ADFlex Solutions Inc. (AFLX) 3 21/32 -5/32: supplier of flexible circuit-based interconnect solutions posts a Q2 net of $0.03, excluding restructuring and one-time charges, ahead of the First Call loss estimate of $0.10, vs year-ago loss of $0.40; net sales fell 22.8% to $34.2 mln; see press release.....
ADFlex Announces Second Quarter 1999 Results
Business Wire - July 15, 1999 17:47
CHANDLER, Ariz.--(BUSINESS WIRE)--July 15, 1999--ADFlex Solutions Inc. (Nasdaq NM: AFLX) Thursday announced results from operations for its second quarter ended June 27, 1999.
Including restructuring and one-time charges of $2.6 million, ADFlex reported a net loss of $2.4 million or $0.27 per diluted share for the second quarter of 1999, compared to a net loss of $3.6 million or $0.40 per diluted share in the second quarter of 1998.
Excluding restructuring and one- time charges, net income for the second quarter was $0.2 million or $0.03 per diluted share. Net sales for the second quarter of 1999 were $34.2 million, compared to $44.3 million in the second quarter of 1998.
For the six months ended June 27, 1999, ADFlex reported a net loss of $23.6 million or $2.62 per diluted share (including restructuring and one-time charges of $18.4 million), compared to a net loss of $0.9 million or $0.11 per diluted share for the first six months of 1998.
The net loss for the six months ended 1998 includes a one-time charge of $1.4 million. Net sales for the six months ended June 27, 1999 were $62.8 million, compared to $94.3 million for the first six months of 1998.
During the quarter, the company recorded a $2.6 million charge to implement cost reductions, improve productivity, and to record certain merger-related expenses.
Actions taken by the company to reduce cost and improve productivity included a worldwide workforce reduction, closing of its United Kingdom facility, transfer of programs from Mexico to the company's new Thailand facility, and the write-down of certain Company assets.
Commenting on the quarter, ADFlex President and Chief Operating Officer Neil Dial stated: "We are pleased with the progress that was made during the quarter to reduce costs, and improve productivity. We believe that these ongoing efforts will continue to have a favorable impact on the Company's future performance.
"Additionally, during the quarter, the Company announced that it has entered into a definitive merger agreement with Innovex, Inc. (Nasdaq: INVX). Under the terms of the agreement, Innovex will commence a cash tender offer to purchase all of the outstanding shares of ADFlex. The tender offer, unless extended, will expire on August 3, 1999.
"We believe that Innovex's strong balance sheet addresses ADFlex's immediate need for capital and provides the liquidity necessary to fund the operations of the Company in the second half of the year. Also, Innovex's technological base compliments our existing products and customer base and creates opportunities to leverage business development with our customers."
Revenues for the second quarter of 1999 increased $5.6 million over the first quarter as certain customers resolved technical and inventory issues experienced during the first quarter.
Gross margins for the second quarter of 1999 improved to 13.5%, compared to a negative 1.3% in the first quarter of 1999 resulting principally from actions taken by the company to reduce cost and improve productivity as well as better factory utilization resulting from higher sales.
Operating expenses for the second quarter of 1999, before restructure and other one-time charges, were $3.7 million compared to $4.1 million (excluding a $6.9 million restructuring charge) in the first quarter of 1999 due to ongoing efforts to reduce expenses.
Backlog at the end of the second quarter was $26.8 million compared to $28.3 million in the first quarter of 1999. The reduction in backlog is due to softer demand in the hard disk drive and other storage product segments partially offset by continued strong demand in the communications segment.
ADFlex Solutions Inc. is a leading supplier of flexible circuit-based interconnect solutions to the computer, computer peripheral, communications and consumer electronic product 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 risk 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; risk associated with the increased competition from Asian flex manufacturers, including pricing pressures; risks of order cancellations or postponements; risk related to manufacturing processes and efficiency; risk that cost reduction measures instituted in 1998 and 1999, may not enable the company to avoid operating losses in the future; risks associated with the Innovex merger, including customary closing conditions and the risk that the merger will not address the company's capital and liquidity needs; and other risks detailed in the Company's Annual Report on Form 10-K for the year ended Dec. 27, 1998 and other Securities and Exchange Commission filings.
ADFlex Solutions Inc.
Summary Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 27, June 30, June 27, June 30,
1999 1998 1999 1998
Net sales $34,187 $44,304 $62,825 $94,327
Cost of sales 29,560 43,151 58,576 82,656
Gross profit 4,627 1,153 4,249 11,671
Operating expenses
Engineering,
selling &
administrative 4,480 5,118 8,437 11,137
Restructuring
charges 903 - 7,806 -
Amortization of
intangible
assets 129 129 258 258
Total operating
expenses 5,512 5,247 16,501 11,395
Operating income
(loss) (885) (4,094) (12,252) 276
Other income
(expense), net (1,517) (870) (2,426) (1,587)
Income (loss)
before income
taxes (2,402) (4,964) (14,678) (1,311)
Income taxes - (1,390) 8,874 (368)
Net income (loss) $(2,402) $(3,574) $(23,552) $(943)
Net income (loss)
per share:
Basic $(0.27) $(0.40) $(2.62) $(0.11)
Diluted $(0.27) $(0.40) $(2.62) $(0.11)
Number of shares
used in computing
net income (loss)
per share:
Basic 8,983 8,835 8,975 8,820
Diluted 8,983 8,835 8,975 8,820
ADFlex Solutions Inc.
Summary Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 27, December 27,
1999 1998
Assets
Current assets:
Cash & short-term
investments $2,641 $5,325
Accounts receivable, net 22,704 24,747
Inventories 9,021 9,397
Deferred taxes - 2,072
Other current assets 1,470 3,113
Total current assets 35,836 44,654
Property, plant & equipment,
net 47,736 55,351
Intangible assets 1,710 1,933
Deferred tax assets - 6,326
Other assets 46 40
----------------- -----------------
$85,328 $108,304
Liabilities and Stockholders'
Equity
Current liabilities:
Line of credit $16,400 $13,000
Notes Payable - 63
Accounts payable 16,422 15,927
Accrued liabilities 9,872 7,183
Current portion of long-term
debt and capitalized leases 16,865 24,613
Total current liabilities 59,559 60,786
Long-term debt and capitalized
leases, less current portion 1,311 69
Stockholders' equity 24,458 47,449
----------------- -----------------
$85,328 $108,304
CONTACT: ADFlex Solutions Inc.
Neil Dial, 602/963-4584
or
Donald E. Frederick, 602/963-8400
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