WEST CALDWELL, N.J., Nov. 13: -- Merrimac Industries, Inc.
(Amex: MRM) results for the third quarter and nine months of 1998
reflect increases in sales volume and nine months earnings
Third quarter 1998 sales of $5,121,000 increased 2.7% over sales in
the third quarter of the prior year of $4,984,000. Net income
decreased $102,000 or 29.1% to $248,000 for the third quarter of
1998 compared to 1997. Diluted net income per share was $.14, a
decrease of $.05 or 26.3%, compared to the diluted per share amount
of $.19 reported for the third quarter of the prior year on a similar
number of weighted average diluted common shares outstanding in
both years.
For the first nine months of 1998 sales of $16,487,000 increased
15.7% over prior year nine-month sales of $14,245,000. Net income
increased 7.8% to $1,084,000 compared to $1,006,000 reported in
the first nine months of 1997, and diluted net income per share
increased to $.59, up 3.5% compared to diluted net income per share
of $.57 reported in the first nine months of the prior year.
The diluted weighted average number of common shares outstanding
increased by 63,000 shares or 3.6% for the first nine months
compared to the first nine months of the prior year. The increase
resulted from common stock issued during the second half of 1997
and first half of 1998 from the exercise of stock options and the sale of
common stock from its treasury.
Chairman and CEO Mason N. Carter commented: "Technology
reinvestment exceeding $700,000 continues at a record pace more
than doubling from last year. Multi-Mix(TM) Microtechnology, a
proprietary 3-dimensional microwave packaging technology, has
recently appeared in important electronics industry trade publication
articles and is featured on the cover of the November issue of
Microwave Journal, a leading RF/Microwave industry publication.
Customer response to our new products has been extremely positive.
"Multi-Mix(TM) is a unique packaging technology that provides for the
integration of a variety of different types of functionality by combining
several components, creating an MMFM(TM) (Micro Multi-Function
Module), that provides customers with what they want, which is a 'total
integrated packaging solution'. It is based on a platform strategy that
provides predesigned modules that combine the benefits of standard
and custom design. During this development process, we have
emphasized the need for technology innovation, process excellence
and market focus. This successful effort provides us with an enabling
technology that meets and exceeds customer requirements.
"Multi-Mix(TM) adds tremendous capability and dimension for our key
account customers. Beyond our traditional components business we
are successfully involved with subassembly and subsystem
applications. This allows us to provide per unit value many times our
historic average. Multi-Mix(TM) is creating a new business model
establishing diversification into high growth commercial market
segments.
"Within our core product technology, we have been notified by the US
Patent Office that our patent application for a 15GHz bi-phase
modulator has been allowed and that we will be receiving a patent for
that design. This proprietary design, nicknamed the 'flatliner' for its
outstanding performance, has application in space and Ku band
frequency applications."
The Company entered the fourth quarter of 1998 with a backlog of
$6.4 million, a decrease of $3.7 million or 37% from the same time
last year. Major satellite and defense customers continued to defer
purchases as a result of delays in certain programs. Management of
the Company believes that many of the satellite constellation
programs that have been delayed may resume and translate into
orders during the remainder of 1998 and continue positively into
1999. Customer requests for design work are on the increase and
are currently under development utilizing the Company's proprietary
Multi-Mix(TM) Microtechnology. This technology provides greater per
unit content and enables the Company's entry into new markets for
increased order opportunities.
Because of the current weakness in orders, the Company is preparing
to layoff approximately 15% of its workforce and to offer early
retirement packages to certain employees during the fourth quarter of
1998. The Company plans to report a restructuring charge in the
fourth quarter of 1998 of approximately $200,000 before taxes for the
reduction in workforce and voluntary early retirements. The saving in
costs for future fiscal years from this restructuring should approximate
at least $800,000 annually, depending upon the number of employees
accepting early retirement. The Company further estimates that sales
will decline for the fourth quarter 1998, as a result of the decline in
backlog for the previous quarters, and it expects to report an operating
loss before the restructuring charge. Mr. Carter commented: "This
restructuring will allow for greater focus and emphasis on the growth
segments of our business. Management is taking appropriate action
to right-size the business given current market conditions."
The Board of Directors of Merrimac Industries, Inc. reaffirms the stock
repurchase program, whereby the Company has been authorized to
repurchase up to 100,000 shares, from time to time, depending on
market conditions.
Certain statements in this news release are forward-looking
statements based on current management expectations and are
subject to risks and uncertainties. Factors that could cause future
results to differ from these expectations include general economic and
industry conditions, competitive products and pricing pressures, risks
relating to governmental regulatory actions in communications and
defense programs, and inventory risks due to technological
innovation. Additional factors to which the Company's performance is
subject are described in the Company's reports filed from time to time
with the Securities and Exchange Commission.
Merrimac Industries, Inc., with locations in West Caldwell, NJ and San
Jose, Costa Rica, has approximately 160 co-workers in the design
and manufacture of components, micro-multifunction modules
(MMFM(TM)) and subsystems providing Total Integrated Packaging
Solutions for communications, defense and aerospace applications.
Merrimac (MRM) is listed on the American Stock Exchange.
Note: Merrimac Industries, Inc. news releases are available in fax form
by calling Company News On-Call. Dial 800-758-5804, ext. 567525.
These news releases are also available on the Internet at:
prnewswire.com.
Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
(Unaudited)
Quarter Ended
October 3 September 27
1998 1997
Net sales $5,121,000 $4,984,000
Gross profit 2,269,000 2,249,000
Selling, general and
administrative expenses 1,675,000 1,546,000
Research and development 282,000 162,000
Income before income taxes 349,000 564,000
Provision for income taxes 101,000 214,000
Net income 248,000 350,000
Net income per
common share -- basic $.14 $.21
Net income per
common share -- diluted $.14 $.19
Weighted average number
of shares outstanding
-- basic 1,783,000 1,694,000
Weighted average number of
shares outstanding
-- diluted 1,806,000 1,807,000
Nine Months Ended
October 3 September 27
1998 1997
Net sales $16,487,000 $14,245,000
Gross profit 7,386,000 6,534,000
Selling, general and
administrative expenses 5,033,000 4,650,000
Research and development 746,000 344,000
Income before income taxes 1,673,000 1,611,000
Provision for income taxes 589,000 605,000
Net income 1,084,000 1,006,000
Net income per
common share
-- basic $.62 $.60
Net income per
common share
-- diluted $.59 $.57
Weighted average number
of shares outstanding
-- basic 1,759,000 1,680,000
Weighted average number of
shares outstanding
-- diluted 1,831,000 1,768,000
Note: The basic and diluted weighted average number of shares
outstanding and net income per share information for all prior
reporting periods have been restated to reflect the effects of the 10%
stock dividend which became effective June 5, 1998.
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