Frequency (AMEX:FEI)
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Frequency Electronics, Inc. (AMEX:FEI) reported revenues
for the fourth quarter of fiscal year 2006, which ended 30 April,
2006, of $15.1 million compared to $11.9 million for the same period
of fiscal 2005. For fiscal year 2006, revenues were $52.8 million
compared to $55.2 million for the previous fiscal year.
Operating income for the fourth quarter was $331,000 compared to
an operating loss of $2.4 million for the same quarter of fiscal 2005.
For the full fiscal year 2006, operating income was $1.7 million,
compared to an operating loss of $1.3 million in fiscal 2005.
In fiscal 2006, the Company recorded net income of $4.8 million,
$0.55 per diluted share, which included pre-tax gains of $3.2 million
from real estate related investments. For fiscal 2005, net income was
$5.0 million, $0.58 per diluted share, after pre-tax gains from real
estate related investments of $6.9 million.
Commenting on this report, Chairman of the Board General Joseph
Franklin said: "We are very pleased with these results. As we forecast
at the end of last year, revenues remained flat for the first half of
fiscal 2006. Then, in the second half of the year, revenues and
operating earnings rose sharply. We expect these higher revenue rates
to continue over the near term, and for fiscal 2007 we anticipate
healthy growth in revenues and operating earnings."
Summarizing the Company's major markets in fiscal year 2006:
-- FEI's satellite business achieved significant gains and
proposal activity remained very high. Revenues from commercial
and U.S. Government satellite sales were $14.7 million,
compared to $6.7 million in the previous fiscal year,
representing 28% of total revenues, compared to 12% in the
prior fiscal year.
-- Total sales to the U.S. Government were $13.3 million, a 20%
increase over fiscal 2005. U.S. Government business this year
comprised 25% of the Company's total sales. FEI products are
now embedded in more than 15 important weapons, navigation,
and communication platforms. FEI's unique low-noise and low-G
sensitivity technology is a key ingredient to achieve the
required functionality of these critical programs, all of
which are in development or pre-production phases. Many of
these programs represent large potential future revenue
opportunities for the Company.
-- Sales of wireless products to telecommunications equipment
manufacturers were off nearly 30% year-over-year, due to a
decline in demand which began in the second half of fiscal
2005. Wireless revenues improved during the second half of the
year, but have not yet recovered to the levels of early fiscal
2005. Over time, the world-wide demand for service and
connectivity will require major expansion of the terrestrial
wireless communications networks that exist today.
Furthermore, the Company expects its new family of proprietary
quartz products to capture a larger market share in the
buildout of this expanding infrastructure.
Effective with this reporting period, the Company will report
sales and operating results for three segments: (1) FEI-NY (2)
Gillam-FEI; and (3) FEI-Zyfer. The FEI-NY segment is a combination of
the former Commercial Communications and U.S. Government segments. The
Company will continue to disclose aggregate U.S. Government sales,
which are generated by both the FEI-Zyfer and FEI-NY segments.
-- Revenues for the FEI-NY segment were $34.8 million for fiscal
2006, compared to $36.2 million for fiscal 2005. These figures
reflect reduced sales to wireless OEM's offset in part by
increased sales of space products.
-- Gillam-FEI recorded revenues of $8.2 million for fiscal 2006,
compared to $10.2 million in fiscal 2005. Intercompany R&D
sales are not included in these figures. In February 2006,
Gillam-FEI reported their initial order for the US5Ge, the new
wireline synchronization system unit developed in conjunction
with FEI-NY. This product addresses a large domestic and
international market. Further bookings in fiscal 2007 will
depend primarily upon the rate of deployment of central office
replacements and upgrades by large US and overseas service
providers.
-- FEI-Zyfer's revenues were $9.7 million for fiscal 2006,
compared to $8.8 million for fiscal 2005. The Company expects
sales and earnings for this segment to continue to grow in
fiscal 2007.
Chief Financial Officer Alan Miller added the following comment:
"The positive trend of improving margins continued. Gross margins in
fiscal year 2006 increased to 35% of sales from the prior year's 33%.
Selling and administrative expenses were 20% of revenues, in line with
our targets. As a result of these operational improvements, we swung
from a $1.3 million operating loss last year to a $1.7 million
operating profit in the current year. This outcome supports our
expectations for much higher operating profits on future increased
revenues."
Investor Conference Call
As previously announced, the Company will hold a conference call
to discuss these results today, July 13, 2006, at 12:30 PM Eastern
Time. Investors and analysts may access the call by dialing
1-866-550-6338. International callers may dial 1-347-284-6930. Ask for
the Frequency conference call.
The call will also be available at the Company's website at
www.frequencyelectronics.com or at Thomson/CCBN's individual investor
center at www.companyboardroom.com or by visiting any of the investor
sites in Thomson/CCBN's Individual Investor Network such as America
Online's Personal Finance Channel, Fidelity Investments(R)
(Fidelity.com) and others.
The call will be archived on the Company's website through August
12, 2006. The archived call may also be retrieved at 1-888-203-1112
(domestic) or 1-719-457-0820 (international) using Passcode ID
4991410.
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. The Company's products are used in commercial,
government and military systems, including satellite payloads,
missiles, UAVs, piloted aircraft, GPS, secure radios, SCADA, energy
exploration and wireline and wireless communication networks. The
Company 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. The Company's Belgium-based Gillam-FEI
subsidiary provides the Company with expertise in wireline network
synchronization, management and SCADA. FEI-Zyfer in Anaheim, CA,
provides GPS and secure timing ("SAASM") capabilities for critical
military and commercial applications. The Company has an affiliate in
St. Petersburg, Russia which supplies high-quality, cost effective
quartz oscillators and components. Additionally, the Company operates
a new, modern manufacturing facility in Tianjin, China through its
wholly-owned subsidiary, FEI-Asia. Additional information is available
on FEI'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.
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Frequency Electronics, Inc. and Subsidiaries
Consolidated Condensed Summary of Operations
Quarter Ended Year Ended
April 30, April 30,
2006 2005 2006 2005
---- ---- ---- ----
(unaudited)
(in thousands except per share data)
Net Sales $15,142 $11,907 $52,810 $55,173
Cost of Sales 10,182 8,476 34,193 37,013
------- ------- ------- -------
Gross Margin 4,960 3,431 18,617 18,160
Selling and Administrative 2,462 2,961 10,616 11,719
Compensation Charges - 876 - 876
Research and Development 2,167 1,984 6,291 6,834
------- ------- ------- -------
Operating Profit (Loss) 331 (2,390) 1,710 (1,269)
Interest and Other, Net 698 7,190 4,917 8,415
------- ------- ------- -------
Income before Taxes &
Minority Interest 1,029 4,800 6,627 7,146
Minority Interest - - - (1)
------- ------- ------- -------
Income before Income Taxes 1,029 4,800 6,627 7,147
Income Tax (Benefit) Provision (47) 1,280 1,829 2,110
------- ------- ------- -------
Net Income $ 1,076 $ 3,520 $ 4,798 $ 5,037
======= ======= ======= =======
Net Income per Share:
Basic $ 0.13 $ 0.41 $ 0.56 $ 0.59
====== ====== ====== ======
Diluted $ 0.12 $ 0.41 $ 0.55 $ 0.58
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Average Shares Outstanding
Basic 8,556,932 8,517,694 8,537,427 8,484,682
========= ========= ========= =========
Diluted 8,756,414 8,683,305 8,690,617 8,684,758
========= ========= ========= =========
Frequency Electronics, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
April 30, April 30,
2006 2005
---- ----
(in thousands)
ASSETS
Cash & Marketable Securities $ 24,475 $ 30,233
Accounts Receivable 15,868 12,728
Inventories 22,971 22,948
Other Current Assets 3,681 3,631
Property, Plant & Equipment 6,663 6,770
Other Assets 13,315 12,064
-------- --------
$ 86,973 $ 88,374
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 7,220 $ 9,844
Long-term Obligations and Other 9,120 9,337
Stockholders' Equity 70,633 69,193
-------- --------
$ 86,973 $ 88,374
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