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| REMEC Announces First Quarter Results |
| SAN DIEGO, Jun 17, 2002 /PRNewswire-FirstCall via COMTEX/ -- REMEC, Inc.
(Nasdaq: REMC), announced results for its first quarter of 2002. Revenues in the
first quarter were $59.1 million compared with $58.9 million for the comparable
prior year period. On a sequential basis, revenues increased from $58.2 million
reported during the fourth quarter. The net loss for the first quarter was
$(5.2) million, or $(0.11) per diluted share, compared with a net loss of $(9.2)
million, or $(0.21) per diluted share, in the same period last year. On a
sequential basis, the net loss fell sharply in comparison to the net loss of
$(48.2) million, or $(1.07) per diluted share, reported during the fourth
quarter. Excluding acquisition related write-offs (in-process R&D) and charges
associated with asset impairment and our restructuring plan, our fourth quarter
loss would have been approximately $(0.29) per share.
Discussion of results:
-- Gross margin as a percentage of revenues was 16.8% during the first
quarter of 2002 compared with 7.4% in the comparable prior year period
and 4.8% reported during the fourth quarter.
-- Prior year gross margins reflected the impact of significant reserves
for potentially excess inventory. Current year margins incorporate
the benefits of previously announced restructuring efforts.
-- Approximately 50 positions were eliminated during the first quarter,
bringing the total since the inception of our restructuring initiative
to in excess of 1,100. The Company is proceeding with plans to
further reduce the number of employees by at least 125 employees
during the second quarter. The anticipated annualized cost savings
from these reductions is approximately $40.0 million, concluding the
initial phase of our cost reductions.
-- Selling, general and administrative costs were down approximately
$2.4 million from the comparable prior year period, and sequentially
as well, principally as a result of the reversal of approximately
$1.7 million of accrued employee compensation and professional fees
accruals and a $0.6 million reduction of goodwill amortization due to
the implementation of new accounting rules which eliminate the
requirement to amortize goodwill.
-- Research and development costs increased to $7.8 million in the first
quarter from $6.2 million in the comparable prior year period as a
result of the increase in the number of development staff dedicated to
new product introductions including the MRI Radio, Fixed Wireless
Access and Coverage Distribution Systems, Advanced MMIC Devices and
other projects.
-- Receivables increased $10.0 million during the quarter as a result of
billing inaccuracies encountered during the implementation of our new
integrated accounting system. The system is now functioning properly,
and we fully expect to complete collection of the past due amounts
during the current quarter.
-- Proceeds of $2.6 million were generated during the first quarter from
the sale of certain U.S. real estate assets. Subsequent to quarter
end, we entered into a letter of intent to sell our Kearney Mesa
facility. By so doing, we will generate net cash proceeds of
$3 million while eliminating the underlying synthetic lease
transaction.
-- Subsequent to quarter end, the Company received a partial Federal
income tax refund of approximately $10.4 million.
Commenting on the results, Ron Ragland, Chairman and Chief Executive Officer of
REMEC said, "Our Defense and Space Group is performing well and continues to
provide a strong, growing performance base. Despite the depressed demand in the
commercial market, we are encouraged by the stabilized revenue level of the last
two quarters and the improvements achieved in both operating efficiencies and
gross margins. We believe that our proposed merger with Spectrian affords the
combined company significant synergy opportunities and note that the transaction
has been well received by industry analysts and key investors. Our focus during
these difficult times remains on gaining market share, developing new products
and driving to expand operational efficiencies and savings. I believe we will be
prepared for a market upturn with a differentiating competitive advantage."
For more information Management will be holding a conference call to discuss quarterly earnings today, at 2:00 p.m. Pacific Daylight Time (Los Angeles). To participate on the conference call within the U.S., please call (800) 310-1961, confirmation code #409892. From outside the U.S., please call (719) 457-2692, confirmation code #409892, ten minutes prior to the scheduled time of the call. To listen to the rebroadcast number, which will play for seven days, call (888) 203-1112 domestically or (719) 457-0820 internationally, with the confirmation code #409892. About REMEC REMEC is a designer and manufacturer of high frequency subsystems used in the transmission of voice, video and data traffic over wireless communications networks and in space and defense electronics applications. Statements in this press release that are not historical are forward-looking statements, which involve known and unknown risks and uncertainties. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including, general and industry economic conditions, competition, development factors, operating costs and other risks and uncertainties that are detailed from time to time in our filings with the Securities and Exchange Commission.
REMEC, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three months ended
May 3, April 27,
2002 2001
Net sales $59,063 $58,923
Cost of sales 49,130 54,552
Gross profit 9,933 4,371
Operating expenses:
Selling, general and administrative 9,556 12,000
Research and development 7,827 6,203
Total operating expenses 17,383 18,203
Loss from operations (7,450) (13,832)
Other income (expense) (83) (1,786)
Interest income 261 1,726
Loss before credit for income taxes (7,272) (13,892)
Credit for income taxes (2,109) (4,723)
Net loss $(5,163) $(9,169)
Net loss per common share:
Basic $(0.11) $(0.21)
Diluted $(0.11) $(0.21)
Shares used in computing net loss per common share:
Basic 45,217 44,681
Diluted 45,217 44,681
REMEC, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
May 3, January 31,
2002 2002
ASSETS
Cash and cash equivalents $34,413 $49,438
Accounts receivable, net 43,717 33,765
Inventories, net 44,704 44,314
Other current assets 43,225 41,180
Total current assets 166,059 168,697
Property, plant and equipment, net 91,875 92,802
Restricted cash 17,049 17,049
Intangible and other assets 48,730 52,037
$323,713 $330,585
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $15,420 $11,039
Accrued expenses and other current liabilities 24,985 30,578
Total current liabilities 40,405 41,617
Deferred income taxes and other long-term liabilities 7,858 7,099
Shareholders' equity 275,450 281,869
$323,713 $330,585
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SOURCE REMEC, Inc.
CONTACT: David L. Morash of REMEC, Inc., +1-858-560-1301
/Company News On-Call: http://www.prnewswire.com/comp/109967.html
(REMC)
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