Frequency Electronics, Inc. (Nasdaq:FEIM) reported revenues for
fiscal year 2011, which ended April 30, 2011, of $53.2 million
compared to $49.4 million in fiscal 2010. This 8% year-over-year
increase reflects the initial impact of recent new orders for
commercial and U.S. government satellite payloads.
Net income for fiscal 2011, after reversing $3.7 million of
deferred tax asset valuation allowance in the fourth quarter, was
$6.0 million, or $0.72 per diluted share, compared to net income of
$2.7 million, or $0.33 per diluted share, in fiscal 2010. Fiscal
2010 results include a net $1.5 million tax benefit after giving
effect to a $2.0 million tax refund.
The Company's operating income for fiscal 2011 was $3.5 million
compared to $1.8 million in fiscal 2010.
For the fourth quarter of fiscal 2011, revenues were $15.9
million, operating income was $1.1 million and net income was $4.7
million or $0.55 per diluted share, after reversing the deferred
tax asset valuation allowance. In the same period of last
year, revenues were $13.1 million, operating income was $536,000
and net income was $175,000 or $0.02 per diluted share.
Chairman of the Board General Joseph Franklin issued the
following statement: "In fiscal 2011 Frequency Electronics:
- Increased revenues to $53.2 million.
- Increased operating income to $3.5 million.
- Reached a record high backlog of $70.8 million.
The outlook for Frequency Electronics continues to be extremely
positive. We anticipate continued high levels of funding on
our major DOD contracts because they support mission-critical
programs. For fiscal 2012, we expect strong revenue growth and
increasing profitability."
Reversal of Deferred Tax Valuation
Allowance
The Company reviewed all available evidence as described in
Accounting Standards Codification 740. Frequency has
demonstrated profitable performance for fiscal years 2011 and 2010
and, when coupled with the substantial new contracts for satellite
payloads which have doubled the Company's backlog, management
expects continuing profitable operations in fiscal year 2012 and
beyond. Based on this assessment, Frequency's management
believes it is more likely than not that it will be able to realize
the tax benefits from the future deductibility of many items
included in its deferred tax assets. Therefore, during the
fiscal fourth quarter, the Company reversed $3.7 million of an $8.2
million valuation allowance against its deferred tax assets,
resulting in a net income tax benefit of $3.6 million in the fourth
quarter and $2.4 million for fiscal year 2011.
Reports on the Company's major business
areas:
-- Satellite Payloads: Revenues from space programs, the
Company's fastest growing business area, were approximately 33% of
consolidated revenues. The revenue mix began to change in the
fourth quarter as commercial satellite revenues rose to 25% of
total satellite payload sales compared to less than 15% in recent
years. With new contract awards, satellite payloads are
expected to be the Company's dominant business area in fiscal year
2012.
-- U.S. Government/DOD non-satellite programs: Fiscal year
2011 revenues from this business area increased by 6% compared to
fiscal 2010 and comprised more than 25% of total
revenues. Advanced development work continued on multiple
essential DOD programs that have been awarded to the Company for
secure communications, high resolution radar, smart munitions and
electronic intelligence.
-- Network infrastructure: Revenues from this business area
increased approximately 4% year-over-year and represented less than
30% of consolidated revenues for fiscal 2011, comparable to the
prior year. Late in fiscal year 2011, wireless infrastructure
product revenues increased as wireless operators sought to extend
the life of their installed infrastructure and respond to ever
increasing demands for bandwidth.
Reporting segments:
Reported segment revenues (in
thousands): |
|
Year ended April 30 |
3 months ended April 30 |
|
2011 |
2010 |
2011 |
2010 |
FEI-NY |
$33,204 |
$29,206 |
$10,124 |
$7,874 |
Gillam-FEI |
13,165 |
13,092 |
4,375 |
4,280 |
FEI-Zyfer |
10,737 |
11,430 |
2,917 |
2,688 |
less intersegment revenues |
(3,883) |
(4,312) |
(1,480) |
(1,786) |
Consolidated revenues |
$53,223 |
$49,416 |
$15,936 |
$13,056 |
|
|
|
|
|
-- FEI-NY The FEI-NY segment includes revenues from satellite
payloads, wireless telecommunications and U.S. Government/DOD
non-space programs.
-- Gillam-FEI The Gillam-FEI segment includes revenues
primarily from wireline telecommunications infrastructure and from
other network management products
-- FEI-Zyfer The majority of FEI-Zyfer's sales are derived from
U.S. Government/DOD programs and a family of commercial wireless
products as well as sales and support of the US5G synchronization
systems.
Chief Financial Officer Alan Miller stated: "Gross margins in
fiscal 2011 continued to improve over fiscal 2010, increasing from
36% to 37.5%. More importantly, higher revenues and improved
gross margins enabled operating profit to double to $3.5
million. As we predicted, operating costs grew more slowly
than revenues. With revenues increasing in future periods, our
potential operating leverage can generate much higher profits."
Investor Conference Call
As previously announced, the Company will hold a conference call
to discuss these results on Wednesday, July 13, 2011, at 4:30 PM
Eastern Time. Investors and analysts may access the call by
dialing 1-877-407-9205. International callers may dial
1-201-689-8054. Ask for the Frequency Electronics conference
call.
The call will be archived on the Company's website through
August 13, 2011. The archived call may also be retrieved at
1-877-660-6853 (domestic) or 1-201-612-7415 (international) using
Passcodes (both are required for playback): Account: 286,
Conference ID: 375753.
About Frequency Electronics
Frequency Electronics, Inc. is a world leader in the design,
development and manufacture of high precision timing, frequency
control and synchronization products for space and terrestrial
applications. Frequency's products are used in commercial,
government and military systems, including satellite payloads,
missiles, UAVs, aircraft, GPS, secure radios, SCADA, energy
exploration and wireline and wireless communication networks.
Frequency has received over 60 awards of excellence for
achievements in providing high performance electronic assemblies
for over 120 space programs. The Company invests significant
resources in research and development and strategic acquisitions
world-wide to expand its capabilities and markets. Subsidiaries and
Affiliates: Gillam-FEI provides expertise in wireline network
synchronization and SCADA; FEI-Zyfer provides GPS and secure timing
("SAASM") capabilities for critical military and commercial
applications; FEI-Asia provides cost effective manufacturing and
distribution capabilities in a high growth market. Frequency's
Morion affiliate supplies high-quality, cost effective quartz
oscillators and components. Elcom Technologies provides added
resources for state-of-the-art RF microwave products. Additional
information is available on the Company's website:
www.frequencyelectronics.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: The Statements in this press release regarding
the future constitute "forward-looking" statements pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements inherently involve
risks and uncertainties that could cause actual results to differ
materially from the forward-looking statements. Factors that
would cause or contribute to such differences include, but are not
limited to, inability to integrate operations and personnel,
actions by significant customers or competitors, general domestic
and international economic conditions, consumer spending trends,
reliance on key customers, continued acceptance of the Company's
products in the marketplace, competitive factors, new products and
technological changes, product prices and raw material costs,
dependence upon third-party vendors, competitive developments,
changes in manufacturing and transportation costs, the availability
of capital, and other risks detailed in the Company's periodic
report filings with the Securities and Exchange Commission. By
making these forward-looking statements, the Company undertakes no
obligation to update these statements for revisions or changes
after the date of this release.
Frequency Electronics,
Inc. and Subsidiaries |
Consolidated Condensed
Summary of Operations Data |
|
|
|
|
|
|
Quarter Ended April 30, |
Year Ended April 30, |
|
2011 |
2010 |
2011 |
2010 |
|
(unaudited) |
(audited) |
|
(in thousands except per share
data) |
Net Revenues |
$15,936 |
$13,056 |
$53,223 |
$49,416 |
Cost of Revenues |
10,365 |
8,451 |
33,254 |
31,694 |
Gross Margin |
5,571 |
4,605 |
19,969 |
17,722 |
|
|
|
|
|
Selling and Administrative |
3,018 |
2,673 |
11,398 |
10,621 |
Research and Development |
1,459 |
1,396 |
5,081 |
5,350 |
Operating Income |
1,094 |
536 |
3,490 |
1,751 |
Interest and Other, Net |
(2) |
89 |
105 |
(522) |
Income before Income Taxes |
1,092 |
625 |
3,595 |
1,229 |
Income Tax (Benefit) Provision |
(3,580) |
450 |
(2,420) |
(1,520) |
Net Income |
$4,672 |
$175 |
$6,015 |
$2,749 |
|
|
|
|
|
Net Income per Share: |
|
|
|
|
Basic |
$0.56 |
$0.02 |
$0.73 |
$0.34 |
Diluted |
$0.55 |
$0.02 |
$0.72 |
$0.33 |
Average Shares Outstanding |
|
|
|
|
Basic |
8,288,282 |
8,197,557 |
8,258,989 |
8,181,867 |
Diluted |
8,475,096 |
8,250,083 |
8,363,023 |
8,211,878 |
|
|
Frequency Electronics,
Inc. and Subsidiaries |
Condensed Consolidated
Balance Sheets |
|
|
|
|
April 30, 2011 |
April 30, 2010 |
|
(in thousands) |
ASSETS |
|
|
Cash & Marketable Securities |
$20,632 |
$20,372 |
Accounts Receivable |
11,663 |
10,504 |
Costs and Estimated Earnings in Excess of
Billings, net |
2,409 |
1,667 |
Inventories |
28,172 |
26,975 |
Other Current Assets |
4,604 |
1,122 |
Property, Plant & Equipment |
7,163 |
7,015 |
Other Assets |
14,932 |
13,765 |
|
$89,575 |
$81,420 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current Liabilities |
$7,386 |
$7,308 |
Long-term Obligations and Other |
10,910 |
10,729 |
Stockholders' Equity |
71,279 |
63,383 |
|
$89,575 |
$81,420 |
CONTACT: Alan Miller, CFO, or General Joseph P. Franklin, Chairman:
TELEPHONE: (516) 794-4500
WEBSITE: www.frequencyelectronics.com
Frequency Electronics (NASDAQ:FEIM)
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