2000 Year End News Release
Elma, NY –Servotronics, Inc. (Amex – SVT) reported net income of $418,000 (or $0.23 per share basic and $0.21 per share diluted) on revenues of $16,969,000 for the year ended December 31, 2000 as compared to a net loss of ($682,000) (or $0.38 per share basic and diluted) on revenue of $16,165,000 before the cumulative effect of a one-time charge for a change in accounting principles of ($1,727,000) net of taxes for the year ended 12/31/99. In 1999, the Company also recorded a pre-tax charge of $854,000 for the restructure of its Consumer Products Group (CPG) operations. The change in accounting principles resulted from the early adoption of accounting pronouncements in 1999 which expensed all accumulated pre-production, development and start-up charges. These charges were previously appropriately amortized. All such charges are now expensed as they occur. This has the effect of reducing reported current program income because of the early expensing of front-end program costs, which in turn enhances reported future program income as programs mature.
Receipt of new orders is continuing to increase for the Advanced Technology Group (ATG). New ATG orders received in the last 3 quarters of 2000 have increased by approximately 40% when compared to the same period in 1999. This trend has continued into the first quarter of 2001. The Company primarily attributes these increases to proactive marketing and product development. Included in these new ATG orders is a recently received letter contract for the purchase of long lead-time items for approximately $1,200,000 of key components for the Standard Missile program and an option for an additional $1,200,000. A third $1,200,000 for the same components is under negotiation for a foreign requirement. During 2000 the Consumer Products Group was successful in becoming U. S. Government qualified and the principal supplier for the M9 bayonet. The initial quantities for this item are substantial. However, production shipments are subject to the vagaries of the government procurement cycles which translates into volatile shipping demands — a requirement that the CPG is now well structured to meet.
Servotronics is currently providing products for a significant number of aerospace programs such as Raytheon’s Hawker Horizon Aircraft, Embraer new Twin-Turbo Fan aircraft, the Airbus 300 and Boeing 700 series of commercial aircraft, DeHavilland DHC8-40, F/A-18 E/F Super Hornet and other jet fighters; the Bell/Boeing MV-22 Osprey Tiltrotor Joint Service Aircraft, the Blackhawk, Apache, A-10 and other helicopters, numerous business and regional jet aircraft, Standard Missiles, satellite launch vehicles, KTX and various other programs.
Discussions with potential acquisition candidates are continuing. The Company believes its current per share market price is significantly undervalued. The Company has been authorized to acquire approximately 290,000 shares in the open market or otherwise at the discretion of management.
Servotronics, Inc. is composed of two operating groups – the Advanced Technology Group and the Consumer Products Group. The Advanced Technology Group designs, develops and manufactures servo control and other components for various commercial and government applications (i.e., aircraft, jet engines, missiles, satellite launch vehicles, etc.). The Consumer Products Group designs and manufactures sporting knives, cutlery and machetes for both commercial and government applications.