Exhibit 99.1
Contact: Brian P. Crescenzo
302-326-5648
FOR IMMEDIATE RELEASE
APPLIED EXTRUSION TECHNOLOGIES, INC.
ANNOUNCES FISCAL 2003 SECOND QUARTER RESULTS
NEW CASTLE, DE, April 28, 2003 – Applied Extrusion Technologies, Inc. (NASDAQ NMS – AETC) today announced financial results for its second fiscal quarter ended March 31, 2003.
SECOND QUARTER 2003 RESULTS
Sales for the second quarter of fiscal 2003 of $62,850,000 were $713,000, or 1.1 percent, lower than the comparable quarter in fiscal 2002. A 5.7 percent decline in volume was partially offset by a 4.8 percent increase in average selling price. The higher average selling price was due both to price increases and an improved mix of products sold.
Gross profit of $12,719,000 was $771,000, or 6.5 percent higher, than the same period of last year. Gross margin was 20.2 percent versus 18.8 percent in the same period of last year. Raw material costs for the quarter were approximately $4,700,000, or 23 percent higher than the same quarter of last year. Nevertheless, the Company was able to deliver higher gross margin and higher absolute gross profit due to higher average selling prices and an improved mix of products sold.
In addition to an improved gross margin, ongoing operating expenses were approximately $1,000,000 lower in the current quarter as a result of the restructuring initiated in September 2002. These cost reductions were partially offset by $420,000 in restructuring transition expenses. Transition expenses include duplicative headcount, travel, and relocation expenses specific to the implementation of the restructuring program. Operating profit for the second quarter of fiscal 2003 was $4,605,000 or 42 percent higher compared with operating profit of $3,239,000 for the second quarter of fiscal 2002.
For the three months ended March 31, 2003, the Company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $10,381,000, an increase of 28 percent compared with EBITDA of $8,138,000 for the second quarter of fiscal 2002.
Interest expense of $7,715,000 was $625,000 higher than the second quarter of fiscal 2002. This was primarily due to increased borrowings on our revolving credit facility and less capitalized interest as compared to the same period in the prior year.
Net loss for the second quarter of fiscal 2003 was $3,110,000, or $.24 per share compared with a net loss of $3,851,000, or $.31 per share for the second quarter of fiscal 2002.
SIX MONTHS 2003 RESULTS
Sales for the first six months of fiscal 2003 of $122,211,000 were $3,171,000, or 2.7 percent higher than the comparable period in fiscal 2002. A 1.3 percent decline in volume was more than offset by a 4.1 percent increase in average selling price. The higher average selling price was due both to price increases and an improved mix of products sold.
Gross profit of $24,900,000 was $2,626,000, or 11.8 percent higher than the same period of last year. Gross margin was 20.4 percent versus 18.7 percent in the same period of last year. Raw material costs for the first six months were approximately $7,000,000, or 17 percent higher than the same period of last year. Nevertheless, the Company was able to deliver higher gross margin and higher absolute gross profit due to lower manufacturing costs, higher selling prices, and an improved mix of products sold.
In addition to an improved gross margin, ongoing operating expenses were approximately $1,500,000 lower in the current six months as a result of the restructuring initiated in September 2002. These cost reductions were partially offset by $884,000 in restructuring transition expenses. Transition expenses include duplicative headcount, travel, and relocation expenses specific to the implementation of the restructuring program. Operating profit for the first six months of fiscal 2003 was $8,625,000 or 60 percent higher compared with operating profit of $5,391,000 for the same period of last year.
For the six months ended March 31, 2003, the Company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $20,163,000, an increase of 33 percent compared with EBITDA of $15,170,000 for the same period of the prior year.
Interest expense of $14,994,000 was $1,012,000 higher than the first six months of fiscal 2002. This was primarily due to increased borrowings on our revolving credit facility and less capitalized interest as compared to the same period in the prior year.
Net loss for the first six months of fiscal 2003 was $6,369,000, or $.50 per share, compared with a net loss of $8,591,000, or $.68 per share for the same period of the prior year.
BALANCE SHEET, CASH FLOW AND LIQUIDITY
The Company recently announced that it had completed the syndication of its amended and restated $50,000,000 revolving credit facility. At March 31, 2003 the Company had borrowings outstanding of $10,097,000 in addition to $6,231,000 of letters of credit.
Unused availability under the credit facility was approximately $21,000,000 at March 31, 2003. Net Debt (total debt less cash) at March 31, 2003 was $286,761,000, representing 88 percent of total capitalization.
COMPANY COMMENTS
“Fiscal 2003 continues to be extremely challenging,” commented Amin J. Khoury, Chairman and Chief Executive Officer. We have led three price increases in the past year and recently instituted a $.04 surcharge on all film shipped in an effort to keep up with rapidly escalating raw material costs, which were approximately $7,000,000 higher in the first six months of this year versus the prior year. Raw material costs are continuing to increase and will be significantly higher in the third fiscal quarter. We will carefully control capital expenditures and continuously re-evaluate our cost structure as we progress through the year. Our focus is on executing a successful turnaround in fiscal 2003 and laying the foundation for solid financial returns beginning in fiscal 2004,” concluded Mr. Khoury.
CONFERENCE CALL
As previously announced, the Company will hold a conference call at 10:00 AM Eastern Time on April 29, 2003 to discuss the results. To listen live via the Internet, visit the Investor Relations section of AET’s website at http://www.aetfilms.com. To access the conference call by phone, dial 1-888-423-3280 and reference access code “AET Call”. A taped replay of the conference call will also be available from approximately 12:30 PM Eastern Time on April 29, 2003 until midnight on May 6, 2003. To listen to the replay, dial 1-800-475-6701 from within the U.S. or 320-365-3844 from outside the U.S. and enter access code 682545.
Applied Extrusion Technologies, Inc. is a leading North American developer and manufacturer of specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging applications.
Except for the historical information contained herein, the matters discussed in this report are forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including those risks related to the ability to implement price increases and related volume losses, the timely development and acceptance of new products, fluctuations in raw materials and other production costs, the ability to satisfy our debt service requirements, the loss of one or more significant customers, the impact of competitive products and pricing, the timely completion of capital projects, the success of the Company’s efforts to access capital markets on satisfactory terms, and to acquire, integrate, and operate new businesses and expand into new markets, as well as other risks detailed in Exhibit 99.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2002 and from time to time in the Company’s other reports filed with the Securities and Exchange Commission.
APPLIED EXTRUSION TECHNOLOGIES, INC.
Balance Sheets
(In thousands, except per share data)
(Unaudited)
| March 31, 2003 |
September 30, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
1,419 |
|
$ |
17,558 |
| ||
| Accounts receivable |
|
40,500 |
|
|
40,010 |
| ||
| Inventory |
|
48,849 |
|
|
32,531 |
| ||
| Prepaid expenses |
|
2,936 |
|
|
2,365 |
| ||
| Total current assets |
|
93,704 |
|
|
92,464 |
| ||
| Property, plant and equipment, net |
|
278,840 |
|
|
276,916 |
| ||
| Goodwill |
|
9,874 |
|
|
9,874 |
| ||
| Other intangible assets |
|
10,738 |
|
|
11,043 |
| ||
| Other assets |
|
15,338 |
|
|
14,765 |
| ||
| $ |
408,494 |
|
$ |
405,062 |
| |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
17,371 |
|
$ |
10,701 |
| ||
| Accrued interest |
|
7,456 |
|
|
7,428 |
| ||
| Accrued expenses and other current liabilities |
|
23,606 |
|
|
33,348 |
| ||
| Borrowings under line of credit |
|
10,097 |
|
|||||
| Total current liabilities |
|
58,530 |
|
|
51,477 |
| ||
| Long-term debt |
|
278,083 |
|
|
277,876 |
| ||
| Long-term liabilities |
|
34,437 |
|
|
36,948 |
| ||
| Stockholders’ equity: |
||||||||
| Preferred stock |
|
— |
|
|
— |
| ||
| Common stock |
|
130 |
|
|
130 |
| ||
| Additional paid-in-capital |
|
103,250 |
|
|
103,250 |
| ||
| Accumulated deficit |
|
(63,158 |
) |
|
(56,789 |
) | ||
| Accumulated comprehensive loss |
|
(525 |
) |
|
(5,577 |
) | ||
|
|
39,697 |
|
|
41,014 |
| |||
|
|
(2,253 |
) |
|
(2,253 |
) | |||
| Treasury stock |
|
37,444 |
|
|
38,761 |
| ||
| Total stockholders’ equity |
$ |
408,494 |
|
$ |
405,062 |
| ||
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Income
(In thousands, except per share data)
(Unaudited)
| Three Months Ended |
||||||||
| March 31, 2003 |
March 31, 2002 As Restated |
|||||||
| Sales |
$ |
62,850 |
|
$ |
63,563 |
| ||
| Cost of sales |
|
50,131 |
|
|
51,615 |
| ||
| Gross profit |
|
12,719 |
|
|
11,948 |
| ||
| Operating expenses: |
||||||||
| Selling, general and administrative |
|
6,090 |
|
|
7,042 |
| ||
| Research and development |
|
2,024 |
|
|
1,667 |
| ||
|
|
8,114 |
|
|
8,709 |
| |||
| Operating profit |
|
4,605 |
|
|
3,239 |
| ||
| Non operating expenses: |
||||||||
| Interest expense, net |
|
7,715 |
|
|
7,090 |
| ||
| Net loss |
$ |
(3,110 |
) |
$ |
(3,851 |
) | ||
| Loss per common share |
$ |
(0.24 |
) |
$ |
(0.31 |
) | ||
| Average common shares outstanding |
|
12,718 |
|
|
12,423 |
| ||
| EBITDA (Operating Profit Reconciliation) |
||||||||
| Operating profit |
$ |
4,605 |
|
$ |
3,239 |
| ||
| Depreciation and Amortization |
|
6,153 |
|
|
5,224 |
| ||
| Less amortization included in interest expense |
|
(469 |
) |
|
(335 |
) | ||
| Other |
|
92 |
|
|
10 |
| ||
| EBITDA |
$ |
10,381 |
|
$ |
8,138 |
| ||
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Income
(In thousands, except per share data)
(Unaudited)
| Six Months Ended |
||||||||
| March 31, 2003 |
March 31, 2002 As Restated |
|||||||
| Sales |
$ |
122,211 |
|
$ |
119,040 |
| ||
| Cost of sales |
|
97,311 |
|
|
96,766 |
| ||
| Gross Profit |
|
24,900 |
|
|
22,274 |
| ||
| Operating expenses: |
||||||||
| Selling, general and administrative |
|
12,310 |
|
|
13,717 |
| ||
| Research and development |
|
3,965 |
|
|
3,166 |
| ||
|
|
16,275 |
|
|
16,883 |
| |||
| Operating Profit |
|
8,625 |
|
|
5,391 |
| ||
| Non operating expenses: |
||||||||
| Interest expense, net |
|
14,994 |
|
|
13,982 |
| ||
| Net loss |
$ |
(6,369 |
) |
$ |
(8,591 |
) | ||
| Loss per common share |
$ |
(0.50 |
) |
$ |
(0.68 |
) | ||
| Average common shares outstanding |
|
12,697 |
|
|
12,660 |
| ||
| EBITDA (Operating Profit Reconciliation) |
||||||||
| Operating profit |
$ |
8,625 |
|
$ |
5,391 |
| ||
| Depreciation and Amortization |
|
12,343 |
|
|
10,464 |
| ||
| Less amortization included in interest expense |
|
(898 |
) |
|
(695 |
) | ||
| Other |
|
92 |
|
|
10 |
| ||
| EBITDA |
$ |
20,163 |
|
$ |
15,170 |
| ||
APPLIED EXTRUSION TECHNOLOGIES, INC.
Statements of Cash Flows
(In thousands, except per share data)
(Unaudited)
| March 31, 2003 |
March 31, 2002 |
|||||||
| OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ |
(6,369 |
) |
$ |
(8,591 |
) | ||
| Adjustments to reconcile net loss to net cash from operating activities: |
||||||||
| Provision for doubtful accounts |
|
300 |
|
|
300 |
| ||
| Depreciation and amortization |
|
12,343 |
|
|
10,464 |
| ||
| Amortization of sale-leaseback gains |
|
(2,475 |
) |
|
(2,248 |
) | ||
| Stock issued for retirement plans, share incentive plan and other compensation |
|
— |
|
|
425 |
| ||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
|
(418 |
) |
|
(2,623 |
) | ||
| Inventory |
|
(15,994 |
) |
|
(580 |
) | ||
| Prepaid expenses and other current assets |
|
(1,732 |
) |
|
(2,198 |
) | ||
| Accounts payable and accrued expenses |
|
(2,483 |
) |
|
(2,708 |
) | ||
| Other |
|
(382 |
) |
|
4,038 |
| ||
| Net cash from operating activities |
|
(17,210 |
) |
|
(3,721 |
) | ||
| INVESTING ACTIVITIES: |
||||||||
| Additions to property, plant and equipment |
|
(9,569 |
) |
|
(14,230 |
) | ||
| Proceeds from sale of property, plant and equipment |
|
1,220 |
|
|
350 |
| ||
| Repurchase of leased assets |
|
— |
|
|
(17,156 |
) | ||
| Collection of receivable from sale of division |
|
— |
|
|
23,212 |
| ||
| Proceeds from sale-leaseback transactions |
|
— |
|
|
18,225 |
| ||
| Net cash from investing activities |
|
(8,349 |
) |
|
10,401 |
| ||
| FINANCING ACTIVITIES: |
||||||||
| Borrowings under line of credit agreement, net |
|
10,097 |
|
|
— |
| ||
| Debt Issuance costs |
|
(673 |
) |
|
— |
| ||
| Proceeds from issuance of stock, net |
|
— |
|
|
696 |
| ||
| Net cash from financing activities |
|
9,424 |
|
|
696 |
| ||
| Effect of exchange rate changes on cash |
|
(4 |
) |
|
(4 |
) | ||
| Increase in cash and cash equivalents, net |
|
(16,139 |
) |
|
7,372 |
| ||
| Cash and cash equivalents, beginning |
|
17,558 |
|
|
22,176 |
| ||
| Cash and cash equivalents, ending |
$ |
1,419 |
|
$ |
29,548 |
| ||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
| Cash paid for interest during the period for: |
||||||||
| Interest, including capitalized interest |
$ |
15,078 |
|
$ |
16,271 |
| ||
| Income taxes |
|
— |
|
|
— |
| ||