Signal Technology Reports Fourth-Quarter and Year-End Financial Results
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), a leading provider of electronic products for wireless communications 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 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, or $0.14 per diluted 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, 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 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 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 an indemnification 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 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," 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," 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) 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 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 the emerging market for fixed wireless broadband access with 3.5 GHz customer premise radio equipment," Lombard said. "Multipoint wireless, or `MMDS,' has the potential to dominate the market for last-mile broadband access for homes and small businesses where broadband cable or DSL 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 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. Development of this high-power transmitter is slated for the F-15, F-16, and other fighter aircraft 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, 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 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, 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 sigtech.com. |
