Three-Five Systems Announces First Quarter Results
Apr 17, 2001, 01:00 ET from Three-Five Systems, Inc.
TEMPE, Ariz., April 17 /PRNewswire/ -- Three-Five Systems, Inc.
(NYSE: TFS) today announced its financial results for the first quarter ended
March 31, 2001.
Revenue for the first quarter was $35.6 million compared to revenue of
$39.2 million for the first quarter of 2000. Net income for the first quarter
of 2001 was $242,000, or $0.01 per share, compared to $3.6 million, or
$0.18 per share, in the first quarter of 2000. The reduced earnings per share
is primarily attributable to reduced gross margins and increased operating
expenditures. The company's gross margins have been affected because of the
current intense pricing pressures in the display industry resulting from
excess LCD capacities and inventory issues with the OEM users of displays,
such as mobile handset makers. In the first quarter of 2001, the company's
operating expenses totaled $6.2 million compared to $5.0 million for the first
quarter of 2000, an increase of $1.2 million. A substantial portion of that
increase in operating expenses was related to the ramp up of LCoS(TM)
microdisplay products, the company's newest display technology, which enables
the development of multi-media projectors, monitors, HDTVs and handheld
Internet appliances.
The company ended the first quarter of 2001 with $153.9 million in cash
and short-term investments, no outstanding borrowings on its working capital
line of credit, and no long-term debt. Total capital expenditures for the
first quarter of 2001 were $1.6 million, most of which were for production
upgrades and investments in manufacturing for LCoS(TM) microdisplays.
Operating cash outflow for Three-Five Systems in the first quarter of 2001 was
$7.2 million, primarily as a result of increased inventories and receivables.
Inventories increased as a result of push outs of product orders from the
company's OEM customers. Accounts receivable increased as a result of OEM
customers extending payment terms on outstanding accounts. Under the
company's $30 million stock buy-back program announced in December 2000, the
company purchased almost 150,000 shares of its common stock for a total of
$2.5 million in the first quarter of 2001. Since the start of the buy-back
program, the company has purchased just over 390,000 shares for $7.2 million.
Several weeks ago, the company announced that weak and uncertain demand in
the cellular handset industry and continued issues with handset inventories
had led to cancellations, delays, and push-outs for existing and new
customers' programs and, consequently, limited visibility for the company with
regard to revenue expectations for the remainder of the year. In addition,
the company said that the pressure on display prices had intensified, and that
the company was experiencing accelerated reductions of its LCD module selling
prices. Based on those unsettled conditions and pricing pressures, the
company reported that it expected its revenue in the second quarter of 2001 to
be in the range of $20 to $30 million and to report a loss in that second
quarter in the range of $.25 to $.35 per share.
Jack L. Saltich, President and Chief Executive Officer, commented, "It is
evident that worldwide economic conditions are uncertain at this time, and as
a result our visibility is clouded for the next several quarters.
Consequently our outlook from a few weeks ago remains unchanged. It is
important to note, however, that our strong financial position will allow us
to execute our strategies of (1) expanding and diversifying our core LCD
business through our numerous design wins that we had in 2000 and (2)
expending research and development resources to add new display technologies
to our product offering."
Saltich continued, "Our key new display technology is LCoS microdisplays.
The level of customer demand that we are seeing with respect to this
revolutionary technology is surpassing our expectations. We continue to focus
on four target markets -- televisions, multi-media projectors, large monitors
and personal display systems -- and we have multiple customer programs in
development."
"In conclusion, I would say that although the outlook on the economy is
uncertain, Three-Five is well positioned in a variety of ways. We have the
marketing strength to continue to seek out and win new customers in new
markets. We have the financial strength to continue to make investments in
technology and strategic opportunities. Most importantly, we have the
technical strength to make significant inroads into completely new display
technologies."
About Three-Five Systems, Inc.(R)
Three-Five Systems, Inc. (NYSE: TFS) is a recognized leader in the design
and manufacture of liquid crystal display (LCD) modules and technology for OEM
customers in wireless communications and data collection, medical electronics,
and other commercial and consumer device marketplaces. The company has also
developed LCoS(TM) (Liquid Crystal on Silicon) microdisplays. These tiny,
high-resolution, low power displays are currently being supplied to customers
developing revolutionary microdisplay-based products including high-definition
television sets, business projectors, computer monitors and wireless Internet
appliances. At its Tempe, Arizona headquarters, Three-Five operates a design
center, the highest volume LCD manufacturing line in North America, and the
David R. Buchanan LCD laboratory, dedicated to the development of advanced
display technologies. Support for the company's growing global customer base
is also provided at production facilities in Manila, the Philippines and
production and design center facilities in Beijing, China. The company's web
site is located at www.threefive.com.
Certain statements contained in this press release may be deemed to be
forward-looking statements under federal securities laws, and Three-Five
Systems intends that such forward-looking statements be subject to the
safe-harbor created thereby. Such forward-looking statements include
(1) expectations regarding the amount and timing of revenue and the operating
results of the company (including expectations regarding earnings per share)
and (2) expectations regarding Three-Five Systems winning new customers and
making inroads into new display technologies. Three-Five Systems cautions
that these statements are qualified by important factors that could cause
actual results to differ materially from those reflected by the forward-
looking statements contained herein. Such factors include (a) changes in the
markets for the company's products; (b) changes in the market for customers'
products; (c) the failure of key technologies, such as LCoS microdisplays to
deliver commercially acceptable performance; (d) the ability of Three-Five
Systems' management, individually or collectively, to guide the company in a
successful manner; and (e) other risks as detailed from time to time in Three-
Five Systems' SEC reports, including the company's most recent Registration
Statement on Form S-3, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and Annual Report on Form 10-K.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MAR 31,
2000 2001
(unaudited) (unaudited)
(in thousands, except
per share data)
Net Sales $39,162 $35,616
Costs and Expenses:
Cost of Sales 29,360 31,243
Selling, General and Administrative 2,262 2,491
Research, Development and Engineering 2,763 3,661
34,385 37,395
Operating Income (Loss) 4,777 (1,779)
Interest and Other Income, Net 580 2,140
Income before Provision for Income Taxes 5,357 361
Provision for Income Taxes 1,770 119
Net Income $3,587 $242
Earnings per Common Share:
Basic $0.19 $0.01
Diluted $0.18 $0.01
Weighted Average Number of Common Shares:
Basic 18,926 21,429
Diluted 20,047 22,054
CONDENSED CONSOLIDATED BALANCE SHEETS DEC 31, MAR 31,
2000 2001
(audited) (unaudited)
ASSETS (in thousands)
Cash and Cash Equivalents $98,876 $103,727
Short-term Investments 66,695 50,127
Accounts Receivable, Net 23,635 26,799
Inventory 20,516 25,485
Deferred Tax Asset 4,346 4,346
Other Current Assets 1,778 2,405
Total Current Assets 215,846 212,889
Long-term Investments 4,534 4,528
Property, Plant and Equipment, Net 43,254 43,417
Other Assets 4,209 5,209
Total Assets $267,843 $266,043
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $11,404 $14,484
Accrued Liabilities 7,005 3,774
Current Taxes Payable 239 295
Term Loan 2,706 2,706
Total Current Liabilities 21,354 21,259
Deferred Tax Liability 4,487 4,487
Total Liabilities 25,841 25,746
Stockholders' Equity 242,002 240,297
Total Liabilities and
Stockholders' Equity $267,843 $266,043
SOURCE Three-Five Systems, Inc.
TEMPE, Ariz., April 17 /PRNewswire/ -- Three-Five Systems, Inc.
(NYSE: TFS) today announced its financial results for the first quarter ended
March 31, 2001.
Revenue for the first quarter was $35.6 million compared to revenue of
$39.2 million for the first quarter of 2000. Net income for the first quarter
of 2001 was $242,000, or $0.01 per share, compared to $3.6 million, or
$0.18 per share, in the first quarter of 2000. The reduced earnings per share
is primarily attributable to reduced gross margins and increased operating
expenditures. The company's gross margins have been affected because of the
current intense pricing pressures in the display industry resulting from
excess LCD capacities and inventory issues with the OEM users of displays,
such as mobile handset makers. In the first quarter of 2001, the company's
operating expenses totaled $6.2 million compared to $5.0 million for the first
quarter of 2000, an increase of $1.2 million. A substantial portion of that
increase in operating expenses was related to the ramp up of LCoS(TM)
microdisplay products, the company's newest display technology, which enables
the development of multi-media projectors, monitors, HDTVs and handheld
Internet appliances.
The company ended the first quarter of 2001 with $153.9 million in cash
and short-term investments, no outstanding borrowings on its working capital
line of credit, and no long-term debt. Total capital expenditures for the
first quarter of 2001 were $1.6 million, most of which were for production
upgrades and investments in manufacturing for LCoS(TM) microdisplays.
Operating cash outflow for Three-Five Systems in the first quarter of 2001 was
$7.2 million, primarily as a result of increased inventories and receivables.
Inventories increased as a result of push outs of product orders from the
company's OEM customers. Accounts receivable increased as a result of OEM
customers extending payment terms on outstanding accounts. Under the
company's $30 million stock buy-back program announced in December 2000, the
company purchased almost 150,000 shares of its common stock for a total of
$2.5 million in the first quarter of 2001. Since the start of the buy-back
program, the company has purchased just over 390,000 shares for $7.2 million.
Several weeks ago, the company announced that weak and uncertain demand in
the cellular handset industry and continued issues with handset inventories
had led to cancellations, delays, and push-outs for existing and new
customers' programs and, consequently, limited visibility for the company with
regard to revenue expectations for the remainder of the year. In addition,
the company said that the pressure on display prices had intensified, and that
the company was experiencing accelerated reductions of its LCD module selling
prices. Based on those unsettled conditions and pricing pressures, the
company reported that it expected its revenue in the second quarter of 2001 to
be in the range of $20 to $30 million and to report a loss in that second
quarter in the range of $.25 to $.35 per share.
Jack L. Saltich, President and Chief Executive Officer, commented, "It is
evident that worldwide economic conditions are uncertain at this time, and as
a result our visibility is clouded for the next several quarters.
Consequently our outlook from a few weeks ago remains unchanged. It is
important to note, however, that our strong financial position will allow us
to execute our strategies of (1) expanding and diversifying our core LCD
business through our numerous design wins that we had in 2000 and (2)
expending research and development resources to add new display technologies
to our product offering."
Saltich continued, "Our key new display technology is LCoS microdisplays.
The level of customer demand that we are seeing with respect to this
revolutionary technology is surpassing our expectations. We continue to focus
on four target markets -- televisions, multi-media projectors, large monitors
and personal display systems -- and we have multiple customer programs in
development."
"In conclusion, I would say that although the outlook on the economy is
uncertain, Three-Five is well positioned in a variety of ways. We have the
marketing strength to continue to seek out and win new customers in new
markets. We have the financial strength to continue to make investments in
technology and strategic opportunities. Most importantly, we have the
technical strength to make significant inroads into completely new display
technologies."
About Three-Five Systems, Inc.(R)
Three-Five Systems, Inc. (NYSE: TFS) is a recognized leader in the design
and manufacture of liquid crystal display (LCD) modules and technology for OEM
customers in wireless communications and data collection, medical electronics,
and other commercial and consumer device marketplaces. The company has also
developed LCoS(TM) (Liquid Crystal on Silicon) microdisplays. These tiny,
high-resolution, low power displays are currently being supplied to customers
developing revolutionary microdisplay-based products including high-definition
television sets, business projectors, computer monitors and wireless Internet
appliances. At its Tempe, Arizona headquarters, Three-Five operates a design
center, the highest volume LCD manufacturing line in North America, and the
David R. Buchanan LCD laboratory, dedicated to the development of advanced
display technologies. Support for the company's growing global customer base
is also provided at production facilities in Manila, the Philippines and
production and design center facilities in Beijing, China. The company's web
site is located at www.threefive.com.
Certain statements contained in this press release may be deemed to be
forward-looking statements under federal securities laws, and Three-Five
Systems intends that such forward-looking statements be subject to the
safe-harbor created thereby. Such forward-looking statements include
(1) expectations regarding the amount and timing of revenue and the operating
results of the company (including expectations regarding earnings per share)
and (2) expectations regarding Three-Five Systems winning new customers and
making inroads into new display technologies. Three-Five Systems cautions
that these statements are qualified by important factors that could cause
actual results to differ materially from those reflected by the forward-
looking statements contained herein. Such factors include (a) changes in the
markets for the company's products; (b) changes in the market for customers'
products; (c) the failure of key technologies, such as LCoS microdisplays to
deliver commercially acceptable performance; (d) the ability of Three-Five
Systems' management, individually or collectively, to guide the company in a
successful manner; and (e) other risks as detailed from time to time in Three-
Five Systems' SEC reports, including the company's most recent Registration
Statement on Form S-3, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and Annual Report on Form 10-K.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MAR 31,
2000 2001
(unaudited) (unaudited)
(in thousands, except
per share data)
Net Sales $39,162 $35,616
Costs and Expenses:
Cost of Sales 29,360 31,243
Selling, General and Administrative 2,262 2,491
Research, Development and Engineering 2,763 3,661
34,385 37,395
Operating Income (Loss) 4,777 (1,779)
Interest and Other Income, Net 580 2,140
Income before Provision for Income Taxes 5,357 361
Provision for Income Taxes 1,770 119
Net Income $3,587 $242
Earnings per Common Share:
Basic $0.19 $0.01
Diluted $0.18 $0.01
Weighted Average Number of Common Shares:
Basic 18,926 21,429
Diluted 20,047 22,054
CONDENSED CONSOLIDATED BALANCE SHEETS DEC 31, MAR 31,
2000 2001
(audited) (unaudited)
ASSETS (in thousands)
Cash and Cash Equivalents $98,876 $103,727
Short-term Investments 66,695 50,127
Accounts Receivable, Net 23,635 26,799
Inventory 20,516 25,485
Deferred Tax Asset 4,346 4,346
Other Current Assets 1,778 2,405
Total Current Assets 215,846 212,889
Long-term Investments 4,534 4,528
Property, Plant and Equipment, Net 43,254 43,417
Other Assets 4,209 5,209
Total Assets $267,843 $266,043
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $11,404 $14,484
Accrued Liabilities 7,005 3,774
Current Taxes Payable 239 295
Term Loan 2,706 2,706
Total Current Liabilities 21,354 21,259
Deferred Tax Liability 4,487 4,487
Total Liabilities 25,841 25,746
Stockholders' Equity 242,002 240,297
Total Liabilities and
Stockholders' Equity $267,843 $266,043
SOURCE Three-Five Systems, Inc.
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