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Frequency Electronics Inc. (FEIM) filed Quarterly Report for the period ended 2011-10-31.
Frequency Electronics Inc. has a market cap of $57.7 million; its shares were traded at around $7.26 with a P/E ratio of 18.3 and P/S ratio of 1.1.
This is the annual revenues and earnings per share of FEIM over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of FEIM.
Highlight of Business Operations:
Fiscal year 2012 compared to fiscal year 2011: The 26% and 20% increases in consolidated revenues for the six and three months ended October 31, 2011, respectively, compared to the same periods of fiscal year 2011, was generated primarily from satellite payload programs as a result of recent contract bookings in the FEI-NY segment. In the fiscal year 2012 periods, revenues from commercial and U.S. Government satellite programs accounted for approximately half of consolidated revenues compared to approximately 30% during the same periods of fiscal year 2011. Revenues on these long-term contracts are recognized primarily under the percentage of completion method. Increased network infrastructure revenues generated by the FEI-Zyfer segment were offset by declines in that business area in the Gillam-FEI segment. Network infrastructure revenues were approximately 20% of consolidated revenues for the six months ended October 31, 2011 compared to approximately 25% for the same period of fiscal year 2011. In the fiscal year 2012 periods, revenues from the U.S. Government/DOD business area, which are recorded in the FEI-NY and FEI-Zyfer segments, were approximately 20% of consolidated revenues compared to more than 25% for the same periods of fiscal year 2011. The percentage decreases in the network infrastructure and U.S. Government/DOD market areas are mostly due to higher satellite payload revenues recorded in fiscal year 2012.Fiscal year 2011 compared to fiscal year 2010: For the six and three months ended October 31, 2010, consolidated revenues increased by 3% and 10%, respectively, from the same periods of fiscal year 2010 due to increased revenues from both U.S. Government/DOD satellite and non-satellite programs partially offset by declines in revenue from wireless infrastructure products recorded in the FEI-NY and FEI-Zyfer segments. Revenues from wireline telecommunications products which are sold by both Gillam-FEI and FEI-Zyfer, were relatively flat in fiscal year 2011 compared to the same periods of fiscal year 2010. Revenues from satellite payload programs which are recorded in the FEI-NY segment, accounted for one-third of the Company s revenues with U.S. Government space programs increasing over 15% year-over-year. These increases were partially offset by continued low levels of activity in commercial satellite space programs. Revenues from U.S. Government/DOD non-space programs, which are recorded in the FEI-NY and FEI-Zyfer segments, also increased over 15% year-over-year and accounted for more than 25% of consolidated revenue in each of the fiscal year 2011 periods compared to approximately 25% in each of the fiscal year 2010 periods.
Research and development expenditures represent investments intended to keep the Company s products at the leading edge of time and frequency technology and enhance competitiveness for future revenues. Research and development (“R&D”) spending for the six and three month periods ended October 31, 2011 was 7% and 6% of revenues, respectively, compared to the same periods of fiscal year 2011 when R&D spending was approximately 10% of revenues, the Company s target rate. R&D spending in the fiscal year 2012 periods continued to facilitate development of new satellite payload products from DC to Ka Band, development and improvement of miniaturized rubidium atomic clocks, development of new GPS-based synchronization products and further enhancement of the capabilities of its line of low g-sensitivity and ruggedized rubidium oscillators. The lower rate and lower R&D expenditures in the fiscal year 2012 periods are due primarily to the dedication of resources to customer-funded programs rather than to internal research and development programs. The cost of this customer-funded development effort appears in cost of revenues, thus reducing the level of internal research and development spending. Although funding is obtained from customers, the rights to any products developed are retained by the Company. The Company will continue to devote significant resources to develop new products, enhance existing products and implement efficient manufacturing processes. For the remainder of fiscal year 2012, the Company anticipates that internal research and development spending will be less than 10% of revenues. Internally generated cash and cash reserves are adequate to fund these development efforts.
For the six months ended October 31, 2011, the Company had positive cash flow from operating activities of $412,000 compared to $1.8 million used in operations in the comparable fiscal year 2011 period. The primary sources of cash in the fiscal year 2012 period were increased profitable operations and reduced estimated tax payments. These inflows were partially offset by increases in inventory, accounts receivable, including costs and estimated earnings in excess of billings (unbilled receivables) and accrued expenses. The increase in costs and estimated earnings in excess of billings is due to the increase in the Company s long-term satellite payload contracts which are accounted for using the percentage of completion method. Under this method revenue was recognized but contractual milestones were not yet billed in accordance with the terms of the contracts. For the six months ended October 31, 2011 and 2010, the Company incurred approximately $3.0 million and $2.0 million, respectively, of non-cash operating expenses, such as depreciation and amortization, impairment charges on its investment in an affiliate and accruals for employee benefit programs. For the balance of fiscal year 2012, the Company expects to generate positive cash flow from operating activities.
For the six months ended October 31, 2011, the Company had positive cash flow from operating activities of $412,000 compared to $1.8 million used in operations in the comparable fiscal year 2011 period. The primary sources of cash in the fiscal year 2012 period were increased profitable operations and reduced estimated tax payments. These inflows were partially offset by increases in inventory, accounts receivable, including costs and estimated earnings in excess of billings (unbilled receivables) and accrued expenses. The increase in costs and estimated earnings in excess of billings is due to the increase in the Company s long-term satellite payload contracts which are accounted for using the percentage of completion method. Under this method revenue was recognized but contractual milestones were not yet billed in accordance with the terms of the contracts. For the six months ended October 31, 2011 and 2010, the Company incurred approximately $3.0 million and $2.0 million, respectively, of non-cash operating expenses, such as depreciation and amortization, impairment charges on its investment in an affiliate and accruals for employee benefit programs. For the balance of fiscal year 2012, the Company expects to generate positive cash flow from operating activities.
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