DPAC Technologies Continues Investment in the Wireless and Military Markets as It Reports Results for First Quarter of Fiscal Year 2004.Business Editors GARDEN GROVE Garden Grove, city (1990 pop. 143,050), Orange co., S Calif., a suburb of Long Beach and Los Angeles, on the Santa Ana River; founded 1877, inc. 1956. Many of its residents work in nearby aerospace and defense installations, and there is light manufacturing. , Calif.--(BUSINESS WIRE)--June 30, 2003 DPAC DPAC Denver Performing Arts Complex (CO, USA aka: DCPA) DPAC Deferred Policy Acquisition Costs (insurance) DPAC District Parent Advisory Committee DPAC Dover Partnership Against Crime Technologies Corp. (Nasdaq:DPAC): -- Research and development increases to 15% of sales -- Loss per share for the quarter, prior to litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. reserve, matches loss per share from the previous quarter -- DPAC reserves $750,000 for a potential litigation settlement DPAC Technologies Corp. (Nasdaq:DPAC), a technology company that provides a diverse portfolio of patented electronic-component-based products, including component packaging technology for high-density high-den·si·ty adj. Having a high concentration: high-density urban areas. , space-saving memory and wireless applications, and solutions for digital image enhancement See image editing. , today reported results for its first quarter of fiscal year 2004, ended May 31, 2003. First Quarter Operating Results For the first fiscal quarter ended May 31, 2003, revenue was $5.2 million as compared to revenue of $11.9 million for the first quarter of the previous year. The decrease in revenue for the quarter is principally attributed to a significant decrease in memory prices, a change in product mix and a decrease in the average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. . The loss for the quarter was $(0.9) million or $(0.04) per share, as compared to net income of $0.8 million or $0.04 per share for the prior year's first quarter. Comment and Outlook "DPAC has experienced tremendous performance over the prior four year's with its proprietary stacking technology and has strengthened its balance sheet during this period," stated Ted Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. , DPAC's president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "To ensure the future growth of DPAC, we are putting necessary resources into appropriate business activities as we execute our strategy to generate new technology and products for existing and new markets. During the first fiscal quarter of 2004, we introduced the formation of a new product line for the wireless marketplace. This product in development will provide the hardware and software necessary to implement a wireless solution for our industrial customers. Significant customer interest has been generated due to its capabilities, which will provide quicker time-to-market, at reduced risks and costs to their development cycle." Mr. Bruce continued, "This month, we announced the purchase of a marketing and manufacturing license for a proprietary weapons target enhancement product. This product, which is used for the enhancement of real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. images, has presented an excellent opportunity for DPAC to expand our defense market presence. "We continue to be viewed as a leader in the memory stacking market segment. With the entry of DRAM semiconductor producers in the stacking business, we must carefully determine the best tactics and business strategy for DPAC. While we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the potential for the DuraStack(TM) technology, equally so, we must realize that the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. success of a service-stacking company is unclear. It is this situation that drives the importance of the diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. efforts for the long-term benefit of our shareholders. So, while it appears the overall stacking technology has been accepted as a viable market, prices have softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. in parallel with the general memory market. The DuraStack(TM), which is a best-in-class See best-of-class. stacking technology, will offer our customer base a more efficient and solder-free method for their stacking needs." Mr. Bruce continued, "We continue to see opportunities for the future growth of DPAC with the above applications. The operational achievements we have delivered indicate that we have the right team in place to successfully execute our strategy." Balance Sheet Summary At May 31, 2003, DPAC had total assets of $24.9 million, including cash and cash equivalents of $7.6 million. The Company used cash during the quarter, principally for the purchased license agreement and property additions. Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. were $10.5 million. The Company's current ratio is approximately 4.6-to-1, and its long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. has been reduced to $74,000. First Quarter Fiscal 2004 Operating Results Gross margin for the first quarter of fiscal 2004 was 23.0 percent, compared with 23.7 percent for the fiscal first quarter of 2003, and 25.5 percent for the fourth quarter of fiscal 2003. Changes in the gross margin are impacted by shifts in product mix and memory pricing among the Company's business lines. Fiscal 2004 first quarter selling, general and administrative expenses (SG&A) were $1.2 million compared with $1.6 million in the first quarter of fiscal 2003. The decrease in SG&A was primarily related to decreased payroll costs and legal expenses. Fiscal 2004 first quarter research and development expenses were $0.8 million or 15.0 percent of sales, compared to $0.5 million or 3.8 percent of sales for the first quarter of fiscal 2003, due to the Company's increased emphasis on new product and technology development. During the quarter, DPAC entered into a potential settlement agreement for its outstanding patent litigation. DPAC recognized a reserve of $750,000 related to this potential settlement. Conference Call and Webcast Management of DPAC will host a conference call today at 10:30 a.m. Pacific/1:30 p.m. Eastern to discuss the first quarter fiscal year 2004 operating performance. The conference call will feature Chief Executive Officer and President Ted Bruce and Chief Financial Officer William Stowell. To participate on the live call, please dial 800-982-3654 toll free. A phone replay will be available for 48 hours (beginning two hours after the completion of the conference call) by dialing 888-266-2081 or 703-925-2533 and entering the Passcode 185504. About DPAC Technologies Located in Garden Grove, California Garden Grove is a city centrally located in northern Orange County, California, United States. As of 2004, the city population was 170,000 people. California State Route 22, also known as the Garden Grove Freeway, passes through the city from east to west. , DPAC Technologies provides a diverse portfolio of patented electronic-component-based products including component packaging technology for high-density, space saving memory and wireless applications, and solutions for digital image enhancement. DPAC's products are used in electronic circuits found in network servers, computer storage devices, weapon guidance systems, medical instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. , communication devices, refrigeration refrigeration, process for drawing heat from substances to lower their temperature, often for purposes of preservation. Refrigeration in its modern, portable form also depends on insulating materials that are thin yet effective. controls, automotive diagnostic equipment and other advanced equipment. The Company also provides value-added manufacturing of prototype designs and medium volume production runs of assembled as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. circuit boards. The Company's web site address is www.DPACTech.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release includes forward-looking statements, including statements regarding management's current beliefs concerning the Company's market, technology development, expansion and business plans, the use of its technology in industrial and military programs, relationships in price parity parity or space parity, in physics, quantity that refers to the relationship between an object or process and the image that it can produce in a mirror. of existing technology with future technology, and the need for various present and future products, which are subject to change, uncertainties and risks. Every statement herein that is not historic in nature is a forward-looking statement for purposes of the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements involve risks and uncertainties, and therefore results may differ materially from those set forth in these statements. Factors that affect DPAC's business include, but are not limited to, the success of patented products, future business opportunities with products, the semiconductor market, protection of technology or proprietary rights, risks of litigation, and general market and economic conditions. More information about the risks and challenges faced by DPAC Technologies Corp. is contained in the Securities and Exchange Commission filings made by the Company on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , 10-Q and 8-K. DPAC Technologies Corp. specifically disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise.
DPAC TECHNOLOGIES CORP.
Condensed Consolidated Balance Sheet Information
(unaudited)
(In 000's) May 31, February 28,
2003 2003
--------------- --------------
Cash $7,629 $8,197
Total current assets 10,489 12,557
Property, net 4,101 3,863
Goodwill 4,529 4,529
Long-term deferred
income taxes 5,125 4,554
Total assets $24,850 $25,753
Current liabilities $2,291 $2,257
Long-term debt 74 99
Shareholders' equity 22,485 23,397
Total liabilities and shareholders'
equity $24,850 $25,753
DPAC TECHNOLOGIES CORP.
Condensed Statement of Income
(Unaudited)
For Periods Ended May 31 First Fiscal Quarter
(in 000's)
------------------------
2004 2003
------------ ----------
Sales $5,163 $11,937
Cost of sales 3,973 9,111
------------ ----------
Gross profit 1,190 2,826
------------ ----------
Selling, general & administrative costs 1,176 1,579
Reserve for litigation settlement 750
Research and development 776 456
------------ ----------
Total operating costs 2,702 2,035
------------ ----------
Income (loss) from operations (1,512) 791
Other income 8 12
------------ ----------
Income (loss) before income taxes (1,504) 803
------------ ----------
Income tax benefit 571 -
------------ ----------
Net income (loss) $(933) $803
============ ==========
Earnings (loss) per share- Basic ($0.04) $0.04
Earnings (loss) per share- Diluted ($0.04) $0.04
Basic shares 20,988 21,016
Diluted shares 20,988 21,374
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