Eltek Returns to Profitability in the Fourth Quarter on Continued Revenue Growth; Fourth Quarter 2004 Net Income of $446,000 vs. Net Loss of $850,000 in Fourth Quarter 2003.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. -- Quarterly Revenues Rise 27% Year over Year and 8% Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to $8.1 million Eltek Ltd. (Nasdaq:ELTK), the leading Israeli manufacturer of advanced circuitry solutions, today announced financial results for the fourth quarter and fiscal year ended December December: see month. 31, 2004. Fourth Quarter 2004 Financial Highlights: --Transition to profitability: quarterly net income of, $446,000 or $ 0.11 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 shares --Increased revenue, both sequentially and year-over-year --Second consecutive quarter of revenues growth --Continued gross margin expansion --Further reduction in bank debt --Increased sales of flex-rigid printed circuits boards pursuant to 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. projects Eltek reported revenues for the three months ended December 31, 2004 of NIS 35 million ($8.1 million) compared with NIS 27.6 million ($6.4 million) during the fourth quarter of 2003. Net income for the fourth quarter totaled NIS 1.9 million ($446,000), or NIS 0.47 per NIS 1 par value of shares ($0.11) compared with a net loss of NIS 3.7 million ($850,000), or NIS (0.84) per NIS 1 par value of shares ($0.19) for the same quarter in 2003. Net income for the fourth quarter, includes income of NIS 542 thousand ($126,000) attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Company's portion of a recoverable tax asset, which arose from the loss incurred by Kubatronik. Revenues for the year ended December 31, 2004, were NIS 125 million ($29.0 million) compared with revenues of NIS 108.3 million ($25.1 million) in 2003. Net loss for the year ended December 31, 2004 was NIS 5.9 million ($1.4 million), or NIS (1.36) per NIS 1 par value of shares ($ 0.32) compared with a net loss of NIS 13.0 million ($3.0 million) or NIS (3.61) per NIS 1 par value of shares ($ 0.84) in 2003. "The results for the fourth quarter of 2004 signify sig·ni·fy v. sig·ni·fied, sig·ni·fy·ing, sig·ni·fies v.tr. 1. To denote; mean. 2. To make known, as with a sign or word: signify one's intent. an important achievement for Eltek," 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. "First, we reached profitability, and second, this is a second consecutive quarter with top and bottom line improvements. We have displayed substantial operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. , expanded our gross and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , and further diversified diversified (di·verˑ·s our customer base."Mr. Reichart continued, "We credit our profitability and continued revenue growth to a relentless focus on executing our strategy of shifting the Company's product mix towards higher margin flex-rigid boards which require high end technology along with increasing our 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. ." Mr. Reichart concluded, "We enter 2005 as a profitable company. We have built an encouraging foundation for our next phase of growth and profitability, and intend to continue to leverage on our leading position in the flex-rigid boards industry." 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, "We can now see that our efforts in implementing the Company's strategy of focusing on this lucrative niche niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the of flex-rigid boards have finally paid off. This quarter is the first quarter after a long difficult period that has generated net income". "Our 2004 growth benefited from the increase in contribution of flex-rigid printed circuits boards pursuant to long-term projects. International sourced revenues in 2004 accounted for 46% of our revenue, compared to 33% in 2003. Purchase orders pursuant to long term projects tend to be supplied on a weekly basis over some period of time, contributing to our production efficiency as well as to our overall corporate productivity. The Company's improved operating results allowed it to reduce its bank debt by repaying $1.6 million of debt during 2004," he added. 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 high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of 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. 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
-----------
Year ended
December 31,
------------------------------------
2003 2004 2004
NIS NIS U.S. $
(Unaudited) (Unaudited) (Unaudited)
------------ ----------- -----------
Adjusted Reported
amounts(b) amounts(a)
------------ ----------- -----------
Revenues 108,303 125,002 29,015
Costs of revenues (102,643) (109,998) (25,533)
------------ ----------- -----------
Gross profit 5,660 15,004 3,482
Research and development, net 18 - -
Selling, general and
administrative expenses (14,996) (18,265) (4,240)
Amortization of goodwill (584) (593) (138)
------------ ----------- -----------
Operating income (loss) (9,902) (3,854) (896)
Financial expenses, net (2,989) (2,948) (684)
------------ ----------- -----------
Income (loss) before other income
(expenses), net (12,891) (6,802) (1,580)
Other income (expenses), net (20) 52 12
------------ ----------- -----------
Income (loss) before taxes on
income (12,911) (6,750) (1,568)
Taxes on income (194) 713 166
------------ ----------- -----------
Net income (loss) after taxes on
income (13,105) (6,037) (1,402)
Minority share in subsidiary's
net results 118 182 42
------------ ----------- -----------
Net income (loss) for the period (12,987) (5,855) (1,360)
============ =========== ===========
Basic and diluted loss per NIS 1
par value of the share
capital(c) (3.61) (1.36) (0.32)
============ =========== ===========
Total par value of shares used to
compute basic and diluted net
loss per NIS 1 par value of
share 3,569 4,131 4,131
============ =========== ===========
Convenience
Translation
-----------
Three months ended
December 31,
------------------------------------
2003 2004 2004
NIS NIS U.S. $
(Unaudited) (Unaudited) (Unaudited)
------------ ----------- -----------
Adjusted Reported
amounts(b) amounts(a)
------------ ----------- -----------
Revenues 27,646 35,017 8,127
Costs of revenues (26,318) (28,238) (6,554)
------------ ----------- -----------
Gross profit 1,328 6,779 1,573
Research and development, net - - -
Selling, general and
administrative expenses (3,575) (5,046) (1,171)
Amortization of goodwill (177) (152) (35)
------------ ----------- -----------
Operating income (loss) (2,424) 1,581 367
Financial expenses, net (1,115) (458) (106)
------------ ----------- -----------
Income (loss) before other income
(expenses), net (3,539) 1,123 261
Other income (expenses), net (183) 13 3
------------ ----------- -----------
Income (loss) before taxes on
income (3,722) 1,136 264
Taxes on income (93) 713 166
------------ ----------- -----------
Net income (loss) after taxes on
income (3,815) 1,849 430
Minority share in subsidiary's
net results 155 70 16
------------ ----------- -----------
Net income (loss) for the period (3,660) 1,919 446
============ =========== ===========
Basic and diluted loss per NIS 1
par value of the share
capital(c) (0.84) 0.47 0.11
============ =========== ===========
Total par value of shares used to
compute basic and diluted net
loss per NIS 1 par value of
share 4,281 4,131 4,131
============ =========== ===========
(a) With respect to discontinuance of adjustment for the effect of
inflation as from CPI of December 2003.
(b) Amounts adjusted to the effect of inflation in terms of NIS of
December 2003.
(c) Ordinary shares of a par value of NIS 0.6 each.
Eltek Ltd.
Consolidated Condensed Balance Sheets
(In thousands)
Convenience
Translation
------------
December 31, December 31,
------------------------- ------------
2003 2004 2004
Unaudited Unaudited Unaudited
NIS NIS U.S. $
------------ ------------ ------------
Adjusted Reported
amounts(b) amounts(a)
------------ ------------ ------------
Assets
Current assets
Cash and cash equivalents 4,371 4,274 992
Receivables: Trade 19,787 23,835 5,533
Other 2,262 1,158 269
Inventories 13,158 13,633 3,164
Prepaid expenses 693 563 131
------------ ------------ ------------
Total current assets 40,271 43,463 10,089
------------ ------------ ------------
Deferred Taxes 753 175
--------------------------------------
Property and equipment, net 43,381 31,569 7,328
------------ ------------ ------------
Goodwill 4,972 4,656 1,081
------------ ------------ ------------
Total assets 88,624 80,441 18,673
============ ============ ============
Liabilities and Shareholder's equity
Current liabilities
Short-term credit and current
maturities of long-term debts 19,461 19,589 4,547
Trade payables 22,314 23,577 5,473
Other liabilities and accrued
expenses 8,555 11,083 2,572
------------ ------------ ------------
Total current liabilities 50,330 54,249 12,592
------------ ------------ ------------
Long-term liabilities
Long term debt, excluding
current maturities 13,692 6,687 1,552
Employee severance benefits, net 940 1,048 243
------------ ------------ ------------
Total long-term liabilities 14,632 7,735 1,795
------------ ------------ ------------
Minority interests 1,970 1,900 441
------------ ------------ ------------
Convertible note 2,295 1,566 364
------------ ------------ ------------
Shareholder's equity
Ordinary shares, NIS 0.6 par
value. Authorized 50,000,000
shares, issued and outstanding
5,491,711 shares as of December
31, 2004 (4,885,651 shares as
of December 31, 2003) 29,334 29,698 6,894
Additional paid in capital 51,985 52,500 12,187
Capital reserves related to
loans from controlling
shareholders 10,010 10,010 2,324
Cumulative foreign currency
translation adjustments 2,004 2,574 597
Capital reserve 6,685 6,685 1,552
Accumulated deficit (80,621) (86,476) (20,073)
------------ ------------ ------------
Total shareholder's equity 19,397 14,991 3,481
------------ ------------ ------------
Total liabilities and
shareholders' equity 88,624 80,441 18,673
============ ============ ============
(a) With respect to discontinuance of adjustment for the effect of
inflation as from CPI of December 2003.
(b) Amounts adjusted to the effect of inflation in terms of NIS of
December 2003.
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