Quarterly Income from Continuing Operations Improves $709,000
New Records for Orders and Backlog Established
WEST CALDWELL, N.J., Nov. 13 /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 third quarter and first nine
months of 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
sheets as of September 29, 2007 and December 30, 2006.
Net sales from continuing operations for the third quarter of 2007 were
$6,612,000, an increase of $1,113,000 or 20.2 percent compared to the third
quarter of 2006 net sales of $5,499,000. 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 third quarter of 2007 was $2,816,000, an
increase of $532,000 or 23.3 percent, and was 42.6 percent of sales as
compared to gross profit of $2,284,000 or 41.5 percent of sales for the
third quarter of 2006. The increase in gross profit and gross profit
percentage for the third quarter of 2007 was due to the impact of the
higher level of sales allowing the Company to absorb fixed manufacturing
costs.
Operating income from continuing operations for the third quarter of
2007 was $317,000, compared to an operating loss from continuing operations
of $(516,000) for the third quarter of 2006. The increase in operating
income from continuing operations for the third quarter of 2007 as compared
to the third quarter of 2006 was due to the improved gross profit caused by
the increase in sales, in addition to lower commissions, administrative
expenses and research and development costs as compared to the third
quarter of 2006.
Income from continuing operations for the third quarter of 2007 was
$245,000 compared to a loss from continuing operations of $(464,000) for
the third quarter of 2006. Income per diluted share from continuing
operations for the third quarter of 2007 was $.08 compared to a loss from
continuing operations of $(.15) per share for the third quarter of 2006.
Loss from discontinued operations for the third quarter of 2007 was
$(2,058,000) compared to a loss from discontinued operations of $(135,000)
for the third quarter of 2006. Loss per basic share from discontinued
operations for the third quarter of 2007 was $(.70) and $(.68) per diluted
share compared to a loss from discontinued operations of $(.04) per share
for the third quarter of 2006. In the third quarter of 2007, the Company
recorded an impairment charge for the remaining FMI goodwill balance of
$1,126,000, and wrote down the remaining net assets of FMI by $586,000 to a
fair value of $450,000.
Net loss for the third quarter of 2007 was $(1,813,000) compared to a
net loss of $(599,000) for the third quarter of 2006. Net loss per basic
share was $(.62) and $(.60) per diluted share for the third quarter of
2007, compared to a net loss per share of $(.19) reported for the third
quarter of 2006.
Net sales from continuing operations for the first nine months of 2007
were $16,495,000, a decrease of $788,000 or 4.6 percent compared to net
sales of $17,283,000 for the first nine months of 2006. Net sales from
continuing operations for the first nine months of 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 the first nine
months of 2007. Gross profit for the first nine months of 2007 was
$6,880,000, a decrease of $782,000 or 10.2 percent, and was 41.7 percent of
sales as compared to gross profit of $7,662,000 or 44.3 percent of sales
for the third quarter of 2006. The decrease in gross profit and gross
profit percentage for the first nine months of 2007 was due to the impact
of the lower level of sales having to absorb fixed manufacturing costs.
Gross profit for the first nine months of 2006 also included $1,060,000
from the early close out of a fixed price customer contract.
Operating loss from continuing operations for the first nine months of
2007 was $(632,000) compared to an operating loss from continuing
operations for the first nine months of 2006 of $(446,000). The increase in
the operating loss from continuing operations for the first nine months of
2007 as compared to the first nine months of 2006 was due to the lower
gross profit caused by the decrease in sales, partially offset by decreased
commissions, administrative expenses and research and development costs
compared to the first nine months of 2006.
Loss from continuing operations for the first nine months of 2007 was
$(688,000) compared to a loss from continuing operations of $(327,000) for
the first nine months of 2006. Loss from continuing operations per share
for the first nine months of 2007 was $(.23) compared to a loss from
continuing operations of $(.10) per share for the first nine months of
2006.
Loss from discontinued operations for the first nine months of 2007 was
$(5,858,000) compared to a loss from discontinued operations of $(183,000)
for the first nine months of 2006. Loss from discontinued operations per
share for the first nine months of 2007 was $(1.97) compared to a loss from
discontinued operations of $(.06) per share for the first nine months of
2006. Loss from discontinued operations includes goodwill impairment
charges of $3,756,000 and a charge of $506,000 to provide a full valuation
allowance for a Canadian net deferred tax asset. Also included in the loss
from discontinued operations for the first nine months of 2007 was a
$586,000 charge for the write down of the remaining FMI net assets to an
estimated net realizable value of $450,000.
Net loss for the first nine months of 2007 was $(6,546,000) compared to
a net loss of $(510,000) for the first nine months of 2006. Net loss per
share for the first nine months of 2007 was $(2.20) compared to a net loss
of $(.16) per share for the first nine months of 2006.
Orders of $7,028,000 were received during the third quarter of 2007, an
increase of $1,985,000 or 39.4 percent compared to $5,043,000 in orders
received during the third quarter of 2006. Orders of $21,767,000, a new
Merrimac record for a nine-month period, were received during the first
nine months of 2007, an increase of $6,460,000 or 42.2 percent compared to
$15,307,000 in orders received during the first nine months of 2006.
Backlog increased by $5,272,000 or 45.9 percent to $16,762,000 at the end
of the third quarter of 2007 compared to $11,490,000 at year-end 2006, due
to the increased orders received during the first nine months. The
book-to-bill ratio for the third quarter of 2007 was 1.06 to 1 and for the
third quarter of 2006 was 0.92 to 1. The book-to-bill ratio for the first
nine months of 2007 was 1.32 to 1 and for the first nine months of 2006 was
0.89 to 1. The orders, backlog and book-to-bill information for the current
and prior periods exclude FMI information.
Chairman and CEO Mason N. Carter commented, "In our third quarter, new
orders remained strong at over $7 million with a book-to-bill ratio of 1.06
to 1. Our backlog has reached another record level, having increased 46%
since the end of last year. Growth in bookings will eventually translate to
higher shipments. This quarter we are seeing those results and are pleased
to report our shipment performance has grown following consecutive quarters
of positive bookings.
"Our trend towards higher levels of RF integration using our patented
Multi-Mix(R) Microtechnology continues unabated. In the third quarter we
received orders for prototype hardware that performs various complex
functions in both Satellite Systems and Airborne and Ground Based Radar
systems. Several of these programs are projected to ramp up to full
production volumes during the ensuing 12 months."
Mr. Carter continued, "Two important milestones in our commercial power
amplifier activity were achieved this quarter. We shipped high power
miniature amplifier prototype units for UMTS and WiMAX to a major telecom
equipment manufacturer. The product performance exceeded our expectations
and we anticipate customer and market acceptance to be strong.
"The most interesting part of the growth we are seeing with our new
Multi- Mix(R) technology is that it has been mostly incremental to our
existing core capabilities of stripline and lumped element component
design. Our business in these more traditional technologies has remained
strong while the new technology grows. In this way, we are realizing our
strategy of increasing our value to our key customers, creating profitable
business growth, and advancing technology."
Mr. Carter continued, "Our financial highlights include:
-- Record orders booked of $21.8 million for the first nine months of
2007. Orders received for the third quarter were $7.0 million.
-- Multi-Mix(R) orders and sales through the first nine months of 2007
have exceeded full year 2006 orders and sales.
-- Highest quarter-end backlog ever of $16.8 million.
-- Book-to-bill ratio of 1.32 to 1 for the first nine months of 2007.
-- Working capital of $9.9 million and current ratio of 3.4 to 1."
Investors are invited to participate in the financial results
conference call on Tuesday, November 13, 2007 at 4:15 p.m. (Eastern) by
dialing 1-800-909-7113 (for International callers: 1-785-830-1914) ten
minutes prior to the scheduled start time, and reference the Merrimac
Industries third 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 8943526.
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=44086
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,
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.
Contact:
Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
(Unaudited)
Quarter Ended
September 29, September 30,
2007 2006 (a)
Net sales $6,612,000 $5,499,000
Gross profit 2,816,000 2,284,000
Selling, general and administrative expenses 2,099,000 2,222,000
Research and development 400,000 578,000
Operating income (loss) 317,000 (516,000)
Interest and other (expense) income, net (72,000) 52,000
Income (loss) from continuing operations 245,000 (464,000)
Loss from discontinued operations (2,058,000) (135,000)
Net loss (1,813,000) (599,000)
Net income (loss) per common share:
Income (loss) from continuing operations - basic $.08 $(.15)
Loss from discontinued operations - basic $(.70) $(.04)
Net (loss) per common share - basic $(.62) $(.19)
Income (loss) from continuing operations
- diluted $(.08) $(.15)
Loss from discontinued operations - diluted $(.68) $(.04)
Net (loss) per common share - diluted $(.60) $(.19)
Weighted average number of shares
outstanding - basic 2,917,000 3,137,000
Weighted average number of shares
outstanding - diluted 3,039,000 3,137,000
(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
(Unaudited)
Nine Months Ended
September 29, September 30,
2007 (a) 2006 (a)
Net sales $16,495,000 $17,283,000
Gross profit 6,880,000 7,662,000
Selling, general and administrative expenses 6,293,000 6,706,000
Research and development 1,219,000 1,402,000
Operating loss (632,000) (446,000)
Interest and other (expense) income, net (56,000) 119,000
Loss from continuing operations (688,000) (327,000)
Loss from discontinued operations (5,858,000) (183,000)
Net loss (6,546,000) (510,000)
Net loss per common share:
Loss from continuing operations $(.23) $(.10)
Loss from discontinued operations $(1.97) $(.06)
Net loss per common share $(2.20) $(.16)
Weighted average number of shares outstanding 2,975,000 3,143,000
(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
September December
29, 2007 30, 2006
(Unaudited) (Unaudited)
(a) (a)
ASSETS
Current assets:
Cash and cash equivalents $1,148,000 $5,399,000
Accounts receivable, net 6,518,000 5,132,000
Inventories 4,482,000 3,740,000
Other current assets 777,000 834,000
Current assets held for sale 1,044,000 1,616,000
Total current assets 13,969,000 16,721,000
Property, plant and equipment, net 11,089,000 11,775,000
Restricted cash 250,000 -
Other assets 499,000 493,000
Deferred tax assets 100,000 100,000
Long-term assets held for sale 793,000 5,165,000
Total Assets $26,700,000 $34,254,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Current portion of long-term debt $550,000 $550,000
Deferred tax liabilities 100,000 100,000
Other current liabilities 2,285,000 2,039,000
Current liabilities related to
assets held for sale 1,151,000 678,000
Total current liabilities 4,086,000 3,367,000
Long-term debt, net of current portion 3,900,000 4,312,000
Deferred liabilities 56,000 38,000
Long-term liabilities related to
assets held for sale 236,000 252,000
Total liabilities 8,278,000 7,969,000
Stockholders' equity:
Common stock 33,000 33,000
Additional paid-in capital 19,612,000 19,237,000
Retained earnings 54,000 6,600,000
Accumulated other comprehensive income 1,845,000 1,389,000
Treasury stock (3,122,000) (974,000)
Stockholders' equity
18,422,000 26,285,000
Total Liabilities and
Stockholders' Equity $26,700,000 $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.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
(Unaudited)
September 29, September 30,
2007 (a) 2006 (a)
Cash flows from operating activities:
Net loss $(6,546,000) $(510,000)
Less, loss from discontinued operations (5,858,000) (183,000)
Loss from continuing operations (688,000) (327,000)
Adjustments to reconcile loss from
continuing operations to net cash used
in operating activities:
Depreciation and amortization 1,757,000 1,759,000
Amortization of deferred financing costs 23,000 37,000
Share-based compensation 223,000 138,000
Changes in operating assets and
liabilities:
Accounts receivable (1,385,000) (1,295,000)
Inventories (742,000) (515,000)
Other current assets 57,000 (32,000)
Other assets (30,000) 35,000
Other current liabilities 245,000 (523,000)
Deferred liabilities 18,000 16,000
Net cash used by operating activities-
continuing operations (522,000) (707,000)
Net cash provided (used) by operating
activities-discontinued operations (363,000) 277,000
Net cash used by operating activities (885,000) (430,000)
Cash flows from investing activities:
Purchases of capital assets (1,071,000) (1,203,000)
Net cash used in investing activities-
continuing operations (1,071,000) (1,203,000)
Net cash used in investing activities-
discontinued operations (180,000) (45,000)
Net cash used in investing activities (1,251,000) (1,248,000)
Cash flows from financing activities:
Repurchase of stock for the treasury (2,148,000) -
Repayment of borrowings (413,000) (520,000)
Restricted cash (250,000) -
Proceeds from stock sales 153,000 200,000
Net cash used in financing activities-
continuing operations (2,658,000) (320,000)
Net cash used in financing activities-
discontinued operations (52,000) (1,000)
Net cash used in financing activities (2,710,000) (321,000)
Effect of exchange rate changes 33,000 33,000
Net decrease in cash and cash equivalents (4,813,000) (1,966,000)
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 $0 and $687,000 reported under
assets held for sale $1,148,000 $2,115,000
(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.
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, Merrimac
Industries, Inc., +1-973-575-1300, ext. 1202, mnc@merrimacind.com
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