Book value looks around $3.00. Not a great earnings quarter, but hopefully the R&D pays off...
Attention Business/Financial Editors:
MITEC CONTINUES DRIVE IN WIRELESS TECHNOLOGY - First Quarter Results
Announced At AGM $4.2 Million in New Orders Strategic Investment Also
Concluded
MONTREAL, Sept. 2 /CNW/ - An intensified Research & Development
program,
backed by an almost tripling of the department's budget, is at the
forefront
of Mitec Telecom Inc.'s (MTM: ME/TSE) strategic plan to focus on
wireless
communications. Shareholders and guests attending today's annual
general
meeting and the official opening of Mitec's new Montreal facility were
told
that the new complex is a major milestone in the Company's road to
future
development and growth.
``We view this as a preparative year for better things to come,
particularly following a year which was somewhat disappointing in
financial
results,' said Mitec Chairman and CEO, Myer Bentob.
He added the commitment to R&D is evidenced by the Company's first
quarter results, announced at the AGM.
------------------------------------------------------------------------
SUMMARY OF FINANCIAL HIGHLIGHTS
($ in thousands, except per share amounts)
First quarter ended July
31,
1999 1998
Change
Revenue 9,680 10,853
-10.8%
Net Income 54 1,070
-95%
Net Income Per Share
Basic 0.01 0.11
-91%
Fully diluted 0.01 0.11
-91%
Backlog 12,758 12,025
6%
------------------------------------------------------------------------
``A full five cents per share more has been dedicated to R&D this
first
quarter in comparison to the first quarter a year ago. We have hired 21
new
people in R&D, a trend that will continue through the year. The payback
is
inevitable as we meet the ever-growing needs of the major original
equipment
manufacturers with which we deal, currently and in the future,' stated
Mr.
Bentob.
Revenue from wireless products continued to increase. During the
first
quarter, they represented 60% of sales, up from 53% a year ago. For
the
fiscal year ended April 30, 1999 wireless revenue grew 41%.
``We have moved from less than $2 million in wireless sales in 1996
to
$17.8 million in fiscal 1999. And this trend continues. The only
drawback to
this significant shift in focus is the fact that the wireless segment
offers
lower margins than the Satcom and terrestrial sectors. We will make up
the
lower margins through even higher volumes, continuous efficiency
improvements
and material cost reductions,' said Keith Findlay, Vice President
Finance and
CFO.
``Globally, wireless communication growth is outpacing wireline,
while
the pressing demand for data continues. This is where the future is.
However,
we will continue to effectively and efficiently serve our Satcom and
terrestrial customers who have been loyal for many years,' stated Mr.
Bentob.
In line with Mitec's focus on wireless products and to streamline
its
European operations, it was announced today that the Company intends to
sell
its U.K. facility, which manufactures Satcom and terrestrial
components.
``The significant revenue growth in the wireless field is a result
of our
ability to develop and produce next generation products to meet the
needs of
original equipment manufacturers on a world-wide basis. This is where
we must
concentrate and devote the majority of our resources,' commented
Company
President and COO John Robinson.
``Our new state-of-the-art manufacturing facility now gives us the
capacity to meet the commitments our major clients require. As we
increase our
volume, we are confident our growth in wireless will soon restore us to
higher
profitability as well. During the summer, representatives of several
world
class OEMs visited our new premises. Their positive reaction has been
clearly
manifested.'
Mr. Robinson told the meeting that Mitec has moved into the design
and
development of the 3rd generation of wireless. ``This involves smaller
base
stations with higher capacity that are easier to deploy, making them
much more
cost-effective.'
It was also announced that Mitec has been awarded a Cdn $3.0
million
order to provide TDMA Tower Top amplifiers to Nortel. Shipments are
anticipated over the next two quarters.
Mitec has also received a Cdn$1.2 million order to supply Ericsson
CDMA
BTS RF equipment. This order is expected to be shipped during the
second
quarter.
This would bring Mitec's backlog to $16.0 million of confirmed
shippable
orders.
Also announced today was a strategic investment in Amplix Inc., a
Montreal-based privately-held Company, specializing in the design and
development of wireless and Satcom products.
Mitec's 15% investment will allow for the joint development of next
generation wireless amplifiers, such as multi-channel power amplifiers
(MCPA).
Mitec also acquired an option to purchase an additional 34% of
Amplix.
Terms were not disclosed.
During the quarter the Company acquired 51,000 of its own common
shares
through a normal course issuer bid. This brings the total shares
acquired to
409,900 which represents 83.5% of the amount allowable under the bid.
Mitec confirmed it is 90% complete in becoming Y2K compliant. The
Company expects to be fully compliant by September 30,1999, and within
the
$100,000 budget allocated to the Y2K Issue.
Mitec Telecom Inc. designs and manufacturers components, subsystems
and
multifunction subsystems for the wireless telecommunications industry.
The
Company sells its products worldwide primarily to original equipment
manufacturers for incorporation into wireless infrastructure equipment,
which
is used in voice, data and cable communications networks. Mitec
Telecom has
275 employees at its facilities in Pointe Claire (Quebec), Tinton Falls
(New
Jersey), Copthorne (England), Wang-Noi (Thailand), and Vaxjo, (Sweden).
MITEC TELECOM INC.
Consolidated Balance Sheet
Unaudited as at July
31st,
(in thousands of CDN dollars) 1999
1998
------------------------------------------------------------------------
ASSETS
Current
Cash and term deposits $ - $
10,868
Marketable securities at cost 6,480
-
Trade receivables 9,408
7,687
Inventories 5,189
7,278
Income tax receivable 270
-
Prepaid expenses and other 400
469
Deferred income taxes 630
290
------------------------------------------------------------------------
Total current assets $ 22,377 $
26,592
------------------------------------------------------------------------
Capital assets 20,594
10,929
Deferred income taxes 77
231
Goodwill 1,059
1,212
------------------------------------------------------------------------
$ 44,107 $
38,964
------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 6,923
-
Accounts payable and accrued liabilities 6,005
6,450
Income taxes payable -
317
------------------------------------------------------------------------
Total current liabilities $ 12,928 $
6,767
------------------------------------------------------------------------
Deferred income taxes 1,366
1,390
------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital stock 20,738
21,489
Retained earnings 9,186
9,461
Cumulative translation adjustment (111)
(143)
------------------------------------------------------------------------
Total shareholders' equity 29,813
30,807
------------------------------------------------------------------------
$ 44,107 $
38,964
------------------------------------------------------------------------
------------------------------------------------------------------------
MITEC TELECOM INC.
Consolidated Statements of Income
Unaudited 3 months ended
July 31,
(in thousands of CDN dollars
except per share data) 1999
1998
------------------------------------------------------------------------
Sales $ 9,680 $
10,853
Cost of sales 6,878
7,113
------------------------------------------------------------------------
Gross profit 2,802
3,740
------------------------------------------------------------------------
Expenses
Research and development 1,310
661
Selling and administrative 1,589
1,699
Financial income (100)
(468)
Interest income (93)
(66)
Other -
225
------------------------------------------------------------------------
2,706
2,051
Income before income taxes 96
1,689
------------------------------------------------------------------------
Income taxes
Current 15
218
Deferred 27
401
------------------------------------------------------------------------
42
619
------------------------------------------------------------------------
Net income for the period $ 54 $
1,070
------------------------------------------------------------------------
------------------------------------------------------------------------
Average number of shares outstanding ('000) 9,445
9,809
Basic earnings per share $ 0.01 $
0.11
------------------------------------------------------------------------
Fully diluted earnings per share $ 0.01 $
0.11
MITEC TELECOM INC.
Consolidated Statements of Changes in Financial Position
Unaudited 3 months ended
July 31,
(in thousands of CDN dollars) 1999
1998
------------------------------------------------------------------------
Operating Activities
Net income for the period $ 54 $
1,070
Add items not affecting cash:
Amortization of capital assets and goodwill 610
401
Deferred income taxes 27
401
Other -
225
------------------------------------------------------------------------
691
2,097
Changes in non-cash working capital balances
related to operations (3,455)
(872)
------------------------------------------------------------------------
Cash provided by (used in) operating activities (2,764)
1,225
------------------------------------------------------------------------
Investing activities
Additions to capital assets (4,644)
(1,146)
Translation adjustment 74
84
------------------------------------------------------------------------
Cash used in investing activities (4,570)
(1,062)
------------------------------------------------------------------------
Financing activities
Issuance of common shares 12
-
Cancelled shares under normal course issue bid (90)
-
------------------------------------------------------------------------
Cash (used in) financing activities (78)
-
------------------------------------------------------------------------
Increase (decrease) in cash position (7,412)
163
Cash position, beginning of period 6,969
10,705
------------------------------------------------------------------------
Cash position, end of period(x) $ (443) $
10,868
(x) Cash position consists of cash, term deposits and marketable
securities less bank indebtedness
-0- 09/02/1999
For further information: Mr. Keith Findlay, Vice President Finance and
Chief Financial Officer, (514) 694-9000, Extension 2186 or Mr Rick
Leckner, Maison Brison, (514) 731-0000; Source : Mitec Telecom Inc.
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