EX-99.1 2 a5125567ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Innovex Announces Fiscal 2006 Second Quarter Results MAPLE PLAIN, Minn.--(BUSINESS WIRE)--April 17, 2006--Innovex (Nasdaq:INVX) today reported revenue of $51.5 million for the fiscal 2006 second quarter ending March 31, 2006; this was a 2% decrease from the $52.7 million reported for the prior year second quarter. Revenue excluding pass-through material was $26.8 million for the fiscal 2006 second quarter; this was an 8% increase from the $24.7 million in the fiscal 2005 second quarter. The Company's net loss was $535,000 or $0.03 per share in the second quarter of fiscal 2006 as compared to a net loss of $14.0 million or $0.73 per share in the prior year second quarter. The fiscal 2006 second quarter includes restructuring charges of $1.4 million or $0.07 per share. The Company's fiscal 2006 second quarter net income excluding the restructuring charge was $843,000 or $0.04 per share. The Company's fiscal 2005 second quarter net loss was $4.6 million or $0.24 per share excluding restructuring charges of $466,000 and a $9.0 million deferred tax asset write-down. The fiscal 2006 second quarter gross margin was 14.6%, compared to 2.9% for the fiscal 2005 second quarter. This improvement in gross margin as compared to the prior year reflects cost reductions related to the transfer of operations from the Maple Plain facility to the new Thailand facility, operating efficiency gains and improved fixed cost absorption driven by increased revenue excluding pass-through material. "We are pleased to see the benefits of our cost leadership strategy beginning to show up in our margins," stated William P. Murnane, Innovex's President and CEO. "We have made significant improvements to our underlying cost structure and are extremely pleased to report $1.4 million of operating income, excluding restructuring charges, in the quarter. In addition, our enhanced cost structure is allowing us to pursue new opportunities where we were previously not competitive. We remain confident that incremental revenue growth and our continued focus on cost leadership will allow us to achieve our target gross margin of 20% before the end of fiscal 2007." FSA products constituted 60% of the Company's net sales for the quarter, AFC revenue was 17%, FPD product revenue was 16%, integrated circuit packaging application revenue was 3%, network system application revenue was 2% and other revenue was 2%. Operating expenses excluding restructuring charges for the fiscal 2006 second quarter were $6.2 million as compared to $6.0 million reported in the fiscal 2005 second quarter. The fiscal 2006 second quarter operating expenses included $800,000 of accrued incentive compensation recorded under the 2006 Bonus Plan previously disclosed in an 8K filing on October 25, 2005. Operating expenses for the fiscal 2006 second quarter also include approximately $160,000 of non-cash compensation expense for stock options related to the adoption of FASB Statement 123R Share Based Payments as of October 1, 2005. Cash flow from operations for the fiscal 2006 second quarter of $700,000 primarily related to improved operations as a decrease in inventory was offset by a reduction in accounts payable. Unused credit facilities of approximately $30 million remain available to meet capital expenditure and other cash requirements for the remainder of fiscal 2006. In its fiscal 2006 third quarter, the Company expects revenue between $44 and $46 million and revenue excluding pass-through material content between $24 and $26 million. The expected decrease is primarily related to normal industry seasonality. The fiscal 2006 third quarter gross margin is expected to decrease modestly due to the lower expected revenue. Operating expenses excluding restructuring are expected to decrease as a result of lower incentive compensation expenses. The Company is scheduled to complete the transfer of its prototyping operation from Litchfield, Minnesota to its new Thailand facility by the end of the fiscal 2006 third quarter. In addition, there has been significant interest from potential buyers of the Company's metal business and the sale of this business could be completed by the end of the fiscal 2006 third quarter. The combined quarterly cost savings from moving prototyping to Thailand and selling the metal business is expected to be between $500,000 and $1 million, which could be realized in the fiscal 2006 fourth quarter ending September 30, 2006 if both actions are completed by June 30, 2006. Conference Call & Live Webcast Innovex will conduct a conference call and webcast for investors beginning at 5:00 p.m. Eastern Time (ET) on Monday, April 17, 2006. During the conference call, Mr. Murnane and senior managers will discuss the Company's future product, revenue, mix and margin expectations along with historical results. To listen to the live conference call, dial 785-832-1508 and ask for conference ID "Innovex." The live webcast will be available at www.innovexinc.com/investor.shtml. A replay of the call will be available 6:00 p.m. ET on Monday, April 17 through 11:59 p.m. ET on Wednesday, April 19, 2006. To access the replay, dial (402) 220-2701 and ask for conference ID "Innovex." The webcast version of the conference call will be archived at www.innovexinc.com/investor.shtml. About Innovex, Inc. Innovex, Inc. is a leading manufacturer of high-density flexible circuit-based electronic interconnect solutions. Innovex's products enable the miniaturization and increasing functionality of high technology electronic devices. Applications for Innovex's products include data storage devices such as hard disk drives and tape drives, liquid crystal displays for mobile telecommunication devices, flat panel displays and printers. Innovex is known worldwide for its advanced technology and world class manufacturing. Safe Harbor for Forward-Looking Statements Except for historical information contained herein, the matters discussed in this Current Report on form 8-K are forward-looking statements that involve risks and uncertainties, including the timely availability and acceptance of new products, impact of restructuring charges, changes in product mix, the impact of competitive products and pricing, effect of world-wide economic conditions on flexible circuit demand, changes in manufacturing efficiencies, fluctuations in financial results and other risks detailed from time-to-time in the Company's reports filed with the Securities and Exchange Commission. INNOVEX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) Three Months Ended March 31, ----------------------------- 2006 2005 -------------- -------------- Net sales $51,539 $52,725 Costs and expenses: Cost of sales 44,019 51,217 Selling, general and administrative 4,341 3,658 Royalty expense 445 514 Engineering 1,371 1,875 Restructuring charges 1,378 466 Net interest expense 583 347 Net other (income) expense (63) (302) -------------- -------------- Income (loss) before income taxes (535) (5,050) Provision for income taxes 0 9,000 -------------- -------------- Net income (loss) ($535) ($14,050) ============== ============== Net income (loss) per share: Basic ($0.03) ($0.73) ============== ============== Diluted ($0.03) ($0.73) ============== ============== Weighted average shares outstanding: Basic shares 19,239 19,150 ============== ============== Diluted shares 19,239 19,150 ============== ============== Six Months Ended March 31, ----------------------------- 2006 2005 -------------- -------------- Net sales $102,047 $92,766 Costs and expenses: Cost of sales 88,367 87,359 Selling, general and administrative 7,988 7,151 Royalty expense 856 892 Engineering 2,760 3,584 Restructuring charges 11,307 809 Net interest expense 1,032 557 Net other (income) expense 41 (885) -------------- -------------- Income (loss) before income taxes (10,304) (6,701) Provision for income taxes 0 8,357 -------------- -------------- Net income (loss) ($10,304) ($15,058) ============== ============== Net income (loss) per share: Basic ($0.54) ($0.79) ============== ============== Diluted ($0.54) ($0.79) ============== ============== Weighted average shares outstanding: Basic shares 19,233 19,139 ============== ============== Diluted shares 19,233 19,139 ============== ============== INNOVEX, INC. CONSOLIDATED BALANCE SHEETS (In thousands) March 31, September 30, Assets 2006 2005 -------------- -------------- Cash and short-term investments $7,381 $12,914 Accounts receivable, net 25,757 32,585 Inventory 15,095 17,744 Other current assets 2,872 1,314 ---------------------------------------------------------------------- Total current assets 51,105 64,557 Property, plant and equipment, net 56,386 66,507 Intangible & other assets, net 4,365 6,762 ---------------------------------------------------------------------- Total assets $111,856 $137,826 ============== ============== Liabilities and Stockholders' Equity Current liabilities $34,725 $48,632 Long-term debt 25,642 27,818 Stockholders' equity 51,489 61,376 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $111,856 $137,826 ============== ============== INNOVEX, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) Six months ended March 31, ----------------------------- 2006 2005 -------------- -------------- Cash Flows From Operating Activities: Net income (loss) ($10,304) ($15,058) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 5,401 5,853 Asset impairment charges 9,183 809 Deferred income taxes - 8,394 Other non-cash items 125 (328) Changes in operating assets and liabilities: Accounts receivable 6,829 (7,248) Inventories 2,649 (8,172) Other current assets 837 (265) Accounts payable (2,223) 10,782 Other current liabilities (246) 326 -------------- -------------- Net cash provided by (used in) operating activities 12,251 (4,907) Cash Flows From Investing Activities: Capital expenditures (4,582) (17,544) Proceeds from sale of assets 327 4 -------------- -------------- Net cash used in investing activities (4,255) (17,540) Cash Flows From Financing Activities: Net long-term debt activity (865) 8,074 Net line of credit activity (12,748) 7,745 Proceeds from exercise of stock options 54 101 Proceeds from employee stock purchase plans 30 69 -------------- -------------- Net cash provided by (used in) financing activities (13,529) 15,989 -------------- -------------- Increase (decrease) in cash and equivalents (5,533) (6,458) Cash and equivalents at beginning of period 12,914 14,422 -------------- -------------- Cash and equivalents at end of period $7,381 $7,964 ============== ============== CONTACT: Innovex, Inc., Maple Plain Doug Keller, 763-479-5300 Facsimile: 763-479-5395 Internet: http://www.innovexinc.com