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Telephonics Corporation has been very successful in adapting advanced, state-of-the-art technology to meet the critical mission requirements of new and upgraded legacy military platforms. As prime contractors continue to place their resources and capabilities on major platforms and systems, they will increase their reliance on focused, commercially oriented suppliers to produce sub-systems for their platforms. We intend to continue to build on our position as a leading supplier of intercommunications, radar, identification friend or foe, and air traffic control systems to the major contractors in the aerospace and defense industry, as well as U.S. and international government agencies.
Telephonics has established long-term relationships with several of the major prime contractors and we will continue to evolve these strategic partnerships to the benefit of both Telephonics and our customers.
Under a program with Lockheed, Telephonics’ AN/APS-147 Multi-Mode Radar for the U.S. Navy’s Light Airborne Multi-Purpose System helicopter, pictured here, has successfully completed development testing, and is ready for Technical Evaluation and Operational Evaluation testing followed by full rate production. This system not only meets all of the operational requirements, but in many cases, far exceeds the Navy’s specification requirements, making it the industry standard for airborne maritime surveillance radar.
The June 2004 quarter was the company’s most profitable third quarter in its history, as were the results for the first nine months of this fiscal year. Each of the company’s business units contributed to the improved operating results.
Net sales for the quarter were $367,948,000 compared to $312,547,000 for the third quarter of fiscal 2003. Income before income taxes increased to $24,760,000 from $19,183,000. Net income was $13,157,000 in the current quarter, up from $11,322,000 in the third quarter of 2003. Basic earnings per share for the quarter was $.44 compared to $.34 last year and diluted earnings per share was $.42 compared to $.33 in 2003.
Telephonics, the electronic information and communication systems segment, had a very strong third quarter, attaining substantial increases in sales and operating profit. The improvement was primarily driven by Telephonics’ performance on new program awards, including a contract to provide ground surveillance radars for perimeter protection of U.S. Air Force bases. Specialty plastic films achieved higher sales and increased operating profit. The segment’s operating improvement reflects improved pricing and product mix and the effect of a weaker U.S. dollar on translated foreign sales, partly offset by lower domestic unit volumes. The building products operations also contributed to the quarter’s improved operating results. Continued sales gains in installation services and its elimination last year of
an underperforming location coupled with effective expense control and higher unit sales of garage doors in all channels of distribution were the principal reasons for the operating improvement. Consolidated earnings in the quarter reflected in-creased interest expense of $1,100,000 associated with the company’s convertible subordinated notes which were sold in the latter part of fiscal 2003.
Net sales for the nine months ended June 30, 2004 were $1,024,086,000 compared to $892,031,000 for the first nine months of fiscal 2003. Income before income taxes for the nine months rose to $69,766,000, up from
$51,500,000 last year. Net income increased to $34,934,000 from $26,859,000 for the first nine months of 2003. Diluted earnings per share for the nine months was $1.10 compared to $.79 last year.
Cash flow from operations for the first nine months of fiscal 2004 was $55,000,000, funding treasury stock purchases of $20,000,000 and capital expenditures of $31,000,000. Based on the company’s cash flow and strong balance sheet, our plan is to continue the stock repurchase program.
We look forward to reporting continued progress.
Harvey R. Blau
Chairman of the Board
Robert Balemian
President |
