EX-99.1 2 v127215_ex99-1.htm
Spectrum Control Reports Third Quarter Profit

Earnings per share up 13% from preceding quarter;
Up 38% from the first quarter of this year

 
FAIRVIEW, Pa., Sept. 25 /PRNewswire-FirstCall/ -- 

FlashResults
Spectrum Control, Inc. (SPEC)
(Numbers in Thousands, Except
Per Share Data)
 
3rd quarter ended
3rd quarter ended
  
 
8/31/2008
    
YTD
8/31/2007
    
YTD
  
Sales
  
$
33,124
    
96,852
  
$
35,418
    
101,863
  
Net Income
    
2,354
    
6,319
   
3,081
   
7,950
  
Average Shares
    
13,058
   
13,352
   
13,908
    
13,766
  
EPS
  
$
0.18
  
$
0.47
  
$
0.22
  
$
0.58
  
 
Fairview, Pa, September 25, 2008 — Spectrum Control, Inc. (NASDAQ: SPEC), a leading designer and manufacturer of custom electronic products and systems, today reported results for the third quarter ended August 31, 2008.

For the third quarter of fiscal 2008, the Company reported net income of $2.4 million or 18 cents per fully diluted share on revenues of $33.1 million, compared to net income of $3.1 million or 22 cents per fully diluted share on sales of $35.4 million for the same period last year. For the first nine months of fiscal 2008, the Company reported net income of $6.3 million or 47 cents per fully diluted share on revenues of $96.9 million. For the comparable period of 2007, the Company reported net income of $8.0 million or 58 cents per fully diluted share on revenues of $101.9 million.

Dick Southworth, the Company’s President and Chief Executive Officer, commented, “We are very pleased to report third quarter results that are consistent with our previous guidance, as well as being up sequentially from our prior two quarters. For the second consecutive quarter, we generated sequential improvement in revenues, operating margins, net income, and earnings per share. Despite ongoing challenges within our telecom equipment markets and growing concerns within the general economic climate, we have managed to resume revenue growth, while implementing numerous operating improvements to increase our profitability.”

 
Increased Operating Margins

In the current quarter our gross margin was $8.6 million or 25.9% of sales, compared to $8.1 million or 24.8% of sales in the preceding quarter and $6.9 million or 22.0% of sales in the first quarter of this year. This increase in gross margin reflects improved production yields across virtually all of our businesses. In addition, we have made a strategic decision to maintain our production capacity and infrastructure to enable us to quickly and efficiently respond to our customers. Accordingly, as sales volumes have begun to grow, we have not needed to add any significant production capacity, allowing us to leverage our fixed manufacturing overhead and enhance our operating margins. This strategy remains a key element of our ongoing business model.
 
Improved Cash Flow

Net cash provided by operating activities in the current quarter grew to $4.4 million. This positive cash flow was primarily driven by reductions in our overall working capital requirements, along with our enhanced profitability. This improved operating cash flow enabled us to reduce our short-term bank borrowings by $2.0 million in the current quarter and repurchase on the open market 313,028 shares of our Common Stock at an aggregate cost of $2.4 million. During the nine month period ended August 31, 2008, we have repurchased a total of 756,395 shares of our Common Stock at an aggregate cost of $6.5 million. Under our Board of Directors current authorization, we may expend an additional $872,000 under our stock buyback program. The amount and timing of future share repurchases, if any, will be based on our ongoing assessment of the Company’s capital structure, liquidity, and the market price of our Common Stock. We believe our ongoing stock buyback program is a positive reflection of our future business outlook and strong financial position.


Current Business Outlook

Mr. Southworth added, “Based on our current assessment of customer demand and our existing customer order backlog, we presently anticipate our 2008 fourth quarter sales to be $33.2 to $34.5 million. Based on this shipment level, we expect our 2008 fourth quarter earnings to be 19 to 21 cents per share. If these operating levels are achieved, we will have demonstrated sequential growth in revenue and profitability in each quarter throughout fiscal year 2008. On a longer-term basis, our strategy remains unchanged. We will continue to diversify our end markets, leverage our business infrastructure, and provide an increasing array of value-added products and solutions to our customers. With this strategy, we believe our Company is well-positioned for dynamic growth and enhanced shareholder value.”

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, Inc. will host a teleconference to discuss its third quarter results on Thursday, September 25, 2008, at 4:45 p.m., Eastern Time. Internet users will be able to access a simultaneous webcast of the teleconference at www.spectrumcontrol.com or www.vcall.com. A taped replay of the call will be available through September 26, 2008, at 877-660-6853, access account 286, conference 296554, or for 30 days over the Internet at the Company’s website.

About Spectrum Control

Spectrum Control, Inc. is a leader in the design, development and manufacture of custom electronic products and systems for the defense, aerospace, communications, and medical industries worldwide. For more information about Spectrum Control and its products, please visit the Company’s website at www.spectrumcontrol.com.

 
Investor Relations
     
8031 Avonia Road
 
John P. Freeman, Senior Vice President
     
Fairview, PA 16415
 
and Chief Financial Officer
     
 
Spectrum Control, Inc.
     
Fax: 814/474-2208
  
Phone: 814/474-4310

 
Spectrum Control, Inc. and Subsidiaries    
Condensed Consolidated Balance Sheets   
( Unaudited )      
 
( Dollar Amounts in Thousands )     

   
August 31,
  
November 30,
  
   
2008
  
2007
  
           
Assets
              
               
Current assets
              
Cash and cash equivalents
  
$
6,449
  
$
5,183
  
Accounts receivable
    
23,336
   
25,461
 
Inventories
    
27,410
   
25,458
 
Deferred income taxes
    
1,332
   
1,332
 
Prepaid expenses and other current assets
    
2,336
   
911
 
               
Total current assets
    
60,863
   
58,345
 
               
Property, plant and equipment, net
    
25,947
   
26,177
 
               
Noncurrent assets
              
Goodwill
    
35,669
   
35,669
 
Other
    
5,842
   
6,728
 
               
Total assets
  
$
128,321
  
$
126,919
  
               
Liabilities and Stockholders' Equity
              
               
Current liabilities
              
Short-term debt
  
$
5,000
  
$
2,000
  
Accounts payable
    
6,275
   
6,764
 
Income taxes payable
    
37
   
1,391
 
Accrued liabilities
    
4,533
   
4,813
 
Current portion of long-term debt
    
100
   
100
 
               
Total current liabilities
    
15,945
   
15,068
 
               
Long-term debt
    
942
   
1,031
 
Other liabilities
    
968
   
1,370
 
Deferred income taxes
    
7,911
   
7,582
 
               
Stockholders' equity
    
102,555
   
101,868
 
               
Total liabilities and stockholders' equity
  
$
128,321
  
$
126,919
  



Spectrum Control, Inc. and Subsidiaries       
Condensed Consolidated Statements of Income      
( Unaudited )         
 
( Amounts in Thousands, Except Per Share Data )      

   
 Three Months Ended
  
Nine Months Ended
  
   
 August 31,
  
August 31, 
  
   
 2008
  
2007
  
2008
  
2007
  
                    
Net sales
  
$
33,124
  
$
35,418
  
$
96,852
  
$
101,863
  
                           
Cost of products sold
    
24,532
   
25,320
   
73,329
   
74,830
 
                           
Gross margin
    
8,592
   
10,098
   
23,523
   
27,033
 
                           
Selling, general and administrative expense
    
4,933
   
5,131
   
13,815
   
14,207
 
                           
Income from operations
    
3,659
   
4,967
   
9,708
   
12,826
 
                           
Other income ( expense )
                          
Interest expense
    
(105
)
  
(127
)
  
(244
)
  
(453
)
Other income and expense, net
    
16
   
48
   
272
   
244
 
     
(89
)
  
(79
)
  
28
   
(209
)
                           
Income before provision for income taxes
    
3,570
   
4,888
   
9,736
   
12,617
 
                           
Provision for income taxes
   
1,216
   
1,807
   
3,417
   
4,667
 
                           
Net income
 
$
2,354
  
$
3,081
  
$
6,319
  
$
7,950
  
                           
Earnings per common share :
                          
Basic
 
$
0.18
  
$
0.23
  
$
0.48
  
$
0.60
  
Diluted
  
$
0.18
  
$
0.22
  
$
0.47
  
$
0.58
  
                           
Average number of common shares outstanding :
                          
Basic
   
12,980
   
13,411
   
13,192
   
13,336
 
Diluted
    
13,058
   
13,908
   
13,352
   
13,766
 



Spectrum Control, Inc. and Subsidiaries          
Selected Financial Data            
( Unaudited )            

   
Three Months Ended
  
Nine Months Ended
  
   
August 31,
  
August 31,
  
                   
   
2008
  
2007
  
2008
  
2007
  
Selected Financial Data, as a Percentage of Net Sales :
                          
                           
Net sales
    
100.0
%
  
100.0
%
  
100.0
%
  
100.0
%
Cost of products sold
    
74.1
   
71.5
   
75.7
   
73.5
 
Gross margin
    
25.9
   
28.5
   
24.3
   
26.5
 
Selling, general and administrative expense
    
14.9
   
14.5
   
14.3
   
13.9
 
Income from operations
    
11.0
   
14.0
   
10.0
   
12.6
 
Other income ( expense )
                          
Interest expense
    
(0.3
)
  
(0.3
)
  
(0.3
)
  
(0.4
)
Other income and expense, net
    
-
   
0.1
   
0.3
   
0.2
 
Income before provision for income taxes
    
10.7
   
13.8
   
10.0
   
12.4
 
Provision for income taxes
   
3.6
   
5.1
   
3.5
   
4.6
 
Net income
    
7.1
%
  
8.7
%
  
6.5
%
  
7.8
%
                           
Selected Operating Segment Data :
                          
( Dollar Amounts in Thousands )
                          
                           
Signal and power integrity components :
                          
Customer orders received
  
$
11,962
  
$
14,337
  
$
44,301
  
$
44,145
  
Net sales
    
13,225
   
15,538
   
40,040
   
45,592
 
                           
Microwave components and systems :
                          
Customer orders received
    
11,891
   
16,016
   
33,482
   
40,401
 
Net sales
    
11,483
   
12,641
   
32,230
   
35,454
 
                           
Power management systems :
                          
Customer orders received
    
1,641
   
1,974
   
7,812
   
5,770
 
Net sales
    
2,341
   
1,836
   
7,731
   
5,269
 
                           
Sensors and controls :
                          
Customer orders received
    
5,577
   
4,719
   
19,543
   
16,195
 
Net sales
    
6,075
   
5,403
   
16,851
   
15,548