Exhibit 99.1
Allen Organ Company
150 Locust Street Macungie, PA 18062
Phone: 610-966-2200
NEWS RELEASE - FOR IMMEDIATE RELEASE
NASDAQ-AORGB
February 24, 2005 From: Nathan S. Eckhart, Vice President-Finance
Consolidated sales for the year ended December 31, 2004 for Allen Organ
Company were $80,170,788, as compared with $60,788,058 for the same period of
2003. The consolidated net income was $4,709,047 or $4.07 per basic share
and $4.06 per diluted share for 2004, compared to $1,396,896 or $1.20 per
basic and diluted share for 2003.
Sales for the fourth quarter of 2004 were $22,351,371, as compared to
$19,255,623 in 2003. Net income for the fourth quarter of 2004 was
$1,219,769 or $1.05 per basic and diluted share, compared to $1,365,679 or
$1.18 per basic and diluted share for 2003.
Musical Instruments segment sales increased approximately $905,000 to
$6,079,188, and $505,000 to $20,886,800, during the three months and year
ended December 31, 2004, respectively, when compared to the same periods in
2003. These increases in sales reflect shipments of organs containing
QuantumT technology introduced in the second quarter of 2004, with shipments
beginning in the third quarter. The 2004 order rate and backlog on December
31, 2004 continued to be higher than the same periods in 2003 reflecting
favorable customer reaction to the Quantum organs that include significant
new features and product benefits, as well as an improved economic
environment. This segment generated operating income of approximately
$449,000 and $613,000, respectively, during the three months and year ended
December 31, 2004, compared to operating losses of approximately $(137,000)
and $(765,000) for the same periods in 2003. The 2004 operating income
reflects higher gross margins on organs due to changes in product mix and the
impact of cost reduction initiatives undertaken in 2003.
The Data Communications segment sales increased approximately $2,166,000 to
$15,121,200 and $18,958,000 to $54,980,044, during the three months and year
ended December 31, 2004, respectively, when compared to the same periods in
2003. These increases are due to higher order volume, which management
believes is attributable to an improvement in the overall data communications
market and the timing of completing sales with the Company's larger
customers. Operating income decreased to approximately $1,096,000 during the
three months ended December 31, 2004, compared to operating income of
$1,360,000 in the same period of 2003. This decrease is due to higher
operating costs, primarily higher research and development costs associated
with the development of this segments next generation of products. Operating
income increased to approximately $6,436,000 for the year ended December 31,
2004, as compared to operating income of $2,446,000 in the same period in
2003, due to the higher sales volume. This segment's business has become
more dependent on sales to larger customers that may cause sales levels to
fluctuate in future quarters. Completion of such sales, product mix changes
and increasing expenditures for new product development could affect future
operating results.
Electronic Assemblies segment sales decreased slightly during the fourth
quarter and were approximately equal for the year ended December 31, 2004,
when compared to the same periods in 2003.
Audio Equipment segment sales increased approximately $47,000 to $414,351,
and decreased $82,000 to $1,481,925, during the three months and year ended
December 31, 2004, respectively, when compared to the same periods in 2003.
This segment's operating losses increased for the three months and year ended
December 31, 2004, compared to the same periods in 2003. The 2004 yearly
loss includes $150,000 of additional inventory reserves included in the
fourth quarter and a charge of approximately $362,000 taken during the second
quarter to write down the value of Legacy Audio's goodwill and intangible
assets.
Investment income for the three months and year ended December 31, 2004 was
lower than the same periods in 2003 due to lower rates of return available on
invested funds.
The effective tax rate for the year ended December 31, 2004 increased due to
higher levels of taxable income when compared to 2003 during which tax
credits and other non-taxable items created a tax benefit.
CONSOLIDATED SALES AND EARNINGS
Three Months Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
Sales $22,351,371 $19,255,623 $80,170,788 $60,788,058
Income From Operations 1,147,467 1,127,567 5,729,224 889,497
Non-Operating Income, Net 86,302 142,112 350,823 432,399
Income Tax Provision
(Benefit) 14,000 (96,000) 1,371,000 (75,000)
Net Income 1,219,769 1,365,679 4,709,047 1,396,896
Earnings Per Share-Basic $1.05 $1.18 $4.07 $1.20
Earnings Per Share-Diluted $1.05 $1.18 $4.06 $1.20
Average Diluted Shares
Outstanding 1,160,080 1,158,179 1,158,819 1,160,481
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, and 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, 2003 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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