Eltek Ltd. Reports Results for the Three and Nine Month Periods Ended September 30, 2003; Eltek Announces the Appointment of a New CEO For Its German Subsidiary.Business Editors/High-Tech Writers PETACH-TIKVA, Israel--(BUSINESS WIRE)--Dec. 2, 2003 First significant order from this strategically important market has been awarded Eltek Ltd. (Nasdaq:ELTK), the leading Israeli manufacturer of advanced circuitry solutions, today announced its financial results for the three and nine month periods ended September September: see month. 30, 2003. Eltek reported revenues for the three months ended September 30, 2003 of NIS Niš or Nish (both: nēsh), city (1991 pop. 175,391), SE Serbia, on the Nišava River. An important railway and industrial center, it has industries that manufacture textiles, electronics, spirits, and locomotives. 27.2 million ($6.1 million), compared to NIS 25.5 million ($5.7 million) during the third quarter of 2002. Net loss for the quarter totaled NIS 3.2 million ($709,000), or NIS 0.75 per share ($0.17), compared to a net loss of NIS 6.7 million ($1.5 million), or NIS 2.28 per share ($0.51), for the third quarter of 2002. For the nine-month period ended September 30, 2003, the Company reported revenues of NIS 81 million ($18.2 million), which is the same as in the comparable period in 2002. Net loss for the nine-month period ended September 30, 2003 was NIS 9.4 million ($2.1 million), or NIS 2.8 ($0.63) per share, compared to a net loss of NIS 8.9 million ($2 million) or NIS 3.04 ($0.68) per share for the same period in 2002.
Q3/2003 Q2/2003 Q1/2003 Q4/2002
------------------------------------- ------- ------- ------- -------
( In millions $)
------------------------------------- ------- ------- ------- -------
Revenues 6.12 5.76 6.35 6.18
------------------------------------- ------- ------- ------- -------
Gross Profit (loss) 0.45 0.26 0.27 (0.36)
------------------------------------- ------- ------- ------- -------
Operating Loss (0.44) (0.57) (0.68) (1.37)
------------------------------------- ------- ------- ------- -------
Financial Expenses
(0.32) 0.00 (0.11) (0.16)
------------------------------------- ------- ------- ------- -------
Net Loss (0.71) (0.58) (0.82) (1.54)
------------------------------------- ------- ------- ------- -------
"The results of the third quarter of 2003 reflect our ongoing marketing efforts and our actions to improve our operational results," said Arie Reichart, President and Chief Executive Officer of Eltek. "Our revenues were on the same level as in the first quarter of 2003, although we reduced our manpower by 50 positions. Gross profit is improving and we are reducing our operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in each quarter. Our disappointment is with the pace of the improvement which was adversely impacted by the re-valuation of the NIS against the US$ beginning in the second quarter. Our financing expenses in the third quarter were unusually high due to the decrease in the CPI (1) (Characters Per Inch) The measurement of the density of characters per inch on tape or paper. A printer's CPI button switches character pitch. (2) (Counts Per I during the quarter." "On July July: see month. 1, 2003, Mr. Earnst Winkler Winkler may refer to:
In mathematics, suppose C is a collection of mathematical objects (for instance sets or functions). and other complex PCBs. He has already played a significant role in our efforts to further penetrate the German market as well as to expand our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. activities. We see great potential in these areas." Mr. Reichart continued: "I am particularly encouraged by the increased contribution of Eltek's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. to our quarterly revenues as well as to our pipeline for 2004. Our international sales accounted for more than 36% of our overall quarterly revenues in the third quarter. We were recently awarded an initial order of $220,000 from a new customer in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). for a complex flex-rigid PCB PCB: see polychlorinated biphenyl. PCB in full polychlorinated biphenyl Any of a class of highly stable organic compounds prepared by the reaction of chlorine with biphenyl, a two-ring compound. to be delivered during 2004." Mr. Reichart concluded: "Our ongoing efforts to further strengthen Eltek's global market position has begun to yield tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. results. We intend to continue to aggressively explore opportunities in the international markets." About the Company Eltek is Israel's leading manufacturers of printed circuit boards (PCB), the core circuitry of most electronic devices. It specializes in the complex high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of PCB manufacturing, i.e., HDI HDI Human Development Index (UNDP yardstick of human welfare) HDI Help Desk Institute HDI Humpty Dumpty Institute (New York, New York) HDI High Density Interconnect , multi-layered and flex-rigid boards. Eltek's technologically advanced circuitry solutions are used in today's increasingly sophisticated and compact electronic products. ELTEK has invested heavily in upgrading its production facilities over the past five years to maintain state of the art technology. For more information, visit Eltek's World Wide Web site at www.eltekglobal.com Certain matters discussed in this news release are 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. that involve a number of risks and uncertainties including, but not limited to statements regarding expected results in future quarters, risks in product and technology development and rapid technological change, product demand, the impact of competitive products and pricing, market acceptance, the sales cycle, changing economic conditions and other risk factors detailed in the Company's filings with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities and Exchange Commission.
ELTEK LTD.
Consolidated Statements of Operations
Adjusted to New Israeli Shekels as of September 2003
(In thousands, except per share data)
Conven- Conven-
ience ience
Trans- Trans-
lation lation
--------- ---------
Nine months ended Three months ended
September 30, September 30,
----------------------------- -----------------------------
2002 2003 2003 2002 2003 2003
NIS NIS U.S. $ NIS NIS U.S. $
(Un- (Un- (Un- (Un- (Un- (Un-
audited) audited) audited) audited) audited) audited)
Revenues 81,017 80,981 18,235 25,527 27,194 6,124
Costs of
revenues (77,820) (76,631) (17,256) (26,848) (25,177) (5,669)
--------- --------- --------- --------- --------- --------
Gross profit
(loss) 3,197 4,350 979 (1,321) 2,017 455
Research and
develop-
ment costs,
net (117) 18 4 - - -
Selling,
general and
adminis-
trative
expenses (10,883) (11,467) (2,582) (3,927) (3,829) (862)
Amortization
of goodwill (157) (409) (92) (157) (154) (35)
--------- --------- --------- --------- --------- --------
Operating
loss (7,960) (7,508) (1,691) (5,405) (1,966) (442)
Financial
expenses,
net (751) (1,882) (424) (1,068) (1,435) (323)
--------- --------- --------- --------- --------- --------
Loss before
other
income
(expenses),
net (8,711) (9,390) (2,115) (6,473) (3,401) (765)
Other income
(expenses),
net (7) 164 37 (15) 135 30
--------- --------- --------- --------- --------- --------
Loss before
taxes on
income (8,718) (9,226) (2,078) (6,488) (3,266) (735)
Taxes on
income (95) (101) (23) (139) 83 19
--------- --------- --------- --------- --------- --------
Net loss
after taxes
on income (8,813) (9,327) (2,101) (6,627) (3,183) (716)
Minority
share in
sub-
sidiary's
net loss
(income) (118) (37) (8) (59) 31 7
--------- --------- --------- --------- --------- --------
Net loss for
the period (8,931) (9,364) (2,109) (6,686) (3,152) (709)
========= ========= ========= ========= ========= ========
Basic and
diluted
loss per
NIS 1 par
value of
the share
capital(a) (3.04) (2.80) (0.63) (2.28) (0.75) (0.17)
========= ========= ========= ========= ========= ========
Total par
value of
shares used
to compute
basic and
diluted net
loss per
NIS 1 par
value of
share 2,932 3,332 3,332 2,932 4,132 4,132
========= ========= ========= ========= ========= ========
(a) shares of a par value of NIS 0.6 each.
Eltek Ltd.
Consolidated Condensed Balance Sheets
Adjusted to New Israeli Shekels as of September 2003
Convenience
Translation
September 30, September 30,
-------------------- ------------
2002 2003 2003
Unaudited Unaudited Unaudited
NIS NIS U.S. $
--------- ---------- ------------
(in
thousands)
Assets
Current assets
Cash and cash equivalents 10,407 4,210 948
Receivables: Trade 24,669(b) 20,566 4,631
Other 776 1,832 413
Inventories 12,981 12,135 2,733
Prepaid expenses 907 615 138
--------- ----------- -----------
Total current assets 49,740 39,358 8,863
--------- ----------- -----------
Property and equipment, net 55,956 45,478 10,240
--------- ----------- -----------
Goodwill 4,927 4,798 1,080
--------- ----------- -----------
Total assets 110,623 89,634 20,183
========= =========== ===========
Liabilities and Shareholder's equity
Current liabilities
Short-term credit and current
maturities of long-term debts 22,182 19,797 4,458
Trade payables 18,872 20,847 4,694
Other liabilities and accrued
expenses 8,723(b) 7,334 1,651
--------- ----------- -----------
Total current liabilities 49,777 47,978 10,803
--------- ----------- -----------
Long- term liabilities
Long term debt, excluding current
maturities 20,435 14,100 3,175
Employee severance benefits 955 1,018 229
--------- ----------- -----------
Total liabilities 71,167 63,096 14,207
--------- ----------- -----------
Minority interests 1,985 1,993 449
--------- ----------- -----------
Convertible note - 2,270 511
--------- ----------- -----------
Shareholder's equity
Ordinary shares, NIS 0.6 par value.
Authorized 50,000,000 shares, issued
and outstanding 4,885,651 shares 29,452 29,452 6,632
Additional paid in capital 52,194 52,194 11,753
Capital reserves related to loans
from controlling shareholders 10,050 10,050 2,263
Cumulative foreign currency
translation adjustments 121 1,137 256
Capital reserve 6,712 6,712 1,511
Accumulated deficit (61,058) (77,270) (17,399)
--------- ----------- -----------
Total shareholder's equity 37,471 22,275 5,016
--------- ----------- -----------
Total liabilities and shareholders'
equity 110,623 89,634 20,183
========= =========== ===========
(b) Reclassified
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