UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 7, 2005
FREQUENCY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-8061 11-1986657
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
55 Charles Lindbergh Blvd., Mitchel Field, NY 11553
(Address of principal executive offices) (Zip Code)
(516) 794-4500
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
________________________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Page 1 of 6 pages
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 7, 2005, Frequency Electronics, Inc. issued a press release, which
sets forth its results of operations for the fiscal year and quarter ended April
30, 2005. A copy of the press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference. Such information shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
and is not incorporated by reference into any filing of the company, whether
made before or after the date hereof, regardless of any general incorporation
language in such filing.
ITEM 9.01 (c). EXHIBITS.
99.1 Press Release of Frequency Electronics, Inc., dated July 7, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FREQUENCY ELECTRONICS, INC.
By: /s/ Alan Miller
---------------
Alan Miller
Chief Financial Officer
and Treasurer
Dated: July 8, 2005
Exhibit 99.1
PRESS RELEASE
Frequency Electronics, Inc., Announces Fiscal Year 2005 Results
Mitchel Field, NY, July 7, 2005 - Frequency Electronics, Inc. (AMEX-FEI) today
announced results for its fiscal year and fourth quarter ended 30 April 2005.
Revenues for the year were $55.2 million, compared to $50.1 million for fiscal
year 2004. Fourth quarter revenues were $11.9 million, compared to $17.3 million
in the same period of fiscal year 2004.
Fiscal year 2005 net income was $5.0 million, or $0.58 per diluted share,
compared to $320 thousand, or $0.04 per share, for the previous fiscal year. Net
income for the fourth quarter of fiscal year 2005 was $3.5 million, or $0.41 per
share, compared to net income of $895 thousand, or $0.10 per diluted share, in
the same period last year. Fiscal year 2005 results include pretax gains (net of
expenses) of $6.5 million from real estate investments which were realized
during the fourth quarter of the year.
Excluding the effects of the $6.5 million real estate gain, the Company would
have recorded pretax profit of $630 thousand compared to $431 thousand for the
prior fiscal year. Gross margin improved to 33%, up from 31% in fiscal year
2004. On a year-over-year basis, incremental revenue of $5.1 million resulted in
increased gross margin of $2.6 million, a 51% marginal rate. Long term
obligations decreased by $8.3 million, or 47%, and stockholders' equity
increased by $5.8 million, or 9%.
Fiscal year 2005 revenues for the Commercial Communications segment were $31.5
million, compared to $28.2 million for fiscal 2004. Included in these figures is
$5.3 million for commercial space projects, up from $3.3 million in the prior
year. Sales of synchronization products to the wireless infrastructure industry
experienced sharp declines in the last half of fiscal year 2005 as key OEMs
postponed deliveries from previously forecasted requirements. These fluctuations
had a major impact on operating results for the fiscal year. Sales to wireless
OEMs are and will continue to be the largest component of revenues in this
segment because the future market for the Company's products in world-wide
wireless infrastructure remains extremely large and growing. For fiscal year
2006, the Company anticipates higher revenues in the Commercial Communications
segment.
Revenues for the US Government segment were $5.6 million this fiscal year,
compared to $7.0 million in the previous year. The Company expects this segment
to show strong growth next fiscal year. Revenues for the FEI-Zyfer segment,
which are derived primarily from US Government programs, were $8.8 million for
fiscal year 2005, up from $6.5 million in the prior year. FEI-Zyfer revenues are
also expected to grow in fiscal year 2006. Accordingly, revenues from US
Government programs will represent a larger share of consolidated sales during
the upcoming fiscal year.
Gillam-FEI recorded revenues of $12.6 million, including $2.4 million of
intercompany sales, in fiscal year 2005, compared to $12.2 million, with $3.5
million of intercompany sales, in fiscal 2004. Gillam-FEI provided a strong
technology partnership for new synchronization product development in fiscal
year 2005. Continued revenue growth is expected for fiscal year 2006, with lower
intercompany sales.
Research and development investment rose from $5.3 million in fiscal year 2004
to $6.8 million in fiscal year 2005, which included $2.0 million in the fourth
quarter. This increased spending produced significant advances in new product
development and added important value to the Company in fiscal 2005. The
Company's development activities address markets with potential business
opportunities in excess of $3 billion over the next 5 years. The Company
believes its superior technology will result in gaining a significant share of
these markets.
Major milestones in the Company's principal technologies this past year,
included:
Wireline:
- In March 2005, the US5G product passed key acceptance testing and the
Company has begun contract negotiations with a major RBOC.
- The US5E (European version of the US5G) has been accepted by a major
service provider in Europe.
- UniSync (a GPS-based synchronization system) has been introduced to
complement the US5G for domestic sales and additional products are
being developed for service providers worldwide.
Wireless:
- Innovative quartz-based products were introduced for UMTS and WCDMA
cell sites. These products expand the Company's offering to cellular
service providers in addition to the current rubidium products.
Space:
- A family of generic frequency generation systems (300 MHz to 18.2 GHz)
were developed and qualified for a major aerospace company, to be used
in commercial and military satellites.
- A high-precision C-band to L-band transponder for GCCS (WAAS) was
completed and delivered.
- The Company was awarded contracts for various space-related programs
from Alenia, Boeing, Lockheed Martin, Space Systems/Loral, COMDEV,
Northrop Grumman, the US Air Force and others.
Industrial and special applications:
- Feasibility models for precision clocks that operate in high
temperatures and harsh environments were developed, qualified, and
delivered, to be used in deep-earth drilling equipment exploring for
natural resources.
- Prototypes of new quartz clocks with unparalleled long-term stability
were provided for a variety of applications.
- The Company delivered over $5 million in various software-based
control systems and associated hardware.
Government/Military:
- Major advancements were achieved in low-g sensitivity technology:
o The Company was awarded contracts for pre-production units for the
Joint Strike Fighter (JSF), C-130, and airborne radars for UAVs
and manned aircraft.
o The Company was awarded contracts to develop feasibility models
for F-15 upgrades and for applications in other classified
airborne platforms.
o A family of ruggedized rubidium standards was introduced that
maintains frequency accuracy in challenging vibration and shock
environments (missiles, helicopters, UAVs, manned aircraft) and
operates in conjunction with low-g sensitivity quartz.
- Development was completed on a rubidium-based timing system for the
Advanced EHF satellite. The first flight system recently completed all
tests and was accepted.
- The Company was awarded a $1.8 million contract for low-g sensitivity
quartz clocks for missile applications.
- The Company was awarded a contract valued in excess of $1 million for
the National Polar-Orbiting Operational Environmental Satellite System
("NPOESS").
- The Company was awarded a $2.0 million contract for a Canadian data
collection, storage and transmission satellite system.
- The Company was selected to develop and qualify an advanced atomic
clock for satellite navigation systems and was awarded a $3 million
multi-year contract in May 2005.
Commenting on these results, Chairman of the Board General Joseph Franklin said:
"In fiscal 2005, Frequency Electronics again increased revenues, raised margins,
and improved profitability over the prior year. We achieved these results in
spite of a fall-off in shipments to wireless OEMs in the second half of the year
and a substantial increase in research and development spending. Increased
investments in technology development produced outstanding results last year.
Our advanced technology represents the real shareholder value of Frequency
Electronics. It enhances performance of critical systems in both government and
commercial sectors. Our plan in 2006 is to accelerate technology development and
the value it creates. Looking ahead today, we see fiscal year 2006 starting
slowly and ramping up in revenues and earnings as the year goes forward,
reversing the profile of fiscal 2005. Based on bookings in early fiscal 2006, we
expect growth in revenues and operating profit this coming year."
Investor Conference Call
- ------------------------
As previously announced, the Company will hold a conference call to discuss
these results today, July 7, at 1:00 PM Eastern Time. Investors and analysts may
access the call by dialing 1-800-478-6251. International callers may dial
1-913-981-5558. Ask for the Frequency conference call.
The call will also be available at the Company's website at
www.frequencyelectronics.com or at Thomson/CCBN's individual investor center at
www.companyboardroom.com or by visiting any of the investor sites in
Thomson/CCBN's Individual Investor Network such as America Online's Personal
Finance Channel, Fidelity Investments(R) (Fidelity.com) and others.
The call will be archived on the Company's website through August 7, 2005. The
archived call may also be retrieved at 1-888-203-1112 (domestic) or
1-719-457-0820 (international) using Passcode ID 6551394.
About Frequency Electronics
- ---------------------------
Frequency Electronics, Inc. is a world leader in the design, development and
manufacture of high-technology frequency, timing and synchronization products
for satellite and terrestrial voice, video and data telecommunications. The
Company's technologies provide unique solutions that are essential building
blocks for the next generation of broadband wireless and fiber optic
communications systems, and for the ongoing expansion of existing wireless and
wireline networks. The Company has received over 60 awards of excellence for
achievements in providing high performance electronic assemblies for over 120
space programs. The Company invests significant resources in research and
development and in strategic acquisitions to expand its capabilities and
markets. The Company's Gillam-FEI subsidiary provides the Company with expertise
in wireline network synchronization and access to worldwide service providers.
The FEI-Zyfer subsidiary provides secure timing ("SAASM") capabilities for
critical military and commercial applications. Additional information is
available on FEI's website: www.frequencyelectronics.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
- --------------------------------------------------------------------------------
The Statements in this press release regarding the future constitute
"forward-looking" statements pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
inherently involve risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements. Factors that would cause
or contribute to such differences include, but are not limited to, inability to
integrate operations and personnel, actions by significant customers or
competitors, general domestic and international economic conditions, consumer
spending trends, reliance on key customers, continued acceptance of the
Company's products in the marketplace, competitive factors, new products and
technological changes, product prices and raw material costs, dependence upon
third-party vendors, competitive developments, changes in manufacturing and
transportation costs, the availability of capital, and other risks detailed in
the Company's periodic report filings with the Securities and Exchange
Commission. By making these forward-looking statements, the Company undertakes
no obligation to update these statements for revisions or changes after the date
of this release.
Contact information: General Joseph P. Franklin, telephone : (516) 794-4500
WEBSITE: www.frequencyelectronics.com
Frequency Electronics, Inc. and Subsidiaries
Consolidated Condensed Summary of Operations
Quarter Ended Year Ended
April 30, April 30,
2005 2004(a) 2005 2004(a)
---- ------- ---- -------
(unaudited)
(in thousands except per share data)
Net Sales $11,907 $17,275 $55,173 $50,106
Cost of Sales 8,476 12,358 37,013 34,529
------- ------- ------- -------
Gross Margin 3,431 4,917 18,160 15,577
Selling and Administrative 2,961 3,026 11,719 11,162
Compensation Charges 876 297 876 725
Research and Development 1,984 1,027 6,834 5,336
------- ------- ------- -------
Operating (Loss) Profit (2,390) 567 (1,269) (1,646)
Interest and Other, Net (a) 7,190 327 8,415 1,933
------- ------- ------- -------
Income before Taxes &
Minority Interest 4,800 894 7,146 287
Minority Interest - (12) (1) (144)
------- ------- ------- -------
Income before Income Taxes 4,800 906 7,147 431
Income Tax Provision 1,280 11 2,110 111
------- ------- ------- -------
Net Income $ 3,520 $ 895 $ 5,037 $ 320
======= ======= ======= =======
Net Income per Share:
Basic $ 0.41 $ 0.11 $ 0.59 $ 0.04
====== ====== ====== ======
Diluted $ 0.41 $ 0.10 $ 0.58 $ 0.04
====== ====== ====== ======
Average Shares Outstanding
Basic 8,517,694 8,403,084 8,484,682 8,374,399
========= ========= ========= =========
Diluted 8,683,305 8,633,585 8,684,758 8,542,575
========= ========= ========= =========
(a) Prior period amounts have been restated to reflect the Company's
equity income from its investment in Morion, Inc.
Frequency Electronics, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
April 30, April 30,
2005 2004(a)
---- -------
(in thousands)
ASSETS
- ------
Cash & Marketable Securities $ 30,233 $ 31,389
Accounts Receivable 12,728 15,036
Inventories 22,948 21,925
Other Current Assets 3,631 4,485
Property, Plant & Equipment 6,770 11,486
Other Assets 12,064 8,546
-------- --------
$ 88,374 $ 92,867
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities $ 9,844 $ 11,827
Long-term Obligations and Other 9,337 17,657
Stockholders' Equity 69,193 63,383
-------- --------
$ 88,374 $ 92,867
======== ========