Servotronics, Inc. Announces 9 Month and 3rd Quarter Results
1110 Maple Street ¨ P.O. Box 300 ¨ Elma, New York 14059-0300 ¨ 716-655-5990 ¨ FAX 716-655-6012
November 14, 2002
SERVOTRONICS, INC. (AMEX-SVT)
ANNOUNCES 9 MONTH AND 3rd QUARTER RESULTS
Elma, NY — Servotronics, Inc. (Amex – SVT) reported net income for the nine month period ended September 30, 2002 of $245,000 (or $0.13 per share – Basic and Diluted) on revenue of $11,895,000 as compared to net income of $448,000 (or $0.24 per share – Basic and Diluted) on revenue of $13,421,000 for the same period in 2001. Third quarter net income was $6,000 (or $0.00 per share – Basic and Diluted) on revenue of $3,761,000 as compared to net income of $112,000 (or $0.06 per share – Basic and Diluted) on revenue of $4,225,000 for the same period in 2001. The decreases in revenues for the nine month period and third quarter ended September 30, 2002 are attributed to previously reported reductions and stretch-outs in the commercial aerospace markets for the Company’s Advanced Technology Group’s (ATG) products combined with lower revenues at the Consumer Products Group due to certain reprioritizations and reductions in government procurements, regionalization of markets by a significant customer and a general decline in retail markets for household knives. Also, substantially contributing to the decrease in net income were increased expenses to procure new applications including the engineering of new products which are expensed as they occur, increased insurance costs of up to 70% as well as increased costs for resources dedicated to merger/acquisition evaluations, for expanded sales and marketing activities, and for new reporting requirements for public companies. The ATG’s 9/30/02 funded backlog increased approximately 20% when compared to the ending backlog for the second quarter of 2002.
As previously reported, Raytheon Missile Systems awarded Servotronics a contract for the production of control hardware for the Standard Missile program. The value of that contract has been recently increased by $522,000 to over $3,200,000. Servotronics’ planned production for this contract will commence in 2002 and be completed in 2004.
It is generally recognized that current events since 9/11/01 have combined and are having a significant negative impact on the U.S. and global economies which is being at least partially offset by increases in government and defense spending. Therefore, while the Company is optimistic, it is unable to precisely quantify with certainty the net long term effect that these events will have on the Company. However, the Company has a long successful history of improving its capabilities and successfully moving forward notwithstanding the cyclical nature of the aerospace industry, recessions or other adverse circumstances.
Servotronics, Inc. is currently providing products for a significant number of aerospace programs such as the 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, the Standard Missile, numerous business and regional jet aircraft, Raytheon’s Hawker Horizon Aircraft, Embraer new TwinTurbo Fan aircraft, the Airbus and Boeing commercial aircraft, DeHavilland DHC8-40 and various other programs.
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, bayonets and machetes for both commercial and government applications.
Certain paragraphs of this release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as those pertaining to the Company’s expectation of new business and success in its entry into new product programs. Forward-looking statements involve numerous risks and uncertainties. The Company derives a material portion of its revenue from contracts with agencies of the U.S. Government or their prime contractors. The Company’s business is performed under fixed price contracts and the following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: uncertainties in today’s global economy and global competition, difficulty in predicting defense appropriations, the vitality and ability of the commercial aviation industry to purchase new aircraft, the willingness and ability of the Company’s customers to fund long-term purchase programs, and market demand and acceptance both for the Company’s products and its customers’ products which incorporate Company-made components. The success of the Company also depends upon the trends that affect the national and international economy. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company assumes no obligation to update forward-looking statements.
SERVOTRONICS, INC. (SVT) IS LISTED ON NYSE Amex