EXHIBIT 99.1
| | Contact: Winston Hickman (858) 560-1301 |
News Release
REMEC Announces Third Quarter FY 2004 Results
SAN DIEGO, CA — December 8, 2003 — REMEC, Inc. (NASDAQ: REMC), announced results for its third quarter of fiscal 2004 that ended October 31, 2003.
Net sales for the three and nine months ended October 31, 2003 were a record $104.1 million and $271.6 million, respectively, compared to $59.4 million and $172.0 million for the comparable prior year periods. The net loss for the three months ended October 31, 2003, was ($4.1) million, or ($0.07) per diluted share compared to a net loss of $(12.0) million, or ($0.26) per diluted share in the comparable prior year period. The operating loss of $2.2M is approximately 58% lower than the Q2 level. The net loss for the nine months ended October 31, 2003 was ($14.8) million, or ($0.25) per diluted share compared to ($28.0) million, or ($0.62) per diluted share for the same period last year.
Discussion of third quarter results:
| | • | | Third quarter sales increased 75% over the comparable prior year quarter and 21% above the second quarter which results in five consecutive quarters of sales growth. |
| | • | | Commercial and Defense sales were up 105% and 14%, respectively, from the prior year third quarter. |
| | • | | Continued strengthening of demand in core commercial markets and the acquisition of Paradigm are expected to result in sales growth in the fourth quarter. |
| | • | | The gross profit margin for the quarter was 22%, reflecting continued industry pricing pressures. |
| | - | | The gross profit margin increased from 11.5% reported in the comparable prior year period as a result of increased sales volume, productivity improvements and reduced supply chain costs. |
| | • | | Third quarter results benefited from the sale of $1.8 million of low cost inventory obtained in the acquisition of Spectrian and the sale of $1.8 million of inventory from a discontinued product line. |
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| | • | | Operating expenses of $25.1 million were up $5.1 million, or 25%, from the same period of fiscal 2003. This increase was primarily the result of the Spectrian acquisition in December 2003 and, to a lesser extent, the acquisition of Himark Corporation in June 2004. |
| | - | | Selling, general and administrative (SG&A) costs were $12.9 million in the third quarter of fiscal 2004 representing an increase of 23% in comparison to the comparable prior year period. |
| | - | | Research and development costs were $12.2 million for the quarter representing an increase of 37% in comparison to the comparable prior year period. |
| | • | | Other income reflects a $2.0 million loss relating to foreign currency forward contracts. |
| | • | | Cash and short-term investments decreased by $14.1 million during the quarter primarily as a result of the sales increase and the attendant increase in receivables and inventories. |
Commenting on the results, Ron Ragland, Chairman and Chief Executive Officer of REMEC said, “ We are pleased with our progress during the third quarter. Our Customers continue to endorse the REMEC strategy, our product and our partnerships. Key financial performance measures are up and we continue to see strong indicators of business growth as reflected by our 21% sales increase over the second quarter. I am particularly satisfied with the reductions we have made in our operating loss. Much of this improvement is coming from our supply chain focus on material cost reductions and the contribution of our offshore factories. Production levels are up at all locations and our China ramp is proceeding on plan. Despite continued industry pricing pressures, we believe we are on track to achieve profitability in the near term.”
For more information
Management will be holding a conference call to discuss quarterly earnings today, at 2:00 p.m. Pacific Daylight Time (Los Angeles). To participate on the conference call within the U.S., please call (800) 289-0730, confirmation code 335722. From outside the U.S., please call (913) 981-5509, confirmation code 335722, ten minutes prior to the scheduled time of the call. A simultaneous webcast of the call will also be provided by the company. Log onto the company’s website at www.remec.com. Then, click on “Live Webcast-Q3 Earnings Call.”
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About REMEC
REMEC is a designer and manufacturer of high frequency subsystems used in the transmission of voice, video and data traffic over wireless communications networks and in space and defense electronics applications.
Statements in this press release that are not historical are forward-looking statements, which involve known and unknown risks and uncertainties. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including, general and industry economic conditions, competition, development factors, operating costs and other risks and uncertainties that are detailed from time to time in our filings with the Securities and Exchange Commission.
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REMEC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| | | Three months ended
| | | Nine months ended
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| | | October 31, | | | November 1, | | | October 31, | | | November 1, | |
| | | 2003
| | | 2002
| | | 2003
| | | 2002
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| | | (unaudited) | |
Net sales | | $ | 104,098 | | | $ | 59,448 | | | $ | 271,647 | | | $ | 171,999 | |
Cost of sales | | | 81,206 | | | | 52,597 | | | | 210,391 | | | | 151,197 | |
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Gross profit | | | 22,892 | | | | 6,851 | | | | 61,256 | | | | 20,802 | |
Operating expenses: | | | | | | | | | | | | | | | | |
Selling, general and administrative | | | 12,937 | | | | 10,499 | | | | 40,468 | | | | 31,637 | |
Research and development | | | 12,160 | | | | 8,846 | | | | 36,998 | | | | 24,457 | |
Restructuring charge | | | — | | | | 659 | | | | 378 | | | | 659 | |
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Total operating expenses | | | 25,097 | | | | 20,004 | | | | 77,844 | | | | 56,753 | |
Loss from operations | | | (2,205 | ) | | | (13,153 | ) | | | (16,588 | ) | | | (35,951 | ) |
Gain on sale of facility | | | — | | | | — | | | | 945 | | | | — | |
Interest income and other, net | | | (2,027 | ) | | | 1,185 | | | | 634 | | | | 2,012 | |
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Loss before income taxes | | | (4,232 | ) | | | (11,968 | ) | | | (15,009 | ) | | | (33,939 | ) |
Credit for income taxes | | | (148 | ) | | | — | | | | (256 | ) | | | (5,932 | ) |
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Net loss | | $ | (4,084 | ) | | $ | (11,968 | ) | | $ | (14,753 | ) | | $ | (28,007 | ) |
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Net loss per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | (0.07 | ) | | $ | (0.26 | ) | | $ | (0.25 | ) | | $ | (0.62 | ) |
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Diluted | | $ | (0.07 | ) | | $ | (0.26 | ) | | $ | (0.25 | ) | | $ | (0.62 | ) |
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Shares used in computing net loss per common share: | | | | | | | | | | | | | | | | |
Basic | | | 59,260 | | | | 45,489 | | | | 58,382 | | | | 45,342 | |
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Diluted | | | 59,260 | | | | 45,489 | | | | 58,382 | | | | 45,342 | |
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REMEC, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
| | | October 31, | | January 31, |
| | | 2003
| | 2003
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| | | (unaudited) |
ASSETS | | | | | | |
Cash and cash equivalents | | $ | 46,339 | | $ | 64,900 |
Short-term investments | | | 12,989 | | | 12,449 |
Accounts receivable, net | | | 63,703 | | | 48,335 |
Notes and other receivables | | | 7,177 | | | 4,818 |
Inventories, net | | | 83,056 | | | 53,117 |
Other current assets | | | 3,943 | | | 5,201 |
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Total current assets | | | 217,207 | | | 188,820 |
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Property, plant and equipment, net | | | 75,995 | | | 86,182 |
Restricted cash | | | 569 | | | 17,049 |
Goodwill, net | | | 47,434 | | | 36,679 |
Intangible assets, net | | | 3,531 | | | 3,950 |
Other assets | | | 5,746 | | | 6,046 |
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| | | $ | 350,482 | | $ | 338,726 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
Accounts payable | | $ | 53,062 | | $ | 33,444 |
Accrued expenses and other current liabilities | | | 34,178 | | | 40,353 |
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Total current liabilities | | | 87,240 | | | 73,797 |
Deferred income taxes and other long-term liabilities | | | 3,384 | | | 2,358 |
Shareholders’ equity | | | 259,858 | | | 262,571 |
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| | | $ | 350,482 | | $ | 338,726 |
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