Phoenix Gold Announces First Quarter Results
PORTLAND, Ore., Feb. 11 -- Phoenix Gold
International, Inc. today reported a net loss of $354,000, or
$0.12 per share, for the first quarter of fiscal 2003, which ended
December 31, 2002 compared to net earnings of $7,000, or $0.00 per diluted
share, for last year's first quarter. Included in the net loss for the
quarter ended December 31, 2002 was a non-cash goodwill impairment charge of
$68,000 (net of tax of $45,000), or $0.02 per share, related to adoption of a
new accounting rule. Revenues decreased 24% to $5.2 million for the three
months ended December 31, 2002 from $6.9 million in the comparable quarter a
year ago.
"We are clearly disappointed with the results for the first quarter of
fiscal 2003," stated Keith A. Peterson, Chairman and Chief Executive Officer.
"The year has begun more slowly than originally planned and the domestic and
international markets are showing no signs of immediate improvement. However,
we are aggressively pursuing a number of strategies to improve our financial
performance."
"We introduced several new products at two trade shows during January
2003," continued Mr. Peterson. "The Octane-R series of car audio amplifiers
and speakers as well as the Tantrum-X series of car audio speakers were
enthusiastically received by our sales representatives and dealers. We will
begin initial shipments of these products during the second quarter. Also
scheduled for release in fiscal 2003 are the XR and ZRx series of professional
sound amplifiers. Additionally, two new entry-level home theater speaker
systems will begin shipping in the second and third quarters to mass
merchants."
The Company also provided the following information on its first quarter
sales and outlook for fiscal 2003. Domestic sales decreased $1.3 million, or
22%, to $4.3 million, primarily due to a 60% decrease in sales of speakers.
The decrease in speaker sales was due to a decrease in sales of AudioSource
products. During the first quarter of fiscal 2002, a large domestic retailer
placed a holiday season order. A similar order for the first quarter of
fiscal 2003 was not received. Additionally, sales of electronics to a
significant customer decreased $261,000 during the quarter. International
sales decreased $385,000, or 30%, to $886,000 for the first quarter of fiscal
2003 as compared to fiscal 2002. The Company expects decreased sales in the
second quarter of fiscal 2003 as compared to fiscal 2002 due to reduced
spending by consumers on discretionary items. The Company also renewed its
bank revolving line of credit agreement. The line of credit provides for
$3.5 million of potential borrowings at the bank's prime rate plus 1%.
Phoenix Gold International, Inc. designs, manufactures, markets and sells
innovative, high quality, high performance electronics, accessories and
speakers for the audio market. The Company sells its products under the brand
names Phoenix Gold, Carver Professional and AudioSource. The Company's
products are used in car audio, professional sound and home audio/theater
applications.
This press release may contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, including,
without limitation, statements as to expectations, beliefs and future
financial performance, and are based on current expectations and are subject
to certain risks, trends and uncertainties that could cause actual results to
vary from those projected, which variances may have a material adverse effect
on the Company. Among the factors that could cause actual results to differ
materially are the following: the adverse effect of reduced discretionary
consumer spending; competitive factors; dependence on a significant customer;
potential fluctuations in quarterly results and seasonality; fixed operating
expenses; the need for the introduction of new products and product
enhancements; dependence on suppliers; control by current shareholders; high
inventory requirements; business conditions in international markets; the
Company's dependence on key employees; the need to protect intellectual
property; environmental regulation; and the potential delisting and limited
trading volume of the Company's common stock, as well as other factors
discussed in Exhibit 99.3 to the Phoenix Gold International, Inc. Annual
Report on Form 10-K for the fiscal year ended September 30, 2002, which
exhibit is hereby incorporated by reference. Given these uncertainties,
readers are cautioned not to place undue reliance on the forward-looking
statements. The Company does not intend to update its forward-looking
statements.
PHOENIX GOLD INTERNATIONAL, INC.
BALANCE SHEETS
(Unaudited)
December 31, September 30,
2002 2002
ASSETS
Current assets:
Cash and cash equivalents $497,920 $214,814
Accounts receivable, net 2,726,461 3,610,939
Inventories:
Raw materials and work-in-process 2,751,559 2,924,498
Finished goods 4,907,168 4,841,025
7,658,727 7,765,523
Prepaid expenses 293,816 188,140
Deferred taxes 746,000 572,000
Total current assets 11,922,924 12,351,416
Property and equipment, net 1,032,437 1,102,498
Deferred taxes 559,000 513,000
Other assets 404,297 552,336
Total assets $13,918,658 $14,519,250
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,066,082 $1,297,507
Accrued payroll and benefits 487,909 430,048
Accrued customer rebates 400,844 382,972
Other accrued expenses 432,322 498,684
Total current liabilities 2,387,157 2,609,211
Deferred gain on sale of facility 637,504 662,023
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock;
Authorized -- 5,000,000 shares;
none outstanding -- --
Common stock, no par value;
Authorized -- 20,000,000 shares
Issued and outstanding --
3,006,945 and 3,006,945 shares 6,511,528 6,511,528
Retained earnings 4,382,469 4,736,488
Total shareholders' equity 10,893,997 11,248,016
Total liabilities and shareholders' equity $13,918,658 $14,519,250
PHOENIX GOLD INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December 31,
2002 2001
Net sales $5,223,934 $6,860,245
Cost of sales 4,109,021 5,412,024
Gross profit 1,114,913 1,448,221
Operating expenses:
Selling 867,799 777,867
General and administrative 699,723 645,714
Total operating expenses 1,567,522 1,423,581
Income (loss) from operations (452,609) 24,640
Other income (expense):
Interest income 632 572
Interest expense (14) (14,687)
Other expense, net (1,028) --
Total other expense (410) (14,115)
Earnings (loss) before income taxes (453,019) 10,525
Income tax benefit (expense) 167,000 (4,000)
Earnings (loss) before cumulative effect of
accounting change (286,019) 6,525
Cumulative effect of accounting change,
net of tax (68,000) --
Net earnings (loss) $(354,019) $6,525
Earnings (loss) per share:
Before accounting change --
basic and diluted $(0.10) $ 0.00
Accounting change --
basic and diluted (0.02) 0.00
Earnings (loss) per share --
basic and diluted $(0.12) $ 0.00
Average shares outstanding --
basic and diluted 3,006,945 3,006,945