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TOROTEL REPORTS CONTINUED ADVANCES IN REVENUES, EARNINGS FOR SECOND QUARTER, SIX MONTHS

           TOROTEL REPORTS CONTINUED ADVANCES IN REVENUES,
               EARNINGS FOR SECOND QUARTER, SIX MONTHS
    KANSAS CITY, Mo., Nov. 21 /PRNewswire/ -- Torotel, Inc. (AMEX: TTL), a leading manufacturer of magnetic components, today announced significant improvement in revenues and earnings for its second quarter and six months ended Oct. 31, 1991.  The company expects to duplicate this level of performance in its third quarter.
    Second Quarter Earnings Compared With Loss
    Net sales for the latest three months rose 26.6 percent to $2.7 million, compared with $2.1 million a year ago.  For the current quarter, earnings before income taxes and the cumulative effect of an accounting change rose to $243,000, compared with a loss of $130,000. Net earnings reached $235,000 or eight cents per share, a dramatic increase from last year's second quarter loss of $126,000, equal to five cents per share.  (The figures for the prior year have been restated as the result of an accounting method change that occurred in last year's third quarter.)
    Earnings Up 67 Percent For Six Months
    For the year-to-date, net sales increased 11.4 percent to $5.2 million from last year's $4.7 million.  Earnings before income taxes and the cumulative effect of an accounting change for the latest six months were $466,000, nearly 5.5-times the $86,000 reported at this time in fiscal 1991.  Net earnings for the first half were $450,000 or 16 cents per share, 67.3 percent higher than last year's first half at $269,000, or 10 cents per share.  (The prior-year figure, which also has been restated for the accounting change, includes an $186,000 or seven cents per share, cumulative effect of an accounting change.)
    Increased Manufacturing Efficiencies Improve Operating Results
    "We continue to see the results of programs implemented last year to improve operating efficiencies," explained Torotel President and Chief Executive Officer Alfred F. Marsh.  "These programs are supported by intensified cost controls and increased customer service.  While revenues rose 27 percent in the second quarter, cost of goods sold increased only 10 percent, which lead to a 67 percent increase in our second quarter gross profit.  For the first half of this year, revenues rose 11 percent and cost of goods sold were up only 1 percent.  This resulted in a 34 percent increase in gross profit, to $2.0 million for the six months.  As a result, gross margins made further progress toward our 40 percent goal; reaching 38.8 percent for the second quarter, compared with 29.3 percent for last year's three months and 38.1 percent for the six months, versus 31.7 percent at this time in 1990."
    Earnings Advances Strengthen Financial Condition
    Torotel's financial condition continued to reflect the benefit of advances in earnings.  Cash flow generated in the last 12 months reached $578,000, up 18 percent from the amount in the 12 months that ended on Oct. 31, 1990.  Working capital saw a 5.0 percent rise since the end of fiscal 1991 (on April 30), to $3.9 million.  The company's current ratio improved to 3.5-to-1 from 3.1-to-1 on April 30, 1991.  A 21.1 percent increase in stockholders' equity, to $2.7 million, helped improve the debt-to-equity ratio to 1.4-to-1 from 1.8-to-1 at the end of fiscal 1991.
    Softness In Defense Electronics Backlog In Second Quarter
    "As occasionally happens, contract awards from the U.S. Department of Defense were delayed," Marsh said.  "This has caused a 25 percent decrease in our backlog for the end of the quarter, to $6.6 million from $8.8 million at the beginning of fiscal 1992.  While order activity has improved in the first few weeks of our third quarter, the company anticipates only $10 million in sales bookings for the fiscal year to end April 30, 1992, down from $12 million last year.  We expect to end the third quarter on Jan. 31, 1992, with a sales backlog near $7.5 million.
    "We have intensified our marketing efforts in the military and commercial markets," Marsh continued.  "A key edge Torotel has is that few are able to match the low prices we can give customers because of our operating efficiencies.  This effort already is proving successful, with orders from new customers being booked in our third quarter.  We also are pursuing acquisitions in and outside of the magnetics industry."
    Third Quarter Should Parallel Second
    Commenting on the outlook for Torotel's third quarter, Marsh said, "We remain focused on the goal we set for the company this year: net sales of $10 million and net earnings between $770,000 and $870,000, or 28 to 32 cents per share.  Third quarter performance is expected to mirror what occurred during second quarter: revenues in the $2.6 million range and earnings between $220,000 to $250,000, or 8 to 9 cents per share.  This would represent a significant improvement over last year's third quarter net earnings of $68,000, or three cents per share, on net sales of $2.5 million."
    Torotel, Inc. specializes in the design and high-volume manufacture of a broad line of precision magnetic components used in military and industrial electronic systems.  These components, which include transformers, chokes and toroidal coils, are sold to original equipment manufacturers for use in such programs as avionic equipment, marine communication and navigation, telecommunications and weapons fire control systems.  The company has a customer base of more than 400 companies and substantially all of its sales are to defense contractors.
    For further information on Torotel as an investment, contact Alfred F. Marsh at 1-800-TALKSTK.  For further information on Torotel by FAX dial 1-800-PRO-INFO, ext. 155.
                               TOROTEL INC.
                             Operating Data
              (Unaudited, dollars in thousands, except per share)
    Period ended                 Three Months       Six Months
      Oct. 31                   1991     1990      1991    1990
    Net sales                  $2,691   $2,126    $5,252  $4,714
    Gross profit                1,045      624     2,002   1,498
    Earnings (loss)
     from operations              309      (44)      601     239
    Earnings before income taxes
     and cumulative effect of
     accounting change            243     (130)      466      86
    Cumulative effect of
     accounting change             --       --        --     186
    Net Earnings (loss)          $235     (126)     $450    $269
    Earnings (loss) per share:
    Earnings (loss) before
     cumulative effect           $.08    $(.05)     $.16    $.03
    Cumulative effect              --       --        --     .07
    Total                        $.08    $(.05)     $.16    $.10
    Weighted average common
    and common equivalent
    shares outstanding          2,886    2,722     2,830   2,753
    The amounts shown for the three and six months ended Oct. 31, 1990 differ from those reported originally due to the change in method of accounting for government contracts, which was adopted during the third quarter of the fiscal year ended April 30, 1991.
                               TOROTEL INC.
                            Balance Sheet Data
                    (Unaudited, dollars in thousands)
                       Oct. 31, 1991    April 30, 1991
    Working capital        $3,890          $3,703
    Current ratio             3.5             3.1
    Total assets           $6,312          $6,231
    Short-term debt        $  124          $  130
    Long-term debt         $2,066          $2,274
    Total liabilities      $3,636          $4,022
    Debt-to-Equity Ratio    1.4:1           1.8:1
    Stockholders' equity   $2,676          $2,209
    -0-         11/21/91
    /CONTACT:  Al Marsh, president of Torotel, 816-761-6314; Lynne Franklin or Linda Eitel, 312-266-7800 or Regina Ryan, 212-661-8030, all of Financial Relations Board/
    (TTL) CO:  Torotel Inc. ST:  Missouri IN: SU:  ERN SM -- NY057 -- 5901 11/21/91 12:34 EST
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Date:Nov 21, 1991
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