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): March 9, 2006
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, address and fiscal year, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
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(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
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|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Page 1 of 4 pages
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On March 9, 2006, Frequency Electronics, Inc. issued a press release, which sets
forth its results of operations for the third quarter of fiscal year 2006 ended
January 31, 2006. 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 March 9, 2006.
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: March 9, 2006
Exhibit 99.1
PRESS RELEASE
Frequency Electronics Announces Results for Third Quarter Fiscal Year 2006
Mitchel Field, NY, March 9, 2006 - Frequency Electronics, Inc. (AMEX-FEI)
reported that revenues for the third quarter of fiscal year 2006, which ended
January 31, 2006, were $15.1 million compared to $11.2 million for the same
period of fiscal 2005, and $11.5 million for the prior quarter of fiscal 2006.
For the nine-month period ended January 31, 2006, revenues were $37.7 million
compared to $43.3 million in the first nine months of the previous fiscal year.
In the third quarter, the Company recorded net income of $1.3 million, $0.14 per
diluted share, compared to a loss of $368,000, ($0.04) per diluted share, in the
same quarter of fiscal 2005. For the nine month period ended January 31, 2006,
net income was $3.7 million, $0.43 per diluted share, compared to $1.5 million,
$0.17 per diluted share, in the same period of the previous fiscal year. The
nine-month period of fiscal 2006 includes realized gains on sales of marketable
securities and real property. Operating income for the third quarter was $1.2
million compared to an $899,000 operating loss in the third quarter of fiscal
2005. For the first nine months of fiscal year 2006 operating income was $1.4
million compared to $1.1 million in the same period of the prior year.
Commenting on this report, Chairman of the Board General Joseph Franklin said:
"We are very pleased with these results. Revenues are rising, as we had
anticipated, up over 30% compared to the revenues in each of the preceding
quarters of this fiscal year. Operating profit increased over 23% for the first
nine months compared to the same period last year. Looking ahead, we see
significant opportunities in both military and commercial space programs, as
well as wireless and wireline markets. Based on bookings to date, our outlook is
very optimistic for the rest of this year and beyond."
Revenues for the Commercial Communications segment were $9.2 million for this
past quarter and $20.1 million for the first nine months of fiscal 2006.
Revenues for the first nine months of fiscal 2005 were $25.4 million. Sales to
wireless infrastructure OEM's increased sequentially this past quarter, but have
not yet reached the levels realized in early fiscal 2005. Over 30% of fiscal
2006 revenues in this segment were generated by commercial satellite sales,
continuing the strong growth that began late last year
Third quarter revenues for the US Government segment were $1.1 million and $4.8
million for the first nine months of fiscal 2006. Revenues for the first nine
months of last year were $4.3 million. FEI-Zyfer's revenues, a majority of which
are derived from US Government programs, were $2.8 million for the third quarter
and $7.9 million for the first nine months of fiscal 2006. In fiscal 2005,
FEI-Zyfer's revenues were $6.6 million for the first nine months.
Government-related sales for fiscal 2006 are in excess of 25% of the Company's
total sales, compared to approximately 20% for full fiscal year 2005.
Gillam-FEI recorded revenues of $2.1 million for the third quarter and $5.8
million for the first nine months of fiscal 2006, compared to $7.6 million for
the first nine months of fiscal 2005. Intercompany R&D sales are not included in
these figures. Gillam-FEI continues development of new products for
telecommunications synchronization. Excluding intercompany R&D sales, fiscal
2006 fourth quarter revenues are expected to increase sequentially, but full
year revenues will not reach the level obtained in fiscal 2005.
Research and development expenses were $1.2 million for the third quarter and
$4.1 million for the first nine months of fiscal 2006. R&D expenses for the
first nine months of fiscal 2005 were $4.9 million. The decrease in internally
funded research and development spending reflects the allocation of engineering
resources to customer-funded programs in the fiscal year 2006 periods.
Chief Financial Officer Alan Miller added the following comment: "The third
quarter's sequentially higher revenues and improved gross margin have generated
significantly higher operating profit compared to the first half of fiscal 2006.
Excluding the impact of reduced spending on internal research and development
programs, third quarter operating profit increased by over $800 thousand from
each of the first two quarters of fiscal year 2006. This increased operating
profit is in excess of 20% of the increase in quarter-to-quarter revenues. This
demonstrates the operating leverage we achieve with higher sales, cost controls
and more efficient operations. As revenues continue at this increased level we
expect to realize greater operating profits in the last quarter of this year and
into fiscal 2007."
Investor Conference Call
As previously announced, the Company will hold a conference call to discuss
these results on March 9, 2006 at 11:30 AM Eastern Time. Investors and analysts
may access the call by dialing 1-800-289-0517. International callers may dial
1-913-981-5529. 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.earnings.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 April 8, 2006. The
archived call may also be retrieved at 1-888-203-1112 (domestic) or
1-719-457-0820 (international) using Passcode ID 9842643.
About Frequency Electronics
---------------------------
Frequency Electronics, Inc. is a world leader in the design, development and
manufacture of high precision timing, frequency control and synchronization
products for space and terrestrial applications. The Company's products are used
in commercial, government and military systems, including satellite payloads,
missiles, UAVs, piloted aircraft, GPS, secure radios, SCADA, energy exploration
and wireline and wireless communication 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 strategic acquisitions
world-wide to expand its capabilities and markets. The Company's Belgium-based
Gillam-FEI subsidiary provides the Company with expertise in wireline network
synchronization, monitoring and SCADA. FEI-Zyfer in Anaheim, CA, provides GPS
and secure timing ("SAASM") capabilities for critical military and commercial
applications. The Company has an affiliate in St. Petersburg, Russia which
supplies high-quality, cost effective quartz oscillators and components.
Additionally, the Company operates a new, modern manufacturing facility in
Tianjin, China through its wholly-owned subsidiary, FEI-Asia. 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: Alan Miller, CFO, or General Joseph P. Franklin, Chairman:
TELEPHONE: (516) 794-4500 WEBSITE: www.frequencyelectronics.com
Frequency Electronics, Inc. and Subsidiaries
Consolidated Condensed Summary of Operations
Quarter Ended Nine Months Ended
January 31, January 31,
2006 2005 2006 2005
---- ---- ---- ----
(unaudited) (unaudited)
(in thousands except per share data)
Net Sales $15,113 $11,222 $37,668 $43,266
Cost of Sales 9,651 7,529 24,011 28,537
------- ------- ------- -------
Gross Margin 5,462 3,693 13,657 14,729
Selling and Administrative 3,077 2,567 8,154 8,759
Research and Development 1,173 2,025 4,123 4,850
------- ------- ------- -------
Operating Profit (Loss) 1,212 (899) 1,380 1,120
Interest and Other, Net 616 361 4,218 1,225
------- ------- ------- -------
Income (Loss) before Taxes &
Minority Interest 1,828 (538) 5,598 2,345
Minority Interest - - - (1)
------- ------- ------- -------
Income (Loss) before Income Taxes 1,828 (538) 5,598 2,346
Income Tax Provision (Benefit) 580 (170) 1,876 830
------- ------- ------- -------
Net Income (Loss) $ 1,248 $ (368) $ 3,722 $ 1,516
======= ======= ======= =======
Net Income (Loss) per Share:
Basic $ 0.15 $ (0.04) $ 0.44 $ 0.18
====== ======= ====== ======
Diluted $ 0.14 $ (0.04) $ 0.43 $ 0.17
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Average Shares Outstanding
Basic 8,541,519 8,499,274 8,530,926 8,473,679
========= ========= ========= =========
Diluted 8,674,434 8,499,274 8,668,685 8,682,099
========= ========= ========= =========
Frequency Electronics, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
January 31, April 30,
2006 2005
---- ----
(in thousands)
ASSETS
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Cash & Marketable Securities $ 26,327 $ 30,233
Accounts Receivable 14,850 12,728
Inventories 23,445 22,948
Other Current Assets 4,211 3,631
Property, Plant & Equipment 6,187 6,770
Other Assets 12,868 12,064
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$ 87,888 $ 88,374
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities $ 8,335 $ 9,844
Long-term Obligations and Other 9,069 9,337
Stockholders' Equity 70,484 69,193
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$ 87,888 $ 88,374
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