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Friday September 17, 12:27 pm Eastern Time
Company Press Release
SOURCE: Innovex, Inc.
Innovex Completes Business Transition by Exiting Lead Wire Business, Becomes One of the World's Leading Flexible Circuit Companies
Company Plans to Incur Charges Up to $2.6 Million During Its Current Quarter.
HOPKINS, Minn., Sept. 17 /PRNewswire/ -- Innovex, Inc. (Nasdaq: INVX - news) today reported that it expects to record up to a $2.6 million charge in its fiscal fourth quarter ending September 30, 1999. The charge is related to excess equipment and inventory resulting from a reduction in demand for its lead wire assembly products. Innovex will exit its fourth quarter with less than 5% of its revenue being generated by lead wire assemblies, down from 75% in the prior fiscal year. Innovex's pre-acquisition flexible circuit based business continues to grow rapidly, increasing 130% over prior year levels.
Commenting on the transition, William P. Murnane, Innovex, Inc. President and Chief Operating Officer stated, ''Innovex continues to successfully execute its strategy to replace its lead wire business with a line of rapidly growing flexible circuit products. Although we are disappointed that the decline of the lead wire business occurred more rapidly than anticipated, we are eager to put this dying business behind us and focus on integrating the ADFlex acquisition and managing the explosive growth of our flexible circuit business.''
Earnings per share for the fiscal fourth quarter are expected to be between $0.10 and $0.14 per share prior to the charge. The lower than expected lead wire assembly revenue generated lower margins due to the high level of lead wire assembly fixed costs. The growth of the flexible circuit business during the quarter was limited due to capacity constraints. Additional high-end flexible circuit capacity is being added and began coming on line in September. Costs and efficiencies related to increasing the flexible circuit capacity will impact the quarter's results.
Eight weeks of operating results related to the ADFlex Solutions, Inc. merger will be included in Innovex's fourth quarter. These results are projected to be slightly dilutive for the quarter due to lower than expected revenues from several hard disk drive and telecommunication customers.
''We continue to expect ongoing operations from the ADFlex acquisition to be accretive to earnings in fiscal 2000. However, we will incur a charge to earnings early in fiscal 2000 related to moving some secondary operations from our existing Mexico facility into our new factory in northern Thailand. This move is necessary to lower our operating cost structure and provide better service to our Asia-based customers,'' said Murnane.
Innovex, Inc. is one of the world's leading suppliers of flexible circuit-based interconnect solutions to the computer, computer peripheral, communication, medical and other industries. Applications for flex-based interconnects include cellular telephones, hard disk drives, other storage systems, high-end consumer products, notebook computers, pagers and personal communications systems. Innovex is known worldwide for its excellence in advanced engineering and low cost manufacturing.
Except for historical information contained herein, the matters discussed in this release are forward looking statements that involve risks and uncertainties, including the timely availability and acceptance of new products, the impact of competitive products and pricing, and other risks detailed from time to time in both companies' SEC reports, including Innovex, Inc.'s report on Form 10K for the year ended September 30, 1998, and Form 10Q for the quarter ended June 30, 1999, and ADFlex Solutions, Inc.'s Form 10K for the year ended December 27, 1998, Form 10Q for the quarter ended June 30, 1999, and other Securities and Exchange Commission filings.
SOURCE: Innovex, Inc.
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