Signal Technology Exceeds First-Quarter Expectations and Raises 2002 Financial Guidance
DANVERS, Mass.--(BUSINESS WIRE)--April 25, 2002--
Company Reports Solid Defense Electronics Sales; Trims Loss with
Further Cost Reductions
Signal Technology Corporation (Nasdaq:STCO), a leading provider
of electronics and power management products for wireless
communications in the defense, space and commercial markets, today
reported its financial results for the first quarter ended March 31,
2002.
Net sales for the first quarter were $19.9 million, compared with
$22.8 million in the first quarter of 2001. Signal reported a net loss
of $977,000 for the first quarter of 2002, or $(0.09) per share,
compared with net income of $170,000, or $0.02 per diluted share, for
the same period last year. The first-quarter loss includes income of
$750,000, or $0.07 per share, as planned, from the cumulative effect
of a change in accounting principle from the partial adoption of SFAS
142 relating to goodwill.
Comments on First-quarter Results:
"Signal Technology's bottom-line performance exceeded our
expectations in the first quarter," said Chairman and Chief Executive
Officer George Lombard. "This reflected a variety of ongoing
belt-tightening efforts that reduced SG&A expenses, as well as R&D
plan refinements as we proceed with our integrated RF module
initiative. In addition, our defense business continues to generate
strong gross margins, as does the cellular base station segment of our
commercial wireless business."
"Despite the delay in U.S. military appropriations, Signal
Technology's defense business was stronger than we had expected in the
first quarter," Lombard said. "We continued to see robust shipments of
products for the mainstay aircraft, missile, radar and electronic
warfare platforms on which we have participated for many years. In
addition, we are beginning to ship products for some of the U.S.
military's new transformational platforms such as the Global Hawk UAV,
the F-22 Raptor, standoff precision-guided weapons and missile
defense."
"Several first-quarter developments in our defense business bode
well for the second half of 2002," said Lombard. "We were awarded six
military contracts for high-power transmitters, power supplies and
electronics with a total value of $7.6 million. The largest of these
awards, valued at $2.6 million, was for the sophisticated high-power
transmitters we recently designed for the U.S. National Missile
Defense Program."
Signal Technology received a $1.6 million follow-on contract that
advances to full-rate production its recent power supply design for
the PAC-3 Patriot Advanced Capability tactical defense missile. The
Company was also awarded contracts valued at a total of $2.7 million
for power supplies and electronics on the Sparrow missile and Tomahawk
cruise missile platforms. Contracts awarded during the first quarter
also included an initial production award valued at $250,000 for power
supply subsystems for the F-22 Raptor fighter aircraft. "In addition
to these new bookings, our discussions and quoting activity with major
defense prime contractors increased substantially as compared with the
past few quarters," Lombard said.
Lombard continued, "In our commercial wireless business, we
continued to make good progress in our initiative to develop
semiconductor RF module solutions for wireless phones and PDAs
(personal digital assistants). Wafers containing our first HBT
(heterojunction bipolar transistor) RFICs (radio frequency integrated
circuits) were completed, and the RFICs are currently being fabricated
into modules. Engineering evaluation will be completed in a few weeks,
followed by production refinements and customer sampling. This should
keep us on schedule toward reporting design wins during the third
quarter of 2002 and commencing volume production in 2003."
"As we had expected, our sales into the mobile wireless
infrastructure market were solid in the first quarter," Lombard said.
"We shipped $800,000 of a $1 million order for our advanced switched
power combiners to a leading global manufacturer of cellular/PCS base
station infrastructure products. This segment of our business
continues to exhibit good momentum in the second quarter. Shortly
after the first quarter closed, we were awarded a $1.5 million
contract for medium capacity fully integrated millimeter wave
transceivers that meet both ETSI and FCC standards. These transceivers
have been designed for point-to-point digital radio applications for
2.5G deployments. We expect to begin shipping this order in the fourth
quarter of 2002, with deliveries continuing through the fourth quarter
of 2003."
"The outlook for Signal Technology's defense business reflects
actual and anticipated increases in defense spending," Lombard said.
"Given this outlook, we have restructured our organization to reflect
increased focus on the defense business. John Cotumaccio has been
named president and chief operating officer, Signal Defense Group.
John has made outstanding contributions to Signal Technology's defense
product development and business performance as our senior vice
president, operations, and as president of our Keltec and Olektron
operations prior to that. Dr. James V. DiLorenzo will continue as the
Company's president, while also serving as president and chief
operating officer of Signal Wireless Group, reflecting his expertise
and accomplishments as the leader of our commercial wireless
initiative. Jim will also provide technical support for several new
defense-related programs. We expect to report further progress in this
organizational realignment going forward."
Business Outlook
"Signal Technology is moving ahead on its plan to grow its defense
business by extending its technology leadership in power management,
transmitters and microwave components and subsystems," said Lombard.
"Demand for these products should continue to rise in line with
ongoing U.S. Department of Defense (DoD) initiatives related to
modernization of existing platforms. Despite the possibility of
continued slippage in some contract awards due to the recent U.S.
defense budget delay, the high level of quoting activity we are
currently seeing suggests that our defense electronics bookings and
sales should rise during the second quarter of 2002 and for the full
year. Longer term, we expect our product roadmap to position us to
capitalize on the DoD's increasing focus on electronic warfare and
intelligence systems, precision guided munitions and missile defense,
as well as emerging homeland security initiatives."
"Our commercial wireless business will continue to feel the
effects of the weakness in telecom industry capital spending in 2002,"
Lombard said. "Nonetheless, our switched power combiner products
fulfill a demonstrated need in what appears to be one of the stronger
niches within this overall market. This creates the potential for a
continuation of the solid sales these products generated during the
first quarter. Our first-quarter win in integrated point-to-point
transceivers positions us well for further contract wins as the fixed
wireless market resumes its growth. In addition, we are optimistic
about the potential of our mobile appliance semiconductor initiative,
which is making encouraging progress and is anticipated to begin
generating revenues in 2003."
Financial Guidance
Based on the current market conditions, Signal Technology is
providing the following financial guidance:
Second-quarter 2002 guidance:
-- Total revenues of approximately $20 million to $23 million.
-- Net loss per share of approximately $0.17 to $0.20.
Signal is raising its guidance for full year 2002:
-- Total revenues of approximately $92 million to $94 million.
-- R & D spending directed at opportunities in both the defense
and mobile wireless markets at approximately $9.0 million.
-- Net loss per share of approximately $0.38 to $0.42. |
