ATSN Artesyn Technologies (MM)

BOCA RATON, Fla., Feb. 7 /PRNewswire-FirstCall/ -- Artesyn Technologies, Inc. (NASDAQ:ATSN) today reported financial results for the fourth quarter and year ended December 30, 2005. (Logo: http://www.newscom.com/cgi-bin/prnh/20050117/FLMLOGO ) Sales for the fourth quarter of 2005 were $112.2 million compared to $120.4 million for the corresponding quarter in 2004. Net income for the fourth quarter of 2005 was $3.9 million, or $0.09 per share, compared to net income of $5.3 million, or $0.12 per share for the fourth quarter of 2004. For the year ended December 30, 2005, Artesyn reported sales of $424.7 million compared to $429.4 million for fiscal year 2004. Net income for fiscal year 2005 was $9.9 million, or $0.25 per share, compared to net income of $13.9 million, or $0.34 per share, for fiscal year 2004. Included in net income for fiscal year 2005 are restructuring charges of $3.7 million, or $0.08 per share net of tax. Total orders received during the fourth quarter were $115.2 million, yielding a book-to-bill ratio of 1.03. Backlog at the end of the quarter was $84.8 million, with approximately 93% shippable during the first quarter of 2006. In the fourth quarter of 2005, Artesyn had 27 major design wins that the Company estimates will realize approximately $206 million in lifetime project revenues. For the year, the Company was awarded 107 design wins that are estimated to generate $965 million of lifetime revenues. The Company incurred additional expenses during the quarter related to inventory and merger activities. A provision of approximately $1.0 million was recorded for inventory not in compliance with the Restriction of Hazardous Substances (RoHS) requirement for products used throughout the European Union. Merger-related expenses for the quarter were approximately $0.9 million. These combined expenses, net of tax, represent $0.03 per share. The Company also realized a net tax benefit of $1.7 million, or $0.03 per share, from the reversal of tax contingencies no longer required. During the quarter, it was determined that certain costs previously classified within cost of sales, are more appropriately classified as research and development costs, included within operating expenses. Accordingly, in the fourth quarter of 2005, $2.7 million was reclassified as research and development costs that related to the first three quarters of 2005. To conform to the 2005 presentation, a reclassification was made for approximately $0.9 million and $3.2 million for the respective quarterly and annual periods in 2004. Business Segment Results Power Conversion Fourth quarter sales for the Power Conversion segment were $87.8 million compared to $96.6 million for the fourth quarter of 2004. The decline in sales is primarily from older programs in the server division going end of life during 2005. Lower sales in this segment, the RoHS related inventory provision of approximately $1.0 million and operating inefficiencies of approximately $1.0 million, related to the closure of the manufacturing facility in Hungary, resulted in an operating loss of $0.4 million compared to operating income of $4.1 million for the same period last year. Embedded Systems Fourth quarter sales for the Embedded Systems segment were $24.5 million compared to $23.8 million for the fourth quarter of 2004. The improvement in sales is primarily from the realization of revenue from large wireless infrastructure customers supplying 3G deployments and carrier upgrades in North America. As a result of higher sales, operating income was $8.6 million for the fourth quarter compared to $7.7 million for the same period last year. About Artesyn Technologies, Inc. Artesyn Technologies, Inc., headquartered in Boca Raton, FL, is a world leader in the design, manufacture and sale of power conversion and embedded board solutions for infrastructure applications in server and storage, networking, wireless and telecommunications systems. The Company's products are used in middle to high-end servers, data storage devices, routers, hubs, high-speed modems, RF amplification systems, base station controllers and transceivers. The Company has a global sales reach with design and manufacturing facilities in Asia, Europe and North America. Artesyn is a public company whose common stock is traded on the Nasdaq stock market under the symbol ATSN. For more information, please visit the Company's web site at http://www.artesyn.com/ . Use of Non-GAAP Financial Measures To supplement the Company's financial statements presented on a GAAP basis, Artesyn uses non-GAAP financial measures to give the reader a clearer picture of Artesyn's current operating performance from management's perspective. These non-GAAP financial measures include EBITDA, which management believes is appropriate to enhance the overall understanding of Artesyn's past financial performance. These measures are not recognized for US GAAP financial statement presentation and, as required, reconciliations to GAAP are provided in the financial highlights after the written portion of this release. Cautionary Statement About Forward-Looking Statements Statements in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that these forward- looking statements involve certain risks and uncertainties and may differ materially from actual future events or results. Undue reliance should not be placed on such forward-looking statements. Certain risks and uncertainties are identified in Artesyn's periodic filings with the United States Securities and Exchange Commission, specifically the most recent annual report on Form 10-K, filed on March 16, 2005. Some of these risk factors include, but are not limited to, operating in a volatile, competitive industry characterized by rapidly changing prices, technologies and demands associated with global manufacturing in foreign locations, dependence on a relatively small number of customers, dependence on and volatility of foreign sales, and technological changes which may render our existing products uncompetitive or obsolete. Any forward-looking statement made in this release is made as of the date of this release and should not be relied upon as representing our estimates as of any subsequent date. Artesyn assumes no obligation to update any such forward- looking statements. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. For a more detailed discussion of such risks and uncertainties, the Company strongly encourages you to review its SEC filings. Artesyn Technologies, Inc. Financial Highlights (In Thousands Except per Share Data) (Unaudited) Quarter Ended Fiscal Year Ended Dec. 30, Dec. 31, Dec. 30, Dec. 31, 2005 2004 2005 2004 Orders $115,217 $115,331 $422,487 $429,661 Capital Expenditures 2,857 3,700 12,597 22,140 Sales Power Conversion 87,773 96,573 346,440 354,625 Embedded Systems 24,459 23,793 78,261 74,764 Total 112,232 120,366 424,701 429,389 Operating income 4,047 8,002 13,188 22,640 Depreciation and amortization 5,120 5,726 21,887 22,275 EBITDA 9,167 13,728 35,075 44,915 Net Income $3,895 5,268 9,936 13,873 Diluted Earnings Per Share $0.09 $0.12 $0.25 $0.34 Weighted Average Shares Outstanding 51,860 51,403 40,442 51,140 Artesyn Technologies, Inc. Condensed Consolidated Statements of Operations (In Thousands Except per Share Data) (Unaudited) Quarter Ended Fiscal Year Ended Dec. 30, Dec. 31, Dec. 30, Dec. 31, 2005 2004 2005 2004 Sales $112,232 $120,366 $424,701 $429,389 Cost of Sales 80,505 88,462 316,596 316,584 Gross Profit 31,727 31,904 108,105 112,805 Operating Expenses Selling, general and administrative 12,640 12,678 42,322 45,851 Research and development 15,003 11,224 48,890 44,314 Restructuring and other charges 37 -- 3,705 -- Total Operating Expenses 27,680 23,902 94,917 90,165 Operating Income 4,047 8,002 13,188 22,640 Interest Expense, net (609) (1,312) (3,405) (5,004) Income Before Income Taxes 3,438 6,690 9,783 17,636 Provision (Benefit) for (457) 1,422 (153) 3,763 Income Taxes Net Income $3,895 $5,268 $9,936 $13,873 Net Income Per Share -Basic $0.10 $0.13 $0.25 $0.35 -Diluted $0.09 $0.12 $0.25 $0.34 Weighted Average Common and Common Equivalent Shares Outstanding -Basic 39,908 39,270 39,666 39,093 -Diluted 51,860 51,403 40,442 51,140 Artesyn Technologies, Inc. Condensed Consolidated Balance Sheets (In Thousands) (Unaudited) December 30, December 31, 2005 2004 ASSETS Current Assets Cash and equivalents $100,260 $84,811 Short term investments 3,408 21,125 Accounts receivable, net 79,708 61,352 Inventories, net 46,273 50,320 Prepaid expenses and other current assets 8,047 1,380 Deferred income taxes, net 7,563 9,137 Total current assets 245,259 228,125 Property, Plant & Equipment, Net 45,788 66,124 Other Assets Goodwill 20,546 22,107 Deferred income taxes, net 5,197 4,155 Other assets 19,539 21,128 Total long-term liabilities 29 -- Total other assets 45,311 47,390 Total Assets $336,358 $341,639 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $56,808 $54,958 Accrued and other current liabilities 38,849 52,838 Total current liabilities 95,657 107,796 Long-Term Liabilities Convertible subordinated debt 90,000 90,000 Other long-term liabilities 7,433 9,867 Total long-term liabilities 97,433 99,867 Total liabilities 193,090 207,663 Shareholders' Equity 143,268 133,976 Total Liabilities and Shareholders' Equity $336,358 $341,639 http://www.newscom.com/cgi-bin/prnh/20050117/FLMLOGO http://photoarchive.ap.org/ DATASOURCE: Artesyn Technologies CONTACT: Gary Larsen, Chief Financial Officer, +1-561-451-1000, or Pamela Rembaum, Director, Investor Relations, +1-561-451-1028, both of Artesyn Technologies, Inc. Web site: http://www.artesyn.com/

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