Sheldahl Reports 6 Month Results; Record Q2 Sales In Core Business
28 March 2000
Sheldahl Reports Six Month Results; Record Q2 Sales In Core Business; Satisfies Bank Covenants
NORTHFIELD, Minn., March 28 Sheldahl, Inc.
today reported results for the six months and second quarter ended
February 25, 2000. For the first half of fiscal 2000, sales increased by more
than 18% to $66.8 million from $56.5 million, on the strength of the Core
Business. Net losses (excluding restructuring charges in 1999) decreased
significantly to $4.0 million versus $6.0 million for the first six months of
fiscal 1999. These results equate to an equivalent per share loss of $0.35
for the first half of fiscal 2000 compared with a loss of $0.56 for the
comparable period of fiscal 1999.
SECOND QUARTER
For the second quarter of fiscal 2000, Sheldahl reported sales of
$32.0 million, an increase of 14.2% compared to $28.0 million for the
comparable period in fiscal 1999, marking an all time record for the second
quarter. Excluding 1999 special charges, pretax losses decreased by
$1.0 million when comparing second quarter results year to year, principally
due to reduced spending and improved operating efficiencies across the entire
company. Excluding 1999 special charges, net losses for the quarter ended
February 25, 2000 were $2.1 million, or $0.18 per share, versus $3.0 million,
or $0.27 per share, for the quarter ended February 26, 1999 and $1.9 million,
or $0.16 per share, for the first quarter of fiscal 2000.
Edward L. Lundstrom, President and Chief Executive Officer, commented on
the quarter, stating, "The strength of our Core Business sales achievement in
what is normally a weak quarter helped drive bottom line improvements. These
efforts were supported by strong cost and cash controls that enabled Sheldahl
to satisfy all of our bank covenants. We are pleased with this achievement."
CORE BUSINESS STRONG
"The Company's Core Business continues to gain momentum, producing
excellent results for the second quarter of fiscal 2000 with sales improving
12% to $30.8 million from $27.6 million in the second quarter of fiscal 1999.
For the six months ended February 25, 2000, sales from the Core Business
totaled $64.4 million versus $55.9 million for the first six months of fiscal
1999. What is even more significant is the backlog we have going into the
remainder of the year," Lundstrom said. "While at this time we have no news
to report regarding strategic alternatives, we continue to focus our resources
on serving our customers and delivering quality products and innovative
solutions to which our customers are responding well."
MICRO PRODUCTS BUSINESS REMAINS FLAT
"Micro Products losses continue to adversely effect our ability to improve
corporate profitability. Significant Micro Products orders did not
materialize this quarter because of the delivery and performance issues we
experienced last summer. This coupled with continued slow market development
for two-metal tape resulted in Micro Products sales being relatively flat with
the first quarter. Backlog going into the second half of the year is at a
level comparable with the previous two quarters," said Lundstrom.
Sheldahl is a leading producer of high-density substrates, high-quality
flexible printed circuitry, and flexible laminates primarily for sale to the
automotive electronics and data communications markets. The Company, which is
headquartered in Northfield, Minnesota, has operations in Northfield;
Longmont, Colorado; South Dakota; Toronto, Ontario, Canada; and Chihuahua,
Chih., Mexico. Its sales offices are located in Detroit, Michigan; Hong Kong,
China; Singapore; and Mainz, Germany. As of March 1, 2000, Sheldahl employed
approximately 850 people. Sheldahl's common stock trades on the Nasdaq
National Market tier of the Nasdaq Stock Market under the symbol: SHEL. In
its' fiscal year ended August 27, 1999, Sheldahl reported revenues of
$122.1 million. Sheldahl news and information can be found on the World Wide
Web at http://www.sheldahl.com .
The discussion above contains statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements by their nature
involve substantial risks and uncertainties as described by Sheldahl's
periodic filings. Actual results may differ materially depending on a variety
of factors, including but not limited to the following: the achievement of
Sheldahl's projected operating results, the ability of Sheldahl to
successfully obtain waivers from its lenders for any defaults on its debt
covenants, the achievement of efficient volume production and related sales
revenue results at Longmont, the ability of Sheldahl to identify and
successfully pursue other business opportunities, Sheldahl not entering into
an agreement with respect to a transaction or any such transaction not being
consummated and Sheldahl successfully defending and ultimately prevailing on
the action brought by Sheldahl shareholders. Additional information with
respect to the risks and uncertainties faced by Sheldahl may be found in, and
the prior discussion is qualified in its entirety by, the Risk Factors
contained in the Company's filings with the Securities and Exchange
Commission, including Sheldahl's Annual Report, Form 10-K for the fiscal year
ended August 27, 1999, Form 10-Q for the quarter ended November 26, 1999 and
other SEC filings.
Sheldahl does not undertake any obligation to update any such factors or
to publicly announce developments or events relating to the matters described
herein.
SHELDAHL, INC. AND SUBSIDIARY
Consolidated Statements Of Operations
Unaudited
Six Months Ended
(in thousands, except for per share data)
February 25, February 26,
2000 1999
Net sales $66,842 $56,516
Cost of sales 57,993 50,697
Gross profit 8,849 5,819
Expenses:
Sales and marketing 3,951 4,751
General and
administrative 4,506 3,758
Research and
development 1,582 1,253
Restructuring -- 3,100
Interest 1,806 987
Total expenses 11,845 13,849
Net loss before
preferred dividends (2,996) (8,030)
Convertible preferred
stock dividends (1,028) (1,072)
Net loss applicable to
common shareholders $(4,024) $(9,102)
Net loss per common share:
Basic and diluted $(0.35) $(0.84)
Number of weighted shares outstanding:
Basic and diluted 11,638 10,772
SHELDAHL, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Unaudited
Three Months Ended
(in thousands, except for per share data)
February 25, February 26, November 26,
2000 1999 1999
Net sales $32,030 $28,042 $34,811
Cost of sales 27,937 24,930 30,054
Gross profit 4,093 3,112 4,757
Expenses:
Sales and marketing 1,861 2,531 2,091
General and
administrative 2,274 1,831 2,231
Research and development 662 679 921
Interest 890 664 916
Restructuring costs -- 3,100 --
Total expenses 5,687 8,805 6,159
Net loss before
preferred dividends (1,594) (5,693) (1,402)
Convertible preferred
stock dividends (520) (418) (508)
Net loss applicable to
common shareholders $(2,114) $(6,111) $(1,910)
Net loss per common share:
Basic and diluted $(0.18) $(0.55) $(0.16)
Number of weighted shares
outstanding:
Basic and diluted 11,663 11,037 11,613
SHELDAHL, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
(unaudited)
(In thousands)
February 25, August 27,
2000 1999
Current assets:
Cash and cash equivalents $1,201 $1,043
Accounts receivable, net 21,459 19,908
Inventories 20,987 18,746
Other current assets 911 593
Total current assets 44,558 40,290
Construction in progress 1,091 3,399
Land and buildings 28,567 28,560
Machinery and equipment 130,288 127,377
Less: accumulated depreciation (84,095) (76,491)
Net plant and equipment 75,851 82,845
Other assets 851 795
$121,260 $123,930
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of
long-term debt $3,468 $4,142
Accounts payable 10,388 10,493
Accrued salaries 1,272 1,323
Other accrued liabilities 5,106 4,682
Restructuring reserves 1,368 2,713
Total current liabilities 21,602 23,353
Long-term debt 30,745 29,284
Restructuring reserves 2,303 2,484
Other long-term accruals 3,341 3,477
Shareholders' investment:
Convertible preferred stock 42 40
Common stock 2,924 2,903
Additional paid-in capital 111,345 109,407
Retained earnings (51,042) (47,018)
Total shareholders' investment 63,269 65,332
$121,260 $123,930