EX-99.1 3 e15712ex99_1.txt PRESS RELEASE Exhibit 99.1 Spectrum Control Reports Third Quarter Profit Continued Strong Cash Flow; introduction of New Products FAIRVIEW, Pa., Sept. 18 /PRNewswire-FirstCall/ -- FlashResults Spectrum Control, Inc. (SPEC) (Numbers in Thousands, Except Per Share Data) 3rd quarter ended 3rd quarter ended 8/31/2003 YTD 8/31/2002 YTD Sales $15,354 $46,070 $15,664 $41,510 Net Income $29 $445 $67 $(895) Average Shares 13,004 12,975 13,104 13,101 EPS $0.00 $0.03 $0.01 $(0.07) Spectrum Control, Inc. (Nasdaq: SPEC), a leading designer and manufacturer of electronic control products and systems, today reported results for the third quarter ended August 31, 2003. For the third quarter of fiscal 2003, the Company reported net income of $29,000 or zero cents per share on sales of $15,354,000, compared to net income of $67,000 or one cent per share on sales of $15,664,000 for the same period last year. For the first nine months of fiscal 2003, the Company generated net income of $445,000 or three cents per share on sales of $46,070,000. For the comparable period of 2002, the Company had a net loss of $895,000 or seven cents per share on sales of $41,510,000. Dick Southworth, the Company's President and Chief Executive Officer, commented, "Our results for the current quarter were negatively impacted by changes in sales mix and a soft customer order bookings rate early in the period. Throughout the quarter, customers continued to reduce their order lead times, limiting our visibility to material requirements and product demand. Despite these challenges, we are pleased to report our sixth consecutive quarter of profitability. In addition, our customer order rates began to improve late in the third quarter. As a result, we achieved a positive book-to-bill ratio (customer orders booked compared to net shipments billed) with customer orders received during the quarter amounting to $15.6 million, up 5% from a year ago and 4% from the immediate preceding quarter. Demand for our frequency control products was particularly strong, with a book-to-bill ratio of 1.5 to 1.0 for the quarter and total customer orders received of $2.5 million, an increase of 87% from the second quarter of this year. We also continued to invest in our future with new product development and establishment of our new manufacturing operations in China. With this strategic focus, we are committed to achieving long-term growth and enhanced profitability." Quarter Highlights Strong Cash Flow Our operating cash flow remains strong. Net cash generated by operating activities was $2.3 million during the third quarter of fiscal 2003 and $5.3 million during the first nine months of fiscal 2003. This positive cash flow reflects our profitable operating performance, as well as improved inventory turnover rates and related inventory reductions. During the first three quarters of fiscal 2003, as a result of various inventory control procedures, aggregate inventories decreased by $1.8 million. New Product Development We continue to invest in the development and introduction of new products. During the third quarter of 2003, we introduced and received orders for our MLFT (Motor Line Feed-Thru Technology) EMI filter. These high performance, patent pending filters have been designed to eliminate the need for multiple component assemblies incorporating capacitors, inductive coils, leads and printed circuit boards, thereby providing certain customers the needed filtering and mechanical interface at a reduced overall cost. Initial applications for these filters will include DC motors used in various automotive applications. During the current quarter, we also introduced a new ceramic antenna designed for SENS (Sensor Enabled Notification System) which is intended to facilitate the transfer of data through a satellite network. These small, lightweight antennas have been specifically designed for use in the Globalstar (TM) satellite system. Excellent Financial Position Our liquidity and overall financial position remains very strong. At August 31, 2003, our cash and short-term investments totaled $24.2 million, up $4.3 million from the end of last fiscal year. At the end of the current quarter, current assets were nine times current liabilities, stockholders' equity was $71.4 million, and our total borrowed funds were only $2.4 million. Current Business Outlook Mr. Southworth stated, "Although we are encouraged by the improved customer order rates in recent weeks, the overall business climate remains uncertain. Many of our customers continue to be cautious and conservative in their business forecasts. For nearly three years, the telecom equipment market has continuously demonstrated its volatility and unpredictability. Based on the current assessment of our business environment and customer expectations, we believe our fourth quarter sales will increase approximately 5% over the current quarter, with earnings of two to four cents per share. Our visibility beyond the fourth quarter is very limited. However, with our ongoing commitment to new product development, market diversification, and low-cost manufacturing, we believe that we are well-positioned for long-term dynamic growth," he concluded. Forward-Looking Information This press release contains statements that are forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These statements are based on current expectations, estimates, and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors and risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. Simultaneous Webcast and Teleconference Replay Spectrum Control will host a teleconference to discuss its third quarter results on Thursday, September 18, 2003, at 4:45 p.m., Eastern Time. Internet users will be able to access a simultaneous webcast of the teleconference at www.spectrumcontrol.com . A taped replay of the call will be available through September 19, 2003, at 877-660-6853, access account 1628, conference 75388, or for 30 days over the Internet at the Company's website. Business Segment Description Our operations are currently conducted in three reportable segments: signal integrity products; power integrity products and management systems; and frequency control products. Our Signal Integrity Products Group designs and manufactures a broad range of low pass electromagnetic interference ("EMI") filters, surface mount EMI filters, filtered arrays, filtered connectors, gaskets, and specialty ceramic capacitors. Our Power Integrity Products and Management Systems Group designs and manufactures numerous power integrity products (power line filters, power entry modules, multisection filters, power terminal blocks, and custom power filter assemblies) and power management systems (power distribution units, remote power management systems, fuse interface panels, breaker interface panels, and custom power distribution systems). Our recently developed Frequency Control Products Group, which includes the operations of Spectrum FSY Microwave, Inc. acquired last year, designs and manufactures ceramic resonators and bandpass filters, ceramic patch antennas, duplexers, lumped element filters, cavity filters, waveguide filters, and related products and systems. About Spectrum Control Spectrum Control, Inc. designs and manufacturers a wide range of components and systems used to condition, regulate, transmit, receive, or govern electronic performance. Although Spectrum Control products are used in many industries worldwide, the Company's largest market is the telecommunications industry. For more information about Spectrum Control and its products, please visit the Company's website at www.spectrumcontrol.com . Spectrum Control, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (Dollar Amounts in Thousands) August 31, November 30, 2003 2002 Assets Current assets Cash and cash equivalents $24,201 $19,934 Accounts receivable, net 10,079 10,035 Inventories 12,757 14,494 Prepaid expenses and other current assets 3,718 3,316 Total current assets 50,755 47,779 Property, plant and equipment, net 13,288 15,543 Noncurrent assets Goodwill 18,019 18,019 Other 444 483 Total assets $82,506 $81,824 Liabilities and Stockholders' Equity Current liabilities Accounts payable $2,989 $3,033 Accrued liabilities 2,106 1,860 Current portion of long-term debt 285 285 Total current liabilities 5,380 5,178 Long-term debt 2,117 2,391 Deferred income taxes 3,631 3,580 Stockholders' equity 71,378 70,675 Total liabilities and stockholders' equity $82,506 $81,824 Spectrum Control, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (Amounts in Thousands Except Per Share Data) Three Months Ended Nine Months Ended August 31, August 31, 2003 2002 2003 2002 Net sales $15,354 $15,664 $46,070 $41,510 Cost of products sold 12,349 12,720 36,315 35,059 Gross margin 3,005 2,944 9,755 6,451 Selling, general and administrative expense 2,977 2,920 9,200 8,935 Income( loss ) from operations 28 24 555 (2,484) Other income ( expense ) Interest expense (32) (39) (89) (116) Other income and expense, net 48 122 251 1,162 16 83 162 1,046 Income ( loss ) before provision for income taxes 44 107 717 (1,438) Provision for income taxes ( benefit ) 15 40 272 (543) Net income ( loss ) $29 $67 $445 $(895) Earnings ( loss ) per common share : Basic $- $0.01 $0.03 $(0.07) Diluted $- $0.01 $0.03 $(0.07) Average number of common shares outstanding : Basic 12,929 13,068 12,936 13,101 Diluted 13,004 13,104 12,975 13,101 Spectrum Control, Inc. and Subsidiaries Selected Financial Data ( Unaudited ) Three Months Ended Nine Months Ended August 31, August 31, 2003 2002 2003 2002 Selected Financial Data, as a Percentage of Net Sales: Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of products sold 80.4 81.2 78.8 84.5 Gross margin 19.6 18.8 21.2 15.5 Selling, general and administrative expense 19.4 18.6 20.0 21.5 Income (loss) from operations 0.2 0.2 1.2 (6.0) Other income ( expense ) Interest expense (0.2) (0.3) (0.2) (0.3) Other income and expense, net 0.3 0.8 0.5 2.8 Income ( loss ) before provision for income taxes 0.3 0.7 1.5 (3.5) Provision for income taxes ( benefit ) 0.1 0.3 0.6 (1.3) Net income ( loss ) 0.2 % 0.4 % 0.9 % (2.2)% Selected Operating Segment Data: (Dollar Amounts in Thousands) Signal integrity products: Customer orders received $9,722 $10,206 $30,829 $32,385 Net sales 10,369 11,151 32,091 31,201 Power integrity products and management systems: Customer orders received 3,333 3,583 9,778 8,096 Net sales 3,301 3,293 8,890 8,300 Frequency control products: Customer orders received 2,526 1,006 5,545 2,030 Net sales 1,684 1,220 5,089 2,009 SOURCE Spectrum Control, Inc. -0- 09/18/2003 /CONTACT: Investor Relations, John P. Freeman, Senior Vice President and Chief Financial Officer of Spectrum Control, Inc., +1-814-474-4310/ /Web site: http://www.spectrumcontrol.com / (SPEC) CO: Spectrum Control, Inc. ST: Pennsylvania IN: CPR SU: ERN CCA MAV ERP