Sheldahl Reports Third Quarter; Nine Month Fiscal 2000 Results
28 June 2000
Record Sales/Positive Cash Flow Achieved Record Micro Products Orders
NORTHFIELD, Minn. - Sheldahl, Inc. today announced record sales of $36.2
million for its third quarter ended May 26, 2000, largely driven by a better
than two-fold increase in business from the Datacom market and increasing
demand in Micro Products. This represents an 11.0% improvement over the
comparable quarter in fiscal 1999 when net sales were $32.6 million. Pre-tax
losses for the quarter prior to the payment of preferred dividends were $3.7
million versus $1.4 million in the comparable period a year ago. Net losses for
the quarter were $4.2 million, or $0.36 per share, compared with $2.0 million,
or $0.18 per share, for the fiscal 1999 third quarter ended May 28, 1999.
The fiscal 2000 third quarter improvements resulted in positive cash flow
for Sheldahl for the quarter but gross profits were off due to a less
profitable sales mix and higher material costs. In addition, material cost
adjustments amounting to $1.2 million were made resulting in a more
conservative presentation of inventory.
Cash requirements to fund restructuring charges taken during fiscal 1999
and 1998, (estimated to be $2.7 million for fiscal 2000 versus $5.0 million
for all of fiscal 1999), coupled with capital expenditures (planned for
$3.0 million in fiscal 2000 compared with $5.5 million in fiscal 1999) and
debt repayments of approximately $3.8 million continue to place significant
pressure on the cash reserves of the Company. As a result, the financial
condition of the Company at May 26, 2000, was not in compliance with one of
its debt covenants. Sheldahl has received a waiver from its lenders with
respect to matters of non-compliance. In addition new debt covenants have
been established for the Company's fourth quarter ending September 1, 2000.
Edward L. Lundstrom, President and Chief Executive Officer commented on
the quarter, stating, "Core business revenues are strong, being driven by the
Datacom market where Sheldahl has made significant in-roads with its
Novaclad(R) family of products -- Novaflex(R) VHD, Novaflex(R) HD and
ViaThin(R). These are most commonly utilized in newer products focused on
smaller scale, more and faster functionality and lighter weight, such as
cellular telephones and portable computing devices."
"Micro Products also had a record quarter, with more than $1.3 million in
sales," Lundstrom continued. "We enter the final quarter of fiscal 2000 with
Micro Products backlog at a record $2.2 million, demonstrative of increasing
market acceptance and reliance on Sheldahl as a preferred vendor. We expect
to see continued progress in this area."
Nine Month Results
For the first nine months of fiscal 2000, Sheldahl reported record sales
of $103.0 million, an increase of more than 15% over the $89.1 million
reported for the first nine months of fiscal 1999. Gross profits improved to
$11.2 million from $9.8 million, driven by significantly more sales in the
Datacom market and a record $3.8 million in sales for Micro Products.
Operating losses before preferred dividends amounted to $6.7 million in fiscal
2000 versus $9.5 million, including $2.6 million of restructuring costs
incurred in the first nine months of fiscal 1999. Net losses for the first
nine months of fiscal 2000 were $8.2 million versus $11.1 million for the
comparable period of fiscal 1999.
"As we enter the final quarter of our fiscal year, we are pleased with the
increasing demand for our products, with our increased sales in the Datacom
market and with the confidence our customers have in our technology and our
ability to deliver quality products," Lundstrom said. "We are focused on
improving our liquidity and capital position and remain committed to our
shareholders to maximize shareholder value for the long-term."
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; Detroit, Michigan; South Dakota; Toronto, Ontario, Canada;
and Chihuahua, Chih., Mexico. Its sales offices are located in Hong Kong,
China; Singapore; and Mainz, Germany. As of June 1, 2000, Sheldahl employed
approximately 820 people. Sheldahl's common stock trades on the Nasdaq
National Market tier of the Nasdaq Stock Market under the symbol: SHEL.
Sheldahl news and information can be found on the World Wide Web at
http://www.sheldahl.com .
The discussion above contains forward-looking 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 its
default on its debt covenants, the achievement of efficient volume production
and relates sales revenue results at Longmont, the ability of Sheldahl to
identify and successfully pursue other business opportunities, and Sheldahl
not entering into an agreement with respect to a transaction or any such
transaction not being consummated. 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,
forms 10-Q for the quarters ending November 26, 1999, February 25, 2000, and
other SEC filings. Sheldahl does not undertake any obligation to update any
such factors or to publicly announce developments or events related to the
matters described herein.
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended
May 26, May 28,
(in thousands, except for per share data) 2000 1999
Net sales $ 36,152 $ 32,575
Cost of sales 33,801 28,527
Gross profit 2,351 4,048
Expenses:
Sales and marketing 2,151 2,172
General and administrative 2,134 2,396
Research and development 793 616
Interest 940 799
Restructuring Costs -- (500)
Total expenses 6,018 5,483
Loss before income taxes (3,667) (1,435)
Benefit (provision) for income taxes -- --
Net income before preferred dividends (3,668) (1,435)
Convertible preferred stock dividends (528) (521)
Net loss applicable to common shareholders $ (4,196) $ (1,956)
Net loss per common share -- Basic and Diluted $ (0.36) $ (0.18)
Number of shares outstanding -- Basic and Diluted 11,762 11,153
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Nine Months Ended
(in thousands, except for per share data) May 26, May 28,
2000 1999
Net sales $ 102,994 $ 89,091
Cost of sales 91,794 79,224
Gross profit 11,200 9,867
Expenses:
Sales and marketing 6,103 6,923
General and administrative 6,640 6,153
Research and development 2,375 1,870
Interest 2,746 1,787
Restructuring Costs -- 2,600
Total expenses 17,864 19,333
Loss before income taxes (6,664) (9,466)
Income taxes -- --
Net loss before preferred dividends $ (6,664) $ (9,466)
Convertible preferred stock dividends $ (1,555) $ (1,593)
Net loss applicable to common shareholders $ (8,219) $ (11,059)
Net loss after convertible preferred stock
dividends -- basic and diluted $ (0.70) $ (1.02)
Weighted average number of shares
outstanding -- basic and diluted 11,680 10,857
SHELDAHL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
Unaudited
(In thousands) May 26, August 27,
2000 1999
Current assets:
Cash and cash equivalents $ 972 $ 1,043
Accounts receivable, net 22,330 19,908
Inventories 18,434 18,746
Other current assets 939 593
Total current assets 42,675 40,290
Construction in progress 793 3,399
Land and buildings 28,662 28,560
Machinery and equipment 130,786 127,377
Less: accumulated depreciation (88,274) (76,491)
Net plant and equipment 71,967 82,845
Other assets 773 795
$ 115,415 $ 123,930
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $ 3,468 $ 4,142
Accounts payable 12,082 10,493
Accrued salaries 1,310 1,323
Other accrued liabilities 5,069 4,682
Restructuring reserves 1,227 2,713
Total current liabilities 23,156 23,353
Long-term debt 27,708 29,284
Restructuring reserves 1,734 2,484
Other non-current liabilities 3,341 3,477
Total Liabilities 55,939 58,598
Shareholders' investment:
Convertible preferred stock 42 40
Common stock 2,940 2,903
Additional paid-in capital 111,732 109,407
Retained earnings (55,238) (47,018)
Total shareholders' investment 59,476 65,332
$ 115,415 $ 123,930