from 10q filed today:
COMPARISON OF THE THREE MONTH PERIODS ENDING MARCH 31, 2000 WITH MARCH 31, 1999.
Net sales for the quarter ending March 31, 2000 increased to $8,348,000
from $6,809,000 for the same period last year, an increase of 22.6% or
$1,539,000. The growth is primarily due to a recent industry wide increase in
demand for discrete semiconductors. The sales increase was also partially due to
an increase in export sales to $718,000 from $397,000, an increase of 80.9% or
$321,000. The average unit selling price decreased to 2.2 cents for the current
period from 2.9 cents during the same period last year mainly due to an increase
in passive components sales which typically have a lower average selling price .
While the average unit selling price decreased, an increase in gross profit
margins to 30.7% from 29.9% for the comparable prior period contributed to the
overall net sales increase.
Cost of goods sold for the current period ending March 31, 2000
increased to $5,786,000 from $4,775,000 for the comparable prior period, an
increase of 21.2% or $1,011,000. Cost of goods sold increased primarily as a
result of the increase in the number of units sold. Gross profit increased by
$528,000 to $2,562,000 for the current period ending March 31, 2000 from
$2,034,000 for the comparable prior period.
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Selling, general and administrative expenses increased by $235,000 or
16.9% for the current period ending March 31, 2000 compared to the same period
of 1999. These costs, as a percentage of net sales, were 19.5% for the three
months ended March 31, 2000 and 20.4% for the three months ended March 31, 1999.
The increase is primarily attributable to increased payroll and new operating
costs incurred from opening our three new sales offices in the United States
during the fourth quarter of 1999 and additional selling, general and
administrative expenses from our subsidiary in Mexico. Also, contributing to the
increase are additional expenses related to the purchase of our new warehouse
and headquarters. At the end of June, 1999, we purchased our new facilities for
$3.3 million which increased depreciation and maintenance fees. There was no
such purchase or related depreciation during the first quarter of last year.
Operating earnings increased by $293,000 or 45.4% between the three
month period ending March 31, 2000 and 1999, and increased as a percentage of
net sales to 11.2% from 9.5%. Operating earnings increased primarily due to
increased net sales.
Interest expense, net of interest income for the current period ending
March 31, 2000 decreased by $19,000 compared to the same period last year. The
decrease is due to decreased borrowings as smaller purchases of inventory were
made during the current quarter as compared to the same quarter last year.
Additionally, the decrease in borrowings were partially offset by higher
interest rates during the current quarter compared to the same period last year.
Income taxes were $311,000 in the current period ending March 31, 2000,
representing an effective tax rate of 41.6%, as compared to $185,000 for the
same period in 1999, an effective tax rate of 41.2%.
Net earnings were $437,000 for the current period ending March 31, 2000
as compared with net earnings of $264,000 for the same period last year, an
increase of $173,000 or 65.5% for the reasons discussed above. Net earnings as a
percentage of net sales increased to 5.2% from 3.9%.
SUPPLY AND DEMAND ISSUES
Since 1996, the demand for discrete semiconductors in the U.S. market
had continued to decrease through the middle of 1999. During 1999, our focus was
to maintain or gradually reduce our inventory while keeping adequate stock to
accommodate our future growth. During the first quarter of 2000, demand for
discrete semiconductors has increased with recent shortages creating significant
price increases. We believe that with $27.9 million of inventory on hand as of
March 31, 2000, we can help customers absorb some of the price increases and
still benefit from increasing profit margins. |
