12/1/2003 - White Electronic Designs Corporation (NASDAQ: WEDC) is pleased to report results for the fourth quarter and fiscal year ended September 27, 2003. Highlights include:
Net sales for the fourth quarter of fiscal 2003 were $30.2 million up 27% from $23.7 million in the fourth quarter of fiscal 2002. Interface Data Systems (IDS), which was acquired in January 2003, accounted for $4.8 million of net sales during the fourth quarter of fiscal 2003. Net income for the fourth quarter of fiscal 2003 was $3,235,000 or $0.14 basic earnings per share, after plant consolidation charges of $524,000 or $0.02 per share, relating to the relocation of the Company's commercial manufacturing operations from Massachusetts to Phoenix, Arizona, and the reversal of accrued costs relating to a completed customer order at our display segment of $510,000 or $0.02 per share. Net income for the fourth quarter of fiscal 2002 was $4,949,000 or $0.25 basic earnings per share, which included a deferred income tax benefit of $3,082,000 or $0.15 per share recognized in the fourth quarter of fiscal 2002.
Net sales for the fiscal year ended September 27, 2003, were $113.5 million as compared to net sales of $90.5 million for fiscal 2002. IDS accounted for $16 million of net sales in fiscal 2003. Net income for fiscal 2003, including the plant consolidation charges and the accrued cost reversal in the fourth quarter, was $10,150,000 or $0.48 basic earnings per share, compared to net income for fiscal 2002 of $8,740,000 or $0.44 basic earnings per share including the deferred income tax benefit of $3,082,000 or $0.15 per share recognized in the fourth quarter of fiscal 2002.
As a result of a change in the way the Company does business with a reseller that began in 2003, the Company determined that revenue relating to shipments to that reseller should be recognized at the time the reseller sells the product to its end customer rather than at the time the goods are shipped to the reseller. As a consequence, the Company plans to restate its unaudited interim financial information for each of the first three quarters of fiscal 2003 to reflect the effects of this change.
The restatement adjustments resulted in the deferral of $1,116,000 of net sales and $741,000 of related gross profit for the first nine months of fiscal 2003. Of those amounts, $573,000 of net sales and $383,000 of related gross profit were recognized during the fourth quarter of 2003 when the reseller sold the related products through to its end customers. The net impact of the change in the manner in which the Company recognized revenue with respect to this reseller was a reduction of the Company’s net income for fiscal 2003 of $240,000. As of September 27, 2003, the Company had deferred net sales of $543,000 and related gross profit of $358,000 on sales to the reseller and expects to recognize such amounts in operating results during the first six months of fiscal 2004 when the related products are sold by the reseller to its end customers.
“We are very pleased with our year-over-year revenue growth and profit performance in fiscal year 2003,” stated Hamid Shokrgozar, President and CEO of White Electronic Designs Corporation. “The continued expansion of our product lines, including those resulting from the IDS acquisition, enabled us to achieve the 25% yearly revenue growth. Our microelectronic segment produced strong results in the fourth quarter, primarily because of the continued solid performance of our military microelectronics products. Our anti-tamper business remained strong in the quarter and exceeded our yearly bookings forecast.” Shokrgozar continued, “We believe that the anti-tamper business will continue to grow faster than any other product sector in our market. We also believe we are very well positioned as we move into fiscal 2004 to start production on several products that were previously in the early design stage.” Shokrgozar added, "The sequential decline in revenue during the fourth quarter was primarily due to a sooner than expected decline in orders from our two largest display customers, GE Medical and Garmin. These two customers had accounted for over 60% of our display revenue in previous quarters, but are now expected to account for less than 10% of our display business in the future."
The Company expects the future impact of decreased sales to the two customers will be mitigated by new opportunities. The Company has secured two major contracts for 15” display monitors from one of the largest ATM manufacturers in the world. The monitor will be used to equip ATMs in the China market. The other display will be used in a point of sale terminal by large retail chains. Mr. Shokrgozar commented, "While we expect the initial display revenue over the next couple of quarters will not be as substantial as the previous revenue from Garmin or GE Medical, we feel that we are now better positioned to expand our display business, and we are laying the groundwork to replace the revenue lost from these customers."
Mr. Shokrgozar continued, "Our backlog continues to remain solid at $47.7 million, of which our microelectronic military products accounted for $24.4 million, or 51%, of the total backlog at the end of the year.”
Gross profit for the fourth quarter of fiscal 2003 reached approximately $11,015,000. Without the accrued cost reversal, gross profit would have been $10,256,000, or 34% of net sales, compared with $7,867,000 or 33% in the fourth quarter of fiscal 2002. The Company's operating income totaled $4.7 million. Without the accrued cost reversal, operating income would have been $4.0 million or approximately 13% of net sales in the fourth quarter, compared to $3.0 million in the fourth quarter of fiscal 2002.
Mr. Shokrgozar added, “We ended the fourth quarter of fiscal 2003 with $35.3 million of cash and marketable securities. Additionally, the Company repaid $5.2 million of long-term debt incurred with the IDS acquisition during the quarter. The increase in cash and marketable securities was attributable to the Company’s public offering of its common stock which resulted in net proceeds of approximately $22 million, as well as strong cash flows from operating activities."
One of the Company's significant achievements in the fourth quarter was the transition of its commercial microelectronic manufacturing operations from Massachusetts to Arizona. The Company was able to transfer all existing orders and products to our Arizona facilities while passing site qualification tests on the related products. In addition, with the complementary surface mount equipment and test lines that have been relocated, the Company now has greater capacity in one location than previously in the two locations combined. Accordingly, this consolidation is expected to generate annualized savings of at least $750,000 starting in April 2004.
Mr. Shokrgozar said, "We are also beginning to see recovery in the data communications sector. We received multi-million dollar releases during the quarter for products supporting the data server market. Going forward, we believe that the microelectronics segment of our business will continue to grow both in the military and the commercial markets. We remain cautiously optimistic that our commercial semiconductor business supporting the data communications market will see positive growth, which would reverse a trend of diminished revenue over the last twelve quarters."
“Looking forward, while we are maintaining our focus on profitability, we are also continuing our efforts in process technology and new product innovation, as we believe these efforts are important for us to be competitive in the markets we serve. We remain confident about the long term growth prospects of our product offerings and we remain optimistic about the future,” concluded Mr. Shokrgozar.
Microelectronic Segment Highlights:
Key awards during the quarter included:
Display Segment Highlights:
Key awards during the quarter included:
White Electronic Designs Corporation designs, develops and manufactures innovative components and systems for high technology sectors in military, industrial, medical and commercial markets. White’s products include advanced semiconductor packaging of high-density memory products and state-of-the-art microelectronic multi-chip modules for military and defense industries; data and telecommunications markets; Anti-Tamper security coatings for mission-critical semiconductor components in defense and secure commercial applications; enhanced and ruggedized high-legibility flat-panel displays for commercial, medical, defense and aerospace systems; digital keyboard and touch-screen operator-interface systems; and electromechanical assemblies for OEM's in commercial and military markets. White is headquartered in Phoenix, Arizona, and has design and manufacturing centers in Arizona, Indiana, Ohio and Oregon. To learn more about White Electronic Designs Corporation's business, as well as employment opportunities, visit our website, www.whiteedc.com. To learn more about White Electronic Designs' subsidiaries please visit their websites, www.Panelview.com & www.interfacedata.com.
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