Exhibit 99.1
For Further Information:
Bob Delk
President and CEO
(310) 537-5444 (222)
(972) 432-0602 (x128)
bdelk@advmatl.com
FOR IMMEDIATE RELEASE:
ADVANCED MATERIALS GROUP REPORTS
FOURTH QUARTER RESULTS
ADMG Posts Quarterly Loss of $0.02 Per Share, Fiscal Year Loss of $0.07 Per Share, Compared to Quarterly Loss of $0.10 and Fiscal Year Loss of $0.14 in the Prior Year
RANCHO DOMINGUEZ, California, (April 27, 2004) – Advanced Materials Group, Inc. today reported final sales and income from operations for the fourth fiscal quarter and fiscal year ended November 30, 2003.
Net sales for the fourth quarter of fiscal 2003 were $2.3 million versus $6.3 million for the comparable period of fiscal 2002. The net loss for the fourth quarter of fiscal 2003 was $203,000 compared to a net loss of $835,000 for the fourth quarter of fiscal 2002. The basic and diluted loss per share for the fourth quarter was $0.02 per share on an average of 8.7 million shares, versus basic and diluted loss of $0.10 per share on an average of 8.7 million shares in the year ago period.
Net sales for the fiscal year 2003 were $14.5 million versus $26.6 million for the comparable period of 2002. The net loss for fiscal year 2003 was $631,000 compared to $1,202,000 for fiscal year 2002. The basic and diluted net loss per share for fiscal year 2003 was $0.07 per share on an average of 8.7 million shares, versus basic and diluted net loss per share of $0.14 per share on an average of 8.7 million shares in fiscal year 2002.
In October 2003, the Company sold its wholly owned subsidiary, Advanced Materials Ltd. (“AML-Ireland”). The consolidated financial results for fiscal years 2003 and 2002 have been restated and operating results of AML-Ireland are shown separately as discontinued operations for those periods. The Company recorded a gain of $378,000, or $0.04 per share, on the sale of AML-Ireland during the 4th quarter of 2003. Additionally, in July 2003, the Company amended its manufacturing agreement in Singapore to change the vendor of record for the customer supplied under the agreement, from the Company to its partner. Although this change does not affect the Company’s share of the profitability under the agreement, it does cause a significant reduction in its reported revenues.
In addition to the changes to the Company’s previously issued consolidated financial statements required by the discontinued operations, management identified an error that resulted in the understatement of cost of sales for its joint venture agreement in Singapore by $728,000, which necessitated a restatement of the Company’s 2002 consolidated financial statements.
Chief Executive Officer Comments on Results
Commenting on the results, Advanced Materials Group CEO and President, Bob Delk said, “In looking back, we enacted a number of changes to the business in a relatively short span of time during 2003.
These changes include significant cost reductions, key management leadership changes, the sale of AML-Ireland, a re-alignment of the Singapore partnership, and the initiative to develop new products. We feel that these steps were necessary to better position AMG for what must be done in 2004; that being, the aggressive pursuit of business development that could provide both opportunity for both revenue growth and profit.”
Some statements contained in this press release, including statements regarding the aggressive pursuit of business development that could provide opportunity for both revenue growth and profit, returning to profitable operations, are forward-looking statements that involve a number of risks and uncertainties. In addition to the factors discussed including escalating pricing pressures, the following are among other factors that could cause actual results to differ materially: general business conditions, competitive factors, concentration of sales in markets and customers, concentration of raw materials suppliers, delays or cancellations in orders, fluctuations in margins, timing of significant orders, and other risks and uncertainties outlined by management in the Company’s most recent Form 10-K.
Advanced Materials Group, Inc. is in the business of developing, manufacturing and fabricating products using flexible raw materials such as specialty foams, plastics, fabrics, foils, films and pressure-sensitive adhesive components for a broad base of customers in the medical, technology, consumer, aerospace and automotive industries both in the U.S. and abroad.
(Financial tables follow)
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ADVANCED MATERIALS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Three Months Ended
November 30, | | Fiscal Year Ended
November 30, | |
| | (Unaudited) | | | | | |
| | 2003 | | 2002 | | 2003 | | 2002 | |
| | | | Restated | | | | Restated | |
Net sales | | $ | 2,300,000 | | $ | 6,312,000 | | $ | 14,475,000 | | $ | 26,588,000 | |
Cost of sales | | 2,161,000 | | 6,469,000 | | 13,142,000 | | 25,071,000 | |
| | | | | | | | | |
Gross profit | | 139,000 | | (157,000 | ) | 1,333,000 | | 1,517,000 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Selling, general and administrative | | 616,000 | | 672,000 | | 2,351,000 | | 2,446,000 | |
Write-down of goodwill | | — | | 387,000 | | — | | 387,000 | |
Restructuring charges | | (352,000 | ) | — | | (352,000 | ) | 226,000 | |
| | | | | | | | | |
Total operating expenses | | 264,000 | | 1,059,000 | | 1,999,000 | | 3,059,000 | |
| | | | | | | | | |
Loss from operations | | (125,000 | ) | (1,216,000 | ) | (666,000 | ) | (1,542,000 | ) |
Other income (expense): | | | | | | | | | |
Interest expense | | (43,000 | ) | (110,000 | ) | (254,000 | ) | (409,000 | ) |
(Loss) gain on disposal of fixed assets | | (159,000 | ) | 13,000 | | (159,000 | ) | 13,000 | |
Other, net | | (35,000 | ) | (56,000 | ) | (69,000 | ) | (108,000 | ) |
| | | | | | | | | |
Total other expenses | | (237,000 | ) | (153,000 | ) | (482,000 | ) | (504,000 | ) |
| | | | | | | | | |
Loss from continuing operations before income taxes | | (1,369,000 | ) | (1,148,000 | ) | (2,046,000 | ) | | |
Income tax (expense) benefit | | (24,000 | ) | 297,000 | | (24,000 | ) | 297,000 | |
| | | | | | | | | |
Loss from continuing operations | | (386,000 | ) | (1,072,000 | ) | (1,172,000 | ) | (1,749,000 | ) |
Discontinued Operations: | | | | | | | | | |
Income (loss) from discontinued operations | | (195,000 | ) | 237,000 | | 163,000 | | 547,000 | |
Gain on sale of discontinued operations | | 378,000 | | — | | 378,000 | | — | |
| | | | | | | | | |
Net loss | | $ | (203,000 | ) | $ | (835,000 | ) | $ | (631,000 | ) | $ | (1,202,000 | ) |
| | | | | | | | | |
Basic and diluted loss per common share: | | | | | | | | | |
Loss from continuing operations | | $ | (0.04 | ) | $ | (0.12 | ) | $ | (0.14 | ) | $ | (0.20 | ) |
Income (loss) from discontinued operations | | (0.02 | ) | 0.02 | | 0.02 | | 0.06 | |
Gain on sale of discontinued operations | | 0.04 | | — | | 0.05 | | — | |
Net loss per share | | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.07 | ) | $ | (0.14 | ) |
| | | | | | | | | |
Basic and diluted weighted average common shares outstanding | | 8,671,272 | | 8,671,272 | | 8,671,272 | | 8,671,272 | |
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ADVANCED MATERIALS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30,
November 30, | | 2003 | | 2002 Restated | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 21,000 | | $ | 157,000 | |
Restricted cash | | 60,000 | | — | |
Accounts receivable, net of allowance for doubtful accounts of $54,000 and $97,000 as of November 30, 2003 and 2002, respectively | | 1,319,000 | | 4,766,000 | |
Inventories, net of allowance for obsolescence of $81,000 and $241,000 as of November 30, 2003 and 2002, respectively | | 939,000 | | 2,310,000 | |
Discontinued operations, net | | — | | 1,690,000 | |
Prepaid expenses and other | | 161,000 | | 136,000 | |
| | | | | |
Total current assets | | 2,500,000 | | 9,059,000 | |
| | | | | |
Property and equipment, net | | 1,059,000 | | 1,683,000 | |
Other assets | | 48,000 | | 58,000 | |
| | | | | |
Total assets | | $ | 3,607,000 | | $ | 10,800,000 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 1,181,000 | | $ | 3,810,000 | |
Accrued liabilities | | 439,000 | | 367,000 | |
Restructuring reserve | | 56,000 | | 378,000 | |
Deferred income | | — | | 97,000 | |
Line of credit | | 609,000 | | 3,701,000 | |
Term loan | | 361,000 | | — | |
Current portion of long-term obligations | | 360,000 | | 599,000 | |
Convertible debentures | | 405,000 | | — | |
| | | | | |
Total current liabilities | | 3,411,000 | | 8,952,000 | |
| | | | | |
Convertible debentures | | — | | 405,000 | |
Restructuring reserve | | 76,000 | | 504,000 | |
Retirement benefit to former employees, net of current portion of $273,000 and $157,000 and of discount of $2,610,000 and $2,871,000 at November 30, 2003 and 2002, respectively | | 951,000 | | 1,094,000 | |
Capital lease obligations, net of current portion of $87,000 and $164,000 at November 30, 2003 and 2002, respectively | | 57,000 | | 143,000 | |
| | | | | |
Total liabilities | | 4,495,000 | | 11,098,000 | |
| | | | | |
Commitments and contingencies | | | | | |
Stockholders’ deficit: | | | | | |
Preferred stock-$.001 par value; 5,000,000 shares authorized; no shares issued and outstanding | | — | | — | |
Common stock-$.001 par value; 25,000,000 shares authorized; 8,671,272 shares issued and outstanding at November 30, 2003 and 2002 | | 9,000 | | 9,000 | |
Additional paid-in capital | | 7,124,000 | | 7,083,000 | |
Accumulated deficit | | (8,021,000 | ) | (7,390,000 | ) |
| | | | | |
Total stockholders’ deficit | | (888,000 | ) | (298,000 | ) |
| | | | | |
Total liabilities and stockholders’ deficit | | $ | 3,607,000 | | $ | 10,800,000 | |
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