Advanced Materials Group Reports First Quarter Results; ADMG Posts Sales Down 13% For First...

Business Editors

RANCHO DOMINGUEZ, Calif.--(BUSINESS WIRE)--April 15, 2002

Advanced Materials Group, Inc. (Nasdaq:ADMG) today reported decreased sales of 13% with a net loss for the first fiscal quarter ended February 28, 2002 of $0.03 per share compared to $0.05 per share for

Net sales for the first quarter of fiscal 2002 were $8.7 million versus $9.9 million for the comparable period of fiscal 2001. Sales in the U.S. declined approximately 39%, while sales in Singapore and Ireland increased 29% and 3%, respectively.

The net loss for the first quarter of fiscal 2002 was $283,000 compared to a net loss of $393,000 for the first quarter of fiscal 2001. The net loss in the U.S. improved by $289,000, while the net income in Singapore and Ireland decreased by $38,000 and $142,000, respectively.

Basic and diluted loss per share for the first quarter was $0.03 per share on an average of 8.7 million shares, compared to basic and diluted loss per share of $0.05 per share on the same number of shares in the comparable period of fiscal 2001.

Chief Executive Officer Comments on Results

Commenting on the results, Advanced Materials Group CEO and President Steve F. Scott said, "In fiscal 2001, The Company consolidated its U.S. operations and substantially lowered its operating costs for the U.S. unit. This allowed us to improve the bottom line even though sales were significantly lower in the first quarter of fiscal 2002.

"The decline in sales was due to a combination of significant competitive pricing pressure and lower customer volumes in the U.S. Sales for the Singapore and Ireland units continue to improve though competitive price pressure has made those operations somewhat less profitable than in prior years. As the U.S. economy improves with the corresponding volumes increase for our domestic operations, the Company should be positioned to return to profitability."

Some statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. In addition to the factors discussed, 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 a leading manufacturer and fabricator of specialty foams, foils, films and pressure-sensitive adhesive components for a broad base of customers in the computer, medical, automotive and aerospace industries both in the U.S. and abroad.

                    ADVANCED MATERIALS GROUP, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                                               Three Months Ended
                                           --------------------------
                                          February 28,    February 28,
                                             2002            2001
                                           -----------    -----------

Net sales                                  $ 8,660,000    $ 9,949,000
Cost of sales                                7,861,000      8,859,000
                                           -----------    -----------
Gross profit                                   799,000      1,090,000
                                           -----------    -----------
Operating expenses:
  Selling, general and administrative          879,000      1,233,000
  Depreciation and amortization                 84,000         80,000
                                           -----------    -----------
Total operating expenses                       963,000      1,313,000
                                           -----------    -----------
Loss from operations                          (164,000)      (223,000)

Other income (expense):
  Interest expense                             (99,000)      (159,000)
  Foreign exchange gain (loss)                  (2,000)        30,000
  Other, net                                   (10,000)       (17,000)
                                           -----------    -----------
    Total other expenses, net                 (111,000)      (146,000)
                                           -----------    -----------
Loss before income taxes                      (275,000)      (369,000)
Income tax expense                              (8,000)       (24,000)
                                           -----------    -----------
Net loss                                   $  (283,000)   $  (393,000)
                                           ===========    ===========
Basic and diluted loss per common share    $     (0.03)   $     (0.05)
                                           ===========    ===========
Basic and diluted weighted
 average common shares outstanding           8,671,272      8,671,272
                                           ===========    ===========


                    ADVANCED MATERIALS GROUP, INC.
                      CONSOLIDATED BALANCE SHEETS
                February 28, 2002 and November 30, 2001

                         ASSETS
                      (Unaudited)
                                                2002          2001
                                           ------------  ------------
Current assets:
  Cash and cash equivalents                $    729,000  $  1,303,000
  Accounts receivable, net                    5,232,000     6,401,000
  Inventories, net                            3,591,000     3,551,000
  Income tax receivable                           3,000         3,000
  Prepaid expenses and other current assets     318,000       305,000
                                           ------------  ------------
    Total current assets                      9,873,000    11,563,000

Property and equipment, net                   2,686,000     2,654,000
Goodwill, net                                   371,000       387,000
Other assets                                    170,000       168,000
                                           ------------  ------------
    Total assets                           $ 13,100,000  $ 14,772,000
                                           ============  ============


         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                         $  5,389,000  $  6,457,000
  Accrued liabilities                           728,000       838,000
  Restructuring reserve                         469,000       406,000
  Deferred income                               215,000       255,000
  Line of credit                              2,674,000     2,788,000
  Current portion of long-term obligations      709,000       708,000
                                           ------------  ------------
    Total current liabilities                10,184,000    11,452,000

  Convertible debentures                        405,000       405,000
  Restructuring reserve                         489,000       647,000
  Deferred compensation,
   net of current portion                     1,129,000     1,129,000
  Capital leases,
   net of current portion                       271,000       234,000
                                           ------------  ------------
    Total liabilities                        12,478,000    13,867,000
                                           ------------  ------------
Stockholders' equity:
  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 February 28,
   2002 and November 30, 2001                     9,000         9,000
  Additional paid-in capital                  7,083,000     7,083,000
  Accumulated deficit                        (6,470,000)   (6,187,000)
                                           ------------  ------------
    Total stockholders' equity                  622,000       905,000
                                           ------------  ------------
  Total liabilities and
   stockholders' equity                    $ 13,100,000  $ 14,772,000
                                           ============  ============