Net sales were $63.6 million compared to $43.5 million in 2003—an increase of 46.2 percent. Operating income was $3.48 million compared to $79,418 in 2003, an increase of 4,281 percent. Net income before extraordinary item was $1.09 million compared to a net loss before extraordinary item of $941,921 for the prior year, an improvement of $2.03 million.
Net income after extraordinary item was $1.27 million compared to $2.02 million for the prior year, a decrease of $760,000, or 37 percent. Insurance proceeds received to reimburse costs of reconstructing the Junction facility following a March 2003 fire resulted in a $173,536 extraordinary gain for 2004 compared to an extraordinary gain of $2.96 million in 2003.
Fully diluted earnings per share after extraordinary items for 2004 were 3 cents, down from 7 cents for 2003.
Net sales for the fourth quarter 2004 were $15.28 million compared to $10.94 million in the fourth quarter 2003, an increase of $4.3 million, or 39.7 percent. The fourth quarter 2004 net loss before extraordinary item was $800,344, a $506,887 improvement over the net loss before extraordinary item in the fourth quarter 2003 of $1,307,231.
Net loss after extraordinary item for the fourth quarter 2004 was $1,664,385. In the first quarter of 2004, AERT booked an insurance receivable of $864,000 and recognized related additional income of such amount related to additional insurance claims we expect to collect with respect to a 2003 fire at its Junction, Texas, facility. Pursuant to litigation filed by the insurer in January 2005, such claims are now being contested. As a result, we reversed the receivable and related income for these additional claims by means of an $864,000 adjustment taken in the fourth quarter of 2004.
Operating income increased in 2004 compared to 2003 in light of higher sales, lower manufacturing costs as a percentage of sales, and lower selling and administrative costs as a percentage of sales. Net income was lower than 2003 due to the lower extraordinary gain in 2004.
AERT filed for an extension of time to file its SEC Form 10-K annual report with audited financial statements March 31, 2005. AERT will file the Form 10-K on or before April 15, 2005.
AERT converts reclaimed plastic and wood fiber waste into Weyerhaeuser ChoiceDek(R) outdoor decking systems, MoistureShield(R) door and window components, MoistureShield(R) CornerLoc(TM) exterior trim and fascia components and MoistureShield(R) outdoor decking. AERT operates manufacturing facilities in Springdale, Lowell and Tontitown, Ark.; Junction, Texas; and Alexandria, La. ChoiceDek Premium decking is marketed exclusively through Lowe's Home Improvement Warehouses throughout the United States.