Exhibit 99
Technitrol's Sequential-Quarter Earnings Growth Continues in Q203
PHILADELPHIA--(BUSINESS WIRE)--July 21, 2003--Technitrol, Inc.
(NYSE:TNL) reported net earnings according to U.S. Generally Accepted
Accounting Principles (GAAP) of $6.0 million, or $.15 per diluted
share, for its second fiscal quarter ended June 27, 2003, including
after-tax restructuring charges totaling $0.4 million, or $.01 per
share. The charges included employee severance and other expenses
related to the company's effort to reduce costs and streamline
operations.
In the previous quarter, by comparison, GAAP net earnings were
$2.6 million, or $.07 per diluted share, including after-tax
restructuring charges totaling $3.0 million, or $.08 per share. In the
second quarter of 2002, the company reported a GAAP net loss of $29.0
million, or $.75 per diluted share, including after-tax restructuring
charges and asset re-valuations totaling approximately $30.1 million,
or $.78 per share.
Technitrol's consolidated second-quarter 2003 revenues were $125.7
million, compared with $122.5 million in the previous quarter and
$106.2 million in the second quarter of 2002.
Earnings before interest, taxes, depreciation and amortization
(EBITDA, see the attached table "Non-GAAP Measures" defining this
non-GAAP measure and reconciling it with GAAP net earnings) were $13.9
million in the second quarter of 2003, compared with $8.4 million in
the previous quarter and negative ($35.6 million) in the second
quarter of 2002, including pre-tax restructuring and other special
items amounting to $0.5 million, $3.9 million and $43.1 million in
each period, respectively.
First and second-quarter 2003 revenues, earnings and EBITDA
reflect contributions from the Eldor High Tech Wire Wound Components
business (now Pulse-Eldor) since its acquisition on January 9, 2003.
Net cash (cash and equivalents of $115.8 million less debt of $6.3
million) at June 27, 2003 was $109.5 million. Technitrol's capital
spending in the second quarter of 2003 was approximately $1.8 million.
Pulse
Pulse designs and manufactures a wide variety of passive
magnetics-based electronic components and modules. Pulse's
second-quarter revenues were $71.8 million, compared with $67.9
million in the previous quarter and $53.9 million in the second
quarter of 2002, which preceded the Pulse-Eldor acquisition. Operating
profit, including pre-tax restructuring charges of $0.3 million for
severance expenses and other special items, was $7.0 million in the
second quarter, compared with $5.6 million (including similar
restructuring items totaling $0.6 million) in the previous quarter and
an operating loss of $39.4 million (including similar restructuring
items and asset impairment charges totaling $41.0 million) in the
second quarter of 2002.
Pulse's sequential-quarter revenue increase was driven mainly by
stronger demand in its networking, telecommunications and power
conversion markets, partly offset by weaker sales of television
transformers in Europe. Moderately weaker first-half demand followed
by increasing strength in the second half is a seasonal pattern in the
European television industry familiar to the Pulse-Eldor business.
Growing unit volumes and stable revenues at Pulse indicate a
continuation of the slow recovery in electronics markets overall.
Pulse showed continued improvement in operating profit in the second
quarter, reflecting the success of its cost reduction efforts,
tempered somewhat by ongoing deflationary pressure on selling prices.
AMI Doduco
AMI Doduco manufactures a full range of electrical contacts,
contact materials and contact assemblies. Revenues for the second
quarter of 2003 were $53.9 million, compared with $54.7 million in the
first quarter and $52.3 million in the second quarter of 2002.
Comparisons with each prior period were affected by a positive
translation effect of a stronger euro versus the dollar in the most
recent quarter. AMI Doduco's second-quarter operating profit,
including pre-tax severance expense of $0.2 million, was $0.8 million,
compared with operating losses of $2.8 million and $1.4 million,
including severance and related charges amounting to $3.3 million and
$2.1 million, in the first quarter of 2003 and the second quarter of
2002, respectively.
AMI Doduco's markets continue to be affected by weak economic
conditions worldwide, particularly in Europe. Commercial and
industrial markets, including non-residential construction and
industrial controls related to capital spending levels, remained quite
weak, while consumer-driven markets such as automotive, appliances and
residential construction, fared somewhat better.
AMI Doduco's second-quarter profitability was negatively affected
by low production volumes, resulting in poor fixed cost absorption.
The effort to improve utilization and market share has gained
momentum, while programs to reduce manufacturing costs and expand
operations in lower-cost areas, most notably, China, remain a top
priority and continue to deliver operating improvements.
2003 Outlook
At this time, Technitrol sees no reason to amend its 2003
full-year outlook for revenues and earnings as updated on May 21,
2003. At that time, the company said it expected fiscal 2003 revenues
of up to $275 million at Pulse and $225 million at AMI Doduco, with
consolidated earnings in the range of $.60 to $.68 per diluted share,
excluding restructuring charges.
Cautionary Note
Statements in the above report are "forward-looking" within the
meaning of the Private Securities Litigation Reform Act of 1995 and
involve a number of risks and uncertainties. Actual results may differ
materially due to the risk factors listed below as well as others
listed from time to time in Technitrol's SEC reports including, but
not limited to, those discussed in the Company's 10-Q report for the
quarter ended March 28, 2003 in Item 2 under the caption "Factors That
May Affect Our Future Results (Cautionary Statements for Purposes of
the 'Safe Harbor' Provisions of the Private Securities Litigation
Reform Act of 1995)."
These risk factors include, but are not limited to, the following:
-- Cyclical changes in the markets we serve, including the recent
contraction, could result in a significant decrease in demand
for our products and reduce our profitability.
-- Reduced prices for our products may adversely affect our
profit margins if we are unable to reduce our costs of
production.
-- An inability to adequately respond to changes in technology
may decrease our sales.
-- If our inventories become obsolete, our future performance and
operating results will be adversely affected.
-- An inability to capitalize on our recent or future
acquisitions may adversely affect our business.
-- Integration of acquisitions into the acquiring segment may
limit the ability of investors to track the performance of
individual acquisitions and to analyze trends in our operating
results.
-- An inability to identify additional acquisition opportunities
may slow our future growth.
-- If our customers terminate their existing agreements, or do
not enter into new agreements or submit additional purchase
orders for our products, our business will suffer.
-- If we do not effectively manage our business in the face of
fluctuations in the size of our organization, our business may
be disrupted.
-- Uncertainty in demand for our products may result in increased
costs of production and an inability to service our customers.
-- A decrease in availability or increase in cost of our key raw
materials could adversely affect our profit margins.
-- Competition may result in lower prices for our products and
reduced sales.
-- Our backlog is not an accurate measure of future revenues and
is subject to customer cancellation.
-- Fluctuations in foreign currency exchange rates may adversely
affect our operating results.
-- Our international operations subject us to the risks of
unfavorable political, regulatory, labor and tax conditions in
other countries.
-- Shifting our operations between regions may entail
considerable expense.
-- Liquidity requirements could necessitate movements of existing
cash balances, which may be subject to restrictions or cause
unfavorable tax and earnings consequences.
-- Losing the services of our executive officers or our other
highly qualified and experienced employees could adversely
affect our business.
-- Environmental liability and compliance obligations may affect
our operations and results.
-- Public health epidemics such as severe acute respiratory
syndrome may disrupt operations in affected regions and affect
operating results.
Based in Philadelphia, Technitrol is a worldwide producer of
electronic components, electrical contacts and assemblies and other
precision-engineered parts and materials for manufacturers in the data
networking, broadband/Internet access, consumer electronics,
telecommunications, military/aerospace, automotive, and electrical
equipment industries. For more information, visit Technitrol's Web
site at http://www.technitrol.com.
Investors: Technitrol's quarterly conference call will take place
Monday, July 21, 2003 at 5:00 p.m. Eastern Time. The dial-in number is
(612) 332-0632. Also, the call will be broadcast live over the
Internet. Visit www.technitrol.com. On-demand Internet and telephone
replay will be available beginning at 8:30 p.m. on July 21 and
concluding at midnight, July 28, 2003. For telephone replay, dial
(320) 365-3844 and enter access code 690351.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per-share amounts)
Quarter Ended Six Months Ended
6/27/03 6/28/02 6/27/03 6/28/02
--------------------------------------------
Net sales $125,706 $106,185 $248,250 $199,605
Cost of goods sold 92,888 81,519 185,011 155,687
-------- -------- -------- --------
Gross profit 32,818 24,666 63,239 43,918
Selling, general and
administrative
expenses 24,558 22,372 48,292 45,851
Restructuring and
unusual and
infrequent items 505 43,098 4,398 45,756
-------- -------- -------- --------
Operating profit (loss) 7,755 (40,804) 10,549 (47,689)
Interest expense, net (257) (133) (544) (374)
Other expense, net (445) (542) (485) (958)
Equity method investment
earnings 233 -- 505 --
-------- -------- -------- --------
Net earnings (loss)
before taxes
and cumulative effect
of accounting change 7,286 (41,479) 10,025 (49,021)
Income taxes (benefit) 1,266 (12,434) 1,371 (14,815)
-------- -------- -------- --------
Net earnings (loss)
before cumulative
effect of accounting
change 6,020 (29,045) 8,654 (34,206)
Cumulative effect of
accounting change, net
of income tax benefit -- -- -- (15,738)
-------- -------- -------- --------
Net earnings (loss) 6,020 (29,045) 8,654 (49,944)
Basic earnings (loss)
per share before
cumulative effect of
accounting change 0.15 (0.75) 0.22 (0.95)
Cumulative effect of
accounting change -- -- -- (0.44)
-------- -------- -------- --------
Basic earnings (loss)
per share 0.15 (0.75) 0.22 (1.39)
Diluted earnings (loss)
per share before
cumulative effect of
accounting change 0.15 (0.75) 0.22 (0.95)
Cumulative effect of
accounting change -- -- -- (0.44)
-------- -------- -------- --------
Diluted earnings (loss)
per share 0.15 (0.75) 0.22 (1.39)
Weighted average common
and equivalent shares
outstanding 40,160 38,984 40,147 36,332
BUSINESS SEGMENT INFORMATION (UNAUDITED)
(in thousands)
Quarter Ended Six Months Ended
6/27/03 6/28/02 6/27/03 6/28/02
--------------------------------------------
Net sales
Pulse $71,766 $53,888 $139,646 $98,999
AMI Doduco 53,940 52,297 108,604 100,606
-------- -------- -------- --------
Total net sales 125,706 106,185 248,250 199,605
Operating profit (loss)
Pulse 6,997 (39,427) 12,553 (45,796)
AMI Doduco 758 (1,377) (2,004) (1,893)
-------- -------- -------- --------
Total operating
profit (loss) 7,755 (40,804) 10,549 (47,689)
FINANCIAL POSITION
(in thousands, except
per-share amounts) 6/27/03 12/27/02
--------------------
(unaudited)
Cash and equivalents $115,830 $205,075
Trade receivables, net 91,866 65,185
Inventories 66,010 60,588
Other current assets 18,182 13,878
Fixed assets 90,721 64,861
Other assets 186,473 138,119
-------- --------
Total assets 569,082 547,706
Current portion of long-term debt 83 10,667
Accounts payable 39,172 28,791
Accrued expenses 72,552 69,689
Long-term debt 6,203 5,681
Other long-term liabilities 12,744 10,501
-------- --------
Total liabilities 130,754 125,329
Shareholders' equity 438,328 422,377
Net worth per share 10.91 10.53
Shares outstanding 40,183 40,130
NON-GAAP MEASURES
(in thousands)
Quarter Ended
6/27/03 3/28/03 6/28/02
----------- ----------- ---------
(unaudited) (unaudited)
Net earnings (loss) $6,020 $2,634 ($29,045)
Income taxes (benefit) 1,266 105 (12,434)
Interest expense, net 257 287 133
Other expense 445 40 542
Depreciation and amortization 6,165 5,628 5,214
Equity method investment earnings (233) (272) (--)
------- ------- -------
EBITDA 13,920 8,422 (35,590)
Restructuring and unusual and
infrequent items 505 3,893 43,098
------- ------- -------
EBITDA excluding restructuring and
unusual and infrequent items 14,425 12,315 7,508
EBITDA (net income plus income taxes, interest and other expense,
depreciation and amortization, minus equity method investment
earnings) is not a measure of performance under accounting principles
generally accepted in the United States. EBITDA should not be
considered a substitute for, and an investor should also consider, net
income, cash flow from operations and other measures of performance as
defined by accounting principles generally accepted in the United
States as an indicator of our profitability or liquidity. EBITDA is
often used by shareholders and analysts as an indicator of a company's
ability to service debt and fund capital expenditures. We believe it
enhances a reader's understanding of our financial condition, results
of operations and cash flow because it is unaffected by capital
structure and, therefore, enables investors to compare our operating
performance to other companies. We understand that our presentation of
EBITDA may not be comparable to other similarly titled captions of
other companies due to differences in the method of calculation.
CONTACT: Technitrol, Inc., Philadelphia
David Stakun, 215-355-2900