ADFlex Announces Third Quarter 1997 Results
CHANDLER, Ariz.--(BUSINESS WIRE)--Oct. 15, 1997--ADFlex Solutions Inc. (Nasdaq NM:AFLX) today announced results from operations for its
third quarter ended Sept. 30, 1997.
For the quarter, ADFlex recorded net sales of $55.1 million, an increase of 49.2 percent, compared with $36.9 million in the third quarter of 1996. Net
income for the quarter was $2.6 million, or 29 cents per share, vs. a net loss in the third quarter of 1996, including restructuring charges, of $25.7 million, or
$2.98 per share.
For the nine months ended Sept. 30, 1997, ADFlex recorded net sales of $159.5 million, an increase of 45.0 percent, compared with $110.0 million for the
first nine months of 1996. Net income for the nine-month period was $5.3 million, or 60 cents per share, vs. a net loss for the first nine months of 1996,
including restructuring charges, of $25.5 million, or $2.97 per share.
Commenting on the results, ADFlex Chairman and Chief Executive Officer Rolando C. Esteverena stated, ''The results for the quarter are due, in part, to
the successful startup of a new production facility in Thailand, and to ADFlex's long-term diversification strategy that mitigated recent shortfalls in demand
experienced by the high-end disk drive segment.''
During the third quarter, the company completed the transition of production from the United Kingdom to its new lower-cost production facility in Thailand.
As a result, gross margins improved on a sequential basis to 18.4 percent in the third quarter, compared with 16.2 percent in the second quarter of 1997.
The company expects to attain further gross margin improvements in the future as all production previously performed in the United Kingdom will now
occur in Thailand.
Approximately $10.1 million of the third-quarter revenue originated at ADFlex's Thailand plant, which is now shipping in volume advanced chip-on-flex
assemblies to several customers. Also, during the quarter, the company announced that it had increased its ownership in the Thailand operations from 80
percent to 100 percent.
Prior to the company increasing its ownership to 100 percent, the Thailand production facility was operated under a joint-venture agreement between
ADFlex and Hana Microelectronics PLC. The timing of the purchase of Hana's equity in ADFlex Thailand coincided with the completion, ahead of plan, of
the production transfer from the United Kingdom to Thailand, and the expectation that there will be a need for expanded manufacturing capacity in
Thailand during 1998.
Esteverena added: ''The improved performance for the period also reflects greater diversification in the customer base for the third quarter, as revenues in
the computer, communications and consumer product segments (applications other than disk drives) represented a record 58 percent of sales. Overall, the
business outlook for the remainder of the year remains unchanged from previous expectations.''
Backlog for the company at the end of the third quarter was $53.3 million, with $44.8 million scheduled to ship in the fourth quarter. He concluded that
''ADFlex is now positioned and ready to be the 'one-stop-shop' supplier, able to meet customers' volume requirements for flex interconnect and flex
assembly. The benefits from this strategy in the future, we believe, will be a significant contributor to growth.''
ADFlex Solutions is a leading supplier of flexible circuit-based interconnect solutions to the computer, computer peripheral, communication and other
industries. Applications for flex-based interconnects include cellular telephones, hard disk drives and other storage systems, high-end consumer products,
notebook computers, pagers and personal communications systems.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts
may contain forward-looking statements that involve risks and uncertainties, including, but not limited to, continuing risks related to concentration of sales,
customers and markets, and the ability of the company to achieve and maintain broad-based customer demand and growth and to mitigate demand
variations in the hard disk drive industry; risks associated with the company's ability to improve margins during the remainder of 1997 and thereafter; risks
relating to the expansion of manufacturing capacity in Thailand; the long-term validity of the company's ''one-stop shop'' growth strategy; and other risks
detailed in the company's Annual Report on Form 10-K for the year ended Dec. 31, 1996, and other Securities and Exchange Commission filings.
ADFlex Solutions Inc.
Summary Consolidated Statements of Operations
(in thousands, except per-share data)
Three Months Ended Nine Months Ended
Sept, 30, Sept. 30,
1997 1996 1997 1996
Net sales $ 55,058 $ 36,898 $159,524 $110,011
Cost of sales 44,913 37,193 132,857 97,864
Gross profit 10,145 (295) 26,667 12,147
Operating expenses
Engineering, selling
& administrative 5,652 5,483 17,270 15,511
Amortization of
intangible assets -- 795 -- 2,386
Restructuring charges -- 29,248 -- 29,248
Total operating
expenses 5,652 35,526 17,270 47,145
Operating income (loss) 4,493 (35,821) 9,397 (34,998)
Other income (expense),
net (674) (229) (1,756) (734)
Income (loss) before
income taxes 3,819 (36,050) 7,641 (35,732)
Income taxes 1,222 (10,387) 2,292 (10,248)
Net income (loss) $ 2,597 $(25,663) $ 5,349 $(25,484)
Net income (loss)
per share 29 cents $ (2.98) 60 cents $ (2.97)
Number of shares used
in computing net income
(loss) per share 9,022 8,617 8,863 8,576
ADFlex Solutions Inc.
Summary Consolidated Balance Sheets
(in thousands)
Sept, 30, Dec. 31,
1997 1996
Assets
Current assets:
Cash & Short-term investments $ 4,644 $ 6,097
Accounts receivable, net 31,478 25,149
Inventories 19,778 14,990
Deferred tax assets 2,405 2,505
Prepaid taxes 913 795
Other current assets 2,189 1,778
Total current assets 61,407 51,314
Property, plant & equipment, net 37,047 34,297
Deferred tax assets 5,424 7,546
Intangible assets 2,578 --
Other assets 26 24
$106,482 $ 93,181
Liabilities and Stockholders' Equity
Current liabilities:
Line of credit $ 1,000 $ 10,000
Accounts payable 18,289 19,882
Accrued liabilities 10,814 9,679
Notes payable, current 2,750 --
Current portion of long-term debt -- 2,500
Current portion of capitalized leases 168 151
Total current liabilities 33,021 42,212
Accrued restructuring charges,
non-current -- 2,500
Capitalized leases & deferred tax
liabilities 1,281 189
Long-term debt, less current
portion 25,000 7,500
Minority interest in consolidated
joint venture -- 491
Stockholders' equity 47,180 40,289
$106,482 $ 93,181 |
