EX-99.1 2 rel42007.htm PRESS RELEASE DATED JUNE 20, 2007 rel42007.htm
Exhibit 99.1
 
TECHNOLOGY RESEARCH CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS

CLEARWATER, FLORIDA, June 19, 2007 -- Technology Research Corporation (“TRC”), (NASDAQ-TRCI), today announced revenues and earnings for its fourth quarter and fiscal year ended March 31, 2007 and completion of the restatement of prior period financial reports.

Revenues for the fourth quarter were $8.9 million, a decrease of $6.1 million or 41% from the $15.0 million reported in the same quarter last year.  The net loss for the fourth quarter was $.5 million compared with restated net income of $1.1 million for the fourth quarter of the prior year. Diluted net loss per share was $.08 per share for the fourth quarter compared with restated net income of $.18 per share for the same quarter last year.

Orders for the fourth quarter were $12.6 million, an increase of $3.2 million over fourth quarter of fiscal 2006.  Military orders were $7.2 million, an increase of $5.9 million over the previous year and Commercial orders of $5.4 million decreased $2.7 million from the previous year.

Fiscal 2007 revenues of $38.0 million declined $7.6 million or 17% from prior year revenues of $45.6 million. Net income of $1.5 million decreased $.3 million from the prior year’s restated net income of $1.8 million.  Diluted net income per share was $.25 in fiscal 2007 compared to restated $.30 in fiscal 2006.

Orders for fiscal 2007 were $35.4 million, a decrease of $14.8 million from fiscal 2006 orders of $50.2 million. For fiscal 2007, commercial orders were $22.9 million, a decrease of $11.6 million from the previous year, and Military orders of $12.6 million declined $3.1 million from the previous year. The decline in revenue and orders for the full fiscal year is primarily a result of the sharp drop in Room Air Conditioner (RAC) revenues due to intense competition from low cost off-shore manufacturers.

In the fourth quarter and for the full year, the Company experienced several large transactions that impacted our operating results. Fourth quarter results were negatively impacted by a $.9 million pretax write down of inventory to market value mostly due to a decline in demand and selling price for RAC products.  Write-downs of RAC inventory for the full fiscal 2007 year amounted to approximately $1.1 million pretax. Full year net income benefited from the $3.2 million settlement of the patent infringement lawsuit in our third fiscal quarter which was partially offset by related legal expenses of approximately $.8 million.
 
Cash and short-term investments increased approximately $.9 million over the previous year’s balances while total debt remained constant during the same period. Cash generated during the current fiscal year was used in early April to pay the additional income taxes (as previously reported) resulting from  borrowings in fiscal 2005 and fiscal 2006 under our joint line of credit with the Company’s Honduran subsidiary. Restatements of fiscal 2005 and 2006 years, certain quarters within fiscal 2005 and 2006, and the first three quarters of fiscal 2007 were recently filed with the SEC and are reflected in this release.
 
Owen Farren, President and Chief Executive Officer, said “The Company has undertaken a series of initiatives since January to improve operating profitability and productivity. We implemented a new financial/operational system, reduced our U.S workforce approximately 12%, and initiated a number of internal programs that will improve customer service and profitability.” Farren continued, “Historically, our revenues have been generated from military generator set electrical subsystems and patented safety products sold in commercial markets. Military sales have benefited significantly in recent years from the demand created by the war in Iraq while the commercial business has been hurt as some of our earlier patents have either expired or been infringed by competitors.”  Mr. Farren added “As a result of our initiatives, the Company’s focus is on accepting and creating profitable businesses that increase shareholder value. Looking forward, TRC will build on its strong relationships with its military, OEM and recreational vehicle customers as well as its industrial distributors to develop new products and engineering solutions. The Company has strong sales and design engineers as well as low-cost responsive manufacturing capabilities at our manufacturing subsidiary. In addition, TRC will build on these strengths as well as expand our engineering capabilities with new electronics and communications resources. Lastly, the Company has set about identifying strategic acquisitions that strengthen our position in these markets and with our customers.”
 
The fourth quarter dividend of $.020 per share was paid on April 20, 2007 to shareholders of record on March 30, 2007.
 
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TRC is an internationally recognized leader in electrical safety products that prevent electrocution and electrical fires and protect against serious injury from electrical shock.  Based on its core technology in ground fault sensing, products are designed to meet the needs of the consumer, commercial and industrial markets worldwide.  The Company also supplies power monitors and control equipment to the United States Military and its prime contractors.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:  Some of the statements in this report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934.  These statements are related to future events, other future financial performance or business strategies, and may be identified by terminology such as "may," "will," "should," "expects," "scheduled," "plans," "intends," "anticipates," "believes," "estimates," "potential," or "continue," or the negative of such terms, or other comparable terminology.  These statements are only predictions.  Actual events as well as results may differ materially.  In evaluating these statements, you should specifically consider the factors described throughout this report.  We cannot be assured that future results, levels of activity, performance or goals will be achieved.
 
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(unaudited)
 
   
Three Months Ended
Year ended 
           
Restated 
          
Restated 
  
     
March 31
    
March 31 
    
March 31 
    
March 31 
  
 
    
2007
    
2006
    
2007
    
2006
  
Operating revenues:                          
   Commercial $   5,446     10,926   26,471     32,250  
   Military     3,408     4,101    
11,521
    
13,370
  
 
  
8,854
  
15,027
  
37,992
  
45,620
  
Operating expenses:                          
   Cost of sales    
6,989
     11,310    
29,368
    
34,978
  
   Selling, general and administrative     2,167     1,724    
7,752
    
5,967
  
   Research, development and engineering     506     511    
2,027
    
1,955
  
   Restructuring charges     138     -     138     -  
   Other     83     -     83     -  
 
  
9,883
  
13,545
  
39,368
  
42,900
  
          Operating income (loss)
  
(1,029
 ) 
1,482
  
(1,376
 ) 
2,720
  
Interest and sundry income (expense)
  
(5
 ) 
(60
 ) 
3,082
  
(223
 ) 
          Income (loss) before income taxes 
  
(1,034
 ) 
1,422
  
1,706
  
2,497
  
Income tax expense (benefit)     (539 )    370    
244
    
746
  
          Net income (loss)
  $
(495
 ) 
1,052
  
1,462
  
1,751
  
Income (loss) per common share:           
  Basic $   (.08 )   .18     .25     .30  
  Diluted $   (.08 )   .18     .25     .30  
                           
Weighted average number of common                   
  shares outstanding:                           
  Basic     5,888,828     5,805,637    
5,884,083
    
5,786,129
  
  Diluted     5,888,828     5,859,660    
5,906,563
    
5,833,947
  
                           
Dividends paid  $   .020     .015     .075     .060  
 
 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
     
 Restated *
 
March 31,  2007
  
March 31, 2006
             ASSETS      
Current assets:                
   Cash and cash equivalents     $ 3,471     2,607  
   Short-term investments       498       500  
   Accounts receivable, net       6,950       10,730  
   Other receivables-current        884       -  
   Inventories       9,294       9,633  
   Prepaid expenses and other current assets        351       210  
   Deferred income taxes       999       455  
     Total current assets       22,447       24,135  
 
Property, plant and equipment       14,884       14,285  
      Less accumulated depreciation       10,472       9,346  
        4,412       4,939  
Other receivables - long term       850       -  
Intangible assets, net       523       -  
Other assets       47       70  
       Total assets     $ 28,279       29,144  
 
              
LIABILITIES AND STOCKHOLDERS' EQUITY
                  
Current liabilities:                  
   Current portion of long-term debt      $ 1,000       1,000  
   Trade accounts payable       3,027       4,850  
   Accrued expenses       1,409       1,323  
   Dividends payable       133       101  
   Income taxes payable       846       1,468  
     Total current liabilities      
6,415		      
8,742		  
                   
Long-term debt, excluding current portion       2,000       2,000  
Deferred income taxes       139       244  
       Total liabilities      
8,554		      
10,986		  
 
Stockholders' equity: 
   Common stock       3,014       2,983  
   Additional paid-in capital       9,287       8,770  
   Retained earnings       7,464       6,445  
   Common stock held in treasury, 21,500 shares, at cost       (40 )      (40 ) 
   Total stockholders' equity      
19,725		      
18,158		  
      $
28,279		      
29,144		  
       
     
 
 
* On April 4, 2007 TRC filed a Form 8-K with the SEC indicating that the Company’s financial statements for certain prior periods would be restated.  Such restatements were filed on June 19, 2007 and June 20, 2007.
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