Friday November 7 8:55 AM EST
Company Press Release
DDL Electronics Reports Profitable First Quarter
Settlement Reached With Century Electronics Manufacturing
NEWBURY PARK, Calif.--(BUSINESS WIRE)--Nov. 7, 1997--DDL Electronics Inc. (NYSE:DDL) Friday announced
results for its first quarter ended Sept. 30, 1997.
Revenues were $12,605,000, an increase of 27 percent over revenues of $9,895,000 for the first quarter of last year. Net
income for the latest quarter was $129,000, or 1 cent per share, compared with a net loss of $725,000, or 3 cents per share,
in last year's first quarter.
Earnings before interest, income taxes, depreciation and amortization (EBITDA) was $930,000 in the latest quarter,
compared with $304,000 in the first quarter of last year.
Gregory L. Horton, president and CEO, commented: ''Things are looking up at DDL! The turnaround efforts implemented in
the last 18 months have resulted in the first annual operating profit in nearly a decade, net income in the latest quarter, and
three consecutive quarters of operating profit.
''Our continued operating improvement, and the pending acquisition of Jolt Technology in Florida, position the company very
well in the rapidly growing electronic manufacturing services industry.''
In another positive development, this week DDL and Century Electronics Manufacturing Inc. entered into a settlement
agreement which generally releases and resolves all claims between them. As previously reported, DDL had initiated legal
action against Century in September.
As a result of the settlement agreement, all pending litigation will be dismissed. As a part of the settlement agreement, DDL
received a small equity interest in Century. The companies look forward to an amicable relationship in the future.
DDL Electronics, with headquarters in Newbury Park, provides integrated design and electronic manufacturing services
(EMS) to original equipment manufacturers in the instrumentation, communications, computer, medical and aerospace
industries. The company's EMS operations are located in Southern California and Northern Ireland.
DDL's subsidiary, SMTEK, built electronics assemblies that were on board JPL's Pathfinder which successfully landed on
Mars. The company also fabricates multilayer printed circuit boards (PCBs) in its subsidiary, Irlandus Circuits Ltd., located in
Northern Ireland.
Certain statements made above are forward-looking in nature and reflect DDL's current expectations and anticipated future
plans. Such statements involve various risks and uncertainties that could cause actual results to differ materially from those
forecast in the statements. Factors that might cause such differences would include, without limitation, the factors described as
''Risk Factors'' in the company's registration statement on Form S-3 (No. 333-31349) on file with the Securities and
Exchange Commission.
DDL ELECTRONICS INC.
Consolidated Statement of Operations
(In thousands except per-share amounts)
Three months ended Sept. 30,
1997 1996
(Unaudited)
Revenues $ 12,605 $ 9,895
Cost of goods sold 10,777 8,799
Gross profit 1,828 1,096
Operating expenses:
Administrative and selling 1,312 1,141
Goodwill amortization 60(a) 317
1,372 1,458
Operating income (loss) 456 (362)
Interest expense (213) (244)
Debt issue cost amortization -- (124)
Other income (expense), net (7) 5
Income (loss) before income taxes 236 (725)
Provision for income taxes (107)(b) --
Net income (loss) $ 129 $ (725)
Earnings (loss) per share $ .01 $ (.03)
Average shares (in 000s) 24,724 23,017
Supplemental information:
Earnings before interest, income
taxes, depreciation and
amortization (EBITDA) $ 930 $ 304
(a) During the quarter ended Sept. 30, 1997, the company revised its
goodwill amortization period from five years to 20 years. This
action was taken after the company conducted a study which
indicated that five years significantly underestimates the
period of benefit that will be realized from the SMTEK
acquisition. This change in accounting estimate, which was
applied prospectively, had the effect of increasing net income
for the quarter ended Sept. 30, 1997, by $257,000 or 1 cent per
share.
(b) Pursuant to quasi-reorganization accounting, as the portion of
loss carryforwards and deferred tax benefits originating prior
to the June 27, 1997, quasi-reorganization are utilized, the
corresponding tax effect ($107,000 for the quarter ended Sept.
30, 1997) is credited to paid-in capital instead of being
treated as a reduction of the provision for income taxes.
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DDL ELECTRONICS INC.
Consolidated Balance Sheet
(In thousands)
Sept. 30, June 27,
1997 1997
(Unaudited)
Current assets:
Cash and cash equivalents $ 563 $ 4,718(c)
Accounts receivable, net 7,910 9,198
Costs and estimated earnings in
excess of billings on uncompleted
contracts 3,568 3,161
Inventories, net 3,502 3,211
Prepaid expenses and deposits 255 132
Total current assets 15,798 20,420
Property, plant and equipment, net 6,498 6,790
Goodwill, net 4,379 4,439
Other assets 233 231
$26,908 $31,880
Current liabilities:
Bank lines of credit payable $ 2,663 $ 1,378
Current portion of long-term debt 820 4,167(c)
Accounts payable 6,663 9,084
Other current liabilities 3,046 3,466(c)
Total current liabilities 13,192 18,095
Long-term debt 7,607 7,820
Stockholders' equity:
Paid-in capital 6,773 6,656(d)
Retained earnings since June 27, 1997 129 --(d)
Foreign currency translation
adjustment (793) (691)
Total stockholders' equity 6,109 5,965
$26,908 $31,880
(c) On June 30, 1997, which is subsequent to the fiscal year ended
June 27, 1997, the company borrowed $2 million under an
8 percent promissory note due Feb. 1, 1999. Also on June 30,
1997, DDL paid off its 10 percent senior secured notes in the
aggregate principal amount of $5.3 million, plus accrued
interest. If these financing transactions had occurred on June
27, 1997, the amounts shown above for cash and cash equivalents,
current portion of long-term debt and other current liabilities
would have been (in thousands) $1,375, $867 and $3,423,
respectively.
(d) Effective June 27, 1997, DDL effected a quasi-reorganization
which resulted in eliminating an accumulated deficit of
$23,678,000 by a transfer from paid-in capital of an equivalent
amount. |
