Spectrum Control Reports Record Fourth Quarter and Year End Results; Fourth Quarter Sales Up 81%, Earnings Increase 49% - Company Financial Information

Edge: Work-Group Computing Report, Jan 17, 2000

Spectrum Control, Inc. (Nasdaq: SPEC), a manufacturer of electronic control products and systems, Monday reported results for the fourth quarter and fiscal year ended November 30, 1999.

For the fourth quarter of 1999, the Company had net income of $1,500,000 or 14 cents per share (13 cents diluted) on sales of $28,971,000, compared to net income of $1,004,000 or nine cents per share on sales of $16,014,000 for the same period last year.

For the fiscal year 1999, the Company reported net income of $5,470,000 or 50 cents per share (49 cents diluted) on net sales of $97,729,000. For the fiscal year 1998, the Company had net income of $3,934,000 or 36 cents per share on sales of $59,868,000.

Customer orders received during the fourth quarter of fiscal 1999 amounted to $34.4 million, an increase of $16.9 million or 97% from the same period last year. For the fiscal year 1999, the Company received customer orders totaling $119.8 million, compared to $61.9 million in 1998.

Dick Southworth, the Company's President and Chief Executive Officer, commented, "The Company's strong 1999 performance reflects a robust overall marketplace for our telecommunication products, as well as the positive impact of the Company's March 1999 acquisition of the Signal Conditioning Products Division of AMP Incorporated ("SCPD"). For the fourth quarter of fiscal 1999, the Company achieved record sales of nearly $29.0 million, up $13.0 million or 81% from same period last year. In addition to SCPD and other interconnect filter product sales increases, the Company's power product offerings continue to demonstrate dramatic growth. Sales of power products amounted to $10.7 million in the fourth quarter of 1999, an increase of $5.1 million or 92% from the comparable period of 1998. Shipments of these power products to original equipment manufacturers remain vibrant, particularly for applications in telecommunication networks and internet servers."

Mr. Southworth added, "During the fourth quarter, we completed the initial phase of SCPD integration into the Company's Signal Products Division. The final phase of integration, including planned cost reductions and production process improvements, is expected to be completed during fiscal year 2000. Despite incurring certain relocation costs and inefficiencies during this integration period, the Company's operating margins remain strong. For the fourth quarter of fiscal 1999, income from operations amounted to $2.9 million, an increase of $1.2 million or 73% from the comparable period of 1998. As a result, net income for the quarter rose to $1.5 million, a 49% increase from the same period last year."

Mr. Southworth continued, "Demand for the Company's products remains exceptionally vigorous, with customer order rates increasing for virtually all of our major product lines. For fiscal 1999, the Company received record customer orders of $119.8 million, an increase of $57.9 million or 94% from 1998. Of this increase, approximately $36.0 million was generated by the Company's interconnect filter products and the remaining $21.9 million from the Company's power and microwave product offerings. In addition to these customer orders, the Company assumed approximately $5.1 million of customer order backlog in connection with the acquisition of SCPD. With this flourishing customer demand and a continued energetic outlook for our telecommunication markets, we are very optimistic and enthusiastic about the Company's future," he concluded.

As an ISO 9001 quality certified company, Spectrum Control, Inc. and its subsidiaries ("Spectrum" or the "Company") design, manufacture and market a broad line of control products and systems. The Company was founded as a solutions-oriented company, designing and manufacturing products to suppress or eliminate electromagnetic interference ("EMI"). The Company has expanded its core EMI filter technology into a complete line of interconnect filter products (discrete filters, filtered arrays, and filtered connectors). In recent years, the Company broadened its focus by developing new lines of power products (power distribution units, intelligent power management and conditioning products, commercial custom assemblies, power entry modules, and power line filters), microwave products (coaxial ceramic bandpass filters, duplexers, and dielectric resonators), and specialty ceramic capacitors (single layer, temperature compensating, high voltage, and switch mode). Spectrum products are used in virtually all industries worldwide, including telecommunications, aerospace, military, medical, computer and industrial controls.

           Spectrum Control, Inc. and Subsidiaries
            Condensed Consolidated Balance Sheets
                         (Unaudited)

                                             (Dollars in Thousands)

                                         November 30    November 30
                                            1999           1998
Assets

Cash and cash equivalents                       $538          $739
Accounts receivable, net                      19,330        10,162
Inventories                                   24,617        12,885
Prepaid expenses and other current assets      1,278           593

  Total current assets                        45,763        24,379

Property, plant and equipment, net            21,366        16,289

Other assets                                  15,425         3,471

  Total assets                               $82,554       $44,139

Liabilities and Stockholders' Equity

Short-term debt                               $5,089          $336
Accounts payable                               8,801         2,719
Accrued liabilities                            3,608         1,875
Current portion of long-term debt              4,276           830

  Total current liabilities                   21,774         5,760

Long-term debt                                19,011         2,500

Deferred income taxes                          2,634         2,105

Stockholders' equity                          39,135        33,774

  Total liabilities and stockholders' equity $82,554       $44,139

           Spectrum Control, Inc. and Subsidiaries
         Condensed Consolidated Statements of Income
                         (Unaudited)

                     (Dollars in Thousands Except Per Share Data)

                   For the Quarter Ended        For the Year Ended
                        November 30                 November 30
                    1999           1998         1999          1998

Net sales          $28,971       $16,014      $97,729       $59,868

Cost of
 products sold      20,556        11,122       69,817        41,584

Gross margin         8,415         4,892       27,912        18,284

Selling, general and
 administrative
 expense             5,497         3,207       17,748        11,822

Income from operations2,918        1,685       10,164         6,462

Other income (expense)
 Interest expense     (520)          (63)      (1,420)         (228)
 Other income
  and expense, net      38             3           96            85
                      (482)          (60)      (1,324)         (143)

Income before
 provision for
 income taxes        2,436         1,625        8,840         6,319

Provision for
 income taxes          936           621        3,370         2,385

Net income          $1,500        $1,004       $5,470        $3,934

Earnings per common share:

  Basic              $0.14         $0.09        $0.50         $0.36
  Diluted            $0.13         $0.09        $0.49         $0.36

Number of shares used
 in computing earnings
 per common share:

  Basic         10,936,000    10,922,000   10,905,000    10,907,000
  Diluted       11,168,000    10,977,000   11,051,000    11,016,000