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MultiFineline Electronix Inc. Reports Operating Results (10-Q)

August 06, 2009 | About:

MultiFineline Electronix Inc. (MFLX) filed Quarterly Report for the period ended 2009-06-30.

Multi-Fineline Electronix is a global provider of high-quality technologically advanced flexible printed circuit and value-added component assembly solutions to the electronics industry. MultiFineline Electronix Inc. has a market cap of $557.5 million; its shares were traded at around $22.41 with a P/E ratio of 11.6 and P/S ratio of 0.8.

Highlight of Business Operations:

Research and Development. Research and development expense increased to $1.5 million for the three months ended June 30, 2009, from $0.6 million in the comparable period in the prior year, an increase of 150%. The increase was primarily due to an increase in compensation and benefits expenses related to increased headcount, bonus accruals of $0.4 million, increased depreciation expense of $0.1 million on research and development equipment purchases, increased purchases of test materials of $0.1 million, and $0.3 million on other research and development expenses. Our research and development activities focus on new technologies, primarily those which are expected to provide for additional miniaturization, cost reduction, and differentiation from our competition, as well as activities related to Pelikon Limited (Pelikon). We expect these expenses to continue to grow as we focus on expanding our product development activities.

Sales and Marketing Expense. Sales and marketing expense increased to $5.2 million during the three months ended June 30, 2009 from $5.1 million during the three months ended June 30, 2008. As a percentage of net sales, sales and marketing expense was 3.0% for both the three months ended June 30, 2009 and June 30, 2008. Changes include a $0.6 million increase in compensation and benefit expense due to headcount to support expanded program management activities, a $0.3 million increase in information technology and human resource support expenses due to expanded infrastructure growth, and a $0.1 million increase in other sales and marketing expenses. These increases were offset by a $0.9 million decrease in commissions due to a change in customer mix.

General and Administrative Expense. General and administrative expense decreased to $6.1 million during the three months ended June 30, 2009, from $7.6 million for the comparable period in the prior year, a decrease of $1.5 million or 20%. As a percentage of net sales, general and administrative expense declined to 3.5% versus 4.5% for the comparable period of the prior year. This was primarily attributable to $1.3 million for information technology and human resource expenses as activities were shifted to support expanded manufacturing operations and infrastructure growth in other areas and reduced compensation expenses of $0.2 million.

Research and Development. Research and development expense increased to $3.9 million for the nine months ended June 30, 2009, from $1.7 million in the comparable period of the prior year, an increase of 129%. The increase was primarily due to an increase in compensation and benefits of $1.0 million resulting from headcount and salary increases related to our increased emphasis on expanding our research and development activities in Anaheim and in our Pelikon subsidiary, increased depreciation of $0.4 million on research and development equipment purchases, increased purchased materials of $0.2 million related to research and development activities, $0.3 million for increased information technology and human resource support expenses due to expanded activities, and $0.3 million of other research and development expenses.

Sales and Marketing Expense. Sales and marketing expense increased by $2.4 million to $16.6 million in the nine months ended June 30, 2009, from $14.2 million in the comparable period in the prior year, an increase of 17%. The increase is primarily attributable to a compensation and benefits expense increase of $2.5 million, as a result of headcount growth, $0.7 million for information technology and human resource support expenses to support the expanded infrastructure, $0.3 million related to travel expenses, and a net increase of $0.3 million from other sales and marketing expenses. These increases were partially offset by reduced commissions expense of $1.4 million due to a change in customer mix and a new negotiated sales commission structure. As a percentage of net sales, sales and marketing expense increased to 2.9% versus 2.8% in the same period of the prior year.

General and Administrative Expense. General and administrative expense decreased by $2.8 million to $19.4 million in the nine months ended June 30, 2009, from $22.2 million in the comparable period in the prior year, a decrease of 13%. The decrease was primarily attributable to a decrease of $3.2 million for information technology and human resource expenses, as activities were shifted to support expanded manufacturing operations and infrastructure growth and a net decrease of other general and administrative expenses of $0.2 million, partially offset by an increase in compensation and benefits expense of $0.6 million due to the increase in salaries and headcount at various locations to support business growth. As a percentage of net sales, general and administrative expense decreased to 3.4% of net sales for the nine months ended June 30, 2009 from 4.3% for the comparable period of the prior year, attributable to the favorable leveraging impact on our operating expenses from the increased net sales.

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