Febuary 12, 2003
APPLIED EXTRUSION TECHNOLOGIES, INC. ANNOUNCES FISCAL 2003 FIRST QUARTER RESULTS
NEW CASTLE, Del., Feb 12, 2003 (BUSINESS WIRE) -- Applied Extrusion Technologies, Inc. (NASDAQ NMS - AETC) today announced financial results for its first fiscal quarter ended December 31, 2002.
FIRST QUARTER 2003 RESULTS
Sales for the first quarter of fiscal 2003 of $59,361,000 were $3,884,000, or 7.0 percent, higher than sales for the first quarter of fiscal 2002. The 7.0 percent increase was due to a 3.6 percent increase in sales volume and a 3.3 percent increase in average selling price.
Gross profit for the first quarter of fiscal 2003 was $12,182,000, or 20.5 percent of sales, compared with $10,326,000, or 18.6 percent of sales for the same period in the prior year. The $1,856,000 improvement in gross profit was due primarily to the increase in volume and price discussed above, and lower manufacturing costs, which were partially offset by increased raw material costs and higher depreciation expense.
The Chemical Data, Inc. (CDI) average cost of polypropylene resin, AET's primary raw material, increased by 18 percent from the first quarter of fiscal 2002 to the first quarter of fiscal 2003. Increases in AET's raw material costs over the same period resulted in an approximate $3,000,000 increase in raw material costs for the first quarter of fiscal 2003, a portion of which was offset by lower manufacturing costs. CDI projects further cost increases over the course of the year.
Operating profit for the first quarter of fiscal 2003 was $4,021,000 compared with $2,152,000 for the first quarter of fiscal 2002. Operating expenses in the first quarter of fiscal 2003 included $464,000 of restructuring transition expenses.
For the three months ended December 31, 2002, the Company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $9,782,000, an increase of 34.1 percent compared with EBITDA of $7,294,000 for the first quarter of fiscal 2002.
Interest expense of $7,279,000 was $387,000 higher than the first quarter of fiscal 2002. This was primarily due to lower interest income and less capitalized interest in the first quarter of fiscal 2003 compared with the same quarter in the prior year. Net loss for the first quarter of fiscal 2003 was $3,258,000, or $.26 per share, compared with a net loss of $4,740,000, or $.38 per share for the first quarter of fiscal 2002.
BALANCE SHEET, CASH FLOW AND LIQUIDITY
At December 31, 2002 the Company had $19,814,000 of cash and cash equivalents and no borrowings, other than $6,219,000 of letters of credit, under its revolving credit facility. Net debt (total debt less cash) at December 31, 2002 was $258,166,000, representing 82 percent of total capitalization. Capital expenditures for the first quarter of fiscal 2003 were $2,988,000 compared with $8,115,000 in the same quarter of 2002.
RESTRUCTURING & REORGANIZATION
In September 2002, the Company announced a restructuring and reorganization aimed at significantly reducing its cost structure. Since the announcement, the Massachusetts-based corporate office has been closed, the Company's business units have been realigned and key roles and responsibilities companywide have been reorganized. The Company anticipates annualized cost savings of $5,000,000 of which approximately 80 percent should be realized in the current fiscal year.
COMPANY COMMENTS
"Fiscal 2003 will be a critical year as we break from the past and establish the Company on a new path aimed at effecting a turnaround," commented Amin J. Khoury, Chairman and Chief Executive Officer. "In the short term, our goal is to generate a sufficient level of EBITDA to cover interest expense and capital expenditures. This will require substantial growth in EBITDA compared with fiscal 2002. While our financial results for the first quarter of 2003 reflect progress in achieving this objective, market conditions remain challenging, with continued excess capacity and rising raw material costs. Therefore, it is even more important that we carefully control capital expenditures and continuously re-evaluate our cost structure as we progress through the year. We are keenly focused on executing a successful turnaround in fiscal 2003, 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 9:00 AM Eastern Time on February 13, 2003 to discuss the results. To listen live via the Internet, visit the Investor Relations section of AET's website at http://www.aetfilms.com. To access the conference call by phone, dial 1-800-230-1092 and reference access code "AET Call". A taped replay of the conference call will also be available from approximately 12:30 PM Eastern Time on February 13, 2003 until midnight on February 20, 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 674720.
Applied Extrusion Technologies, Inc. is a leading North American developer and manufacturer of specialized oriented polypropylene (OPP) 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 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 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 Commission.
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------
December 31, December 31,
2002 2001
------------ -----------
As Restated
-----------
Sales $ 59,361 $ 55,477
Cost of sales 47,179 45,151
--------- ---------
Gross profit 12,182 10,326
Operating expenses:
Selling, general and administrative 6,220 6,675
Research and development 1,941 1,499
--------- ---------
8,161 8,174
Operating profit 4,021 2,152
Non operating expenses:
Interest expense, net 7,279 6,892
--------- ---------
Loss before income taxes (3,258) (4,740)
Income taxes - -
--------- ---------
Net loss $ (3,258) $ (4,740)
========= =========
Loss per common share $ (0.26) $ (0.38)
========= =========
Average common shares outstanding 12,582 12,470
========= =========
EBITDA
Operating profit $ 4,021 $ 2,152
Depreciation 5,606 4,618
Amortization and other 155 524
--------- ---------
EBITDA $ 9,782 $ 7,294
========= =========
APPLIED EXTRUSION TECHNOLOGIES, INC.
Balance Sheets
(In thousands, except per share data)
(Unaudited)
December 31, September 30,
2002 2002
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 19,814 $ 17,558
Accounts receivable 37,536 40,010
Inventory 40,818 32,531
Prepaid expenses 2,268 2,365
--------- ---------
Total current assets 100,436 92,464
Property, plant and equipment, net 274,594 276,916
Goodwill 9,874 9,874
Other intanbible assets 10,609 11,043
Other assets 15,085 14,765
--------- ---------
$ 410,598 $ 405,062
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,314 $ 10,701
Accrued interest 14,839 7,428
Accrued expenses and other current
liabilities 33,590 33,348
--------- ---------
Total current liabilities 59,743 51,477
Long-term debt 277,980 277,876
Long-term liabilities 36,458 36,948
Stockholders' equity:
Preferred stock - -
Common stock 130 130
Additional paid-in-capital 103,250 103,250
Accumulated deficit (60,047) (56,789)
Accumulated comprehensive loss (4,663) (5,577)
--------- ---------
38,670 41,014
Treasury stock (2,253) (2,253)
--------- ---------
Total stockholders' equity 36,417 38,761
--------- ---------
$ 410,598 $ 405,062
========= =========
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Cash Flows
(In thousands, except per share data)
(Unaudited)
December 31, September 30,
2002 2002
----------- ------------
OPERATING ACTIVITIES:
Net loss $ (3,258) $ (4,740)
Adjustments to reconcile net loss to
net cash from operating activities:
Provision for doubtful accounts 150 120
Depreciation and amortization 6,190 5,240
Amortization of sale-leaseback gains (1,237) (1,124)
Stock issued for retirement plans, share
incentive plan and other compensation - 425
Changes in assets and liabilities:
Accounts receivable 2,364 5,223
Inventory (8,286) (5,079)
Prepaid expenses and other current assets (145) (1,564)
Accounts payable and accrued expenses 8,999 4,732
Other 459 3,985
--------- ---------
Net cash from operating activities 5,236 7,218
INVESTING ACTIVITIES:
Additions to property, plant and equipment (2,988) (8,115)
Collection of
receivable from sale of division - 23,212
--------- ---------
Net cash from investing activities (2,988) 15,097
FINANCING ACTIVITIES:
Borrowings under line of credit agreement,
net - 2,000
Proceeds from issuance of stock, net - 100
--------- ---------
Net cash from financing activities - 2,100
Effect of exchange rate changes on cash 8 (3)
--------- ---------
Increase in cash and cash equivalents, net 2,256 24,412
Cash and cash equivalents, beginning 17,558 22,176
--------- ---------
Cash and cash equivalents, ending $ 19,814 $ 46,588
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest during the
period for:
Interest, including capitalized interest $ 54 $ 504
Income taxes - -
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For more information contact:
Brian P. Crescenzo, Applied Extrusion Technologies, Inc.
Phone: 302-326-5648
SOURCE: Applied Extrusion Technologies, Inc.
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"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Applied Extrusion Technologies' business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.
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