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 2004.
Sales for the fourth quarter of 2004 were $7,786,000, a $55,000 decrease
compared to fourth quarter 2003 sales of $7,841,000. Fourth quarter 2003
sales included $226,000 from rate increases in prior year contract costs on
certain U.S. Government contracts. Gross profit for the fourth quarter was
$3,091,000 or 39.7 percent of sales as compared to fourth quarter 2003 gross
profit of $3,369,000 or 43.0 percent of sales. Gross profit percentage in 2003
included a 2.9 percent increase reflecting income from the government contract
rate increases. Gross profit and gross profit percentage in 2004 were
negatively impacted by $83,000 or approximately 1.1 percentage points
resulting from the decline in U.S. dollar exchange rates when compared to the
Canadian dollar.
Operating income in the fourth quarter of 2004 was $202,000, compared to
operating income of $581,000 in the fourth quarter of 2003. Operating income
for the fourth quarter of 2004 reflects $225,000 of employee incentive
compensation and profit sharing expense. In addition to the previously
mentioned foreign exchange impact on gross profit of $83,000, operating income
was further impacted negatively by $76,000 of foreign currency conversion
losses resulting from unfavorable U.S. dollar exchange rates compared to the
Canadian dollar during the fourth quarter of 2004. Operating income in the
fourth quarter of 2003 included $210,000 of income from the government
contract rate increases.
Net income for the fourth quarter of 2004 was $209,000 compared to net
income of $500,000 for the fourth quarter of 2003. Net income was $.07 per
diluted share for the fourth quarter of 2004 compared to net income of $.16
per diluted share for the fourth quarter of 2003, which included $.07 per
share from the government contract rate increases.
For fiscal year 2004, sales increased 13.3 percent to $30,949,000,
establishing a record for the Company, compared to sales of $27,322,000 for
fiscal year 2003. Gross profit for fiscal year 2004 was $12,910,000 or 41.7
percent of sales as compared to $10,577,000 or 38.7 percent of sales for
fiscal year 2003. Gross profit and gross profit percentage increased due to
the higher sales level and the associated increase in utilization of the
Company's manufacturing facilities, better product mix and the benefits from
cost containment and restructuring programs instituted during 2003.
Operating income for fiscal year 2004 totaled $1,367,000 as compared to an
operating loss for fiscal year 2003 of $(856,000). Operating income for 2004
reflects $225,000 of employee incentive compensation and profit sharing
expense. 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 totaling approximately $400,000 and personnel restructuring charges
of $160,000 negatively impacted results for fiscal year 2003. In addition,
fiscal 2003 included $210,000 of income from the government contract rate
increases previously noted.
Net income for fiscal year 2004 was $1,198,000. Net loss for fiscal year
2003 was $(914,000), which includes the aggregate impact of $400,000 of
expenses associated with the bank modification agreements and personnel
restructuring charges of $160,000 recorded during the last three quarters of
2003, which was partially offset by $210,000 of income from the government
contract rate increases and gains on dispositions of assets of $104,000.
For fiscal year 2004 net income per share was $.38. For fiscal year 2003,
the net loss per share was $(.29), which included the aggregate impact of
$(.13) per share of expenses associated with the bank modification agreements
and $(.05) per share personnel restructuring charges taken during the last
three quarters of 2003, which were partially offset by $.07 per share of
income from the government contract rate increases and gains on the
dispositions of assets of $.03 per share.
The backlog at year-end 2004 was $12.9 million, an increase of $500,000 or
approximately 4.0 percent compared to the backlog of $12.4 million at year-end
2003. Orders received during the fourth quarter of 2004 totaled $8.2 million
and were approximately 5.4 percent above fourth quarter 2004 sales. Orders
received for fiscal year 2004 totaled $31.5 million, establishing a record for
the Company and were approximately 2.2 percent above fiscal year 2004 sales.
Chairman and CEO Mason N. Carter commented, "Achieving the record sales of
over $30.9 million for 2004 and fifth consecutive profitable quarter is a
significant accomplishment for our Team. Other financial results reflecting
consistent performance include:
* Gross profit greater than 40 percent for three of four quarters and
41.7 percent for the year, compared to 38.7 percent for the prior year.
* Cash increased during 2004 by $1.7 million to a total of $3.7 million,
which approximates the amount of current and long-term debt.
* Record orders of $31.5 million.
* Debt repayments of $1.5 million.
* Working capital of $8.5 million and current ratio of 2.9 to 1.
Beyond important financial accomplishments we continued to introduce new
state-of-the-art products including Zapper(R) Wireless Components, a family of
Zapper(R) Delay Lines, WiMAX connectivity solutions and custom Multi-Mix(R)
products for challenging applications."
Mr. Carter continued, "We received an important patent for our Multi-
Mix(R) PICO products. This revolutionary breakthrough in microwave design and
manufacturing delivers miniaturized single and multifunction product
solutions. This patent further supports our Multi-Mix(R) Product/Market
Strategy and provides further protection for our intellectual property. We
continue our commitment to product development and plan to continue to
commercialize our leading edge Multi-Mix(R) technology for mission critical
applications requiring high performance, high frequency and high power
solutions."
Investors are invited to participate in the financial results conference
call on Friday April 1, 2005 at 4:15 p.m. (Eastern) by dialing 1-800-231-9012
(for International callers: 1-719-457-2617) ten minutes prior to the scheduled
start time, and reference the Merrimac Industries fourth quarter 2004
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 2706749.
This conference call will also be broadcast live over the Internet by
logging on to the web at this address:
http://phx.corporate-ir.net/playerlink.zhtml?c=73209&s=wm&e=1045642
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 RF
Microwave signal processing components, assemblies and subsystems, Multi-Mix
PICO(R) components 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. 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; general
economic and industry conditions; 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; 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; failure of our Original Equipment
Manufacturer, or OEM, customers to successfully incorporate our products into
their systems; 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; 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; 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; 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)
January 1, January 3,
2005 2004
Net sales $7,786,000 $7,841,000
Gross profit 3,091,000 3,369,000
Selling, general and administrative
expenses 2,493,000 2,361,000
Research and development 396,000 396,000
Restructuring charge - 31,000
Operating income 202,000 581,000
Interest and other expense, net (59,000) (107,000)
Income before income taxes 143,000 474,000
Benefit for income taxes (66,000) (26,000)
Net income 209,000 500,000
Net income per common share - basic
and diluted $.07 $.16
Weighted average number of shares
outstanding - basic 3,133,000 3,121,000
Weighted average number of shares
outstanding - diluted 3,171,000 3,130,000
Year Ended
January 1, January 3,
2005 2004
Net sales $30,949,000 $27,322,000
Gross profit 12,910,000 10,577,000
Selling, general and administrative
expenses 9,820,000 9,536,000
Research and development 1,723,000 1,737,000
Restructuring charge - 160,000
Operating income (loss) 1,367,000 (856,000)
Interest and other expense, net (265,000) (271,000)
Gain on disposition of assets - 104,000
Income (loss) before income taxes 1,102,000 (1,023,000)
Benefit for income taxes (96,000) (109,000)
Net income (loss) 1,198,000 (914,000)
Net income (loss) per common share -
basic and diluted $.38 $(.29)
Weighted average number of shares
outstanding - basic 3,127,000 3,121,000
Weighted average number of shares
outstanding-diluted 3,154,000 3,121,000
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
January 1, 2005 January 3, 2004
ASSETS
Current assets:
Cash and cash equivalents $ 2,166,000 $ 453,000
Income tax refunds receivable 98,000 136,000
Accounts receivable 6,473,000 6,299,000
Inventories 2,931,000 3,188,000
Other current assets 583,000 482,000
Deferred tax assets 676,000 542,000
Total current assets 12,927,000 11,100,000
Property, plant and equipment, net 15,584,000 17,222,000
Restricted cash 1,500,000 1,500,000
Other assets 747,000 854,000
Deferred tax assets 439,000 221,000
Goodwill 3,378,000 3,123,000
Total Assets $ 34,575,000 $ 34,020,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt $ 905,000 $ 954,000
Other current liabilities 3,558,000 3,341,000
Total current liabilities 4,463,000 4,295,000
Long-term debt, net of current portion 2,778,000 4,208,000
Deferred compensation 54,000 89,000
Deferred liabilities 34,000 48,000
Deferred tax liabilities 648,000 542,000
Total liabilities 7,977,000 9,182,000
Stockholders' equity 26,598,000 24,838,000
Total Liabilities and Stockholders'
Equity $ 34,575,000 $ 34,020,000
Contact: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
SOURCE Merrimac Industries, Inc.
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