WEST CALDWELL, N.J., March 31 /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
2005.
Sales for the fourth quarter of 2005 were $7,002,000, a $784,000 or
10.1 percent decrease compared to fourth quarter 2004 sales of $7,786,000. The
reduction in sales was due to lower orders from earlier in 2005 due to delays
in expected satellite and defense programs. Gross profit for the fourth
quarter was $2,662,000 or 38.0 percent of sales as compared to fourth quarter
2004 gross profit of $3,091,000 or 39.7 percent of sales.
Operating loss was $(147,000) for the fourth quarter of 2005, compared to
operating income of $202,000 for the fourth quarter of 2004. Operating results
for the fourth quarter of 2005 were lower due to a reduction of gross profit
resulting from decreased sales, offset by slightly lower operating expenses.
For the fourth quarter of 2004, operating income was reduced by $225,000 of
employee incentive compensation and profit-sharing expense, which did not
recur in 2005.
Net income for the fourth quarter of 2005 was $117,000 compared to net
income of $209,000 for the fourth quarter of 2004. Net income was $.04 per
diluted share for the fourth quarter of 2005 compared to net income of
$.07 per diluted share for the fourth quarter of 2004. Net income for the
fourth quarter of 2005 included a tax benefit of $250,000 or $.08 per share
representing refundable Canadian provincial technology tax credits for which
the Company has qualified. Net income for the fourth quarter of 2004 included
a Canadian tax benefit of $143,000 or $.05 per share.
For fiscal year 2005, sales decreased 4.0 percent to $29,719,000, compared
to sales of $30,949,000 for fiscal year 2004 as a result of lower orders
during 2005 due to delays in expected satellite and defense programs. Gross
profit for fiscal year 2005 was $12,214,000 or 41.1 percent of sales as
compared to $12,910,000 or 41.7 percent of sales for fiscal year 2004.
Operating income for fiscal year 2005 totaled $742,000 as compared to
operating income for fiscal year 2004 of $1,367,000. Operating results for
2005 were lower due to a reduction of gross profit resulting from decreased
sales and the increase in research and development costs to support new Multi-
Mix(R) products to be available in 2006. For fiscal year 2004, operating
income was reduced by $225,000 of employee incentive compensation and profit-
sharing expense, which did not recur in 2005.
Net income for 2005 was $761,000 or $.24 per diluted share compared to
$1,198,000 or $.38 per diluted share for 2004. As noted before, net income for
2005 included a tax benefit of $250,000 or $.08 per share related to
refundable Canadian provincial technology tax credits, while net income for
2004 included a Canadian tax benefit of $218,000 or $.07 per share.
The backlog at year-end 2005 was $13.1 million, an increase of $194,000 or
approximately 1.5 percent compared to the backlog of $12.9 million at year-end
2004. Orders received during the fourth quarter of 2005 totaled $8.4 million
and were approximately 20 percent above fourth quarter 2005 sales. Orders
received for fiscal year 2005 totaled $29.9 million and were slightly above
fiscal year 2005 sales.
Chairman and CEO Mason N. Carter commented, "Other 2005 financial results
reflecting consistent performance include:
* Cash of $5.6 million (includes $1.5 million of restricted cash)
exceeds the total of current and long-term debt of $3.0 million.
* Net debt repayments of $ .7 million.
* Working capital of $9.8 million and current ratio of 3.2 to 1.
* Research and development costs increased $209,000 for 2005 to support
new Multi-Mix(R) products expected to be available in 2006.
* Orders received of $29.9 million.
* Book-to-bill ratio of 1 to 1.
* Gross profit for the year was over 41 percent.
Mr. Carter further commented, "Building upon our component business and
the key attributes and synergies of its Multi-Mix(R) component portfolio,
Merrimac has leveraged the advanced capabilities of its Multi-Mix(R)
Microtechnology to develop industry's first high power integrated platform
solution, enabling the Company to gain market traction and establish
significant relationships with major wireless infrastructure OEMs and RF
Microwave power semiconductor manufacturers. The following is an overview of
Merrimac progress:
Multi-Mix(R) High Power Components
As 3G and 4G wireless networks evolve, base station OEMs face an ever-
increasing need for more efficient, compact and low cost RF subsystems. These
challenges provide opportunities for new Multi-Mix(R) component solutions for
a wide range of RF subsystem applications.
* Increased Multi-Mix(R) production shipments to China for use in high
power base station amplifiers.
* Custom designed high power Multi-Mix(R) components were delivered for
a Homeland Security and Public Safety integrated communications system
to assist in future civil and governmental inter-departmental
communications. This program offers a substantial future growth
opportunity for Multi-Mix(R).
* Increases in Multi-Mix PICO(R) orders for WiMAX customer premise
equipment (CPE), offering size and cost advantages. WiMAX is another
growth area for Multi-Mix(R). WiMAX provides wireless access
technology for "last mile" broadband services for the home, such as
high-speed Internet and video on demand.
* Custom designed and delivered several high power Multi-Mix(R) parts
for Joint Tactical Radio System (JTRS) customer.
* Shipped Multi-Mix(R) standard products for DD(X) Advanced Radar System
as the United States Government upgrades its shipboard radar systems.
Multi-Mix(R) Modules
"Merrimac's advanced high power integration technology is further
exploited, offering wireless infrastructure OEMs new opportunities for size,
weight, and cost reduction of base station power amplifiers. Multi-Mix(R)
Resource Module, a patent pending advanced high power integrated platform
technology replaces a wide range of expensive complex RF circuitry,
dramatically reducing size, weight and cost while at the same time improving
reliability and peak power handling.
* Received a Notice Of Allowance for our proprietary and versatile
Multi-Mix(R) Resource Module (Patent Pending) as the foundation for
building compact high power amplifier modules, phased array radar
transmitter elements, phase shifters, attenuators, mixers, modulators
and high power pin diode switches.
* Received Multi-Mix(R) patent for the "Method of Making Microwave
Multifunction Modules Using Fluoropolymer Composite Substrates" from
the People's Republic of China. This patent enhances our competitive
position for establishing significant partnerships with major base
station OEMs in China, enabling Merrimac to participate with its
advanced integrated high power amplifier technology in a growing
number of base station configurations.
Subsystem Integration
"Upgrades to existing military systems require more functionality and
advanced capabilities in smaller and lightweight equipment. Multi-Mix(R)
Microtechnology provides leverage to a host of military systems where size,
weight and performance requirements are mission critical. Ongoing
collaborative efforts with our key account customers ensure the best tradeoffs
in size, cost, performance and power for their systems, while utilizing
advanced integration capabilities of Multi-Mix(R) Microtechnology.
* Co-designed an integrated Multi-Mix(R) subsystem with one of our
satellite customers to meet the increased functionality and size
requirements by integrating a subsystem that will allow 30-50% system
size reduction while achieving the increased functionality
requirement.
* Shipped integrated assemblies for GPS satellite applications. Current
and future generation GPS applications offer growth opportunities as
the need for more enhanced GPS functionality continues to expand.
* Delivered multiple Multi-Mix(R) phase detector subsystems for a
military satellite customer to meet the future National Defense
requirements of the U.S.A. Armed Services.
* Currently, we are discussing upgrades to shipboard radar systems and
next generation naval radar systems with our key account customer
utilizing Multi-Mix(R) as a Total Integrated Platform Technology
Solution in meeting their performance and size requirements while
remaining well within their cost objectives.
* Received a combined total of $1.2 million from a commercial satellite
key account for two different satellite builds.
* We are completing shipments for satellite radio, ICO and Terrastar
satellite orders. More satellites are planned to support the growing
demand for satellite radio services.
Merrimac has a solid foundation for future growth in components, modules
and subsystems by providing Multi-Mix(R) Total Integrated Platform Solutions,
incorporating strong value propositions."
Investors are invited to participate in the financial results conference
call on Friday, March 31, 2006 at 4:15 p.m. (Eastern) by dialing
1-800-310-1961 (for International callers: 1-719-457-2692) ten minutes prior
to the scheduled start time, and reference the Merrimac Industries fourth
quarter 2005 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 5584294.
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=33075
If you are 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, etched resistors, passive circuit elements and
plated-through via holes to form a three-dimensional integrated module
applicable to 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,
San Jose, Costa Rica and Ottawa, Ontario, Canada, and has approximately
240 co-workers dedicated to the design and manufacture of signal processing
components, gold plating of high-frequency microstrip, bonded stripline and
thick metal-backed Teflon (PTFE) micro-circuitry 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) and Total Integrated Packaging Solutions(R) are trademarks of
Merrimac Industries, Inc. For more information about Merrimac Industries,
Inc. and its Canadian subsidiary Filtran Microcircuits Inc., please visit
http://www.merrimacind.com and http://www.filtranmicro.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; 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 risk that the benefits
expected from the Company's acquisition of Filtran Microcircuits Inc. are not
realized; 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; foreign currency fluctuations between the U.S. and
Canadian dollars; 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
Quarter Ended
(Unaudited)
December 31, January 1,
2005 2005
Net sales $7,002,000 $7,786,000
Gross profit 2,662,000 3,091,000
Selling, general and administrative expenses 2,415,000 2,493,000
Research and development 394,000 396,000
Operating income (loss) (147,000) 202,000
Interest and other expense, net (41,000) (59,000)
Income (loss) before income taxes (188,000) 143,000
Benefit for income taxes (305,000) (66,000)
Net income 117,000 209,000
Net income per common share - basic and diluted $.04 $.07
Weighted average number of
shares outstanding - basic 3,146,000 3,133,000
Weighted average number of
shares outstanding - diluted 3,180,000 3,171,000
Year Ended
December 31, January 1,
2005 2005
Net sales $29,719,000 $30,949,000
Gross profit 12,214,000 12,910,000
Selling, general and administrative expenses 9,540,000 9,820,000
Research and development 1,932,000 1,723,000
Operating income 742,000 1,367,000
Interest and other expense, net (218,000) (265,000)
Loss on disposition of assets (43,000) -
Income before income taxes 481,000 1,102,000
Benefit for income taxes (280,000) (96,000)
Net income 761,000 1,198,000
Net income per common share - basic $.24 $.38
Net income per common share - diluted $.24 $.38
Weighted average number of
shares outstanding - basic 3,142,000 3,127,000
Weighted average number of
shares outstanding - diluted 3,177,000 3,154,000
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
December 31, January 1,
2005 2005
ASSETS
Current assets:
Cash and cash equivalents $ 4,081,000 $ 2,166,000
Income tax refunds receivable 418,000 98,000
Accounts receivable 5,310,000 6,473,000
Inventories 3,710,000 2,931,000
Other current assets 693,000 583,000
Deferred tax assets 140,000 676,000
Total current assets 14,352,000 12,927,000
Property, plant and
equipment, net 13,973,000 15,584,000
Restricted cash 1,500,000 1,500,000
Other assets 614,000 747,000
Deferred tax assets 482,000 439,000
Goodwill 3,501,000 3,378,000
Total Assets $34,422,000 $34,575,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt $ 908,000 $ 905,000
Other current liabilities 3,590,000 3,558,000
Total current liabilities 4,498,000 4,463,000
Long-term debt, net of current portion 2,071,000 2,778,000
Deferred liabilities 23,000 88,000
Deferred tax liabilities 140,000 648,000
Total liabilities 6,732,000 7,977,000
Stockholders' equity 27,690,000 26,598,000
Total Liabilities and
Stockholders' Equity $34,422,000 $34,575,000
Contact:
Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
SOURCE Merrimac Industries, Inc.
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Related links:
http://www.merrimacind.com
http://www.filtranmicro.com
Company News On-Call:
http://www.prnewswire.com/comp/567525.html
CONTACT:
Mason N. Carter, Chairman & CEO of Merrimac
Industries, Inc., +1-973-575-1300, ext. 1202, mnc@merrimacind.com
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