WEST CALDWELL, N.J., April 1 /PRNewswire-FirstCall/ -- Merrimac
Industries, Inc. (Amex: MRM), a leader in the design and manufacture of RF
Microwave components, assemblies and micro-multifunction modules (MMFM(R)),
today announced results for the fourth quarter and fiscal year 2003.
Sales for the fourth quarter of 2003 were $7,841,000, establishing a
quarterly record for the Company and a 47.4 percent increase compared to
fourth quarter 2002 sales of $5,318,000, due to an improvement in orders
received earlier in the year and higher backlog going into the fourth quarter.
Fourth quarter 2003 sales included $226,000 from the settlement of rate
increases in prior year contract costs on certain U.S. Government contracts.
Operating income in the fourth quarter totaled $581,000, including
$210,000 of income from such rate increases on prior year contract costs.
Operating income of $581,000 was impacted by a personnel restructuring charge
of $31,000 recorded in the fourth quarter of 2003. Fourth quarter 2003
operating income compares to an operating loss of $1,916,000 for the fourth
quarter of 2002, which included a personnel restructuring charge of $270,000.
Operating results for the fourth quarter improved as a result of increased
sales, improved facilities utilization and the favorable impact from cost
management initiatives instituted earlier in 2003, including a $422,000 or
51.6 percent planned reduction in research and development costs in the fourth
quarter of 2003 compared to the fourth quarter of 2002.
Net income for the fourth quarter of 2003 was $500,000 compared to a net
loss of $2,281,000 for the fourth quarter of 2002. Net income per share was
$.16 for the fourth quarter of 2003, which included $.07 from rate increases
on prior year contract costs, compared to a net loss per share of $.73
reported for the fourth quarter of 2002. The net loss for the fourth quarter
of 2002 also included a non-cash valuation allowance of $645,000 ($.21 per
share) against certain previously recorded deferred tax assets, as discussed
below.
For fiscal year 2003, sales of $27,322,000 were also a record for the
Company. This represents an 11.2 percent increase compared to sales of
$24,570,000 for fiscal year 2002. Operating loss for fiscal year 2003 totaled
$856,000, which includes aggregate personnel restructuring charges of $160,000
recorded in the last three quarters, compared to an operating loss of
$1,723,000 for fiscal year 2002, which included combined personnel
restructuring charges of $510,000 in the second and fourth quarters of 2002.
Expenses associated with bank modification agreements incurred during the
second quarter, additional professional fee expenses and the accelerated
amortization of deferred financing costs in connection with our prior bank
facilities totaled approximately $400,000, and impacted results for fiscal
year 2003. In addition, fiscal 2003 included $210,000 of income from the
settlement of rate increases previously noted and research and development
expenses decreased $992,000 compared to fiscal 2002.
For fiscal year 2003, the net loss was $914,000, which includes the
aggregate impact of personnel restructuring charges of $160,000 recorded
during the last three quarters of 2003, gains on the dispositions of assets of
$104,000, $210,000 of income from increases on prior year contract rates, and
$400,000 of expenses associated with the bank modification agreements. Net
loss for fiscal year 2002 was $2,135,000, which included the impact of
combined personnel restructuring charges of $510,000 in the second and fourth
quarters of 2002. The 2002 net loss also included a non-cash valuation
allowance of $645,000 against certain previously recorded deferred tax assets.
For fiscal year 2003, the net loss per share was $.29, which includes the
aggregate impact of $.05 per share personnel restructuring charges taken
during the last three quarters of 2003, gains on the dispositions of assets of
$.03 per share, $.07 of income from increases on prior year contract rates,
and $.13 of expenses associated with the bank modification agreements. Net
loss per share for fiscal year 2002 was $.69, which included the impact of the
$.17 per share combined personnel restructuring charges reported in the second
and fourth quarters of 2002 and the $.21 per share valuation allowance against
deferred tax assets recorded in the fourth quarter of 2002.
The backlog at year-end 2003 was $12.4 million, an increase of
$2.4 million or approximately 23.4 percent compared to the backlog of
$10.0 million at year-end 2002. Orders received during the fourth quarter of
2003 totaled $8.1 million and were approximately 2.7 percent above fourth
quarter 2003 sales. Orders received for fiscal year 2003 totaled
$29.7 million, approximately 8.6 percent above fiscal year 2003 sales.
The decline in gross profit percentage during 2003 to 38.7 percent from
42.6 percent in 2002 was primarily attributable to competitive pricing,
additional production costs above anticipated costs, increases in depreciation
and other occupancy expenses related to expansion and the underutilization of
manufacturing facilities.
Chairman and CEO Mason N. Carter commented, "We clearly benefited from
actions taken in much of 2003 by restructuring and streamlining our
operations. These actions combined with a strong defense segment, along with
some pick-up in the wireless telecom market, culminated in greatly improved
Fourth Quarter sales and profitable operating results.
Mr. Carter continued, "While one quarter is not a trend, it is a big first
step to significantly improving our operating performance. Our Key Account
program, leading product development and never-ending process improvement
programs, position us well for what we hope will be a strong economic rebound
in the general economy as well as in our focused market segments. Our Key
Account customers are becoming more aware that the tangible value Merrimac
supplies is passed on to our customers and this provides increased value to
their customers."
Investors are invited to participate in the financial results conference
call on Thursday April 1, 2004 at 4:30 p.m. (Eastern) by dialing
1-800-915-4836 (for International callers: 1-973-317-5319) ten minutes prior
to the scheduled start time, and reference the Merrimac Industries fourth
quarter 2003 conference call. For those unable to participate, a replay will
be available for seven days by dialing 1-800-428-6051, or 1-973-709-2089 for
international callers, passcode number 348168.
This conference call will also be broadcast live over the Internet by
logging on to the web at this address:
http://www.firstcallevents.com/service/ajwz403089094gf12.html
If you are unable to participate during the live webcast, a link to the
archived webcast will be listed on the Merrimac Industries, Inc. website
http://www.merrimacind.com .
About Merrimac
Merrimac Industries, Inc. is a leader in the design and manufacture of
Multi-Mix PICO(TM) RF Microwave components, assemblies and micro-multifunction
modules (MMFM), serving the wireless telecommunications industry worldwide
with enabling technologies for space, defense and commercial applications.
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. The Multi-Mix(R) process
for microwave, multilayer integrated MMFM circuitry is a patented method
developed by Merrimac Industries based on fluoropolymer composite substrates.
The fusion bonding of multilayer structures provides a homogeneous dielectric
medium for superior electrical performance at microwave frequencies. The
bonded layers may incorporate embedded semiconductor devices, MMICs, etched
resistors, passive circuit elements and plated-through via holes to form a
three-dimensional subsystem enclosure that requires no further packaging.
Merrimac Industries facilities are registered under ISO 9000, an
internationally developed set of quality criteria for manufacturing
operations.
Merrimac Industries, Inc. and its subsidiary Filtran Microcircuits Inc.,
are located in West Caldwell, NJ, San Jose, Costa Rica and Ottawa, Ontario,
Canada, and have approximately 210 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(TM), MMFM(R) and Total Integrated
Packaging Solutions(R) are trademarks of Merrimac Industries, Inc. For more
information about Merrimac Industries, Inc. and 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; general
economic and industry conditions; slower than anticipated penetration into the
satellite communications, defense and wireless markets; the risk that the
benefits expected from the acquisition of Filtran Microcircuits Inc. are not
realized; the ability to protect proprietary information and technology;
competitive products and pricing pressures; 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, including but not limited to those 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)
January 3, December 28,
2004 2002
Net sales $7,841,000 $5,318,000
Gross profit 3,369,000 1,671,000
Selling, general and administrative
expenses 2,361,000 2,499,000
Research and development 396,000 818,000
Restructuring charge 31,000 270,000
Operating income (loss) 581,000 (1,916,000)
Interest and other expense, net (107,000) (48,000)
Income (loss) before income taxes 474,000 (1,964,000) (a)
Provision (benefit) for income taxes (26,000) 317,000 (a)
Net income (loss) 500,000 (2,281,000) (a)
Net income (loss) per common share -
basic and diluted $.16 $(.73) (a)
Weighted average number of shares
outstanding - basic 3,121,000 3,128,000
Weighted average number of shares
outstanding - diluted 3,130,000 3,128,000
Year Ended
January 3, December 28,
2004 2002
Net sales $27,322,000 $24,570,000
Gross profit 10,577,000 10,466,000
Selling, general and administrative
expenses 9,536,000 8,950,000
Research and development 1,737,000 2,729,000
Restructuring charges 160,000 510,000
Operating loss (856,000) (1,723,000)
Interest and other expense, net (271,000) (175,000)
Gain on disposition of assets 104,000 -
Loss before income taxes (1,023,000) (1,898,000) (b)
Provision (benefit) for income taxes (109,000) 237,000 (b)
Net loss (914,000) (2,135,000) (b)
Net loss per common share - basic and
diluted $(.29) $(.69) (b)
Weighted average number of shares
outstanding - basic and diluted 3,121,000 3,074,000
(a) Reflects the effects of the fourth quarter 2002 restructuring charge
which increased the net loss by $270,000 or $.09 per share for the
fourth quarter of 2002, and a tax provision to establish a $645,000
valuation allowance (or $.21 per share) against deferred tax assets.
(b) Reflects the effects of the second and fourth quarter restructuring
charges which increased the net loss by $510,000 or $.17 per share
for fiscal year 2002, and a tax provision to establish a $645,000
valuation allowance (or $.21 per share) against deferred tax assets.
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
January 3, December 28,
2004 2002
ASSETS
Current assets:
Cash and cash equivalents $453,000 $3,611,000
Income tax refunds receivable 136,000 301,000
Accounts receivable 6,299,000 3,801,000
Inventories 3,188,000 4,015,000
Other current assets 482,000 318,000
Deferred tax assets 1,055,000 945,000
Total current assets 11,613,000 12,991,000
Property, plant and equipment, net 17,222,000 19,282,000
Restricted cash 1,500,000 -
Other assets 854,000 818,000
Deferred tax assets, non-current 573,000 905,000
Goodwill 3,123,000 2,491,000
Total Assets $34,885,000 $36,487,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt $954,000 $6,240,000
Other current liabilities 3,341,000 3,134,000
Total current liabilities 4,295,000 9,374,000
Long-term debt, net of current portion 4,208,000 429,000
Deferred compensation 89,000 123,000
Deferred liabilities 48,000 156,000
Deferred tax liabilities 1,407,000 1,703,000
Total liabilities 10,047,000 11,785,000
Stockholders' equity 24,838,000 24,702,000
Total Liabilities and
Stockholders' Equity $34,885,000 $36,487,000
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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