Third Quarter and Nine Months 2002 Results

 
Sales for the third quarter of 2002 were $5,939,000, a 2.2 % increase compared to third quarter 2001 sales of $5,812,000. Operating income in the current quarter was $72,000 compared to an operating loss of $349,000 for the third quarter of 2001.

Net income for the third quarter of 2002 was $57,000 compared to a net loss of $209,000 for the third quarter of 2001. Net income per share was $.02 for the third quarter of 2002 compared to a net loss of $.08 per share for the third quarter of 2001.

For the first nine months of 2002 sales were $19,252,000, a 3.1 % increase compared to sales of $18,669,000 for the first nine months of 2001. Operating income for the first nine months of 2002 was $433,000, giving effect to the second quarter 2002 personnel restructuring charge of $240,000, compared to operating income of $47,000 for the first nine months of 2001, giving effect to the first quarter 2001 reincorporation charge of $330,000.

Net income for the first nine months of 2002 was $146,000, giving effect to the after-tax impact of the second quarter 2002 personnel restructuring charge of $150,000. For the first nine months of 2001, net loss was $104,000, giving effect to the after-tax impact of the first quarter 2001 reincorporation charge of $198,000.

Net income per basic and diluted share for the first nine months of 2002 was $.05, giving effect to the after-tax impact of the $.05 per share second quarter personnel restructuring charge. For the first nine months of 2001, net loss per share was $.04, giving effect to the after-tax impact of the $.08 per share reincorporation charge in the first quarter of 2001.

The weighted average number of basic shares outstanding increased by approximately 522,000 shares or 19.9 % for the third quarter of 2002 compared to the third quarter of 2001, and increased by 440,000 shares or 16.8 % for the first nine months of 2002 compared to the first nine months of 2001. The increase in shares outstanding was primarily due to the issuance of 528,000 shares to DuPont Electronic Technologies during the first quarter of 2002.

 
The backlog at the end of the third quarter of 2002 was $10.9 million, a decrease of $.9 million or 8.0 % compared to year-end 2001, and a decrease of $1.8 million or 14.2 % when compared to the backlog of $12.7 million at the end of the third quarter of 2001. Orders received during the third quarter of 2002 totaled $5.7 million and were approximately 3 % below third quarter 2002 sales. Orders received for the first nine months of 2002 totaled $18.3 million and were approximately 5 % below sales recorded in the first nine months of 2002. The reductions in orders and backlog reflected continuing softness in certain communications markets that the Company serves.

The first nine months of 2002 reflect a substantial improvement in operating performance over 2001. While our design wins and proposal activity to date have been steady there is increased unpredictability related to both the placement and timing of orders in the wireless telecommunications industry. We continue to monitor order activity and will take more aggressive steps in the fourth quarter, not only in right-sizing the business, but also in how our businesses are organized. This will include further personnel reductions, organizing around strategic markets, and reviewing how we can best utilize our assets, which includes combining our two Costa Rica facilities. These changes are very positive and reach well beyond pure expense reductions, allowing us to be leaner, more aggressive and market competitive.


Thank you for your continued support and confidence,

Mason N. Carter
Chairman and CEO
November 7, 2002

 
Note: This report contains statements relating to future results of the Company (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: general economic and industry conditions; slower than anticipated penetration into the satellite communications, defense and wireless markets; the risk that the benefits expected from the acquisition of Filtran Microcircuits Inc. are not realized; the ability to protect proprietary information and technology; competitive products and pricing pressures; the risk that the Company will not be able to continue to raise sufficient capital to expand its operations as currently contemplated by its business strategy; risks relating to governmental regulatory actions in communications and defense programs; risks associated with demand for and market acceptance of existing and newly developed products; and inventory risks due to technological innovation and product obsolescence, as well as other risks and uncertainties, including but not limited to those detailed from time to time in the Company's Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.