WEX 2.10/2.30 Amex...3m outstanding shares 52wh 2.89:
PR NEWSWIRE) Winland Electronics Earns $0.12/Share in Second Quarter
Winland Electronics Earns $0.12/Share in Second Quarter
MANKATO, Minn., July 29 /PRNewswire-FirstCall/ --
Winland Electronics, Inc. (Amex: WEX) today reported net income of
$351,009 or $0.12 per basic and diluted share for the second quarter ended
June 30, 2002 compared to a net loss of $253,955 or ($0.09) per basic and
diluted share for the same period in 2001. For the six months ended June 30,
2002, net income was $632,082 or $0.21 per basic and diluted share compared to
a net loss of $383,510 or ($0.13) per basic and diluted share for the same
period in 2001.
Winland recorded net sales of $5,111,078 in the second quarter, a 33.6%
increase over net sales of $3,824,474 in the second quarter last year. For
the six months ended June 30, 2002, net sales increased 12.5% to $9,396,725
from $8,355,581 reported for the same period last year.
Winland's CEO, Lorin Krueger, stated, "We are pleased that one of
Winland's primary initiatives -- to build a path that leads toward our number
one goal of consistent profitability for the Company, is showing increasingly
satisfactory results."
EARNINGS
The improvement in net income for the first six months of 2002 was
primarily due to increased gross profit margins based on a more profitable
sales mix and the Company's ability to maintain lower direct and variable
indirect expenses as sales increased from the latter part of 2001 into the
first six months of 2002. Profitability also increased due to overall
reductions in operating expenses and interest expense.
Krueger noted, "These earnings results are consistent with the objectives
of initiatives we implemented and outlined to shareholders last year that were
designed to improve margins, reduce expenses, and lower debt."
NET SALES
The increase in sales for both the second quarter and six months ended
June 30, 2002 was primarily the result of higher sales to original equipment
manufacture (OEM) customers. Sales of Winland's proprietary products, which
include security/industrial sensors, DC motor controls and utility controls,
declined during both the second quarter and six months ended June 30, 2002,
compared to the same periods last year.
GROSS PROFIT
Gross profit increased 85.8% to $1,195,639 or 23.4% of net sales for the
second quarter ended June 30, 2002, compared to $643,403 or 16.8% of net sales
for the second quarter last year. For the first six months of 2002, gross
profit was $2,281,207 or 24.3% of net sales, an increase from $1,342,450 or
16.1% for the same period in 2001. The increase in gross profit for the
second quarter ended June 30, 2002 was primarily due to a more profitable
sales mix and Winland's ability to maintain lower direct and variable indirect
expenses as sales increased from the latter part of 2001 into the first and
second quarter of 2002. For the first six months of 2002, the decrease in
cost of goods sold, as a percentage of sales, was primarily due to decreased
salaries and employee related expenses and lower information technology and
facility expenses, offset in part by increased, warranty and obsolescence
reserves, commissions expense, accrued employee incentive plan expense and the
administrative expenses related to the establishment of the new Arrow
Electronics, Inc. "In Plant Store" (IPS). Inventory in the IPS, although
located on Company premises, is owned and managed by Arrow Electronics, Inc.
and is invoiced to the Company when first utilized by the Company in
manufacturing. The Company expects the use of the IPS to reduce the shipping
and carrying costs of inventory.
Mr. Krueger added, "These substantial improvements in gross profit
performance reflect the high level of energy and attention our entire staff
has directed at strategic initiatives related to sales, cost reductions, and
managing relationships with our customers. This level of gross margin
improvement, together with reduced operating expenses, resulted in operating
income of 9.8% of net sales for the second quarter 2002 compared to negative
operating income in the second quarter last year; and 9.5% for the first six
months of 2002 compared to negative operating income in the same period last
year."
OPERATING EXPENSES
General and administrative expense was $321,752 or 6.3% of net sales for
the second quarter this year, compared to $529,360 or 13.8% of net sales for
the same period last year. For the first six months of 2002, general and
administrative expense was $624,994 or 6.7% of net sales, compared to $847,991
or 10.1% of net sales for the same period in 2001. The decrease in general
and administrative expense for both periods this year was primarily due to
reductions in salary expense, executive severance expense for the former CEO,
leased vehicle expense and professional fees, offset in part by increased
employee incentive plan accruals, and expenses for investor relations and
directors and officers insurance premiums.
Sales and marketing expense (including project management) was $209,905 or
4.1% of net sales for the second quarter this year compared to $182,221 or
4.8% of net sales for the second quarter last year. For the first six months
of 2002 sales and marketing expense was $445,942 or 4.7% of net sales,
compared to $351,548 or 4.2% of net sales for the same period in 2001. The
increase in sales and marketing expense for both periods this year is
primarily due to increased salaries and employee related costs due to
reassignment of certain personnel and the addition of a Vice President of
Sales. Also, the Company incurred increased expense related to employee
incentive plan accruals, offset in part by decreased leased vehicle expenses,
information technology expenses and promotional expenses.
Research and development expense was $165,687 or 3.2% of net sales for the
second quarter this, compared to $207,937 or 5.4% of net sales for second
quarter last year. Research and development expense for the first six months
of 2002 was $314,468 or 3.3% of net sales, compared to $462,277 or 5.5% of net
sales for the same period in 2001. Research and development expense includes
the development of new Company products as well as design services and support
to OEM customers. The decline in research and development expense for both
periods this year compared to 2001 was primarily due to employee attrition and
reassignment without replacement. Accordingly, total salaries and related
expenses decreased, as well as decreased facility, information technology and
leased vehicle expenses, offset in part by employee incentive plan accruals.
INTEREST EXPENSE
Interest expense was $64,365 or 1.3% of net sales and $143,133 or 1.5% of
net sales for the second quarter and six months ended June 30, 2002, compared
to $126,459 or 3.3% of net sales and $282,400 or 3.4% of net sales for the
same periods in 2001, respectively. The decrease in interest expense for the
second quarter and first six months of 2002 was due to a reduction in short-
term and long-term debt as well as lower interest rates on short-term debt.
During the first six months of 2002, the Company paid down $1,085,501, or 55%,
on its line-of-credit and paid down $269,744 of long-term debt. All of the
cash used to reduce debt was generated from the Company's operating
activities.
CAUTIONARY STATEMENTS
Certain statements contained in this press release and other written and
oral statements made from time to time by the Company do not relate strictly
to historical or current facts. As such, they are considered forward-looking
statements, which provide current expectations or forecasts of future events.
The statements included in this release with respect to increasingly
satisfactory results in efforts to achieve consistent profitability and
expected reductions in inventory costs through the use of IPS are forward
looking statements. These statements involve a variety of risks and
uncertainties, known and unknown, including, among others, the risks that (i)
one or more significant customers may elect to take their business elsewhere,
(ii) the new products of our clients will not achieve the projected market
acceptance; (iii) unanticipated problems in design, manufacture or performance
of the products will arise; (iv) costs of production will exceed current
estimates, and (v) the IPS system may not perform as well as currently
anticipated. Consequently, no forward-looking statement can be guaranteed and
actual results may vary materially.
Winland Electronics, based in Mankato, MN, designs and manufactures custom
electronic control products and systems, as well as proprietary products for
the security/industrial marketplace.
WINLAND ELECTRONICS, INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2002 and 2001
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Net sales $5,111,078 $3,824,474 $9,396,725 $8,355,581
Cost of sales 3,915,439 3,181,071 7,115,518 7,013,131
Gross profit 1,195,639 643,403 2,281,207 1,342,450
Operating expenses:
General and
administrative 321,752 529,360 624,994 847,991
Research and development 165,687 207,937 314,468 462,277
Sales and marketing 209,905 182,221 445,942 351,548
697,344 919,518 1,385,404 1,661,816
Operating income
(loss) 498,295 (276,115) 895,803 (319,366)
Other income (expenses):
Interest expense (64,365) (126,459) (143,133) (282,400)
Other, net (7,921) 11,619 3,412 12,256
(72,286) (114,840) (139,721) (270,144)
Income (loss) before
income taxes 426,009 (390,955) 756,082 (589,510)
Income tax (expense)
benefit (75,000) 137,000 (124,000) 206,000
Net income (loss) $351,009 $(253,955) $632,082 $(383,510)
Earnings (loss) per share
data:
Basic $0.12 $(0.09) $0.21 $(0.13)
Diluted 0.12 (0.09) 0.21 (0.13)
Weighted-average number of
common shares
outstanding:
Basic 2,961,030 2,952,352 2,960,439 2,952,333
Diluted 3,031,438 2,952,352 3,007,096 2,952,333 |
