Quarterly Continuing Operations Results Improve $796,000 Annual Orders and
Backlog Set Records
WEST CALDWELL, N.J., March 28 /PRNewswire-FirstCall/ -- Merrimac
Industries, Inc. (Amex: MRM), a leader in the design and manufacture of RF
Microwave components, subsystem assemblies and micro-multifunction modules
(MMFM(R)), today announced results for the fourth quarter and fiscal year
2007.
Previously reported results of operations of Filtran Microcircuits Inc.
("FMI") for the current and prior periods have been reclassified and
reported as discontinued operations and the assets and liabilities relating
to FMI have been reclassified as held for sale in the consolidated balance
sheet as of December 30, 2006. These operations were sold on December 28,
2007.
Net sales from continuing operations for the fourth quarter of 2007
were $5,392,000, an increase of $144,000 or 2.7 percent compared to the
fourth quarter of 2006 net sales of $5,248,000. Net sales from continuing
operations increased due to the higher level of orders received earlier in
2007 including higher sales of Multi-Mix(R) products to the defense
industry. Gross profit for the fourth quarter of 2007 was $2,219,000, an
increase of $706,000 or 46.7 percent, and was 41.2 percent of sales as
compared to gross profit of $1,513,000 or 28.8 percent of sales for the
fourth quarter of 2006. The increase in gross profit and gross profit
percentage for the fourth quarter of 2007 was due to an improved product
mix.
Operating loss from continuing operations for the fourth quarter of
2007 was $(283,000), compared to an operating loss from continuing
operations of $(1,079,000) for the fourth quarter of 2006. The decrease in
operating loss from continuing operations for the fourth quarter of 2007
was due to the improved gross profit and reduced research and development
costs. In addition, a restructuring charge of approximately $200,000 was
recorded in the fourth quarter of 2006.
Loss from continuing operations for the fourth quarter of 2007 was
$(351,000) compared to a loss from continuing operations of $(1,217,000)
for the fourth quarter of 2006. Loss from continuing operations for the
fourth quarter of 2006 included the write-off of approximately $170,000 of
deferred costs related to the Company's prior financing agreement. Loss
from continuing operations for the fourth quarter of 2007 was $(.12) per
share compared to a loss from continuing operations of $(.39) per share for
the fourth quarter of 2006.
As a result of the sale of the FMI discontinued operations in the
fourth quarter of 2007, the Company recorded a gain from the disposal of
discontinued operations of $1,936,000, which primarily consists of the
non-cash realization of foreign currency translation adjustment of
$2,025,000. Income from discontinued operations for the fourth quarter of
2007 was $1,471,000 compared to a loss from discontinued operations of
$(499,000) for the fourth quarter of 2006. The increase in income from
discontinued operations for 2007 was primarily due to the gain described
above. Income from discontinued operations for the fourth quarter of 2007
was $.50 per share compared to a loss from discontinued operations of
$(.16) per share for the fourth quarter of 2006.
Net income for the fourth quarter of 2007 was $1,120,000 compared to a
net loss of $(1,716,000) for the fourth quarter of 2006. Net income was
$.38 per share for the fourth quarter of 2007 compared to a net loss of
$(.55) per share for the fourth quarter of 2006.
Net sales from continuing operations for fiscal year 2007 were
$21,887,000, a decrease of $644,000 or 2.9 percent compared to net sales of
$22,531,000 for fiscal year 2006. Net sales from continuing operations for
fiscal year 2006 included both the shipment of a $750,000 order to a
significant military customer and $1,200,000 of revenue recognized in
connection with the early close out of a fixed price customer contract
which did not recur in 2007. Gross profit for fiscal year 2007 was
$9,099,000, a decrease of $76,000 or 0.8 percent, and was 41.6 percent of
sales as compared to gross profit of $9,175,000 or 40.7 percent of sales
for fiscal year 2006, notwithstanding that gross profit for fiscal year
2006 included $1,060,000 from the early close out of a fixed price customer
contract.
Operating loss from continuing operations for fiscal year 2007 was
$(915,000) compared to an operating loss from continuing operations for
fiscal year 2006 of $(1,526,000). The decrease in the operating loss from
continuing operations for fiscal year 2007 as compared to fiscal year 2006
was due to lower administrative expenses and research and development costs
compared to fiscal year 2006. Operating loss for fiscal year 2006 also
included a restructuring charge of approximately $200,000.
Loss from continuing operations for fiscal year 2007 was $(1,039,000)
compared to a loss from continuing operations of $(1,543,000) for fiscal
year 2006. Loss from continuing operations for fiscal year 2006 included
the write-off of approximately $170,000 of loan costs related to the
Company's prior financing agreement. Loss from continuing operations for
fiscal year 2007 was $(.35) per share compared to a loss from continuing
operations of $(.49) per share for fiscal year 2006.
Loss from discontinued operations for fiscal year 2007 was $(4,387,000)
compared to a loss from discontinued operations of $(682,000) for fiscal
year 2006. Loss from discontinued operations for fiscal year 2007 was
$(1.48) per share compared to a loss from discontinued operations of $(.22)
per share for fiscal year 2006. Loss from discontinued operations includes
goodwill impairment charges of $3,756,000, a charge of $506,000 to provide
a full valuation allowance for a Canadian net deferred tax asset in the
second quarter of 2007, a $586,000 charge for the write down of the
remaining FMI net assets to an estimated net realizable value of $450,000
in the third quarter of 2007 and a gain from the disposal of discontinued
operations of $1,936,000, which primarily consists of the non-cash
realization of foreign currency translation adjustment of $2,025,000 in the
fourth quarter of 2007.
Net loss for fiscal year 2007 was $(5,426,000) compared to a net loss
of $(2,225,000) for fiscal year 2006. Net loss for fiscal year 2007 was
$(1.83) per share compared to a net loss of $(.71) per share for fiscal
year 2006.
Orders of $6,621,000 were received during the fourth quarter of 2007, a
decrease of $44,000 or 0.7 percent compared to $6,665,000 in orders
received during the fourth quarter of 2006. Orders of $28,388,000, a new
Merrimac record for a fiscal year, were received during fiscal year 2007,
an increase of $6,416,000 or 29.2 percent compared to $21,972,000 in orders
received during fiscal year 2006. Backlog increased by $6,501,000 or 56.6
percent to $17,991,000 at the end of fiscal year 2007 compared to
$11,490,000 at year-end 2006, due to the increased orders received during
2007 from military and commercial satellite customers. The book-to-bill
ratio for the fourth quarter of 2007 was 1.23 to 1 and for the fourth
quarter of 2006 was 1.27 to 1. The book-to-bill ratio for fiscal year 2007
was 1.30 to 1 and for fiscal year 2006 was 0.98 to 1. The orders, backlog
and book-to-bill information for the current and prior periods excludes
discontinued operations information.
On December 28, 2007, the Company sold substantially all of the assets
of its wholly-owned subsidiary, FMI, to Firan Technology Group Corporation
("FTG") (TSX: FTG), a manufacturer of high technology/high reliability
printed circuit boards, that has operations in Toronto, Ontario, Canada and
Chatsworth, California. The transaction was effected pursuant to an asset
purchase agreement entered into between Merrimac, FMI and FTG. The total
consideration payable by FTG was $1,482,000 (Canadian $1,450,000) plus the
assumption of certain liabilities of approximately $368,000 (Canadian
$360,000). FTG paid $818,000 (Canadian $800,000) of the purchase price at
closing and the balance was paid on February 21, 2008 following the
conclusion of a transitional period. The sale of FMI will enable Merrimac
to concentrate its resources on RF Microwave and Multi-Mix(R)
Microtechnology product lines to generate sustained, profitable growth.
Chairman and CEO Mason N. Carter commented, "Looking into the data we
have presented, there is good reason to be optimistic. Most of our losses
for the past year have come from discontinued operations allowing us to
focus on our Merrimac business. These operations will no longer have an
effect in 2008. During this same past year, we have also seen an
encouraging growth trend in our continuing operations or 'base business'.
"It is the balance of growth in our base business that is so exciting
now. Our 'Core' stripline and lumped element technology, and our new
Multi-Mix(R) RF integration technology, have both seen significant
increases in new orders in 2007. This only confirms that our execution of
the strategy to increase key account customer share by offering creative
solutions utilizing state-of-the- art technology is correct."
Mr. Carter further commented, "If you look at our business by market
sector, our penetration into the defense and space market has been exciting
this year, and is primarily the cause of the impressive growth in both
bookings and backlog. Our key customers are becoming more and more familiar
with Multi-Mix(R) technology and its benefits, and thus are bringing us
into closer partnership. Our business paradigm is changing as we move from
'Vendor' to 'Partner' status with several of our large OEM Defense and
Space customers."
Mr. Carter continued, "Our financial highlights include:
-- Record orders booked of $28.4 million for 2007, an increase of 29% over
2006.
-- Record quarter-end and year-end backlog of $18.0 million.
-- Book-to-bill ratio of 1.30 to 1 for fiscal year 2007 and 1.23 for the
fourth quarter of 2007.
-- Multi-Mix(R) orders and sales for 2007 have exceeded 2006 orders and
sales.
-- Working capital of $9.9 million and current ratio of 3.5 to 1."
Investors are invited to participate in the financial results
conference call on Friday, March 28, 2008 at 4:15 p.m. (Eastern) by dialing
1-888-256-1007 (for International callers: 1-913-981-5552) ten minutes
prior to the scheduled start time, and reference the Merrimac Industries
fourth quarter 2007 conference call. For those unable to participate, a
replay will be available for seven days by dialing 1-888-203-1112, or
1-719-457-0820 for international callers, passcode number 8461634.
This conference call will also be broadcast live over the internet by
logging on to the web at this address:
http://www.videonewswire.com/event.asp?id=47002
Should you be unable to participate during the live webcast, a link to
the archived webcast will be posted on the Merrimac Industries, Inc.
website http://www.merrimacind.com .
About Merrimac
Merrimac Industries, Inc. is a leader in the design and manufacture of
RF Microwave signal processing components, subsystem assemblies, and
Multi-Mix(R) micro-multifunction modules (MMFM(R)), for the worldwide
Defense, Satellite Communications (Satcom), Commercial Wireless and
Homeland Security market segments. Merrimac is focused on providing Total
Integrated Packaging Solutions(R) with Multi-Mix(R) Microtechnology, a
leading edge competency providing value to our customers through
miniaturization and integration. Multi-Mix(R) MMFM(R) provides a patented
and novel packaging technology that employs a platform modular architecture
strategy that incorporates embedded semiconductor devices, MMICs,
resistors, passive circuit elements and plated- through via holes to form a
three-dimensional integrated module used in High Power, High Frequency and
High Performance mission-critical applications. Merrimac Industries
facilities are registered under ISO 9001:2000, an internationally developed
set of quality criteria for manufacturing operations.
Merrimac Industries, Inc. has facilities located in West Caldwell, NJ
and San Jose, Costa Rica and has approximately 180 co-workers dedicated to
the design and manufacture of signal processing components, gold plating of
high- frequency microstrip and bonded stripline Teflon (PTFE) circuits and
subsystems providing Total Integrated Packaging Solutions(R) for wireless
applications. Merrimac (MRM) is listed on the American Stock Exchange.
Multi- Mix(R), Multi-Mix PICO(R), MMFM(R), System In A Package(R), SIP(R)
and Total Integrated Packaging Solutions(R) are registered trademarks of
Merrimac Industries, Inc. For more information about Merrimac Industries,
Inc. please visit our website http://www.merrimacind.com .
This press release contains statements relating to future results of
the Company (including certain projections and business trends) that are
"forward- looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from
those projected as a result of certain risks and uncertainties. These risks
and uncertainties include, but are not limited to: risks associated with
demand for and market acceptance of existing and newly developed products
as to which the Company has made significant investments, particularly its
Multi-Mix(R) products; the possibilities of impairment charges to the
carrying value of our Multi-Mix(R) assets, thereby resulting in charges to
our earnings; risks associated with adequate capacity to obtain raw
materials and reduced control over delivery schedules and costs due to
reliance on sole source or limited suppliers; slower than anticipated
penetration into the satellite communications, defense and wireless
markets; failure of our Original Equipment Manufacturer or OEM customers to
successfully incorporate our products into their systems; changes in
product mix resulting in unexpected engineering and research and
development costs; delays and increased costs in product development,
engineering and production; reliance on a small number of significant
customers; the emergence of new or stronger competitors as a result of
consolidation movements in the market; the timing and market acceptance of
our or our OEM customers' new or enhanced products; general economic and
industry conditions; the ability to protect proprietary information and
technology; competitive products and pricing pressures; our ability and the
ability of our OEM customers to keep pace with the rapid technological
changes and short product life cycles in our industry and gain market
acceptance for new products and technologies; risks relating to
governmental regulatory actions in communications and defense programs; and
inventory risks due to technological innovation and product obsolescence,
as well as other risks and uncertainties as are detailed from time to time
in the Company's Securities and Exchange Commission filings. These
forward-looking statements are made only as of the date hereof, and the
Company undertakes no obligation to update or revise the forward-looking
statements, whether as a result of new information, future events or
otherwise.
Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
(Unaudited)
Quarter Ended
December 29, December 30,
2007 2006 (a)
Net sales $5,392,000 $5,248,000
Gross profit 2,219,000 1,513,000
Selling, general and administrative expenses 2,142,000 1,885,000
Research and development 360,000 507,000
Restructuring charge - 200,000
Operating loss (283,000) (1,079,000)
Interest and other expense, net (68,000) (137,000)
Loss from continuing operations (351,000) (1,217,000)
Income (loss) from discontinued operations,
including non-cash realization of $2,025,000
of foreign currency translation adjustment in
2007, net of income taxes 1,471,000 (499,000)
Net income (loss) 1,120,000 (1,716,000)
Net income (loss) per common share-basic and
diluted:
Loss from continuing operations $(.12) $(.39)
Income (loss) from discontinued operations $.50 $(.16)
Net income (loss) per common share $.38 $(.55)
Weighted average number of shares
outstanding-basic and diluted 2,926,000 3,138,000
(a) In accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the operating results of
Filtran Microcircuits Inc. for the prior period have been reported as
discontinued operations.
Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
Year Ended
December 29, December 30,
2007 2006 (a)
Net sales $21,887,000 $22,531,000
Gross profit 9,099,000 9,175,000
Selling, general and administrative expenses 8,435,000 8,591,000
Research and development 1,579,000 1,910,000
Restructuring charge - 200,000
Operating loss (915,000) (1,526,000)
Interest and other expense, net (124,000) (17,000)
Loss from continuing operations (1,039,000) (1,543,000)
Loss from discontinued operations, including
non-cash realization of $2,025,000 of foreign
currency translation adjustment in 2007, net
of income taxes (4,387,000) (682,000)
Net loss (5,426,000) (2,225,000)
Net loss per common share-basic and diluted:
Loss from continuing operations $(.35) $(.49)
Loss from discontinued operations $(1.48) $(.22)
Net loss per common share $(1.83) $(.71)
Weighted average number of shares outstanding-
basic and diluted 2,963,000 3,142,000
(a) In accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the operating results of
Filtran Microcircuits Inc. for the current and prior periods have been
reported as discontinued operations.
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
December 29, December 30,
2007 2006 (a)
ASSETS
Current assets:
Cash and cash equivalents $2,004,000 $5,399,000
Accounts receivable, net 5,300,000 5,140,000
Inventories 5,040,000 3,740,000
Other current assets 774,000 834,000
Due from assets sale contract 664,000 -
Current assets held for sale - 1,608,000
Total current assets 13,782,000 16,721,000
Property, plant and equipment, net 10,956,000 11,776,000
Restricted cash 250,000 -
Other assets 532,000 492,000
Deferred tax assets 52,000 100,000
Long-term assets held for sale - 5,165,000
Total Assets $25,572,000 $34,254,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Current portion of long-term debt $550,000 $550,000
Accounts payable 944,000 768,000
Other current liabilities 2,328,000 1,303,000
Deferred tax liabilities 52,000 100,000
Current liabilities related to assets
held for sale - 646,000
Total current liabilities 3,874,000 3,367,000
Long-term debt, net of current portion 3,763,000 4,312,000
Deferred liabilities 61,000 38,000
Long-term liabilities related to assets
held for sale - 252,000
Total liabilities 7,698,000 7,969,000
Stockholders' equity:
Common stock 33,000 33,000
Additional paid-in capital 19,789,000 19,237,000
Retained earnings 1,174,000 6,600,000
Accumulated other comprehensive income - 1,389,000
Treasury stock (3,122,000) (974,000)
Stockholders' equity 17,874,000 26,285,000
Total Liabilities and Stockholders'
Equity $25,572,000 $34,254,000
(a) In accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the assets and
liabilities of Filtran Microcircuits Inc. have been reclassified as
held for sale.
Merrimac Industries, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 29, December 30,
2007(a) 2006(a)
Cash flows from operating activities:
Net loss $(5,426,000) $(2,225,000)
Less, loss from discontinued operations (4,387,000) (682,000)
Loss from continuing operations (1,039,000) (1,543,000)
Adjustments to reconcile loss from
continuing operations to net cash
provided by (used in) operating
activities:
Depreciation and amortization 2,365,000 2,333,000
Amortization of deferred financing costs 31,000 211,000
Share-based compensation 394,000 189,000
Changes in operating assets and
liabilities:
Accounts receivable (167,000) (1,057,000)
Inventories (1,299,000) (120,000)
Other current assets 184,000 (44,000)
Other assets (71,000) (66,000)
Other current liabilities 460,000 (575,000)
Deferred liabilities 23,000 15,000
Net cash provided by (used by) operating
activities-continuing operations 881,000 (659,000)
Net cash provided by (used by) operating
activities-discontinued operations (776,000) 263,000
Net cash provided by (used by) operating
activities 105,000 (396,000)
Cash flows from investing activities:
Purchases of capital assets (1,546,000) (1,597,000)
Proceeds from sale of discontinued
operations 818,000 -
Net cash used in investing activities-
continuing operations (728,000) (1,597,000)
Net cash used in investing activities-
discontinued operations (180,000) (79,000)
Net cash used in investing activities (908,000) (1,676,000)
Cash flows from financing activities:
Borrowings under term loans - 5,000,000
Repurchase of common stock for the treasury (2,148,000) -
Repayment of borrowings (550,000) (2,728,000)
Restricted cash (deposited) returned (250,000) 1,500,000
Proceeds from stock sales 158,000 225,000
Net cash provided by (used in) financing
activities-continuing operations (2,790,000) 3,997,000
Net cash used in financing activities-
discontinued operations (350,000) (44,000)
Net cash provided by (used in) financing
activities (3,140,000) 3,953,000
Effect of exchange rate changes (14,000) (1,000)
Net increase (decrease) in cash and cash
equivalents (3,957,000) 1,880,000
Cash and cash equivalents at beginning of
period, including $562,000 and $423,000
reported under assets held for sale 5,961,000 4,081,000
Cash and cash equivalents at end of period
including $562,000 reported under assets
held for sale in 2006 $2,004,000 $5,961,000
(a) In accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the operating results of
Filtran Microcircuits Inc. for the current and prior periods have been
reported as discontinued operations.
Contact: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
SOURCE Merrimac Industries, Inc.
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Related links:
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CONTACT:
Mason N. Carter, Chairman & CEO, Merrimac
Industries, Inc., +1-973-575-1300, ext. 1202, mnc@merrimacind.com
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