Eltek Reports Q3 2005 Financial Results.PETACH-TIKVA, Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. -- Eltek Ltd. (Nasdaq:ELTK): --4th Consecutive Quarter of Profitability, Revenues of $8M with EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.05 ($0.09 Per 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. 1 Par Value of Share) --Operating Income Up 100% Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to $480,000 --Commenced Deliveries to New Major U.S. Customers -- Expect Shipments to These Customers to Increase in Upcoming Quarters Eltek Ltd. (Nasdaq:ELTK), the leading Israeli manufacturer of advanced circuitry solutions, today announced its financial results for the third quarter and nine months ended September September: see month. 30, 2005. Third Quarter 2005 Highlights: --Revenues increased by 12 % year-over-year and by 8% sequentially --Fourth consecutive quarter of profitability --Quarterly net income of $361,000 or $0.05 per share ($0.09 per NIS 1 par value of share) --Begin investment in new manufacturing equipment to expand high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. production capacity Eltek reported revenues for the three months ended September 30, 2005 of NIS 36.6 million ($8.0 million) compared with NIS 32.6 million ($7.1 million) during the third quarter of 2004, a 12% increase. Net income for the third quarter totalled NIS 1.7 million ($361,000), or NIS 0.42 per NIS 1 par value of shares ($0.05 per share or $0.09 per NIS 1 par value of share) compared with a net loss of NIS 933,000 ($203,000), or NIS (0.22) per NIS 1 par value of shares (or $(0.03) per share) for the same quarter in 2004. Revenues for the nine-month period ended September 30, 2005, were NIS 104.9 million ($22.8 million) compared with revenues of NIS 90.0 million ($19.6 million) for the comparable period in 2004. Net income for the nine-month period ended September 30, 2005 was NIS 3.0 million ($644,000), or NIS 0.80 per NIS 1 par value of shares ($0.10 per share or $0.17 per NIS 1 par value of share), compared with a net loss of NIS 7.8 million ($1.7 million) or NIS (1.85) per NIS 1 par value of shares (or $(0.24) per share) for the same period in 2004. "We are pleased to report our fourth consecutive quarter of profitability. Our sustained quarterly momentum continues to be driven by the growing demand for Eltek's flex-rigid PCBs used for the most demanding applications in many industries," said Arieh Arieh (ārī`ə), in the Bible, one of the two guards murdered with King Pekahiah. Reichart, President and Chief Executive Officer of Eltek. "I am particularly encouraged by our penetration The successful unauthorized breach of a security perimeter. See penetration test. into the U.S. market. During the third quarter we made initial deliveries to new U.S. customers and we expect that shipments to these customers will increase in Q4 2005 and into 2006. In addition, we have succeeded in passing qualifications by other major U.S. manufacturers. These developments in the strategic U.S. 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. market, coupled with a prospective sales pipeline including new potential customers, lead us to expect further improvement in our results in 2006," said Reichart. Amnon Amnon. In the Bible, David's eldest son. He raped his half sister Tamar and was killed for it by her brother Absalom. Amnon ravishes his sister, Tamar. [O.T.: II Samuel 13:14] See : Incest Shemer Shemer (shē`mər), in the Bible. 1 Owner and eponym of the hill of Samaria. 2 Founder of a clan in the tribe of Asher. Alternate forms are Shamer and Shomer. , CFO See Chief Financial Officer. of Eltek commented: "During the third quarter we saw continued improvement in the financial metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. of our business. In the third quarter of 2005 our gross margin improved to 21.0%, from 11.1% in fiscal 2004 and 18.0% in the second quarter of 2005.Our operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased to $480,000 in the third quarter from $241,000 in the second quarter, and an 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. of $120,000 in the third quarter of 2004." Mr. Shemer continued, "In order to meet increasing demand, we have begun to invest in new advanced manufacturing equipment to increase our high end production capacity. These investments are financed by new bank loans, reflecting their confidence in our business model and cash generation capabilities. The successful installation and integration of the new equipment will enable us to establish a strong manufacturing base for continued growth going forward." About the Company Eltek is Israel's leading manufacturers of printed circuit boards, the core circuitry of most electronic devices. It specializes in the complex high-end 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. The Company has invested heavily in upgrading its production facilities over the past five years. 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
(In thousands, except per share data)
Convenience
translation
-----------
Nine months ended
Reported amounts September 30,
---------------------------------------
2004 2005 2005
(Unaudited) (Unaudited) (Unaudited)
NIS NIS U.S. $
------------ ----------- ------------
Revenues 89,985 104,859 22,805
Costs of revenues (81,760)(a) (84,750) (18,432)
------------ ----------- ------------
Gross profit 8,225 20,109 4,373
Research and development, net - (485) (105)
Selling, general and
administrative Expenses (13,219) (14,417) (3,135)
Amortization of goodwill (441) (447) (97)
------------ ----------- ------------
Operating income (loss) (5,435) 4,760 1,036
Financial expenses, net (2,490) (2,028) (441)
------------ ----------- ------------
Income (loss) before other
income, net (7,925) 2,732 595
Other income, net 39 (a) 34 7
------------ ----------- ------------
Income (loss) before taxes on
income (7,886) 2,766 602
Taxes on income - - -
------------ ----------- ------------
Income (loss) after taxes on
income (7,886) 2,766 602
Minority share in subsidiary's
net results 112 194 42
------------ ----------- ------------
Net income (loss) for the
period (7,774) 2,960 644
============ =========== ============
Basic and diluted earnings
(loss) per NIS 1 par value of
the share capital (b) (1.85) 0.80 0.17
============ =========== ============
Total par value of shares used
to compute basic and diluted
earnings (loss) per NIS 1 par
value of share 4,131 4,197 4,197
============ =========== ============
Convenience
Translation
-----------
Three months ended
Reported amounts September 30,
--------------------------------------
2004 2005 2005
(Unaudited) (Unaudited) (Unaudited)
NIS NIS U.S. $
------------ ------------ ------------
Revenues 32,569 36,622 7,964
Costs of revenues (28,780) (28,921) (6,289)
------------ ------------ ------------
Gross profit 3,789 7,701 1,675
Research and development, net - (134) (29)
Selling, general and
administrative Expenses (4,043) (5,212) (1,134)
Amortization of goodwill (147) (147) (32)
------------ ------------ ------------
Operating income (loss) (401) 2,208 480
Financial expenses, net (674) (648) (141)
------------ ------------ ------------
Income (loss) before other
income, net (1,075) 1,560 339
Other income, net 68 58 13
------------ ------------ ------------
Income (loss) before taxes on
income (1,007) 1,618 352
Taxes on income - - -
------------ ------------ ------------
Income (loss) after taxes on
income (1,007) 1,618 352
Minority share in subsidiary's
net results 74 42 9
------------ ------------ ------------
Net income (loss) for the
period (933) 1,660 361
============ ============ ============
Basic and diluted earnings
(loss) per NIS 1 par value of
the share capital(b) (0.22) 0.42 0.09
============ ============ ============
Total par value of shares used
to compute basic and diluted
earnings (loss) per NIS 1 par
value of share 4,131 4,197 4,197
============ ============ ============
(a) Reclassified
(b) Ordinary shares of a par value of NIS 0.6 each.
Eltek Ltd.
Consolidated Condensed Balance Sheets
(In thousands)
Convenience
December September Translation
31, 30, -----------
---------- -----------
Reported amounts 2004 2005 2005
(Audited) (Unaudited) (Unaudited)
NIS NIS U.S. $
----------- ----------- -----------
Assets
Current assets
Cash and cash equivalents 4,274 1,749 380
Receivables: Trade 23,835 28,100 6,112
Other 1,158 2,676 582
Inventories 13,633 15,822 3,441
Prepaid expenses 563 1,417 308
---------- ----------- -----------
Total current assets 43,463 49,764 10,823
---------- ----------- -----------
Deferred taxes 753 708 154
---------- ----------- -----------
Property and equipment, net 31,569 30,617 6,659
---------- ----------- -----------
Goodwill 4,656 3,938 856
---------- ----------- -----------
Total assets 80,441 85,027 18,492
========== =========== ===========
Liabilities and Shareholder's
equity
Current liabilities
Short-term credit and current
maturities of long-term debts 19,589 19,460 4,232
Trade payables 23,577 25,263 5,495
Other liabilities and accrued
expenses 11,083 10,672 2,321
---------- ----------- -----------
Total current liabilities 54,249 55,395 12,048
---------- ----------- -----------
Long- term liabilities
Long term debt, excluding current
maturities 6,687 6,545 1,423
Employee severance benefits 1,048 179 39
---------- ----------- -----------
Total liabilities 61,984 62,119 13,510
---------- ----------- -----------
Minority interests 1,900 1,594 346
---------- ----------- -----------
Convertible note 1,566 1,773 386
---------- ----------- -----------
Shareholder's equity
Ordinary shares, NIS 0.6 par value.
Authorized 50,000,000 shares,
issued and outstanding 5,602,511
shares at September 30, 2005 and
5,491,711 shares at December 31,
2004 29,698 29,765 6,473
Additional paid in capital 52,500 54,553 11,865
Capital reserves related to loans
from controlling shareholders 10,010 10,010 2,177
Cumulative foreign currency
translation adjustments 2,574 2,044 445
Capital reserve 6,685 6,685 1,454
Accumulated deficit (86,476) (83,516) (18,164)
---------- ----------- -----------
Total shareholder's equity 14,991 19,541 4,250
---------- ----------- -----------
Total liabilities and shareholders'
equity 80,441 85,027 18,492
========== =========== ===========
Eltek Ltd.
Consolidated Statement of Cash Flows
(In thousands)
Three months ended Convenience
--------------------- Translation
September September September
30, 30, 30,
Reported amounts 2004 2005 2005
---------- ----------- ----------
(Unaudited)(Unaudited)(Unaudited)
NIS NIS U.S. $
---------- ----------- ----------
Cash flows from operating activities
------------------------------------
Net income (loss) for the period (933) 1,660 361
Adjustment to reconcile net income
(loss) to net cash flows provided by
operating activities:
Depreciation 3,290 2,623 570
Capital gain from disposal of
fixed assets (74) (58) (13)
Accrued interest and inflationary
impact on long-term debts (29) 60 13
Minority share in subsidiary's
net results (74) (42) (9)
Amortization of goodwill 147 147 32
Increase (decrease) in employee
severance benefits, net 68 (952) (207)
Increase in trade receivables (3,583) (2,850) (620)
Increase in other
receivables and prepaid expenses (68) (1,719) (374)
Increase in trade payables 2,206 5,136 1,117
Increase (decrease) in other
liabilities and accrued expenses 417 (645) (140)
Accrued interest on convertible
note 38 44 10
Decrease (increase) in inventories 476 (2,034) (442)
---------- ----------- ----------
Net cash provided by operating
activities 1,881 1,370 298
---------- ----------- ----------
Cash flows from investing activities:
Purchase of fixed assets (335) (2,748) (598)
Proceeds from sale of fixed assets 151 61 13
---------- ----------- ----------
Net cash used for investing
activities (184) (2,687) (585)
---------- ----------- ----------
Cash flows from financing activities:
Increase (decrease) in short-term
credit (5) 690 150
Repayment of long-term loans (1,854) (1,732) (377)
Receipt of long-term loans - 1,800 392
---------- ----------- ----------
Net cash provided by (used for)
financing activities (1,859) 758 165
---------- ----------- ----------
Adjustments from translation of
financial statements of
Autonomous Units 22 (1) -
---------- ----------- ----------
Net decrease in cash
and cash equivalents (140) (560) (122)
Cash and cash equivalents at
beginning of period 4,710 2,309 502
---------- ----------- ----------
Cash and cash equivalents at
end of period 4,570 1,749 380
========== =========== ==========
Non-cash activities:
Purchase of fixed assets
Not yet paid - 3,340 726
========== =========== ==========
Eltek Ltd.
Consolidated Statement of Cash Flows
(In thousands)
Nine months ended Convenience
--------------------- Translation
September September September
30 30 30
Reported amounts 2004 2005 2005
---------- ----------- ----------
(Unaudited)(Unaudited)(Unaudited)
NIS NIS U.S. $
---------- ----------- ----------
Cash flows from operating activities
------------------------------------
Net income (loss) for the period (7,774) 2,960 644
Adjustment to reconcile net income
(loss) to net cash flows provided by
operating activities:
Depreciation 10,237 8,210 1,785
Capital gain from disposal of
fixed assets (74) (34) (7)
Accrued interest and inflationary
impact on long-term debts 355 506 111
Minority share in subsidiary's
net results (112) (194) (42)
Amortization of goodwill 441 447 97
Increase (decrease) in employee
severance benefits, net 117 (864) (188)
Increase in trade receivables (2,594) (4,369) (950)
Decrease (increase) in other
receivables and prepaid expenses 1,084 (2,389) (520)
Increase in trade payables 1,113 957 208
Increase (decrease) in other
liabilities and accrued expenses 1,685 (261) (57)
Accrued interest on convertible
note 113 126 27
Decrease (increase) in inventories 611 (2,291) (498)
---------- ----------- ----------
Net cash provided by operating
activities 5,202 2,804 610
---------- ----------- ----------
Cash flows from investing activities:
Purchase of fixed assets (1,156) (4,175) (908)
Proceeds from sale of fixed assets 151 61 13
---------- ----------- ----------
Net cash used for investing
activities (1,005) (4,114) (895)
---------- ----------- ----------
Cash flows from financing
activities:
Increase in short-term credit 36 479 104
Repayment of long-term loans (4,025) (5,509) (1,198)
Receipt of long-term loans - 1,800 392
Proceeds from exercise of stock
Options - 2,120 461
---------- ----------- ----------
Net cash used for financing
activities (3,989) (1,110) (241)
---------- ----------- ----------
Adjustments from translation of
financial statements of
autonomous units (9) (105) (23)
---------- ----------- ----------
Net increase (decrease) in cash
and cash equivalents 199 (2,525) (549)
Cash and cash equivalents at
beginning of period 4,371 4,274 929
---------- ----------- ----------
Cash and cash equivalents at
end of period 4,570 1,749 380
========== =========== ==========
Non-cash activities:
Conversion of convertible note
into additional paid in capital 879 - -
========== =========== ==========
Purchase of fixed assets not yet
paid - 3,340 726
========== =========== ==========
The accompanying notes are an integral part of the financial
statements.
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