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| REMEC Announces First Quarter FY 2004 Results |
SAN DIEGO, Jun 9, 2003 /PRNewswire-FirstCall via COMTEX/ -- REMEC, Inc. (Nasdaq: REMC), announced results for its first quarter of fiscal 2004 which ended May 2, 2003. Net sales in the first quarter were $81.3 million compared with $59.1 million for the comparable prior year period and $74.6 million for the fourth quarter of fiscal 2003. The pre-tax loss for the first quarter was ($7.2) million compared with a pre-tax loss of ($7.3) million for the comparable prior year period and ($11.3) million for the fourth quarter of fiscal 2003. The net loss for the first quarter of fiscal 2004, was ($7.1) million, or ($0.12) per diluted share, compared with a net loss of ($5.2) million, or ($0.11) per diluted share, in the same period last year and ($35.8) million, or ($0.70) per diluted share, for the fourth quarter of fiscal 2003. Discussion of results:
-- REMEC's first quarter sales increased 37.7% over the comparable prior
year quarter and 9.1% in comparison to the fourth quarter of fiscal
2003.
-- Achieved third consecutive quarterly sales increase, resulting from
increased demand at our Commercial and Defense segments.
-- We anticipate that the ongoing strengthening of demand for our
commercial products should lead to increases in net sales during the
remainder of fiscal 2004.
-- Despite price erosion in certain commercial markets, gross margin as a
percentage of net sales has increased to 21.4% for the first quarter
of fiscal 2004. This compares with 16.8% reported in the comparable
prior year period and 19.1% reported for the fourth quarter of fiscal
2003.
-- The improvement in our gross margin as a percentage of net sales
represented the third consecutive quarterly increase and is primarily
the result of increased sales volume, productivity improvements and
reduced supply chain costs. We anticipate this trend will continue in
future quarters as our performance improves.
-- Selling, general and administrative (SG&A) costs were $14.1 million in
the first quarter of fiscal 2004 as compared to $9.6 million in the
comparable prior year period and $10.8 million for the preceding
quarter. Fiscal 2003 first quarter results include the reversal of
$1.7 million of previously accrued employee compensation and
professional fee accruals. The increase in SG&A expenses relates
primarily to additional Spectrian sales and marketing expenses and the
majority of over $1 million of transition costs relating to the
acquired Spectrian operations.
-- Research and development costs increased to $12.5 million in the first
quarter of fiscal 2004 from $7.8 million in the comparable prior year
period and $10.1 million in the preceding quarter principally as a
result of new product development initiatives in our Commercial
segment.
-- During the first quarter of fiscal 2004, we recognized a $0.9 million
gain from the sale of our Aylesbury, United Kingdom manufacturing
facility and other income of $1.0 million, principally from foreign
currency transaction gains.
-- Results for the first quarter of fiscals 2004 and 2003 reflect a
credit for income taxes of approximately $0.1 million and $2.1
million, respectively. First quarter fiscal 2004 results reflect the
recognition of a provincial tax benefit for losses at our Canadian
subsidiary while the 2003 results reflect the recognition of a tax
benefit associated with U.S. operating losses.
-- We experienced a net outflow of cash from operations of $13.9 million
during the first quarter of fiscal 2004 as a result of our loss, net
of depreciation, and working capital requirements of $10.5 million.
Working capital requirements of $7.6 million related primarily to an
increase in inventory and other receivables for two European OEM
customers. During the period we established a warehouse location in
Europe, increasing inventory both on hand and in transit.
Additionally, a substantial portion of the remaining working capital
increase arose from obligations relating to Spectrian's prior
outsourced manufacturing supplier.
-- In April 2003, we completed the sale of our Kearny Mesa (San Diego),
California business campus which allowed us to retire the existing
$17.0 million synthetic lease.
-- The sales of our Aylesbury and Kearney Mesa facilities provided net
cash proceeds of $6.2 million in addition to allowing the release of
$17.0 million of formerly restricted cash for general corporate
purposes.
Commenting on the results, Ron Ragland, Chairman and Chief Executive Officer of REMEC said, "REMEC continues to grow revenue and improve gross margins in weak commercial market conditions. Our Defense & Space Group provides an ongoing solid performance base while our Commercial Group is experiencing improved market share gains. Our increased sales, supply chain savings and productivity improvements are generating higher gross margins. Prospectively we intend to gain market share, develop new products and expand operational efficiencies and cost savings." 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) 289-0493, confirmation code #528848. From outside the U.S., please call (913) 981-5510, confirmation code #528848, 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 #528848. 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 OPERATIONS
(in thousands, except per share data)
Three months ended
May 2, May 3,
2003 2002
(unaudited)
Net sales $81,349 $59,063
Cost of sales 63,926 49,130
Gross profit 17,423 9,933
Operating expenses:
Selling, general and administrative 14,138 9,556
Research and development 12,452 7,827
Total operating expenses 26,590 17,383
Loss from operations (9,167) (7,450)
Gain on sale of facility 945 --
Interest income and other, net 1,008 178
Loss before income taxes (7,214) (7,272)
Credit for income taxes (103) (2,109)
Net loss $(7,111) $(5,163)
Net loss per common share:
Basic $(0.12) $(0.11)
Diluted $(0.12) $(0.11)
Shares used in computing net loss
per common share:
Basic 57,440 45,217
Diluted 57,440 45,217
REMEC, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
May 2, January 31,
2003 2003
(unaudited)
ASSETS
Cash and cash equivalents $82,268 $64,900
Short-term investments 4,515 12,449
Accounts receivable, net 48,251 48,335
Notes and other receivables 7,770 4,818
Inventories, net 57,733 53,117
Deferred income taxes 1,075 801
Prepaid expenses and other current assets 3,429 4,400
Total current assets 205,041 188,820
Property, plant and equipment, net 80,059 86,182
Restricted cash -- 17,049
Goodwill, net 36,679 36,679
Intangible assets, net 3,819 3,950
Other assets 5,152 6,046
$330,750 $338,726
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $32,156 $33,444
Accrued expenses and other current
liabilities 38,030 40,353
Total current liabilities 70,186 73,797
Deferred income taxes and other
long-term liabilities 3,253 2,358
Shareholders' equity 257,311 262,571
$330,750 $338,726
SOURCE REMEC, Inc. CONTACT: |