Exhibit 99.1
CELERITEK REPORTS THIRD QUARTER RESULTS
(SANTA CLARA, CA), January 27, 2004,------Celeritek (NASDAQ National
Market System Symbol: CLTK), a manufacturer of GaAs semiconductor components and
GaAs-based subsystems for defense applications and commercial communications
networks, today reported financial results for its third quarter ended December
31, 2003.
FINANCIAL RESULTS
For the third quarter of fiscal 2004, Celeritek reported revenues of $7.7
million, compared with $7.1 million in the second quarter of fiscal 2004 and
$10.5 million in the third quarter of fiscal 2003. The net loss for the third
quarter of fiscal 2004 was $3.1 million or $0.25 per share, compared with a net
loss of $10.1 million or $0.82 per share for the same period a year ago.
Included in the net loss for the third quarter of fiscal 2004 was a special
charge of $1.9 million for termination expenses, a building lease impairment
charge and facilities consolidation costs related to Celeritek's decision to
exit the wireless handset power amplifier market. Included in the net loss for
the third quarter of fiscal 2003 was a special charge of $2.8 million for
termination expenses and impairment of fixed assets and equipment leases and a
charge of $4.4 million for the write-off of in-process research and development
related to the acquisition of the assets of Tavanza, Inc. As previously
announced, Celeritek expects to significantly reduce its breakeven revenue to
approximately $10.0 million per quarter and achieve annual cost savings in the
range of $9.0 million to $10.0 million as a result of the September 2003
restructurings.
Celeritek's backlog at December 31, 2003 was $15.8 million up from $12.9
million at the end of September 2003 and was comprised of $3.8 million in
semiconductor products and a development contract and $12.0 million in defense
products. The book-to-bill ratio in the quarter for semiconductor products,
absent a $1.7 million development contract, was 0.9 and the book-to-bill for
defense products was 1.3.
Semiconductor revenues were $3.0 million in the third quarter of fiscal
2004, compared to $2.2 million in the second quarter of fiscal 2004 and $5.5
million in the third quarter of fiscal 2003. The increased semiconductor revenue
in the third quarter of fiscal 2004 included approximately $650,000 from the
sale of power amplifiers for handsets that were written off in fiscal 2003 and
$400,000 of revenue for a development contract.
Subsystem revenues were $4.7 million in the third quarter of fiscal 2004,
compared to $4.9 million in the second quarter of fiscal 2004 and $4.9 million
in the third quarter of fiscal 2003.
Gross margin improved sequentially to 34% of sales in the third quarter of
fiscal 2004 versus 19% in the second quarter of fiscal 2004 and 18% in the third
quarter of fiscal 2003. The improvement in gross margin was mainly attributable
to approximately $650,000 in sales for products that were written off in fiscal
2003 and $400,000 in sales for a development contract with the corresponding
costs in research and development, and to a
lesser extent, a reduction of $450,000 in overhead expenses due to reductions in
headcount and equipment costs. Celeritek used $2.4 million in operating cash in
the third quarter of fiscal 2004, resulting in a balance of cash and short-term
investments of $83.6 million at December 31, 2003. At the end of the third
quarter of fiscal 2004, the accounts receivable balance had increased to
$5.4 million from $4.1 million at the end of the second quarter due to
non-linear shipments. The inventory balances were relatively flat at
$3.1 million at the end of December 2003.
COMMENTS FROM MANAGEMENT
"We at Celeritek are focused on returning the company to profitability and
are making progress on this goal. The positive book-to-bill ratio for the
quarter in our defense business demonstrates that we are executing on this
strategy, and we believe that we are taking the right steps to achieve our goal
of returning to profitability," said Tamer Husseini, president and chief
executive officer of Celeritek.
"In our semiconductor business, we received a $1.7 million order for the
development of a power amplifier module for satellite handsets with production
quantities forecast for 2005. As part of our efforts to expand our standard
product base and concentrate resources on high-demand segments, we also recently
introduced a new family of gain blocks. Unlike other products currently in the
marketplace, Celeritek's offering reduces field failures and leads to lower
maintenance and warranty costs for manufacturers of defense, homeland security,
CATV infrastructure and wireless infrastructure products and systems.
"Demand in our defense business remains steady. During the quarter, we
booked the first order for a highly complex integrated subsystem for a defense
aerospace application. Celeritek's system was chosen because it responds to
customer demand for products with a higher degree of integration and
functionality. The benefit to Celeritek of providing these complex assemblies is
increased revenue per platform," continued Mr. Husseini.
Celeritek noted that it remains committed to delivering value to its
shareholders. During the quarter, the company's Board of Directors declared an
extraordinary cash dividend of $4.50 per share of common stock, payable on March
11, 2004, to shareholders of record on February 5, 2004. Based on the expected
needs of the business, Celeritek believes that this return of capital is an
appropriate use of cash and that the company will continue to have sufficient
cash resources to achieve its long-term financial, operational and product
goals.
BUSINESS OUTLOOK
Celeritek currently expects revenues to be approximately $7.0 million to
$8.0 million in the fourth quarter of fiscal 2004 with gross margins of
approximately 20% to 25%. R&D expense is expected to be $1.7 million to $1.9
million for the quarter and SG&A expense is expected to be $2.3 million to $2.4
million for the quarter. The company expects to use $1.0 million to $2.0 million
in operating cash in the March quarter and have cash balances on March 31, 2004,
after the payment of the special dividend, of approximately $25.0 million to
$26.0 million.
CONFERENCE CALL
Celeritek will host a conference call this afternoon at 2:00 PM Pacific
Time to discuss the results for the third quarter of fiscal 2004 and comment on
the Company's business outlook. The conference call will be broadcast live over
the Internet and can be accessed through the Investor Relations section of
Celeritek's web site: www.celeritek.com. The call will also be available live by
dialing (888) 882-0147 (within the US) and (415) 908-4723 (outside the US). A
replay of the call will be available through Saturday, January 31st until 4:00
PM PT. The replay number is (800) 633-8284 (within the US) and (402) 977-9140
(outside the US). Enter reservation # 21181424 for the replay.
ABOUT CELERITEK
Celeritek designs and manufactures GaAs semiconductor components and
GaAs-based subsystems used in defense applications and commercial communications
networks. Its GaAs-based subsystems are designed for missile guidance, radar
applications and electronic countermeasures. Its GaAs semiconductor components
primarily consist of transmit solutions, including power amplifiers, control
devices, gain blocks and millimeter wave devices for use in defense and
commercial applications. Commercial semiconductor applications include wireless
communication network and satellite applications.
SAFE HARBOR STATEMENT
This release contains forward-looking statements. These forward-looking
statements represent the Company's expectations or beliefs concerning future
events and include statements, among others, regarding: the expected reduction
in Celeritek's breakeven revenue level to approximately $10.0 million per
quarter; the expected annual cost savings of approximately $9.0 million to $10.0
million; the ability of the company to return to profitability; the forecast for
delivering production quantities of a power amplifier module for satellite
handsets in the second half of fiscal 2005; increased revenue per platform with
respect to orders of a integrated subsystem for a defense aerospace application;
the Company's belief that it will continue to have sufficient cash resources to
achieve its long-term financial, operational and product goals; expected
revenues of approximately $7.0 million to $8.0 million in the fourth quarter of
fiscal 2004; expected gross margins of approximately 20% to 25% in the fourth
quarter; expected R&D expense of approximately $1.7 million to $1.9 million and
SG&A expense of approximately $2.3 million to $2.4 million for the fourth
quarter; expected use of operating cash of $1.0 million to $2.0 million; and
expected cash balances of approximately $25.0 million to $26.0 million at the
end of March 2004. The Company undertakes no duty to update these
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements as a result of known and unknown
risk factors and uncertainties. Such risks may include, but are not necessarily
limited to: the risk that Celeritek will be unable to manage effectively and
efficiently its exit from the wireless handset power amplifier business, leading
to higher costs than expected; the risk that increasing engineering staff will
not result in product breakthroughs or sales with respect to the defense
business; the risk that our competitors may introduce products superior to ours;
and the risk that the company will not achieve the necessary revenue level to
reach profitability. Reference is made to the discussion of risk factors
detailed in the company's filings with the Securities and Exchange Commission,
including its reports on Forms 10-K and 10-Q.
CELERITEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, March 31,
2003 2003
------------ ---------
(Unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $ 12,406 $ 28,909
Short-term investments 71,219 66,727
Accounts receivable, net 5,375 4,483
Inventories 3,135 3,599
Prepaid expenses and other current assets 1,638 1,925
-------- --------
Total current assets 93,773 105,643
Property and equipment, net 5,693 11,029
Intangible assets 0 931
Other assets 4,673 4,857
-------- --------
Total assets $104,139 $122,460
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,161 $ 4,355
Accrued payroll 1,288 1,601
Accrued liabilities 4,968 4,201
Current portion of long-term debt 2,379 2,543
Current obligations under capital leases 749 597
-------- --------
Total current liabilities 12,545 13,297
Long-term debt, less current portion 401 2,126
Non-current obligations under capital leases 393 793
Shareholders' equity 90,800 106,244
-------- --------
Total liabilities and shareholders' equity $104,139 $122,460
======== ========
Note: The balance sheet at March 31, 2003 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
CELERITEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net sales $ 7,714 $ 10,523 $ 21,369 $ 41,348
Cost of goods sold 5,084 8,601 16,805 31,591
-------- -------- -------- --------
Gross profit 2,630 1,922 4,564 9,757
Operating expenses:
Research and development 1,861 2,530 7,690 7,973
Selling, general and administrative 2,236 2,488 9,343 7,905
In-process research and development -- 4,414 -- 4,414
Special charge 1,939 2,783 4,607 2,783
Amortization of intangibles 0 86 257 86
-------- -------- -------- --------
Total operating expenses 6,036 12,301 21,897 23,161
Loss from operations (3,406) (10,379) (17,333) (13,404)
Impairment of strategic investment -- -- -- (330)
Interest income and other, net 258 329 1,557 1,249
-------- -------- -------- --------
Loss before income tax (3,148) (10,050) (15,776) (12,485)
Provision for income taxes -- -- -- --
-------- -------- -------- --------
Net loss ($ 3,148) ($10,050) ($15,776) ($12,485)
======== ======== ======== ========
Basic loss per share ($ 0.25) ($ 0.82) ($ 1.27) ($ 1.02)
======== ======== ======== ========
Diluted loss per share ($ 0.25) ($ 0.82) ($ 1.27) ($ 1.02)
======== ======== ======== ========
Weighted average common shares outstanding 12,408 12,301 12,375 12,271
Weighted average common shares outstanding,
assuming dilution 12,408 12,301 12,375 12,271