"today we are announcing a new $30 million contract for Dovatron China and Multek China to provide printed wiring boards and assemblies for a Nasdaq-listed
multi-media company;"
Tuesday April 27, 7:31 am Eastern Time
Company Press Release
SOURCE: The Dii Group
The Dii Group, Inc. Exceeds Expectations for First Quarter and Raises
'Guidance' for Fiscal 1999 and 2000
NIWOT, Colo., April 27 /PRNewswire/ -- The Dii Group today exceeded expectations with first quarter 1999 net income of $8.9
million, up 30 percent from $6.8 million in the first quarter of 1998, excluding nonrecurring charges. Diluted earnings per share in the first quarter of 1999 were 31 cents, compared
with 25 cents, as adjusted, in the prior year. Revenues for fiscal 1999 are expected to increase approximately 30 percent over 1998, and amounted to $247 million in the first quarter
of 1999, which was in line with expectations.
(Photo: newscom.com )
Ronald R. Budacz, chairman and chief executive officer of the Dii Group commented: ''This was an exceptionally strong quarter for the Dii Group:
-- we exceeded expectations with our first quarter results;
-- tax planning strategies resulted in a drop in our tax rate for fiscal 1999 and 2000 to 15 percent from 20 percent last year;
-- we strengthened our balance sheet by redeeming $86 million of convertible notes into equity;
-- Dovatron announced two contracts to produce TV set-top boxes for separate customers in Europe and Asia -- growing to more than $200 million of aggregate annual
revenues by fiscal 2000;
-- today we are announcing a new $30 million contract for Dovatron China and Multek China to provide printed wiring boards and assemblies for a Nasdaq-listed
multi-media company;
-- we initiated plans to expand manufacturing facilities on Europe, Asia and North America;
-- by mid April we had sold two of our three non-core businesses;
-- our Dovatron facility in the Czech Republic earned ISO-9002 certification;
-- and we announced a contract to develop and manufacture computer system platforms for UT Automotive, Inc.'s deltaVIEW line of in-vehicle computing products.''
Budacz continued: ''More important than first quarter results, however, is the momentum our businesses are showing. Dii Semiconductor, which had a good first quarter, has a
book-to-bill ratio above parity, which we believe is a good leading indicator for the strength of the electronics industry in general, and our businesses, in particular. Dovatron has
already booked several sizable contracts that will sharply accelerate momentum in the latter part of the year, and is also actively pursuing OEM divestitures and other acquisition
possibilities around the globe. Multek is in the process of qualifying its manufacturing processes with several significant new customers, in addition to obtaining approval to rotate
current customers to newly added manufacturing sites in China and Germany.''
Commenting on the company's strategic initiative to streamline its businesses and to narrow its focus, Carl R. Vertuca, Jr., executive vice president of the Dii Group, added: ''We
continue to make progress with our efforts to divest non-core assets, and at this point, most have been sold. This initiative is solely to increase management focus on the businesses
we consider core to the Dii Group: design and semiconductor services, printed wiring board fabrication, and systems assembly and distribution.''
Vertuca added: ''We are aggressively pursuing acquisition opportunities in North and South America and Europe, including OEM plant divestitures. The strengthening of our balance
sheet in the first quarter with the redemption of $86 million of convertible notes into equity gives us additional financial flexibility for pursuing these worldwide opportunities.''
Earnings Guidance:
Thomas J. Smach, Dii's chief financial officer, provided the following earnings outlook: ''Our guidance for earnings is increasing because of the reduction in our expected tax rate to
15 percent from 20 percent. It does not consider the completion of any acquisitions, despite our continuous efforts in this regard. With these assumptions, we now expect fiscal 1999
diluted earnings per share to be about $1.70 to $1.75, compared with the current First Call consensus of $1.64 per share. In addition, the 15 percent tax rate applies to fiscal 2000 as
well.''
The Dii Group provided the following commentary on its key business units:
Systems Assembly and Distribution
Dovatron is showing considerable momentum. Contracts to provide TV set- top boxes in China and Europe have already been announced. Each is expected to ramp in the second half
of 1999, and they should provide aggregate revenues greater than $200 million in fiscal 2000. Also, today the company announced a $30 million contract has been awarded to
Dovatron China to provide printed circuit assemblies for a Nasdaq-listed multimedia company. Printed wiring boards for this project will be sourced from Multek China. In addition,
Dovatron has identified a parcel of land in Guadalajara for consolidation and expansion of its operations.
Printed Wiring Boards
In the first quarter, most of Multek's top customers were in the process of qualifying production of their printed wiring boards at any Multek facility worldwide. This will allow more
efficient manufacturing and improved market share potential for Multek. In addition, several significant new customer qualifications are under way and at various stages of
completion. Multek's first quarter book-to-bill ratio was greater than parity.
Design and Semiconductor Services
Dii Semiconductor sold its wafer fabrication facility at the end of January, becoming a ''fabless'' semiconductor company. Its mixed signal and ENCORE! product lines were
extremely strong in the first quarter, and its book-to-bill ratio was above parity.
This press release contains historical information and forward-looking statements. Statements looking forward in time involve risks and uncertainties, including risks associated with
customer concentration, dependence on the electronics industry, economic conditions, the successful integration of newly acquired businesses and other risks associated with
acquisitions, changes in product mix, competition, and international operations. For further information, reference should be made to the Dii Group's filings with the Securities and
Exchange Commission, including the company's ''Management's Discussion and Analysis of Financial Condition and Results of Operations'' included in the company's most recent
Annual Report on Form 10-K.
The Dii Group, Inc. (Nasdaq: DIIG - news) is a leading, value-added electronics design and manufacturing service provider, which operates through a global network of companies
in North America, Europe, and Asia. The company serves the electronics industry through its core competencies: design and semiconductor services; printed wiring boards; and
systems assembly and distribution, which includes circuit board assembly and box build. The Dii Group employs approximately 8,000 people and had revenues of $926 million in
fiscal 1998. Its Internet (Web) Site can be reached by accessing ''www.diigroup.com'' to view recent press releases, company information, and financial data relating to the Dii
Group.
THE DII GROUP, INC. AND SUBSIDIARIES
(In thousands, except earnings per share)
For the first quarter ended
Apr. 4, 1999 Mar. 29, 1998
Condensed Consolidated Income Statements
Net sales:
Systems assembly and distribution $150,913 150,419
Printed wiring boards 71,321 50,708
Other 25,234 34,247
Total net sales 247,468 235,374
Cost of sales 209,539 201,932
Gross profit 37,929 33,442
Selling, general and administrative expenses 20,110 19,176
Non-recurring charges (1) -- 54,000
Interest income (394) (927)
Interest expense 6,482 4,719
Amortization of intangibles 1,295 1,121
Other, net (14) (168)
Income (loss) before income taxes 10,450 (44,479)
Income tax expense (benefit) 1,567 (12,432)
Net income (loss) $8,883 (32,047)
Earnings (loss) per common share:
Basic:
Excluding non-recurring charges $0.32 0.27
Non-recurring charges (1) -- (1.54)
$0.32 (1.27)
Diluted (2):
Excluding non-recurring charges $0.31 0.25
Non-recurring charges (1) -- (1.52)
$0.31 (1.27)
Weighted average number of common shares
and equivalents outstanding:
Basic 27,352 25,303
Diluted 30,447 31,050
Other Consolidated Financial Data (3):
Gross margin 15.3% 14.2%
SG&A expenses as a percentage of sales 8.1% 8.1%
Operating income as a percentage of sales 7.2% 6.1%
Pretax income as a percentage of sales 4.2% 4.0%
Income tax rate 15% 28%
EBITDA margin 10.6% 9.3%
EBITDA $26,179 21,832
Capital expenditures $21,342 15,153
Depreciation $8,346 7,398
Working capital at end of period $94,898 153,549
Total debt at end of period $314,064 247,574
Days sales outstanding 55 51
Inventory turns 12.2x 10.5x
Total debt/Equity at end of period 1.15x 1.45x
Net debt/Equity at end of period 1.00x 1.08x
Total debt/Total capital at end of period 0.54x 0.59x
Net debt/Total capital at end of period 0.46x 0.44x
(1) The Company recorded a non-recurring pre-tax charge of $54,000 in the
quarter ended March 29, 1998 related to the divestiture of Orbit
Semiconductor, a wholly-owned subsidiary.
(2) Potential dilutive securities were antidilutive for the quarter ended
March 29, 1998, and, therefore not included in actual diluted earnings per
share computation.
(3) Results from operations used in the other Consolidated Financial Data
excludes non-recurring charges.
THE DII GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
April 4, January 3,
1999 1999
Assets
Current assets:
Cash and cash equivalents $42,522 55,972
Accounts receivable, net 144,480 153,861
Inventories 70,891 66,745
Other 24,774 18,819
Total current assets 282,667 295,397
Property, plant and equipment, net 328,122 326,226
Intangible assets, net 103,270 106,794
Minority investments in
unconsolidated subsidiaries 20,507 -
Other 18,044 18,892
$752,610 747,309
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $122,022 122,536
Accrued expenses 37,840 44,134
Accrued interest payable 2,400 6,769
Notes payable to sellers of
businesses acquired 5,000 11,550
Current installments of other
long-term financing obligations:
Bank term loans 16,500 16,000
Other 4,007 7,098
Total current installments of
long-term financing obligations 20,507 23,098
Total current liabilities 187,769 208,087
Long-term financing obligations,
excluding current installments:
Bank term loans 79,500 84,000
Line-of-credit borrowings 57,500 37,500
Senior subordinated notes payable 150,000 150,000
Convertible subordinated notes payable -- 86,235
Other 1,557 2,184
Total long-term financing obligations,
excluding current installments 288,557 359,919
Other 3,705 3,582
Stockholders' equity 272,579 175,721
$752,610 747,309
Schedule 1
THE DII GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands)
For the three months ended April 4, 1999
Systems
Assembly Printed
and % of Wiring % of
Distribution Sales Boards Sales
Net sales $150,913 71,321
Cost of sales 137,314 55,763
Gross profit 13,599 9.0% 15,558 21.8%
Selling, general and
administrative
expenses 6,044 4.0% 5,255 7.4%
Operating income $7,555 5.0% 10,303 14.4%
For the three months ended April 4, 1999
Unallocated
% of General % of
Other Sales Corporate Total Sales
Net sales 25,234 -- $247,468
Cost of sales 16,462 -- 209,539
Gross profit 8,772 34.8% -- 37,929 15.3%
Selling, general
and administrative
expenses 5,871 23.3% 2,940 20,110 8.1%
Operating
income 2,901 11.5% (2,940) $17,819 7.2%
SOURCE: The Dii Group |
