Artesyn Fourth Quarter Results Match Expectations
Enters 2002 With Enhanced Financial and Competitive Position
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BOCA RATON, Fla.--(BUSINESS WIRE)--Jan. 22, 2002--Artesyn Technologies, Inc. (Nasdaq:ATSN) today reported financial results for the fourth quarter and full year ended December 28, 2001. Revenue for the quarter totaled $107.4 million, down from $183.6 million a year ago. The company incurred a cash loss of $(0.10) per diluted share for the quarter, excluding charges and a one-time gain. This compares to cash earnings of $0.27 per diluted share in 2000. For the full year, sales totaled $494.0 million with a cash loss of $(0.52) per diluted share, excluding charges and the one-time gain. The results were in line with analyst expectations.
Total orders during the quarter rose to $116.0 million, the highest level of the year. The book-to-bill ratio also improved to 1.08, with a total quarter ending backlog of $92.4 million.
``The initial signs of stabilization that we saw during the third quarter continued in the fourth, as both orders and backlog strengthened,'' commented Artesyn's President and CEO, Joseph M. O'Donnell. ``The degree of stability, however, varies by end market, with the storage, server and wireless markets slightly ahead of the cycle. Although revenues were relatively flat with the third quarter, we continued to realize the benefits of our cost-cutting efforts. The increase in gross margin, combined with lower operating expenses, allowed us to significantly improve bottom line performance from the third to the fourth quarter.''
As a result of the sale of Artesyn's repair and logistics business, the company realized a pre-tax operating gain of $31.3 million during the quarter. This business had net sales of $6.9 million in the quarter and $45.8 million for the full year. In addition, a previously announced pre-tax restructuring charge of $2.7 million was recorded in the fourth quarter relating to ongoing restructuring and facility consolidations. Artesyn expects to incur approximately $1.0 million in additional charges related to the restructuring plan in the first quarter of 2002. Including the impact of charges and a one-time gain, the company's cash earnings were $0.35 per diluted share in the fourth quarter and a cash loss of $(0.62) per diluted share for the full year. Net income for the quarter was $11.5 million, with a loss of $31.8 million for the year.
Positioned for Market Improvement
During the year, the company initiated a major restructuring of global operations. Approximately 3,600 positions were eliminated, while several manufacturing and operating facilities were consolidated, and production transferred to the company's low cost plants. These and other actions were designed to improve Artesyn's operational focus, financial position and competitive standing, better positioning the company for future growth.
``Our objective has always been to emerge from this slowdown as a much stronger competitor,'' O'Donnell continued. ``During the year, we launched several new high efficiency DC/DC products and AC/DC front-ends that have positioned us a leading provider of products for distributed power architectures. This is particularly true in the area of point of load products, where we are a leader in powering high-end 32 Bit processors and have design wins for next generation 64 Bit processors. Prospects for future growth improved in 2001, as we were awarded a total of 91 project designs and added new business relationships with both IBM and EMC. I feel that we are well-positioned to benefit from the eventual pickup in end market demand.''
``I am also pleased with the progress we made in the second half of the year in improving our financial position. Our cost-cutting initiatives are projected to yield savings of over $50 million per year, and our focus on cash management has significantly improved the balance sheet. During the fourth quarter, we were able to double our stated target and reduced inventory levels by over $26 million. This is a $55 million reduction from peak levels in the first quarter of this year. The cash position has also improved from approximately $20 million in the first quarter to over $54 million at the end of the year. Last week's announcement of the $50 million strategic investment has pushed the cash balance above $70 million, while reducing senior bank debt to $70 million and providing us with a strong strategic partner to explore future business opportunities.''
Business Outlook
``While we have seen some signs of stabilization, most of our customers are not expecting any meaningful recovery until the second half of the year, and we are, therefore, remaining cautious in our outlook. For the first half of the year, we would expect revenue from our continuing businesses to be flat and grow modestly throughout the rest of the year. Reduced costs should result in improved bottom line performance sequentially, and we anticipate Artesyn will return to profitability in the second half of the year,'' concluded O'Donnell.
Investors will have the opportunity to listen to management's discussion of this release in a conference call to be held on January 22, 2002 at 8:30 a.m. Eastern time either by calling (800) 711-4000 (passcode: O'Donnell) or over the Internet at artesyn.com. To listen to the live call, please go to the web site at least 15 minutes early to register, download and install any necessary audio software. The web cast will be available for replay immediately following the teleconference. |
