0862 11/05/91 16:41 EST