WEST CALDWELL, N.J., April 16 /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
2006.
Due to unanticipated delays in reviewing compliance with certain
contracts, Merrimac was unable to file its Annual Report on Form 10-K
within the prescribed time period without unreasonable effort and expense.
We have completed our review of the contracts and we will be filing our
Annual Report on Form 10-K today.
Sales for the fourth quarter of 2006 were $6,192,000, a decrease of
$810,000 or 11.6 percent compared to the fourth quarter of 2005 sales of
$7,002,000. The sales decrease was due to the loss of certain anticipated
orders as well as from delays in space and defense program orders for both
of the Company's operating segments. Gross profit for the fourth quarter of
2006 was $1,524,000, a decrease of $1,138,000 or 42.7 percent, and was 24.6
percent of sales as compared to gross profit of $2,662,000 or 38.0 percent
of sales for the fourth quarter of 2005. Gross profit percent in the fourth
quarter of 2006 decreased from the fourth quarter of 2005 due to the impact
of the lower level of sales having to absorb fixed manufacturing costs,
lower margin on approximately $900,000 sales of products to key account
customers accepted at very competitive prices, and higher warranty costs.
Operating loss for the fourth quarter of 2006 was $(1,526,000),
compared to an operating loss of $(147,000) for the fourth quarter of 2005.
Operating loss for the fourth quarter of 2006 was due to the lower gross
profit from the decrease in sales and higher research and development costs
related to the Company's Multi-Mix(R) products and included a non-cash
charge of $50,000 for share-based compensation expense resulting from the
adoption of SFAS No. 123R in the first quarter of 2006. As a result of the
declining level of orders and sales, the Company reduced its headcount by
15 employees and recorded a restructuring charge of $286,000 in the fourth
quarter of 2006.
Net loss for the fourth quarter of 2006 was $(1,716,000) or $(.55) per
share compared to net income of $117,000 or $.04 per share for the fourth
quarter of 2005. Net loss for the fourth quarter of 2006 included the
write- off of approximately $167,000 or $.05 per share of unamortized loan
costs related to the Company's prior financing agreement. Net income for
the fourth quarter of 2005 included a tax benefit of $250,000 or $.08 per
share related to certain Canadian tax credits.
For fiscal year 2006 sales of $27,421,000 decreased $2,298,000 or 7.7
percent compared to sales of $29,719,000 for fiscal year 2005. Sales for
fiscal year 2006 were lower than fiscal year 2005 primarily due to our key
account customers loss of significant orders that were to include our
products as well as from delays in expected satellite and defense programs
for all product lines which resulted in lower shippable booking levels
received during fiscal year 2006 compared to fiscal year 2005. Fiscal year
2006 sales included $1,200,000 of revenue recognized in connection with the
early close out of a fixed price customer contract during the second
quarter and a year-to-date sales reduction in the microwave micro-circuitry
segment of $2,327,000 due to declines in the segment's defense orders.
Gross profit for fiscal year 2006 was $10,134,000, a decrease of $2,080,000
or 17.0 percent and was 37.0 percent of sales as compared to gross profit
of $12,214,000 or 41.1 percent of sales for fiscal year 2005. Gross profit
percentage for fiscal year 2006 decreased 4.1 percentage points compared to
fiscal year 2005 due to the impact of the lower level of sales having to
absorb fixed manufacturing costs partially offset by the effects from the
early contract close out of the customer contract mentioned above.
Operating loss for fiscal year 2006 was $(2,037,000) compared to
operating income of $742,000 for fiscal year 2005. The reduction in
operating income for fiscal year 2006 as compared to fiscal year 2005 was
due to the lower gross profit from the decrease in sales, the fourth
quarter 2006 restructuring charge of $286,000, and higher selling, general
and administrative expenses compared to fiscal year 2005. Operating loss
for fiscal year 2006 included a non-cash charge of $189,000 for share-based
compensation expense resulting from the adoption of SFAS No. 123R.
Net loss for fiscal year 2006 was $(2,225,000) or $(.71) per share
compared to net income of $761,000 or $.24 per share for fiscal year 2005.
Net loss for fiscal year 2006 included the write-off of approximately
$167,000 or $.05 per share of unamortized loan costs related to the
Company's prior financing agreement and a tax benefit of $69,000 or $.02
per share representing refundable Canadian provincial technology tax
credits for which the Company has qualified. Net income for fiscal year
2005 included a tax benefit of $250,000 or $.08 per share related to
similar Canadian tax credits.
Orders of $7,587,000 were received during the fourth quarter of 2006, a
decrease of $814,000 or 9.7 percent compared to $8,401,000 in orders
received during the fourth quarter of 2005. Orders of $26,668,000 were
received for fiscal year 2006, a decrease of $3,245,000 or 10.9 percent
compared to $29,913,000 in orders received for fiscal year 2005. The
decrease in orders for fiscal year 2006 as compared to the fiscal year 2005
was due to our key account customers loss of significant orders that were
to include Merrimac products as well as from delays in expected satellite
and defense programs for all product lines, including our Multi-Mix(R)
products. Backlog decreased by $753,000 or 5.7 percent to $12,385,000 at
the end of fiscal year 2006 compared to $13,138,000 at year-end 2005. The
book-to-bill ratio for the fourth quarter of 2006 was 1.23 to 1 and for the
fourth quarter of 2005 was 1.20 to 1. The book-to-bill ratio for fiscal
year 2006 was 0.97 to 1 and for fiscal year 2005 was 1.01 to 1.
Recently, the Company became aware of a problem with purchased material
that was utilized in certain products. The Company has evaluated the
material and found the problem with the material does not affect the
functionality and reliability of the products. This problem did cause
shipment delays of approximately $1,000,000 of products that were expected
to be sold in the first quarter of 2007. The delay in shipments will have a
significant negative impact on the results of operations for the first
quarter of 2007.
Chairman and CEO Mason N. Carter commented, "We still are experiencing
unforeseen delays in Defense and Space programs but feel comfortable with
our alignment and teaming with our key customers in co-designing the next-
generation Military and Space solutions. Their adoption of our Multi-Mix
technology as an enabling technology is encouraging. We believe that our
customers will be successful in achieving their mission.
"These delays in orders caused us to reduce our headcount by 15
persons, principally involved in production, manufacturing support, sales
and administration. We did not reduce our commercial, military or satellite
development capabilities."
Mr. Carter continued, "Our financial information includes:
-- Orders booked of $7.6 million for the fourth quarter.
-- Cash of $6.0 million exceeds the total of current and long-term debt of
$5.2 million. In March 2007, we repurchased 238,700 shares of Merrimac
Common Stock for approximately $2.2 million.
-- Developed a new commercial banking relationship with North Fork Bank
and completed refinancing of our loans in October 2006.
-- Working capital of $13.3 million increased $3.5 million and the current
ratio improved to 4.9 to 1.
-- Research and development costs increased $89,000 for 2006 to support
new Multi-Mix(R) products to be available in 2007."
Investors are invited to participate in the financial results
conference call on Monday, April 16, 2007 at 4:15 p.m. (Eastern) by dialing
1-800-500-3792 (for International callers: 1-719-457-2734) ten minutes
prior to the scheduled start time, and reference the Merrimac Industries
fourth quarter 2006 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 2535411.
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=39158
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 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(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; 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 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.
Contact: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
Quarter Ended
(Unaudited)
December 30, December 31,
2006 2005
Net sales $6,192,000 $7,002,000
Gross profit 1,524,000 2,662,000
Selling, general and administrative expenses 2,239,000 2,415,000
Research and development 525,000 394,000
Restructuring charge 286,000 -
Operating (loss) (1,526,000) (147,000)
Interest and other expense, net (198,000) (41,000)
(Loss)before income taxes (1,724,000) (188,000)
Benefit for income taxes (8,000) (305,000)
Net income (loss) (1,716,000) 117,000
Net income (loss) per common share
- basic and diluted $(.55) $.04
Weighted average number of shares outstanding
- basic 3,138,000 3,146,000
Weighted average number of shares outstanding
- diluted 3,138,000 3,180,000
Year Ended
December 30, December 31,
2006 2005
Net sales $27,421,000 $29,719,000
Gross profit 10,134,000 12,214,000
Selling, general and administrative expenses 9,864,000 9,540,000
Research and development 2,021,000 1,932,000
Restructuring charge 286,000 -
Operating income (loss) (2,037,000) 742,000
Interest and other expense, net (257,000) (218,000)
Loss on disposition of assets - (43,000)
Income (loss) before income taxes (2,294,000) 481,000
Benefit for income taxes (69,000) (280,000)
Net income (loss) (2,225,000) 761,000
Net income (loss) per common share
- basic and diluted $(.71) $.24
Weighted average number of shares outstanding 3,142,000 3,142,000
- basic
Weighted average number of shares outstanding
- diluted 3,142,000 3,176,000
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
December 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $5,961,000 $4,081,000
Accounts receivable, net 5,852,000 5,310,000
Income tax refunds receivable 99,000 418,000
Inventories 3,917,000 3,710,000
Other current assets 882,000 693,000
Deferred tax assets 10,000 140,000
Total current assets 16,721,000 14,352,000
Property, plant and equipment, net 12,985,000 13,973,000
Restricted cash - 1,500,000
Other assets 493,000 614,000
Deferred tax assets 552,000 482,000
Goodwill 3,503,000 3,501,000
Total Assets $34,254,000 $34,422,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt $649,000 $908,000
Deferred tax liabilities 100,000 20,000
Other current liabilities 2,618,000 3,570,000
Total current liabilities 3,367,000 4,498,000
Long-term debt, net of current portion 4,564,000 2,071,000
Deferred liabilities 38,000 23,000
Deferred tax liabilities - 140,000
Total liabilities 7,969,000 6,732,000
Stockholders' equity 26,285,000 27,690,000
Total Liabilities and Stockholders' Equity $34,254,000 $34,422,000
Merrimac Industries, Inc.
Condensed Consolidated Statements of Cash Flows
Year Ended
December 30, December 31,
2006 2005
Cash flows from operating activities:
Net income (loss) $(2,225,000) $761,000
Adjustments to reconcile net income
(loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization 2,592,000 3,155,000
Amortization of deferred financing costs 211,000 50,000
Share-based compensation 189,000 -
Loss (gain) on disposition of assets - 43,000
Deferred and other compensation 4,000 65,000
Deferred income taxes (benefit) - 5,000
Changes in operating assets and
liabilities:
Accounts receivable (515,000) 1,202,000
Income tax refunds receivable 324,000 (312,000)
Inventories (146,000) (774,000)
Other current assets (188,000) (98,000)
Other assets (66,000) 82,000
Other current liabilities (587,000) (80,000)
Deferred compensation (23,000) (40,000)
Deferred liabilities 35,000 (31,000)
Net cash (used in) provided by operating
activities (395,000) 4,028,000
Cash flows from investing activities:
Purchases of capital assets (1,676,000) (1,774,000)
Proceeds from disposition of capital
assets - 300,000
Net cash used in investing activities (1,676,000) (1,474,000)
Cash flows from financing activities:
Borrowings under loan agreements 5,160,000 392,000
Restricted cash returned 1,500,000 -
Repayment of borrowings (2,933,000) (1,118,000)
Proceeds from stock sales 225,000 67,000
Net cash provided by (used in) financing
activities 3,952,000 (659,000)
Effect of exchange rate changes (1,000) 20,000
Net increase (decrease) in cash and cash
equivalents 1,880,000 1,915,000
Cash and cash equivalents at beginning
of year 4,081,000 2,166,000
Cash and cash equivalents at end of year $5,961,000 $4,081,000
SOURCE Merrimac Industries, Inc.
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Related links:
http://www.merrimacind.com
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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