Exhibit 99.1
Allen Organ Company
150 Locust Street Macungie, PA 18062
Phone: 610-966-2200
NEWS RELEASE - FOR IMMEDIATE RELEASE
NASDAQ-AORGB
February 28, 2003 From: Nathan S. Eckhart, Vice President-Finance
Consolidated sales for the year ended December 31, 2002 for Allen Organ
Company were $67,739,548 as compared with $60,490,513 for the same period of
2001. The consolidated net income was $2,685,357 or $2.29 per share on
1,170,191 average outstanding shares for 2002, as compared to a net loss of
$(4,083,810) or $(3.49) per share on 1,170,480 average outstanding shares for
2001.
Sales for the fourth quarter of 2002 were $18,652,619 as compared to
$16,725,951 in 2001. Net income for the fourth quarter of 2002 was $215,822
or $0.18 per share, compared to $370,388 or $0.32 per share for 2001.
Musical Instruments segment sales increased approximately $73,000 and
$567,000 during the three months and year ended December 31, 2002,
respectively, when compared to the same periods in 2001. While the order
rate was slightly lower in 2002 than the same period in 2001, sales for the
year were higher due to shipments made against the order backlog. Electronic
Assemblies segment sales increased approximately $187,000 and decreased
approximately $3,631,000 during the three months and year ended December 31,
2002, respectively, when compared to the same periods in 2001. Electronic
Assemblies segment sales for the year decreased due to lower order volume
from the Company's contract manufacturing customers that have been negatively
affected by the economic slowdown. Audio Equipment segment sales decreased
slightly during the three months and year ended December 31, 2002 when
compared to the same periods in 2001.
The Musical Instruments operating income decreased during the three months
and year ended December 31, 2002 due to changes in product mix and higher
operating costs. The Electronic Assemblies segment incurred an operating
loss during the three months and year ended December 31, 2002 due to lower
sales volume over which to absorb fixed costs.
The Data Communications segment sales increased by approximately $1,742,000
and $10,626,000 during the three months and year ended December 31, 2002,
respectively, when compared to the same periods in 2001. The 2002 sales
increased due to new product introductions and the redirection of the
Company's sales and marketing efforts away from CLECs to other Data
Communications markets. The Data Communications segment operating income for
the three months ended December 31, 2002 was approximately $108,000 as
compared to $722,000 in the same period of 2001. This decrease is due to
lower gross margins on sales, which resulted from changes in product mix, in
the fourth quarter of 2002. The combination of increased sales, higher gross
margins in earlier quarters in 2002 and lower operating costs resulted in
operating income of approximately $2,017,000 for the year ended December 31,
2002, compared to an operating loss of approximately $(8,284,000) in the same
period of 2001. The 2001 operating loss included $1,539,000 of additional
inventory reserves related to discontinued products at VIR and a charge of
$1,930,000 to write down the value of VIR's goodwill and for restructuring
related to the combination of VIR Linear Switch into Eastern Research, Inc.
Future sales visibility remains limited throughout the Data Communications
market that this segment serves. In addition, this segment's business is
more dependent on larger individual sales that may cause sales levels to vary
more in future quarters'.
Investment income increased slightly during the three months and year ended
December 31, 2002 when compared to the same periods in 2001 due to realized
gains on investments and higher invested balances that offset lower rates of
return on invested funds.
The effective tax rate for the year ended December 31, 2002 decreased due to
tax credits and other non-taxable items.
CONSOLIDATED SALES AND EARNINGS
Three Months Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Sales $18,652,619 $16,725,951 $67,739,548 $60,490,513
Income (Loss) From
Operations 15,332 646,665 3,106,847 (6,963,264)
Non-Operating Income, Net 253,490 131,723 689,510 519,454
Income Tax Provision
(Benefit) 53,000 408,000 1,111,000 (2,360,000)
Net Income (Loss) 215,822 370,388 2,685,357 (4,083,810)
Earnings Per Share-Basic
and Diluted $0.18 $0.32 $2.29 $(3.49)
Average Shares Outstanding 1,170,191 1,170,480 1,170,191 1,170,480
Allen Organ Company and its subsidiaries manufacture and distribute
electronic keyboard musical instruments, audio equipment, electronic
assemblies, and data communication equipment for the domestic and
international markets.
Factors that May Affect Operating Results:
The statements contained in this press release that are not purely historical
are forward looking statements, including statements regarding the Company's
expectations, hopes, intentions or strategies regarding the future. Forward
looking statements include: statements regarding future products or product
development; statements regarding future research and development spending
and the Company's marketing and product development strategy, statements
regarding future production capacity. All forward looking statements
included in this press release are based on information available to the
Company on the date hereof, and the Company assumes no obligation to update
any such forward looking statements. Readers are cautioned not to place
undue reliance on these forward looking statements, which reflect
management's opinions only as of the date hereof. Readers should carefully
review the risk factors described in other documents the Company files from
time to time with the Securities and Exchange Commission, including the
Annual Report on Form 10-K for the year ended December 31, 2001 and its
Quarterly Reports on Form 10-Q. It is important to note that the Company's
actual results could differ materially from those in such forward looking
statements. Some of the factors that could cause actual results to differ
materially are set forth below.
The Company has experienced and expects to continue to experience
fluctuations in its results of operations. Factors that affect the Company's
results of operations include the volume and timing of orders received,
changes in global economics and financial markets, changes in the mix of
products sold, market acceptance of the Company's and its customer's
products, competitive pricing pressures, global currency valuations, the
availability of raw materials that the Company purchases from suppliers, the
Company's ability to meet increasing demand, the Company's ability to
introduce new products on a timely basis, the timing of new product
announcements and introductions by the Company or its competitors, changing
customer requirements, delays in new product qualifications, the timing and
extent of research and development expenses and fluctuations in manufacturing
yields. As a result of the foregoing or other factors, there can be no
assurance that the Company will not experience material fluctuations in
future operating results on a quarterly or annual basis, which would
materially and adversely affect the Company's business, financial condition
and results of operations.
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