Coastcast Reports Fourth Quarter and Fiscal Year End 2001 Financial Results
RANCHO DOMINGUEZ, Calif.--Feb. 7, 2002--Coastcast Corporation reported financial results for the fourth quarter and year ended December 31, 2001.For the fourth quarter of 2001 as compared to the same period in 2000, sales were $24,796,000 vs. $24,897,000, net (loss) income was ($2,489,000) vs. $69,000, and diluted (loss) earnings per share were ($0.33) vs. $0.01.
For the year ended December 31, 2001 as compared to the same period in 2000, sales were $115,480,000 vs. $141,371,000, net (loss) income was ($2,290,000) vs. $8,749,000, and diluted (loss) earnings per share were ($0.30) vs. $1.12.
Commenting on the quarter, Hans Buehler, Chairman and CEO, stated: "A combination of factors contributed to the substantial loss from operations in the fourth quarter of 2001, including charges resulting from discontinuing manufacture of aluminum turbo charger wheels, charges for shutting down one of our four plants in Mexicali, and a shift in sales mix to lower margin steel golf clubheads."
Mr. Buehler further stated: "We are taking action to improve manufacturing performance and reduce costs in an effort to return to profitability on lower revenue. We are working on making improvements in our manufacturing processes to reduce our workforce and costs and shorten manufacturing lead times. Plans are underway to consolidate manufacturing operations into less space in fewer locations with the expectation of not limiting production capacity. These improvements and cost cutting measures will result in substantial non-recurring consolidation charges in 2002 and possibly into 2003. Although I believe we can become profitable, excluding the non-recurring consolidation charges, in 2002, we anticipate a loss in the first quarter of this year on sales of not more than $22 million."
Coastcast, a leading manufacturer of golf clubheads, produces metal woods, irons and putters in a variety of metals, including stainless steel and titanium. Customers include Callaway (including Odyssey), Cleveland, Cobra, Ping, and Titleist. The company also manufactures a variety of investment-cast orthopedic implants and surgical tools and other specialty products that are made to customers' specifications.
Except for the historical information, other statements in this release are forward-looking statements, including statements by the company's CEO regarding the plans to consolidate manufacturing operations into less space in fewer locations with the expectation of not limiting production capacity, the belief that the company can become profitable and the anticipation of a loss in the first quarter, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially. The non-recurring charges could be higher than the Company anticipates. The Company's sales have been and very likely will continue to be concentrated among a small number of customers, and a loss of a customer, or reduction in sales from a customer, could have a material adverse effect on the Company's profitability. The Company also operates in a highly competitive market, and some of the Company's current and potential competitors may have greater resources than the Company. The Company's success will depend on its continued ability to supply clubheads for companies whose new products rapidly attained a significant portion of the market for high-quality, premium-priced golf clubs, including the Company's ability to respond in a timely manner to large new product orders from customers and fluctuations in demand due to a sudden increase or decrease in popularity of specific golf clubs. The Company's profitability is impacted by variations in manufacturing costs and yields which occur from time to time, especially with new products during the "learning curve" phase of production and products which are more difficult to manufacture such as titanium or oversized metal wood and iron golf clubheads. In addition, in certain energy crisis situations, the Company's energy costs have been subject to fluctuation depending on the cost and sources of energy. The Company manufactures in Tijuana and Mexicali, Mexico pursuant to the "maquiladora" duty-free program established by the Mexican and U.S. governments which enables the Company to take advantage of generally lower costs in Mexico, without paying duty on inventory shipped into or out of Mexico or paying certain Mexican taxes. There can be no assurance that the Mexican government will continue the "maquiladora" program or that the Company will continue to be able to take advantage of the benefits of the program. Also, in connection with such facilities, the Company bears the risk of currency fluctuations and other general risks of doing business outside the United States. In the ordinary course of its manufacturing process, the Company uses hazardous substances and generates hazardous waste. The success of the Company is dependent upon its senior management, and their ability to attract and retain qualified personnel.
Coastcast Corporation
Financial Highlights
($ in 000s, except share data)
Statements of Operations Summary (Unaudited)
Three Months Ended December 31, 2001 2000
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Sales $ 24,796 $ 24,897
Cost of sales 27,000 24,985
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Gross loss (2,204) (88)
Selling, general & administrative expense 1,482 1,005
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Loss from operations (3,686) (1,093)
Other income, net 55 867
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Loss before benefit from income taxes (3,631) (226)
Benefit from income taxes (1,142) (295)
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Net (loss) income $ (2,489) $ 69
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Net (loss) income per share - basic $ (0.33) $ 0.01
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Weighted average shares
outstanding - basic 7,635,042 7,467,214
Net (loss) income per share - diluted $ (0.33) $ 0.01
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Weighted average shares
outstanding - diluted 7,635,042 7,637,690
Year Ended December 31, 2001 2000
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Sales $ 115,480 $ 141,371
Cost of sales 112,266 122,750
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Gross profit 3,214 18,621
Selling, general & administrative expense 6,800 6,652
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(Loss) income from operations (3,586) 11,969
Other income, net 396 2,683
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(Loss) income before (benefit)
provision for income taxes (3,190) 14,652
(Benefit) provision for income taxes (900) 5,903
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Net (loss) income $ (2,290) $ 8,749
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Net (loss) income per share - basic $ (0.30) $ 1.15
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Weighted average shares
outstanding - basic 7,661,496 7,613,357
Net (loss) income per share - diluted $ (0.30) $ 1.12
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Weighted average shares
outstanding - diluted 7,661,496 7,794,854
Coastcast Corporation
Financial Highlights
($ in 000s)
Condensed Balance Sheets Summary
12/31/01
(Unaudited) 12/31/00
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Assets
Cash and cash equivalents $13,248 $52,168
Accounts receivable - net 7,293 7,298
Inventories 9,319 9,538
Prepaid expenses and other current assets 2,640 4,419
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Total current assets 32,500 73,423
Property, plant & equipment - net 21,127 23,434
Other assets 3,804 2,493
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Total assets $57,431 $99,350
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Liabilities and Shareholders' Equity
Total current liabilities $7,448 $45,783
Long-term liabilities 1,728 828
Shareholders' equity 48,255 52,739
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Total liabilities & shareholders' equity $57,431 $99,350
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