Advanced Materials Group Reports Third Quarter Results
RANCHO DOMINGUEZ, Calif.--Oct. 15, 2002--Sales Up 2% Over Third Quarter of Prior Year, Year-to-Date Sales Still Down Compared to Prior Year Income For the Quarter of $27,000,
Compared to Loss of $426,000 in Prior Year
Advanced Materials Group, Inc. today reported increased sales of 2% over the prior year period with $27,000 in net earnings for the third fiscal quarter ended August 31, 2001.
Net sales for the third quarter of fiscal 2002 were $9.6 million versus $9.4 million for the comparable period of fiscal 2001. The net income for the third quarter of fiscal 2002 was $27,000 compared to net loss of $426,000 for the third quarter of fiscal 2001.
Basic and diluted income per share for the third quarter was $0.00 per share on an average of 8.7 million shares, compared to basic and diluted loss per share of $0.05 per share on an average of 8.7 million shares, in the year ago period.
Net sales for the nine months of fiscal 2002 were $27.5 million versus $29.3 million for the comparable period of fiscal 2001. The net loss for the nine months of fiscal 2002 was $369,000, compared to $2,544,000 for the nine months of fiscal 2001, including a $1.4 million restructuring charge in fiscal 2001.
Basic and diluted loss per share for the nine months was $0.04 per share on an average of 8.7 million shares, compared to basic and diluted loss per share of $0.29 per share on an average of 8.7 million shares, in the year ago period.
Chief Executive Officer Comments on Results
Commenting on the results, Advanced Materials Group CEO and President, Steve F. Scott said, "We are encouraged to have broken back into profitability in the quarter ending August 31, 2002. Advanced Materials Group has made good progress in reducing expenses, pruning our account mix, and improving profit elements such as pricing, material yields etc. The market remains fragile, however.
"There is cost pressure from our polyurethane foam suppliers to raise prices and there is the usual resistance from the marketplace to allow these increases to be passed on. The stability of demand is difficult to predict with customers keeping a keen eye on inventories. These types of elements are frequently encountered by all of us in manufacturing but we must recognize their potential impact by keeping lean and agile.
"We believe we are positioned to be profitable at much lower sales volumes than one year ago. Our focus on cost containment and profitable account mix upgrades have positioned us well to grow with the market or to maintain profitability with a flat or slightly declining market."
Advanced Materials Group, Inc. is a leading manufacturer and fabricator of specialty foams, foils, films and pressure-sensitive adhesive components for a broad base of customers in the computer, medical, automotive and aerospace industries both in the U.S. and abroad.
Certain disclosures made by the Company in this release and in other reports and statements released by the Company are and will be forward-looking in nature, such as comments that express the Company's opinions about trends and factors that may impact future operating results. Disclosures that use words such as the Company "believes," "anticipates" or "expects," or use similar expressions, are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ from those expected, and readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to republish revised forward-looking statements to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company in this release that seek to advise interested parties of the risks and other factors that affect the Company's business, as well as in the Company's periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission. The risks affecting the Company's business include reliance on the success of the home healthcare industry, the reimbursement system currently in place and future changes to that system, competition in the industry, economic conditions in foreign countries, currency exchange rates, technological changes and product availability. Any such forward-looking statements, whether made in this release or elsewhere, should be considered in context with the various disclosures made by the Company about its business.
ADVANCED MATERIALS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
2002 2001 2002 2001
Net sales $9,555,000 $9,379,000 $27,470,000 $29,283,000
Cost of sales 8,474,000 8,601,000 24,719,000 26,356,000
Gross profit 1,081,000 778,000 2,751,000 2,927,000
Operating expenses:
Selling, general
and
administrative 813,000 1,001,000 2,472,000 3,295,000
Depreciation and
amortization 84,000 88,000 261,000 258,000
Restructuring costs --- --- --- 1,440,000
Total operating
expenses 897,000 1,089,000 2,733,000 4,993,000
Income (loss)
from operations 184,000 (311,000) 18,000 (2,066,000)
Other income (expense):
Interest expense (105,000) (105,000) (295,000) (397,000)
Foreign exchange
(loss) gain (7,000) 11,000 13,000 25,000
Other, net (28,000) (12,000) (68,000) (56,000)
Total other
expenses,
net (140,000) (106,000) (350,000) (428,000)
Income (loss)
before income taxes 44,000 (417,000) (332,000) (2,494,000)
Income tax expense (17,000) (9,000) (37,000) (50,000)
Net income (loss) $ 27,000 $ (426,000) $ (369,000) $(2,544,000)
Basic and diluted
income (loss) per
common share $ 0.00 $ (0.05) $ (0.04) $ (0.29)
Basic weighted average
common shares
outstanding 8,671,272 8,671,272 8,671,272 8,671,272
Diluted weighted average
common shares
outstanding 8,676,535 8,671,272 8,671,272 8,671,272
ADVANCED MATERIALS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
Aug. 31, November 30,
2002 2001
Current assets:
Cash and cash equivalents $ 415,000 $ 1,303,000
Accounts receivable, net 6,534,000 6,401,000
Inventories, net 3,699,000 3,551,000
Prepaid expenses and other 369,000 308,000
Total current assets 11,017,000 11,563,000
Property and equipment, net 2,334,000 2,654,000
Goodwill, net 339,000 387,000
Other assets 142,000 168,000
Total assets $ 13,832,000 $ 14,772,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,538,000 $ 6,457,000
Accrued liabilities 826,000 838,000
Restructuring reserve, current 357,000 406,000
Deferred income 118,000 255,000
Line of credit 3,718,000 2,788,000
Current portion of long-term
obligations 626,000 708,000
Total current liabilities 11,183,000 11,452,000
Convertible debentures 405,000 405,000
Deferred compensation, net of
current portion 1,129,000 1,129,000
Restructuring reserve, net of
current portion 390,000 647,000
Capital leases, net of current
portion 189,000 234,000
Total liabilities 13,296,000 13,867,000
Commitments and contingencies
Stockholders' equity:
Preferred stock-$.001 par value;
5,000,000 shares authorized
no shares issued and outstanding --- ---
Common stock-$.001 par value;
25,000,000 shares authorized;
8,671,272 shares issued and
outstanding at August 31, 2002
and November 30, 2001 9,000 9,000
Additional paid-in capital 7,083,000 7,083,000
Accumulated deficit (6,556,000) (6,187,000)
Total stockholders' equity 536,000 905,000
Total liabilities and stockholders'
equity $ 13,832,000 $ 14,772,000