Exhibit 99.1
DPAC Technologies Continues Investment in the Wireless Market as It
Reports Results for the Second Fiscal Quarter
GARDEN GROVE, Calif.--(BUSINESS WIRE)--Sept. 30, 2003--DPAC
Technologies Corp. (Nasdaq:DPAC):
-- During the quarter, the Company completes new wireless product
introduction.
-- New innovative stacking technology, the DuraStack(TM), still
on schedule for volume production this fiscal year.
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, today reported results
for its second fiscal quarter of fiscal year 2004, ended August 31,
2003.
Second Quarter Operating Results
Second quarter revenue was $4.4 million as compared to $5.2
million for the first quarter of the current fiscal year. The decrease
in revenue for the quarter is primarily due to a reduction in the
LP-Stack business as the industry shifts from single data rate to
double data rate memory and the stacking market became more
competitive. The development of the new DuraStack(TM) process will
address both the industry shift to double data rate memory and the
increasing competition in the stacking market with an advanced
stacking technology. For the second fiscal quarter, the Company
recorded a net loss of $1.1 million, or $(0.05) per share, as compared
to a net loss of $.9 million or $(0.04) per share for the first fiscal
quarter.
Second quarter sales, general and administrative, (SG&A) expenses
were $1.4 million as compared with $1.2 million in the first quarter
of fiscal 2004. The increase in SG&A was primarily related to an
increase in legal fees, costs to redesign the Company's web page, as
well as an increase in sales and marketing as DPAC began to prepare
for the launch of its new wireless product.
Second quarter research and development expenses were $749,000 or
17 percent of revenue, compared to $776,000 or 15 percent of revenue
for the first quarter of fiscal 2004, due to the Company's continued
allocation of resources towards the new wireless products and the
DuraStack technology development.
Year-to-date Results
For the six-months ended August 31, 2003, revenue was $9.6
million, a 58 percent decrease from revenue of $22.8 million for the
same period last year. The decrease in revenue for the quarter is due
to a reduction in the LP-Stack business as the industry shifts from
single data rate to double data rate memory and the stacking market
becomes more competitive. The development of the new DuraStack(TM)
process will address both the industry shift to double data rate
memory and the increasing competition in the stacking market with an
advanced stacking technology. The loss for the six months was $2.0
million or $(.10) per share, as compared with income of $3.1 million,
or $.14 per diluted share, for the same period in fiscal 2003. During
the second quarter of fiscal year 2003, the Company recorded an income
tax benefit of $1.4 million associated with the reversal of a
valuation allowance against its net deferred tax asset.
Balance Sheet Summary
At August 31, 2003, DPAC had total assets of $24.9 million,
including cash and cash equivalents of $7.2 million. The Company's
current ratio was approximately 3.1.
Comment and Outlook
Ted Bruce, DPAC's CEO and president commented, "The forethought to
diversify into the wireless market continues to show itself as the
right strategy for DPAC. While short-term revenue performance
continues to be disappointing at this time, I can assure our
shareholders we are on a much better path that promises to build
shareholder value. This key strategic decision will expand our
customer base and strengthen our business performance for the future."
Mr. Bruce continued, "Our plan today is for DuraStack to start
limited production this quarter. Then in fourth fiscal quarter, we
would start broader customer support with an aggressive ramp of the
technology in the first and second quarters of next year. We continue
to evaluate potential acceleration of this schedule which is a key
factor, along with our new wireless product, to reversing our revenue
and profitability performance."
"The introduction of our first Airborne product has been received
very positively and is driving our employees even harder. I have seen
a distinct change in the momentum of DPAC, which is for the positive.
We remain confident that this new market offers the opportunity for
growth and increasing shareholder value," Bruce said.
Conference Call
Management of DPAC will host a conference call today at 10:30 a.m.
Pacific/1:30 p.m. Eastern to discuss the second quarter 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 888-243-0811. A phone
replay will be available for 48 hours (beginning two hours after the
completion of the conference call) by dialing 888-266-2081 and
entering the pass code 269956.
About DPAC Technologies
Based in Garden Grove, California, DPAC Technologies(TM) provides
patented component packaging technology to create high-density,
space-saving memory and wireless products. DPAC's products are used in
electronic circuits found in network servers, computer storage
devices, guidance systems, medical instrumentation, and communication
devices. The Company provides outsourced engineering design services
to aid customers in creating cost-saving circuit designs as well as
contract 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) August 31, February 28,
2003 2003
-------- --------
Cash $7,152 $8,197
-------- --------
Current assets 9,854 12,557
Fixed assets, net 4,167 3,863
Goodwill 4,529 4,529
Deferred income taxes-LT 5,794 4,554
Other assets 576 250
-------- --------
Total assets $24,920 $25,753
-------- --------
Current liabilities $3,170 $2,257
Long-term debt 337 99
Shareholders' equity 21,413 23,397
Total liabilities and shareholders'
equity $ 24,920 $ 25,753
-------- --------
DPAC TECHNOLOGIES CORP.
Condensed Statements of Operations
(Unaudited)
For Periods Ended August 31
(in 000's, except per share data) Second Quarter Six Months
--------------- ---------------
2003 2002 2003 2002
------- ------- ------- -------
Sales $4,400 $10,883 $9,563 $22,819
Cost of sales 4,028 7,965 8,001 17,075
------- ------- ------- -------
Gross profit 372 2,918 1,562 5,744
------- ------- ------- -------
Sales, general & administrative 1,388 1,674 2,565 3,253
Research and development 749 448 1,525 904
Reserve for litigation - - 750 -
------- ------- ------- -------
Total operating costs 2,137 2,122 4,840 4,157
------- ------- ------- -------
Income (loss) from operations (1,765) 796 (3,278) 1,587
Other income 5 13 14 25
------- ------- ------- -------
Income (loss) before income taxes (1,760) 809 (3,264) 1,612
------- ------- ------- -------
Income tax benefit 669 1,445 1,240 1,445
------- ------- ------- -------
Net income (loss) $(1,091) $2,254 $(2,024) $3,057
======= ======= ======= =======
EPS - Basic $(0.05) $0.11 $(0.10) $0.15
EPS - Diluted $(0.05) $0.11 $(0.10) $0.14
Basic Shares 21,010 21,044 20,999 21,030
Diluted Shares 21,010 21,305 20,999 21,464
CONTACT: DPAC Technologies Corp., Garden Grove
William M. Stowell (Investor Relations), 714-898-0007
William.Stowell@dpactech.com
www.dpactech.com