Exhibit 99.1
FLOW INTERNATIONAL ANNOUNCES FINAL
THIRD FISCAL QUARTER 2003 RESULTS,
RESTATEMENT OF SECOND FISCAL QUARTER 2003
KENT, Wash., March 24, 2003 — Flow International Corporation (Nasdaq: FLOW), the world’s leading developer and manufacturer of ultrahigh-pressure waterjet technology equipment used for cutting, cleaning (surface preparation) and food safety applications, today reported final results for its third fiscal quarter ended January 31, 2003 (see attached financial tables). The company intends to file its Form 10-Q the week of March 31, 2003. In addition, the company will be re-stating its second quarter fiscal 2003 results. The company intends to file an amended Form 10-Q for the quarter ended October 31, 2002, prior to its filing of its third quarter Form 10-Q.
FLOW had previously announced preliminary third quarter financial results on March 17, 2003. As compared to the previously announced results, the company has adjusted revenues, cost of goods sold and operating expenses. The effect of these adjustments as compared to the previously announced results are noted below:
| • | FLOW reports consolidated fiscal third quarter revenues of $30.9 million, which is $2.0 million higher than preliminary revenues of $28.9 million that the company had previously reported. The previously reported third quarter revenue of $28.9 million includes $2.0 million in revenue reversals which have been re-stated as a reversal in the second quarter of fiscal 2003. There was no impact on revenues for the nine months ended January 31, 2003. |
| • | FLOW reports a consolidated net loss of $41.6 million, which represents a reduction in loss of $706,000 compared to the preliminary net loss of $42.3 that the company had previously reported. The consolidated net loss includes $32.8 million in previously announced charges related to accounts receivable and inventory reserves, goodwill impairment, allowances for deferred tax assets and other adjustments. On a per-share basis, FLOW reports a net loss of $2.71 per diluted share, compared to the previously reported preliminary net loss of $2.61 per diluted share. This change includes a $.04 improvement associated with the net loss reduction of $706,000 above, offset by a reduction in the weighted average shares outstanding which, for the third fiscal quarter only, had included 860,000 warrants. This reduction increased the loss per share by $.14. |
The company announced that it will restate its second quarter fiscal 2003 results. No re-statement of a prior year period is required. The restated amounts for the three months ended October 31, 2002 are as follows:
| • | Consolidated restated revenues are $42.2 million for the three months ended October 31, 2002, a decrease in revenues of $2.0 million from the previously reported revenues of $44.2 million. The restatement results from the reversal of percentage of completion revenue previously recognized on food systems. |
| • | Consolidated restated cost of goods sold are $27.4 million, a decline of $1.2 million from the previously reported total of $28.6 million. The cost of sales is impacted by the reversal of related revenues. |
| • | Consolidated total operating expenses are $15.9 million, an increase of $196,000 from the previously reported total operating expenses of $15.7 million. |
| • | Consolidated net loss is $8.9 million and $.58 per diluted share as compared to the previously reported net loss of $7.9 million and $.51 per diluted share. |
Over the next few quarters, certain food system revenue will be recognized upon installation and acceptance, as several completed food systems are currently in inventory and will not qualify for percentage of completion accounting when customers commit to purchase these units. Percentage of completion accounting treatment will continue to be applied to the sale of new food systems when construction commences upon receipt of executable customer orders.
Final results for the third fiscal quarter ended January 31, 2003 are reported in the financial tables that follow.
About Flow International
Flow International Corporation is the world’s leading developer and manufacturer of ultrahigh-pressure (UHP) waterjet technology for cutting, cleaning, and food-safety applications, as well as isostatic and flexform presses. FLOW provides total system solutions for various industries, including automotive, aerospace, paper, job shop, surface preparation, and food production. For more information, visit www.flowcorp.com.
About Avure Technologies Incorporated
Avure Technologies is a wholly owned subsidiary of Flow International Corporation. Avure’s Fresher Under Pressure HPP technology destroys food-borne pathogens, including Salmonella, E. coli and Listeria. HPP also destroys other organisms that can cause health hazards and spoilage in fresh foods, without compromising taste, color, texture, or nutritional value.
For more information, visit www.avure.com.
This press release contains forward-looking statements relating to future events or future financial performance that involve risks and uncertainties. The words “believe,” “expect,” “intend,” “anticipate,” variations of such words and similar expressions identify forward-looking statements but their absence does not mean that the statement is not forward-looking. These statements are only predictions and actual results could differ materially from those anticipated in these statements based on a number of risk factors, including those set forth in the April 30, 2002, Flow International Corporation Form 10-K Report filed with the Securities and Exchange Commission. Forward-looking statements in this press release include, without limitation, statements regarding the expecting timing of the filing of the third quarter Form 10-Q and the statement that certain food revenue will be recognized upon acceptance as compared to the percentage of completion method. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement.
Flow International Corporation
Statement of Operations
Divisional Breakdown
(Unaudited)
Dollars in thousands, except per share data
Three months ended January 31, 2003 | Three months ended January 31, 2002 | |||||||||||||||||||||||
Flow Waterjet Systems | Avure Technologies | Consolidated | Flow Waterjet Systems | Avure Technologies | Consolidated | |||||||||||||||||||
Revenues | $ | 30,532 |
| $ | 333 |
| $ | 30,865 |
| $ | 30,101 |
| $ | 11,382 |
| $ | 41,483 |
| ||||||
Cost of goods sold |
| 27,001 |
|
| 4,634 |
|
| 31,635 |
|
| 18,182 |
|
| 6,077 |
|
| 24,259 |
| ||||||
Gross margin |
| 3,531 |
|
| (4,301 | ) |
| (770 | ) |
| 11,919 |
|
| 5,305 |
|
| 17,224 |
| ||||||
Operating expenses |
| 24,511 | a) |
| 4,594 |
|
| 29,105 | a) |
| 10,969 |
|
| 4,677 |
|
| 15,646 |
| ||||||
Operating (loss) income |
| (20,980 | ) |
| (8,895 | ) |
| (29,875 | ) |
| 950 |
|
| 628 |
|
| 1,578 |
| ||||||
Interest expense, net |
| (1,209 | ) |
| (1,989 | ) |
| (3,198 | ) |
| (1,290 | ) |
| (913 | ) |
| (2,203 | ) | ||||||
Other expense, net |
| (945 | ) |
| (2,289 | ) |
| (3,234 | ) |
| (119 | ) |
| (9 | ) |
| (128 | ) | ||||||
Loss before taxes |
| (23,134 | ) |
| (13,173 | ) |
| (36,307 | ) |
| (459 | ) |
| (294 | ) |
| (753 | ) | ||||||
Income tax expense (benefit) |
| 3,485 |
|
| 1,827 |
|
| 5,312 |
|
| (151 | ) |
| (97 | ) |
| (248 | ) | ||||||
Net loss | $ | (26,619 | ) | $ | (15,000 | ) | $ | (41,619 | ) | $ | (308 | ) | $ | (197 | ) | $ | (505 | ) | ||||||
Diluted loss per share | $ | (1.73 | ) | $ | (0.98 | ) | $ | (2.71 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | ||||||
| a) | includes $7.1 million of goodwill impairment |
Flow International Corporation
Statement of Operations
Divisional Breakdown
(Unaudited)
Dollars in thousands, except per share data
Nine months ended January 31, 2003 | Nine months ended January 31, 2002 | |||||||||||||||||||||||
Flow Waterjet Systems | Avure Technologies | Consolidated | Flow Waterjet Systems | Avure Technologies | Consolidated | |||||||||||||||||||
Revenues | $ | 96,545 |
| $ | 17,008 |
| $ | 113,553 |
| $ | 96,817 |
| $ | 35,506 |
| $ | 132,323 |
| ||||||
Cost of goods sold |
| 70,883 |
|
| 15,669 |
|
| 86,552 |
|
| 58,468 |
|
| 19,588 |
|
| 78,056 |
| ||||||
Gross margin |
| 25,662 |
|
| 1,339 |
|
| 27,001 |
|
| 38,349 |
|
| 15,918 |
|
| 54,267 |
| ||||||
Operating expenses |
| 47,616 | a) |
| 13,757 |
|
| 61,373 | a) |
| 33,692 |
|
| 12,949 |
|
| 46,641 |
| ||||||
Operating (loss) income |
| (21,954 | ) |
| (12,418 | ) |
| (34,372 | ) |
| 4,657 |
|
| 2,969 |
|
| 7,626 |
| ||||||
Interest expense, net |
| (3,873 | ) |
| (4,328 | ) |
| (8,201 | ) |
| (4,126 | ) |
| (2,635 | ) |
| (6,761 | ) | ||||||
Other expense, net |
| (1,312 | ) |
| (2,741 | ) |
| (4,053 | ) |
| (197 | ) |
| (233 | ) |
| (430 | ) | ||||||
(Loss) income before taxes |
| (27,139 | ) |
| (19,487 | ) |
| (46,626 | ) |
| 334 |
|
| 101 |
|
| 435 |
| ||||||
Income tax expense |
| 7,831 |
|
| — |
|
| 7,831 |
|
| 110 |
|
| 34 |
|
| 144 |
| ||||||
Net (loss) income | $ | (34,970 | ) | $ | (19,487 | ) | $ | (54,457 | ) | $ | 224 |
| $ | 67 |
| $ | 291 |
| ||||||
Diluted (loss) earnings per share | $ | (2.28 | ) | $ | (1.27 | ) | $ | (3.55 | ) | $ | 0.02 |
| $ | 0.00 |
| $ | 0.02 |
| ||||||
| a) | includes $7.1 million of goodwill impairment |
Flow International Corporation
Consolidated Statement of Operations
(Unaudited)
Dollars in thousands, except per share data
Three months ended January 31, | Nine months ended January 31, | |||||||||||||||||||||
2003 | 2002 | % Change | 2003 | 2002 | % Change | |||||||||||||||||
Revenues | $ | 30,865 |
| $ | 41,483 |
| -26 | % | $ | 113,553 |
| $ | 132,323 |
| -14 | % | ||||||
Cost of goods sold |
| 31,635 |
|
| 24,259 |
| 30 | % |
| 86,552 |
|
| 78,056 |
| 11 | % | ||||||
Gross margin |
| (770 | ) |
| 17,224 |
| -104 | % |
| 27,001 |
|
| 54,267 |
| -50 | % | ||||||
Operating expenses: | ||||||||||||||||||||||
Marketing |
| 10,853 |
|
| 8,036 |
| 35 | % |
| 27,132 |
|
| 23,280 |
| 17 | % | ||||||
Research and engineering |
| 3,696 |
|
| 3,538 |
| 4 | % |
| 10,324 |
|
| 10,825 |
| -5 | % | ||||||
General and administrative |
| 7,411 |
|
| 4,072 |
| 82 | % |
| 16,772 |
|
| 12,536 |
| 34 | % | ||||||
Impairment of goodwill |
| 7,145 |
|
| — |
| NM |
|
| 7,145 |
|
| — |
| NM |
| ||||||
Operating expenses |
| 29,105 |
|
| 15,646 |
| 86 | % |
| 61,373 |
|
| 46,641 |
| 32 | % | ||||||
Operating (loss) income |
| (29,875 | ) |
| 1,578 |
| NM |
|
| (34,372 | ) |
| 7,626 |
| NM |
| ||||||
Interest expense, net |
| (3,198 | ) |
| (2,203 | ) | 45 | % |
| (8,201 | ) |
| (6,761 | ) | 21 | % | ||||||
Other expense, net |
| (3,234 | ) |
| (128 | ) | NM |
|
| (4,053 | ) |
| (430 | ) | NM |
| ||||||
(Loss) income before taxes |
| (36,307 | ) |
| (753 | ) | NM |
|
| (46,626 | ) |
| 435 |
| NM |
| ||||||
Income tax expense (benefit) |
| 5,312 |
|
| (248 | ) | NM |
|
| 7,831 |
|
| 144 |
| NM |
| ||||||
Net (loss) income | $ | (41,619 | ) | $ | (505 | ) | NM |
| $ | (54,457 | ) | $ | 291 |
| NM |
| ||||||
(Loss) earnings per share: | ||||||||||||||||||||||
Basic | $ | (2.71 | ) | $ | (0.03 | ) | NM |
| $ | (3.55 | ) | $ | 0.02 |
| NM |
| ||||||
Diluted |
| (2.71 | ) |
| (0.03 | ) | NM |
|
| (3.55 | ) |
| 0.02 |
| NM |
| ||||||
Weighted average shares outstanding (000): | ||||||||||||||||||||||
Basic |
| 15,359 |
|
| 15,354 |
|
| 15,345 |
|
| 15,221 |
| ||||||||||
Diluted |
| 15,359 |
|
| 15,354 |
|
| 15,345 |
|
| 16,284 |
| ||||||||||
NM = not meaningful
Flow International Corporation
Supplemental Data
(Unaudited)
Dollars in thousands
Three months ended January 31, | Nine months ended January 31, | ||||||||||||||||||
2003 | 2002 | % Change | 2003 | 2002 | % Change | ||||||||||||||
Divisional revenue breakdown: | |||||||||||||||||||
Flow Waterjet Systems: | |||||||||||||||||||
Systems | $ | 19,571 |
| $ | 20,515 | -5 | % | $ | 60,443 | $ | 64,813 | -7 | % | ||||||
Consumable parts and services |
| 10,961 |
|
| 9,586 | 14 | % |
| 36,102 |
| 32,004 | 13 | % | ||||||
Total |
| 30,532 |
|
| 30,101 | 1 | % |
| 96,545 |
| 96,817 | 0 | % | ||||||
Avure Technologies | |||||||||||||||||||
Fresher Under Pressure |
| (3,780 | ) |
| 2,815 | -234 | % |
| 2,817 |
| 6,790 | -59 | % | ||||||
General Press |
| 4,113 |
|
| 8,567 | -52 | % |
| 14,191 |
| 28,716 | -51 | % | ||||||
Total |
| 333 |
|
| 11,382 | -97 | % |
| 17,008 |
| 35,506 | -52 | % | ||||||
$ | 30,865 |
| $ | 41,483 | -26 | % | $ | 113,553 | $ | 132,323 | -14 | % | |||||||
Geographic revenue breakdown: | |||||||||||||||||||
United States | $ | 15,960 |
| $ | 21,056 | -24 | % | $ | 62,130 | $ | 71,779 | -13 | % | ||||||
Rest of Americas |
| 4,225 |
|
| 3,205 | 32 | % |
| 12,664 |
| 9,588 | 32 | % | ||||||
Europe |
| 6,340 |
|
| 13,533 | -53 | % |
| 25,120 |
| 39,206 | -36 | % | ||||||
Asia |
| 4,340 |
|
| 3,689 | 18 | % |
| 13,639 |
| 11,750 | 16 | % | ||||||
$ | 30,865 |
| $ | 41,483 | -26 | % | $ | 113,553 | $ | 132,323 | -14 | % | |||||||
Depreciation and amortization expense | $ | 3,032 |
| $ | 1,810 | 68 | % | $ | 7,638 | $ | 4,968 | 54 | % | ||||||
Capital spending | $ | 1,406 |
| $ | 2,798 | -50 | % | $ | 3,635 | $ | 6,812 | -47 | % | ||||||
Flow International Corporation
Condensed Balance Sheet Data
Dollars in thousands
January 31, 2003 | April 30, 2002 | % Change | |||||||
(Unaudited) | |||||||||
Cash | $ | 6,599 | $ | 7,120 | -7 | % | |||
Receivables, net |
| 44,092 |
| 62,774 | -30 | % | |||
Inventories |
| 45,096 |
| 48,164 | -6 | % | |||
Total current assets |
| 111,022 |
| 131,646 | -16 | % | |||
Total assets |
| 161,804 |
| 206,476 | -22 | % | |||
Total debt | $ | 95,529 | $ | 88,113 | 8 | % | |||
Total liabilities |
| 136,880 |
| 133,546 | 2 | % | |||
Total shareholders’ equity |
| 22,587 |
| 70,684 | -68 | % | |||
