Pen Interconnect Inc. Issues Open Letter to Shareholders
SALT LAKE CITY--(BUSINESS WIRE)--April 8, 1998--Pen Interconnect Inc. (NASDAQ:PENC; PENCW)
Dear Shareholders,
During the first six months of Fiscal 1998, we have been successful in reestablishing Pen's momentum that was lost in the latter part of 1997 due to capital constraints and an industry wide slow down. During this period Pen went through some serious cost cutting activities by reducing overhead and streamlining the automation of its manufacturing lines.
After establishing its $6.3 million line of credit with Finova, Pen is now able to meet their customers' increasing demand. The Company was also able to strengthen its balance sheet by raising additional capital through the conversion of warrants, the completion a $1.5 million convertible debenture and the sale of the TMCI stock received through the sale of its QIS Division.
As a result of the above activities, Pen enters its 3rd quarter with its biggest backlog of orders and with all of its division profitable or near profitable. One of the biggest challenges now will be the financing of this exciting growth phase and meeting its customers' delivery requirements. These are great opportunities to have and we look forward to meeting the delivery needs of each and every client. A number of Pen's largest customers pushed out their delivery schedules into the third and fourth quarters which has caused some slowdown in current revenue recognition and profits. However, one of these customers has just increased their orders and has accelerated their delivery demands. The other two are expected to expedite their releases soon.
1998 Highlights -
Some of the major events of 1998 were to date:
-- Finova $6.3 million credit line (Sept. 97)
-- Delivery and acceptance of first articles to L3 Communications as the first step in our $12 million letter of intent.
-- $5 million order from ALARIS Medical Systems (San Diego)
-- Settlement of lawsuit regarding the sale of the QIS Division
-- Completion of a $1.5 million convertible debenture and conversion of warrants
-- $2 + million order received from New Media Corporation - Irvine
-- $3.4 million order from BOLDER Technologies for a new battery charger product.
Positive Outlook
Looking at our core businesses, we project steady, profitable growth rates along with exciting new design wins occurring in our engineered products division. Due to our cost reduction efforts, our operating costs have been significantly reduced thereby increasing our profit margins and enabling us to grow exponentially with the increased demand. We are excited about the near and long term prospects of Pen Interconnect, and look forward to increasing shareholder equity and value throughout 1998 and beyond.
Pen Interconnect, Inc.
Headquartered in Salt Lake City and with divisions in Tustin, Calif., and Orem Utah, Pen Interconnect is a total interconnection solution provider, offering internal and external custom cable and harness interconnections, custom power supply and battery charger design, mobile satellite equipment and EMSI (electronic manufacturing service industry) manufacturing for OEMs in the computer, peripheral, telecommunication, instrumentation, medical and testing equipment industries.
The statements contained in this news release that are not purely historical are forward-looking statements that may involve risks and uncertainties. The company's actual results may differ significantly from the results contained in the forward-looking statements. Factors that might cause such differences include, but are not limited to, the effect of losses and other factors on the company's credit facilities, business and results of operations; the company's limited capital resources and its ability to fulfill its existing obligations and ongoing capital needs; risks associated with excess or obsolete inventory; the potential impairment of assets; the company's dependence on key customers and their financial viability; the impact of competition; and the company's abilities to effectively manage growth. These and other risk factors are discussed in the company's filing on Forms 8-K, 10-Q and 10-K.
CONTACT:
Pen Interconnect Inc., Salt Lake City
Stephen J. Fryer, 714/247-2285
FAX 714/258-5207
sfryer@incirt.com
KEYWORD: UTAH CALIFORNIA |
