Sheldahl Reports Fiscal 2000 Results
13 November 2000
Sheldahl Reports Fiscal 2000 Results; Building Sales in Datacom Market
Significant Margin Pressure
NORTHFIELD, Minn., Nov. 13 Sheldahl, Inc.
today announced increased sales but deteriorating margins for its fiscal year
ended September 1, 2000. Sales of $136.7 million represent a 12% improvement
over the fiscal 1999 sales results that totaled $122.1 million. Pre-tax
losses for the year prior to the payment of preferred dividends were
$12.9 million versus $10.8 million in fiscal year 1999, excluding
$10.7 million in restructuring charges in 1999. Net losses for fiscal year
2000 were $15.0 million, or $1.28 per share, compared with $23.6 million, or
$2.15 per share, for fiscal 1999 ended August 27, 2000.
Edward L. Lundstrom, President and Chief Executive Officer commented on
the year, stating, "Fiscal 2000 proved to be a very difficult year for the
Company as we worked toward a definitive agreement to resolve liquidity issues
while simultaneously focusing on building the business. Sheldahl's Core
Business, particularly work associated with the automotive sector, slowed,
affecting product mix and margins, some of which was precipitated by customer
concerns related to the future of the Company. On the other hand, we gained
strong momentum in the Datacom market and in our Micro Products segment."
"The data communications market is proving to be an excellent growth area
for Sheldahl's Novaclad(R) family of products -- Novaflex(R) VHD, Novaflex(R)
HD and ViaThin(R). Major new programs were started for an integrated circuit
manufacturer and Sheldahl delivered quality goods on time," Lundstrom
continued. "Micro Products finished the year with $6.7 million in sales and
an annualized run rate of $12.0 million. We remain optimistic that our
technology and production capabilities are real assets. However, there is
definitely room for cost improvement as we initiate new programs and work to
improve margins."
Gross profits were off due to a less profitable sales mix, higher material
costs and increased costs associated with new production runs in Micro
Products. In addition, the Company's Core Business, which historically has
relatively higher margins associated with the automotive sector, reported
sales growth, up 7.8% but with a 3.6% decrease in automotive business.
Datacom sales during this quarter, while up significantly, carried with them
lower gross margins which have been negatively impacted by competitive price
erosion.
In the fourth quarter, the Company took a charge for $371,000 in expenses
associated with strategic alternatives advisory services. Cash requirements to
fund restructuring charges taken during fiscal 2000 were $2.7 million versus
$5.0 million for fiscal 1999. These expenses, coupled with capital
expenditures of $2.4 million in fiscal 2000 versus $5.5 million in fiscal 1999
and debt repayments of $2.7 million, continue to place significant pressure on
the cash position of the Company.
Sheldahl 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 2001 fiscal year, with quarterly targets pinpointed.
Lundstrom stated, "We are survivors and look forward to completing the
IFT/Morganthaler/Ampersand transaction. An aggressive close to this
transaction is central to our cash situation. We have improved many aspects
of the business, including inventory and accounts receivable management,
datacom market penetration and Micro Products commercialization. Our banks
are supporting us as we move forward to a positive resolution to the cash
situation. Cash flow from operations after capital expenditures was negative
at $5.6 million compared to last year's negative $9.5 million. We enter
fiscal 2001 cautiously optimistic, focused on achieving customer satisfaction
while closing our transaction."
FOURTH QUARTER RESULTS
For the fourth quarter of fiscal 2000, Sheldahl reported sales of
$33.7 million, an increase of 2.1% over the $33.0 million reported for the
fourth quarter of fiscal 1999. Gross profits were off substantially due to a
less profitable sales mix, higher material costs, competitive pricing issues
and manufacturing inefficiencies that resulted from the start-up of new
programs in Micro Products. However, spending controls are proving effective
as operating expenses decreased 8% from $6.3 million in the fiscal 1999 fourth
quarter to $5.8 million in the last quarter of fiscal 2000. Fiscal 2000 sales
and expenses represent a period of fourteen weeks as compared to
thirteen weeks in fiscal 1999.
Operating losses before preferred dividends amounted to $6.2 million
versus $12.0 million in the comparable quarter of fiscal 1999, which included
$8.1 million in restructuring costs. Net losses for the 2000 fourth quarter
were $6.8 million versus $12.5 million a year ago.
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended
September 1, August 27,
(in thousands, except for per share data) 2000 1999
Net sales $136,741 $122,086
Cost of sales 124,677 109,157
Gross profit 12,064 12,929
Expenses:
Sales and marketing 8,658 9,666
General and administrative 9,158 8,742
Research and development 3,083 2,825
Restructuring costs 0 2,600
Asset impairment and other 0 8,085
Interest 4,060 2,499
Total expenses 24,959 34,417
Net loss before preferred dividends (12,895) (21,488)
Convertible preferred stock dividends (2,091) (2,080)
Net loss applicable to common shareholders $(14,986) $(23,568)
Net loss per common share
- Basic and diluted: $(1.28) $(2.15)
Number of weighted shares outstanding:
Basic and Diluted 11,753 10,987
SHELDAHL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended
September 1, August 27, May 26,
(in thousands, except for 2000 1999 2000
per share data)
Net sales $ 33,747 $ 32,995 $ 36,152
Cost of sales 32,883 29,932 33,801
Gross profit 864 3,063 2,351
Expenses:
Sales and marketing 2,555 2,743 2,151
General and administrative 2,518 2,589 2,134
Research and development 708 956 793
Interest 1,314 713 940
Asset impairment and other 0 8,085 0
Total expenses 7,095 15,086 6,018
Net loss before preferred dividends (6,231) (12,023) (3,667)
Convertible preferred stock dividends (536) (487) (528)
Net loss applicable
to common shareholders $ (6,767) $(12,510) $ (4,195)
Net loss per common share
- Basic and Diluted $( .57) $ (1.10) $ (0.36)
Number of weighted average shares outstanding:
Basic and Diluted 11,975 11,352 11,762
SHELDAHL, INC. AND SUBSIDIARY
SUMMARY CONSOLIDATED BALANCE SHEET
Unaudited
September 1, August 27, May 26,
(in thousands) 2000 1999 2000
Total current assets $ 42,069 $ 40,290 $ 42,676
Net fixed assets 68,353 82,845 71,967
Other assets 640 795 773
Total assets $111,062 $123,930 $115,416
Total current liabilities $ 20,775 $ 23,353 $ 23,156
Total long-term debt 31,537 29,284 27,708
Other long-term liabilities 4,255 5,961 5,075
Total equity 54,495 65,332 59,477
Total liabilities and equity $111,062 $123,930 $115,416