Exhibit 99.1
DPAC Technologies Continues Investment in the Wireless and Military
Markets as It Reports Results for First Quarter of Fiscal Year 2004
GARDEN GROVE, Calif.--(BUSINESS WIRE)--June 30, 2003--DPAC
Technologies Corp. (Nasdaq:DPAC):
-- Research and development increases to 15% of sales
-- Loss per share for the quarter, prior to litigation reserve,
matches loss per share from the previous quarter
-- DPAC reserves $750,000 for a potential litigation settlement
DPAC Technologies Corp. (Nasdaq:DPAC), a technology company that
provides a diverse portfolio of patented electronic-component-based
products, including component packaging technology for high-density,
space-saving memory and wireless applications, and solutions for
digital image enhancement, today reported results for its first
quarter of fiscal year 2004, ended May 31, 2003.
First Quarter Operating Results
For the first fiscal quarter ended May 31, 2003, revenue was $5.2
million as compared to revenue of $11.9 million for the first quarter
of the previous year. The decrease in revenue for the quarter is
principally attributed to a significant decrease in memory prices, a
change in product mix and a decrease in the average selling price. The
loss for the quarter was $(0.9) million or $(0.04) per share, as
compared to net income of $0.8 million or $0.04 per share for the
prior year's first quarter.
Comment and Outlook
"DPAC has experienced tremendous performance over the prior four
year's with its proprietary stacking technology and has strengthened
its balance sheet during this period," stated Ted Bruce, DPAC's
president and CEO. "To ensure the future growth of DPAC, we are
putting necessary resources into appropriate business activities as we
execute our strategy to generate new technology and products for
existing and new markets. During the first fiscal quarter of 2004, we
introduced the formation of a new product line for the wireless
marketplace. This product in development will provide the hardware and
software necessary to implement a wireless solution for our industrial
customers. Significant customer interest has been generated due to its
capabilities, which will provide quicker time-to-market, at reduced
risks and costs to their development cycle."
Mr. Bruce continued, "This month, we announced the purchase of a
marketing and manufacturing license for a proprietary weapons target
enhancement product. This product, which is used for the enhancement
of real-time images, has presented an excellent opportunity for DPAC
to expand our defense market presence.
"We continue to be viewed as a leader in the memory stacking
market segment. With the entry of DRAM semiconductor producers in the
stacking business, we must carefully determine the best tactics and
business strategy for DPAC. While we are optimistic about the
potential for the DuraStack(TM) technology, equally so, we must
realize that the long-term success of a service-stacking company is
unclear. It is this situation that drives the importance of the
diversification efforts for the long-term benefit of our shareholders.
So, while it appears the overall stacking technology has been accepted
as a viable market, prices have softened in parallel with the general
memory market. The DuraStack(TM), which is a best-in-class stacking
technology, will offer our customer base a more efficient and
solder-free method for their stacking needs."
Mr. Bruce continued, "We continue to see opportunities for the
future growth of DPAC with the above applications. The operational
achievements we have delivered indicate that we have the right team
in place to successfully execute our strategy."
Balance Sheet Summary
At May 31, 2003, DPAC had total assets of $24.9 million, including
cash and cash equivalents of $7.6 million. The Company used cash
during the quarter, principally for the purchased license agreement
and property additions. Current assets were $10.5 million. The
Company's current ratio is approximately 4.6-to-1, and its long-term
debt has been reduced to $74,000.
First Quarter Fiscal 2004 Operating Results
Gross margin for the first quarter of fiscal 2004 was 23.0
percent, compared with 23.7 percent for the fiscal first quarter of
2003, and 25.5 percent for the fourth quarter of fiscal 2003. Changes
in the gross margin are impacted by shifts in product mix and memory
pricing among the Company's business lines.
Fiscal 2004 first quarter selling, general and administrative
expenses (SG&A) were $1.2 million compared with $1.6 million in the
first quarter of fiscal 2003. The decrease in SG&A was primarily
related to decreased payroll costs and legal expenses. Fiscal 2004
first quarter research and development expenses were $0.8 million or
15.0 percent of sales, compared to $0.5 million or 3.8 percent of
sales for the first quarter of fiscal 2003, due to the Company's
increased emphasis on new product and technology development.
During the quarter, DPAC entered into a potential settlement
agreement for its outstanding patent litigation. DPAC recognized a
reserve of $750,000 related to this potential settlement.
Conference Call and Webcast
Management of DPAC will host a conference call today at 10:30 a.m.
Pacific/1:30 p.m. Eastern to discuss the first quarter fiscal year
2004 operating performance. The conference call will feature Chief
Executive Officer and President Ted Bruce and Chief Financial Officer
William Stowell. To participate on the live call, please dial
800-982-3654 toll free. A phone replay will be available for 48 hours
(beginning two hours after the completion of the conference call) by
dialing 888-266-2081 or 703-925-2533 and entering the Passcode 185504.
About DPAC Technologies
Located in Garden Grove, California, DPAC Technologies provides a
diverse portfolio of patented electronic-component-based products
including component packaging technology for high-density, space
saving memory and wireless applications, and solutions for digital
image enhancement. DPAC's products are used in electronic circuits
found in network servers, computer storage devices, weapon guidance
systems, medical instrumentation, communication devices, refrigeration
controls, automotive diagnostic equipment and other advanced
equipment.
The Company also provides value-added manufacturing of prototype
designs and medium volume production runs of assembled circuit boards.
The Company's web site address is www.DPACTech.com.
Forward-Looking Statements
This press release includes forward-looking statements, including
statements regarding management's current beliefs concerning the
Company's market, technology development, expansion and business
plans, the use of its technology in industrial and military programs,
relationships in price parity of existing technology with future
technology, and the need for various present and future products,
which are subject to change, uncertainties and risks. Every statement
herein that is not historic in nature is a forward-looking statement
for purposes of the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and
uncertainties, and therefore results may differ materially from those
set forth in these statements. Factors that affect DPAC's business
include, but are not limited to, the success of patented products,
future business opportunities with products, the semiconductor market,
protection of technology or proprietary rights, risks of litigation,
and general market and economic conditions. More information about the
risks and challenges faced by DPAC Technologies Corp. is contained in
the Securities and Exchange Commission filings made by the Company on
Form 10-K, 10-Q and 8-K. DPAC Technologies Corp. specifically
disclaims any obligation to update or revise any forward-looking
statements whether as a result of new information, future developments
or otherwise.
DPAC TECHNOLOGIES CORP.
Condensed Consolidated Balance Sheet Information
(unaudited)
(In 000's) May 31, February 28,
2003 2003
--------------- --------------
Cash $7,629 $8,197
Total current assets 10,489 12,557
Property, net 4,101 3,863
Goodwill 4,529 4,529
Long-term deferred
income taxes 5,125 4,554
Total assets $24,850 $25,753
Current liabilities $2,291 $2,257
Long-term debt 74 99
Shareholders' equity 22,485 23,397
Total liabilities and shareholders'
equity $24,850 $25,753
DPAC TECHNOLOGIES CORP.
Condensed Statement of Income
(Unaudited)
For Periods Ended May 31 First Fiscal Quarter
(in 000's)
------------------------
2004 2003
------------ ----------
Sales $5,163 $11,937
Cost of sales 3,973 9,111
------------ ----------
Gross profit 1,190 2,826
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Selling, general & administrative costs 1,176 1,579
Reserve for litigation settlement 750
Research and development 776 456
------------ ----------
Total operating costs 2,702 2,035
------------ ----------
Income (loss) from operations (1,512) 791
Other income 8 12
------------ ----------
Income (loss) before income taxes (1,504) 803
------------ ----------
Income tax benefit 571 -
------------ ----------
Net income (loss) $(933) $803
============ ==========
Earnings (loss) per share- Basic ($0.04) $0.04
Earnings (loss) per share- Diluted ($0.04) $0.04
Basic shares 20,988 21,016
Diluted shares 20,988 21,374
CONTACT: DPAC Technologies Corp.
William M. Stowell, 714/898-0007
William.Stowell@dpactech.com
www.dpactech.com