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| REMEC Announces Fourth Quarter and Year-End Results |
| SAN DIEGO, Mar 18, 2003 /PRNewswire-FirstCall via COMTEX/ -- REMEC, Inc.
(Nasdaq: REMC), announced results for its fourth quarter and for the fiscal year
ended January 31, 2003 (fiscal 2003). Revenues in the fourth quarter were $74.6
million compared with $59.4 million in the preceding quarter and $58.2 million
for the comparable prior year period. The pre-tax loss for the fourth quarter of
fiscal 2003 was ($11.3) million compared with a pre-tax loss of ($12.0) million
in the preceding quarter and ($56.5) million for the comparable prior year
period. The net loss for the fourth quarter of fiscal 2003, which includes a
$24.5 million charge to write off certain deferred tax assets, was ($35.8)
million, or ($0.70) per diluted share, compared with a net loss of ($12.0)
million, or ($0.26) per diluted share, in the preceding quarter and ($48.2)
million, or ($1.07) per diluted share, in the same period last year.
Fiscal 2003 revenues totaled $246.6 million as compared with $230.0 million for the comparable prior year. The pre-tax loss for the year ended January 31, 2003, was ($45.2) million compared with a pre-tax loss of ($92.0) million for the comparable prior year period. The Company reported a net loss of ($63.8) million, or ($1.36) per diluted share, during the 2003 fiscal year as compared with a net loss of ($69.9) million, or ($1.56) per diluted share in the prior year period.
Discussion of results:
* Revenues for the fourth quarter of fiscal 2003 increased 25.5% over
the third quarter of fiscal 2003 and 28.2% over the comparable prior
year period. These increases were 13.3% and 15.7%, respectively,
after excluding revenues of $7.2 million arising from our recent
Spectrian acquisition. In the future, Spectrian's results will be
included in the Company's commercial segment product sales.
* In addition to the revenues generated by Spectrian, the Company also
experienced an increase in sales of its multi-carrier power
amplifier, filter and fixed wireless access products to certain
European OEM customers.
* The Company believes that a strengthening of demand for its
commercial products should lead to an increase in sales during the
first quarter of fiscal 2004, although the rate of increase is not
expected to be as high as the quarter over quarter sales growth
achieved during the fourth quarter of fiscal 2003.
* Gross margin as a percentage of revenues was 19.1% for the fourth
quarter of fiscal 2003 as compared with 11.5% reported for the third
quarter of fiscal 2003 and 4.8% reported in the comparable prior year
period.
* The improvement in fourth quarter gross margin is attributable to:
1) the previously announced reductions in workforce during the third
quarter of fiscal 2003, 2) the ongoing shift of manufacturing to
off-shore production facilities, 3) the continuing rationalization of
the Company's domestic facilities, 4) the impact of increasing sales
and 5) the impact of the gross margins generated by Spectrian.
* Selling, general and administrative (SG&A) costs were $10.8 million
in the fourth quarter of fiscal 2003 and included a $0.5 million
charge for costs associated with an abandoned facility. SG&A was
unchanged from the preceding quarter as the additional costs arising
at our Spectrian subsidiary were offset by a decrease in consulting
and other costs.
* Research and development costs, excluding in-process charges,
increased to $10.1 million in the fourth quarter of fiscal 2003 from
$8.8 million in the preceding quarter and $8.9 million in the
comparable prior year period, as a result of additional research
costs arising from the acquisition of Spectrian. The results for the
fourth quarter of fiscal 2002 included an in-process research and
development charge of $6.2 million.
* The Company recorded a $3.6 million charge for restructuring and
asset impairment costs in the fourth quarter of fiscal 2003
associated with the write-off of certain intangible assets and the
accrual of lease costs associated with abandoned facilities, as well
as a $1.8 million write-down in the value of an investment in the
stock of an unconsolidated company.
* Results for the fourth quarter of fiscal 2003 reflect a tax provision
of $24.5 million resulting from the establishment of a valuation
reserve against certain previously recorded deferred tax assets. In
conjunction with its acquisition of Spectrian, the Company undertook
a reassessment of its tax strategy and its overall tax situation.
This analysis led the Company to conclude that, while it expects a
transition to profitability during fiscal 2004, the majority of
projected future profitability will be generated in tax jurisdictions
with low effective tax rates. As a result, the Company now believes
that its ability to recover previously recorded deferred tax assets
in the near term has diminished and that it is appropriate to
establish a valuation allowance to fully reserve the Company's
previously recorded deferred tax asset.
Commenting on the results, Ron Ragland, Chairman and Chief Executive Officer of
REMEC said, "We are pleased with the solid revenue growth in a difficult
marketplace achieved by REMEC during the fourth quarter. We believe REMEC is
well positioned to gain additional market share as our customers continue to
express confidence in our capabilities and technology to deliver
next-generation, integrated equipment solutions as an important strategic
partner. REMEC generated positive cash flow during the fourth quarter and, for
the second consecutive quarter, saw improvements in both sales and gross
margins. Excluding the restructuring charge, the non-recurring write down of our
investment and the costs reflected in SG&A related to an abandoned facility, the
fourth quarter pre-tax loss would have been $(5.4) million. We have captured the
opportunity to make a significant competitive leap, in spite of the
disappointing year for the telecom industry. We have been able to enhance our
presence in the MCPA marketplace with the value acquisition of Spectrian;
develop "best of class" product for the fixed wireless access and the millimeter
wave radio ODU markets; transition manufacturing to low-cost offshore
operations; launch an aggressive, well contemplated entry into China with a
design, development and manufacturing initiative; and implement a global ERP
system to support the major restructuring of the company into an effective,
integrated global infrastructure. Despite the unsettled business environment,
REMEC has made the right decisions to advance our competitive posture and
significantly enhance shareholder value."
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) 967-7134, confirmation code #425143. From outside the U.S., please call (719) 457-2625, confirmation code #425143, 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 #425143. 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)
(unaudited)
Three months ended Year ended
January 31, January 31 January 31 January 31
2003 2002 2003 2002
Net sales $74,589 $58,195 $246,588 $229,981
Cost of sales 60,337 55,385 211,533 207,411
Gross profit 14,252 2,810 35,055 22,570
Operating expenses:
Selling, general and
administrative 10,756 11,987 42,393 49,400
Research and development,
including in-process 10,111 15,092 34,568 34,334
Restructuring and asset
impairment charges 3,569 33,597 4,228 34,952
Total operating expenses 24,436 60,676 81,189 118,686
Loss from operations (10,184) (57,866) (46,134) (96,116)
Interest income and
other, net (1,106) 1,396 905 4,078
Loss before income taxes (11,290) (56,470) (45,229) (92,038)
Income tax expense (benefit) 24,497 (8,275) 18,565 (22,175)
Net loss $(35,787) $(48,195) $(63,794) $(69,863)
Net loss per common share:
Basic $(0.70) $(1.07) $(1.36) $(1.56)
Diluted $(0.70) $(1.07) $(1.36) $(1.56)
Shares used in computing
net loss per common share:
Basic 51,125 45,098 46,784 44,904
Diluted 51,125 45,098 46,784 44,904
REMEC, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
January 31, January 31,
2003 2002
ASSETS
Cash, cash equivalents and short
term investments $77,349 $49,438
Accounts receivable, net 48,335 33,765
Inventories, net 53,117 44,314
Deferred income taxes 105 34,582
Other current assets 9,762 2,767
Total current assets 188,668 164,866
Property, plant and equipment, net 86,182 90,786
Goodwill, net 36,134 34,909
Restricted cash 17,049 17,049
Intangible assets, net 3,950 8,774
Other assets 6,048 8,354
$338,031 $324,738
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $33,575 $11,039
Accrued expenses and other current
liabilities 39,527 28,562
Total current liabilities 73,102 39,601
Deferred income taxes and other
long-term liabilities 2,359 3,268
Shareholders' equity 262,570 281,869
$338,031 $324,738
SOURCE
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