Signal Technology Reports Fourth-Quarter and Year-End Financial Results.Business/Technology Editors DANVERS, Mass.--(BUSINESS WIRE)--Feb. 13, 2001 Company's Commercial Wireless Segment Exceeds Expectations for First Year of Operations Signal Technology Corporation ("Signal") (Nasdaq: STCO STCO Star Trek ConQuest Online (game) ), a leading provider of electronic products for wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. in the commercial, defense and space markets, today reported its financial results for the fourth quarter and 12 months ended December 31, 2000. For the fourth quarter of 2000, Signal reported a 38% increase in net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight to $28.0 million from $20.3 million for the fourth quarter of 1999. Net income for the fourth quarter of 2000 was $1.5 million, before a one-time charge related to previously reported 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. , or $0.14 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $1.6 million, or $0.20 per diluted share, for the same period last year. Gross margin increased to $9.3 million during the fourth quarter of 2000 from $7.4 million a year ago. Order backlog was $98.8 million at December 31, 2000, compared with $83.4 million a year earlier. "This marks the 10th consecutive quarter in which Signal has achieved or exceeded our targets for growth and profitability," said George Lombard George Lombard (born September 14, 1975, in Atlanta, Georgia) is a Major League Baseball outfielder for the Washington Nationals. He bats and throws left-handed. He is 6'0 and weighs 200 lbs. , chairman and chief executive officer. "The ramp-up in our commercial wireless business has exceeded our expectations over the past year. We continue to make solid progress in our strategy of leveraging our defense-based technology heritage into penetration of commercial cellular/PCS and fixed wireless broadband High-speed wireless transmission of data. What is "high" speed is always a changing number. Wireless systems are typically slower than land-based, wireline networks. In the past, wireless broadband started at 250 Kbps, whereas land-based broadband was generally considered to start at T1 markets." For the 12 months ended December 31, 2000, Signal reported net sales of $98.5 million, compared with $82.4 million for the comparable period a year ago. Net income for 2000 was $3.1 million before a one-time charge related to previously reported litigation, or $0.32 per diluted share, compared with $4.5 million, or $0.56 per diluted share last year. Eaton Corporation This article is about an industrial manufacturer. For other meanings see Eaton. Eaton Corporation (NYSE: ETN) is a diversified industrial manufacturer with 2006 sales of $12.4 billion, putting it at 198 on the Fortune 500 for 2007. Lawsuit Status and Related Reserve In December 2000, Signal announced that it will appeal a jury's findings in an action pending in the U.S. District Court, Northern District of California. The decision was in favor of upon the side of; favorable to; for the advantage of. See also: favor an indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from claim by Eaton Corporation in the amount of $4.2 million, related to environmental liabilities allegedly assumed by Signal when it purchased Eaton Corporation's Microwave Products Division in 1989. "Although we believe that our appeal has merit and we look forward to resolving this issue on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms, we believe it is prudent to establish a reserve that reflects the company's current estimate of the $4.2 million judgment, plus interest and legal fees, along with our current estimate of the cost of future environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a ," Lombard said. The reserve, which amounts to $9.0 million, resulted in a one-time charge to earnings, net of taxes, of $5.6 million. Including the charge, Signal posted a net loss for the fourth quarter of 2000 of $4.0 million, or $0.41 per diluted share. "This reserve represents our best estimate of the company's potential liability based on the information currently available. Should further developments warrant an adjustment to the amount of the reserve, the adjustment will be reported in Signal's December 31, 2000 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. ," Lombard said. Product Development Highlights "Signal increased R&D spending in 2000 by approximately 140% over 1999, and our product development teams did an outstanding job leveraging this investment into a pipeline of new and future products," Lombard said. "Signal Wireless Group (SWG SWG abbr. standard wire gauge ) launched a number of successful new offerings in some of the most promising segments of the wireless broadband transport and access markets during the second half of 2000." Lombard continued, "Signal's strength in high-performance RF technology for point-to-point cellular/PCS backhaul positions us well to benefit as wireless telecom transitions toward 3G platforms over the next few years. The outlook is especially bright in international markets where wireless technology is already a dominant solution for backhaul from cellular/PCS base stations. We continue to deepen deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. deepen Verb to make or become deeper or more intense Verb 1. our commitment and our capabilities, as evidenced most recently by our adding Paul Shanfeld to the Signal Wireless Group, bringing us more than 10 years of industry-leading success in cellular/PCS base station product development and marketing. Paul will be a tremendous asset for Signal as we work to penetrate the 3G telecom market over the next few years." "We were also pleased with the progress Signal made in penetrating penetrating breaching the tissues of the body. the emerging market for fixed wireless broadband access with 3.5 GHz customer premise radio equipment," Lombard said. "Multipoint wireless, or `MMDS (Multichannel Multipoint Distribution Service or Microwave Multipoint Distribution Service) A digital wireless transmission system that works in the 2.2-2.4 GHz range. ,' has the potential to dominate the market for last-mile broadband access See broadband and wireless broadband. for homes and small businesses where broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). cable or DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary connectivity is unavailable. Independent studies forecast as many as 30 million MMDS broadband subscribers in the U.S. and as many as 60 million overseas within the next few years. Signal's new 3.5 GHz offering is aimed squarely square·ly adv. 1. Mathematics At right angles: sawed the beam squarely. 2. In a square shape. 3. at one of the most promising segments of this market, providing an attractive combination of high data rates, linearity, low cost and rugged reliability. The $7.5 million production order we announced early in January was the largest initial contract signed by Signal Wireless Group since we established SWG last year." Other Recent Highlights Signal recently announced significant contract awards in both the commercial wireless and defense markets: -- A $7.5 million production order for multipoint broadband customer premise equipment from a leading provider of carrier class, fixed wireless broadband access solutions. The company has been selected as the primary supplier of multipoint radio technology for the subscriber end of this customer's fixed wireless MMDS offerings. -- A $2.6 million contract from Israeli Aircraft Industries, to develop and manufacture an airborne high density Ku band communications transmitter A device that generates signals. Contrast with receiver. . Development of this high-power transmitter is slated for the F-15, F-16, and other fighter aircraft fighter aircraft Aircraft designed primarily to secure control of essential airspace by destroying enemy aircraft in combat. Designed for high speed and maneuverability, they are armed with weapons capable of striking other aircraft in flight. platforms. Follow-on potential orders for this new product should exceed $5.0 million. Among the company's other recent highlights were: -- Acquisition of the high-power amplifier unit of LogiMetrics, Inc., during the fourth quarter. Signal's Keltec Division had been operating the LogiMetrics high-power amplifier business since March 2000. The operation manufactures a well-respected line of medium- and high-power amplifiers as well as traveling wave tube amplifiers A traveling wave tube amplifier (abbreviated TWTA and often pronounced "TWEET-uh") is an electronic device used to produce high-power radio frequency signals. The bandwidth of a broadband TWTA can be as high as one octave, although tuned (narrowband) versions exist, and , which has provided SWG with a strong line of commercial amplifiers capable of meeting customers' needs for high power and high-frequency performance. -- Selection of Signal as a winner of Spectrian Corporation's "Supplier Partnership Award" for 2000. The award is presented annually to a select group of Spectrian suppliers who have demonstrated outstanding performance in the areas of service, on-time delivery and quality. Outlook "The outlook for 2001 is encouraging, given Signal Wireless Group's strong momentum and the prospects for continued stability in our defense business," Lombard said. "We are reaching a transition point in the shift from mid-capacity to high-capacity radios in the point-to-point backhaul market that is expected to temporarily slow our growth during the first half of the year. However, we foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. accelerating growth in MMDS throughout 2001, as well as a rise in our point-to-point growth rate during the second half of the year as our product lines and customer rosters expand in both markets." "We remain confident in forecasting that Signal will reach between $115 million and $120 million in net sales and generate earnings of between $0.32 per share and $0.35 per share for the full year of 2001. For the first quarter of 2001, we expect to generate net sales in the range of $22 million to $24 million and net income of approximately $0.02 per share. We expect our defense sales for the first quarter of 2001 to account for the largest part of the decrease in total sales from the fourth quarter of 2000, due to the timing of certain contract awards in the second half of 2000. In summary, demand for our commercial wireless products is growing very rapidly, and our defense business, while somewhat cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. , is stable and profitable. Signal is in an excellent position as we enter 2001." Fourth-quarter Conference Call Signal will host its fourth-quarter conference call this morning at 11:00 a.m., Eastern Time. The call will be broadcast live on the company's Web site at http://www.sigtech.com. About Signal Technology Signal is a leader in developing state-of-the-art electronic components and systems for wireless communications, defense and space applications. Through its Signal Wireless Group (SWG), the company is addressing the exploding global demand for Internet and data bandwidth by developing RF radio sub-systems for broadband fixed wireless telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. applications worldwide. SWG also develops and manufactures switching/combining components and subsystems for PCS/cellular digital applications for sale to wireless base station infrastructure providers. In its defense businesses, Signal develops and manufactures RF, microwave, and power conversion products for communications networks The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. , electronic countermeasures Noun 1. electronic countermeasures - electronic warfare undertaken to prevent or reduce an enemy's effective use of the electromagnetic spectrum ECM , missiles, radar, intelligence and guidance systems for sale to defense prime contractors worldwide. For further information about Signal, please visit Signal's Web site at http://www.sigtech.com. 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. Statement This press release may contain "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. " within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, (i) trends in the federal defense budget and military reliance upon sophisticated electronic equipment, (ii) the impact upon the Company of loss of customers or sales, (iii) the impact and effects of competition and the Company's continued ability to compete in its markets, (iv) the suitability and adequacy of the Company's properties for its intended uses, (v) the incidence, materiality MATERIALITY. That which is important; that which is not merely of form but of substance. 2. When a bill for discovery has been filed, for example, the defendant must answer every material fact which is charged in the bill, and the test in these cases seems to , and frequency of fluctuations in the Company's operating results, (vi) the Company's optimism about improvements in its operating efficiencies, (vii) the impact on the Company and effects of the expansion of the Company's business in the wireless infrastructure market place, (viii) the Company's ability to successfully integrate acquisitions into its operations, (ix) the actual costs of site remediation associated with the Company's purchase of Eaton Corporation's Microwave Products Division, the actual amount of interest accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. in relation to those costs, management's decision to appeal to the Ninth Circuit Court of Appeals and the decision of that Court, as well as management's decision to pursue additional litigation, and (x) certain other statements identified or qualified by words such as "likely", "will", "suggests", "may", "would", "could", "should", "expects", "anticipates", "estimates", "plans", "projects", "believes", "is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about", or similar expressions (and variants of such words or expressions). Investors are cautioned that forward-looking statements are inherently uncertain. These forward-looking statements represent the best judgment of the Company as on the date of this press release, and the Company cautions readers not to place undue reliance on such statements. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties including, without limitation, risks associated with court proceedings and litigation, fluctuations in the Company's operating results, volume and timing of orders received, changes in the mix of products sold, competitive pricing pressure, the Company's ability to meet or renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. customer demands, the ability to anticipate changes in the market, the Company's ability to finance its operations on terms that are acceptable, the Company's ability to attract and retain qualified personnel including the Company's management, changes in the global economy, changes in regulatory processes, the dependence on certain key customers (including the U.S. government), the Company's ability to realize sufficient margins on sales of its products, the availability and timing of funding for the Company's current products and the development of future products. Signal Technology assumes no obligation to update the information included in this news release.
SIGNAL TECHNOLOGY CORPORATION
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
Quarter ended Year ended
December 31, December 31,
2000 1999 2000 1999
Net sales $ 27,971 $ 20,260 $ 98,487 $ 82,449
Cost of sales 18,701 12,866 66,582 56,215
Gross profit 9,270 7,394 31,905 26,234
Selling, general
and
administrative
expense 5,773 4,655 22,179 18,883
Research and
development
expense 1,502 402 4,266 1,786
Operating income 1,995 2,337 5,460 5,565
(1) Other expense,
net 8,903 -- 9,105 1,250
Interest expense
(income) (453) 22 177 368
Income (loss)
before income
taxes (6,455) 2,315 (3,822) 3,947
Income tax
expense
(benefit) (2,418) 731 (1,299) (529)
Net income (loss) $ (4,037) $ 1,584 $ (2,523) $ 4,476
Basic earnings
(loss) per share $ (0.41) $ 0.21 $ (0.30) $ 0.59
(2) Diluted
earnings (loss)
per share $ (0.41) $ 0.20 $ (0.30) $ 0.56
Basic weighted
average shares
outstanding 9,923 7,673 8,537 7,587
Diluted weighted
average shares
outstanding 9,923 8,065 8,537 7,986
(1) Includes $9.0 million charge for liabilities associated with Eaton
Corporation indemnification claim.
(2) Prior to $9.0 million charge for Eaton Corporation indemnification
claim, diluted EPS was $0.14 for the quarter and $0.32 for the year
ended December 31, 2000.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2000 1999
Assets:
Cash and cash equivalents $ 31,024 $ 3,571
Accounts receivable, net 19,136 13,299
Inventory 17,656 10,446
Deferred taxes 8,516 4,134
Refundable income taxes - 638
Other current assets 333 346
Total current assets 76,665 32,434
Property, plant and equipment, net 17,214 14,954
Intangible assets, net 7,562 9,365
Other assets 812 848
Total assets $ 102,253 $ 57,601
Liabilities and shareholders' equity:
Current maturities of long-term debt $ 707 $ 3,605
Accounts payable 7,402 3,292
Accrued liabilities 20,113 10,318
Customer advances 1,733 1,603
Total current liabilities 29,955 18,818
Deferred income taxes 1,134 1,524
Long-term debt, net 5,760 5,573
Shareholders' equity 65,404 31,686
Total liabilities and shareholders'
equity $ 102,253 $ 57,601
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