Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
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CONTACT: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
MERRIMAC REPORTS RECORD FOURTH QUARTER AND FISCAL YEAR 2003 SALES
AND PROFITABLE FOURTH QUARTER RESULTS
WEST CALDWELL, N.J., APRIL 1, 2004: 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 2003.
Sales for the fourth quarter of 2003 were $7,841,000, establishing a quarterly
record for the Company and a 47.4 percent increase compared to fourth quarter
2002 sales of $5,318,000, due to an improvement in orders received earlier in
the year and higher backlog going into the fourth quarter. Fourth quarter 2003
sales included $226,000 from the settlement of rate increases in prior year
contract costs on certain U.S. Government contracts.
Operating income in the fourth quarter totaled $581,000, including $210,000 of
income from such rate increases on prior year contract costs. Operating income
of $581,000 was impacted by a personnel restructuring charge of $31,000 recorded
in the fourth quarter of 2003. Fourth quarter 2003 operating income compares to
an operating loss of $1,916,000 for the fourth quarter of 2002, which included a
personnel restructuring charge of $270,000. Operating results for the fourth
quarter improved as a result of increased sales, improved facilities utilization
and the favorable impact from cost management initiatives instituted earlier in
2003, including a $422,000 or 51.6 percent planned reduction in research and
development costs in the fourth quarter of 2003 compared to the fourth quarter
of 2002.
Net income for the fourth quarter of 2003 was $500,000 compared to a net loss of
$2,281,000 for the fourth quarter of 2002. Net income per share was $.16 for the
fourth quarter of 2003, which included $.07 from rate increases on prior year
contract costs, compared to a net loss per share of $.73 reported for the fourth
quarter of 2002. The net loss for the fourth quarter of 2002 also included a
non-cash valuation allowance of $645,000 ($.21 per share) against certain
previously recorded deferred tax assets, as discussed below.
For fiscal year 2003, sales of $27,322,000 were also a record for the Company.
This represents an 11.2 percent increase compared to sales of $24,570,000 for
fiscal year 2002. Operating loss for fiscal year 2003 totaled $856,000, which
includes aggregate personnel restructuring charges of $160,000 recorded in the
last three quarters, compared to an operating loss of $1,723,000 for fiscal year
2002, which included combined personnel restructuring charges of $510,000 in the
second and fourth quarters of 2002. 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 totaled approximately $400,000, and
impacted results for fiscal year 2003. In addition, fiscal 2003 included
$210,000 of income from the settlement of rate increases previously noted and
research and development expenses decreased $992,000 compared to fiscal 2002.
For fiscal year 2003, the net loss was $914,000, which includes the aggregate
impact of personnel restructuring charges of $160,000 recorded during the last
three quarters of 2003, gains on the dispositions of assets of $104,000,
$210,000 of income from increases on prior year contract rates, and $400,000 of
expenses associated with the bank modification agreements. Net loss for fiscal
year 2002 was $2,135,000, which included the impact of combined personnel
restructuring charges of $510,000 in the second and fourth quarters of 2002. The
2002 net loss also included a non-cash valuation allowance of $645,000 against
certain previously recorded deferred tax assets.
For fiscal year 2003, the net loss per share was $.29, which includes the
aggregate impact of $.05 per share personnel restructuring charges taken during
the last three quarters of 2003, gains on the dispositions of assets of $.03 per
share, $.07 of income from increases on prior year contract rates, and $.13 of
expenses associated with the bank modification agreements. Net loss per share
for fiscal year 2002 was $.69, which included the impact of the $.17 per share
combined personnel restructuring charges reported in the second and fourth
quarters of 2002 and the $.21 per share valuation allowance against deferred tax
assets recorded in the fourth quarter of 2002.
The backlog at year-end 2003 was $12.4 million, an increase of $2.4 million or
approximately 23.4 percent compared to the backlog of $10.0 million at year-end
2002. Orders received during the fourth quarter of 2003 totaled $8.1 million and
were approximately 2.7 percent above fourth quarter 2003 sales. Orders received
for fiscal year 2003 totaled $29.7 million, approximately 8.6 percent above
fiscal year 2003 sales.
The decline in gross profit percentage during 2003 to 38.7 percent from 42.6
percent in 2002 was primarily attributable to competitive pricing, additional
production costs above anticipated costs, increases in depreciation and other
occupancy expenses related to expansion and the underutilization of
manufacturing facilities.
Chairman and CEO Mason N. Carter commented, "We clearly benefited from actions
taken in much of 2003 by restructuring and streamlining our operations. These
actions combined with a strong defense segment, along with some pick-up in the
wireless
telecom market, culminated in greatly improved Fourth Quarter sales and
profitable operating results.
Mr. Carter continued, "While one quarter is not a trend, it is a big first step
to significantly improving our operating performance. Our Key Account program,
leading product development and never-ending process improvement programs,
position us well for what we hope will be a strong economic rebound in the
general economy as well as in our focused market segments. Our Key Account
customers are becoming more aware that the tangible value Merrimac supplies is
passed on to our customers and this provides increased value to their
customers."
Investors are invited to participate in the financial results conference call on
Thursday April 1, 2004 at 4:30 p.m. (Eastern) by dialing 1-800-915-4836 (for
International callers: 1-973-317-5319) ten minutes prior to the scheduled start
time, and reference the Merrimac Industries fourth quarter 2003 conference call.
For those unable to participate, a replay will be available for seven days by
dialing 1-800-428-6051, or 1-973-709-2089 for international callers, passcode
number 348168.
This conference call will also be broadcast live over the Internet by logging on
to the web at this address:
http://www.firstcallevents.com/service/ajwz403089094gf12.html
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 Multi-Mix
PICO(TM) RF Microwave components, assemblies 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. and its subsidiary Filtran Microcircuits Inc., are
located in West Caldwell, NJ, San Jose, Costa Rica and Ottawa, Ontario, Canada,
and have 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(TM),
MMFM(R)and Total Integrated Packaging Solutions(R)are trademarks of Merrimac
Industries, Inc. For more information about Merrimac Industries, Inc. and
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; slower than anticipated penetration into the satellite
communications, defense and wireless markets; the risk that the benefits
expected from the acquisition of Filtran Microcircuits Inc. are not realized;
the ability to protect proprietary information and technology; competitive
products and pricing pressures; 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, including but not limited to those 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
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(Unaudited)
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January 3, December 28,
2004 2002
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Net sales $7,841,000 $5,318,000
Gross profit 3,369,000 1,671,000
Selling, general and administrative expenses 2,361,000 2,499,000
Research and development 396,000 818,000
Restructuring charge 31,000 270,000
Operating income (loss) 581,000 (1,916,000)
Interest and other expense, net (107,000) (48,000)
Income (loss) before income taxes 474,000 (1,964,000)(a)
Provision (benefit) for income taxes (26,000) 317,000 (a)
Net income (loss) 500,000 (2,281,000)(a)
Net income (loss) per common share - basic and diluted $.16 $(.73)(a)
Weighted average number of shares outstanding - basic 3,121,000 3,128,000
Weighted average number of shares outstanding - diluted 3,130,000 3,128,000
Year Ended
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January 3, December 28,
2004 2002
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Net sales $27,322,000 $24,570,000
Gross profit 10,577,000 10,466,000
Selling, general and administrative expenses 9,536,000 8,950,000
Research and development 1,737,000 2,729,000
Restructuring charges 160,000 510,000
Operating loss (856,000) (1,723,000)
Interest and other expense, net (271,000) (175,000)
Gain on disposition of assets 104,000 -
Loss before income taxes (1,023,000) (1,898,000)(b)
Provision (benefit) for income taxes (109,000) 237,000 (b)
Net loss (914,000) (2,135,000)(b)
Net loss per common share - basic and diluted $(.29) $(.69)(b)
Weighted average number of shares outstanding - basic and diluted 3,121,000 3,074,000
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(a) Reflects the effects of the fourth quarter 2002 restructuring charge which
increased the net loss by $270,000 or $.09 per share for the fourth quarter
of 2002, and a tax provision to establish a $645,000 valuation allowance
(or $.21 per share) against deferred tax assets.
(b) Reflects the effects of the second and fourth quarter restructuring charges
which increased the net loss by $510,000 or $.17 per share for fiscal year
2002, and a tax provision to establish a $645,000 valuation allowance (or
$.21 per share) against deferred tax assets.
MERRIMAC INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
January 3, 2004 December 28, 2002
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ASSETS
Current assets:
Cash and cash equivalents $ 453,000 $ 3,611,000
Income tax refunds receivable 136,000 301,000
Accounts receivable 6,299,000 3,801,000
Inventories 3,188,000 4,015,000
Other current assets 482,000 318,000
Deferred tax assets 1,055,000 945,000
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Total current assets 11,613,000 12,991,000
Property, plant and equipment, net 17,222,000 19,282,000
Restricted cash 1,500,000 -
Other assets 854,000 818,000
Deferred tax assets, non-current 573,000 905,000
Goodwill 3,123,000 2,491,000
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Total Assets $ 34,885,000 $ 36,487,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt $ 954,000 $ 6,240,000
Other current liabilities 3,341,000 3,134,000
Total current liabilities 4,295,000 9,374,000
Long-term debt, net of current portion 4,208,000 429,000
Deferred compensation 89,000 123,000
Deferred liabilities 48,000 156,000
Deferred tax liabilities 1,407,000 1,703,000
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Total liabilities 10,047,000 11,785,000
Stockholders' equity 24,838,000 24,702,000
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Total Liabilities and
Stockholders' Equity $ 34,885,000 $ 36,487,000
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