1st Quarter Results for 2005
1110 Maple Street ¨ P.O. Box 300 ¨ Elma, New York 14059-0300 ¨ 716-655-5990 ¨ FAX 716-655-6012
May 13, 2005
SERVOTRONICS, INC. (AMEX– SVT) ANNOUNCES 1ST QUARTER RESULTS FOR 2005
Elma, NY — Servotronics, Inc. (Amex – SVT) reported net income of $134,000 (or $0.06 net per share – Basic and Diluted) on revenues of $5,684,000 for the quarter ended March 31, 2005 as compared to net income of $158,000 (or $0.08 per share Basic and Diluted) on revenues of $5,328,000 for the comparable period ended March 31, 2004. The decrease in net income is primarily the result of increased costs and expenses necessitated by the requirements and regulations associated with Section 404 of the Sarbanes-Oxley Act. Under the Government’s current regulations, Section 404 will be effective for Servotronics and similar size companies for the year ending in 2006.
The Company’s Advanced Technology Group (ATG), has been awarded an exclusive multi-year contract for certain control components for the Standard Missile. The value of this award for the first year is estimated to be approximately $2,000,000. The Company’s Consumer Products Group (CPG) has been awarded a multi-year contract by the Government for its ASEK™ survival system for use in the Air Warrior Program. The CPG was selected as the source after an intense world-wide competition, evaluation and field tests. Continuing investment of resources and front-end costs associated with prototype, pre-production and start-up activities by both the ATG and CPG are integral to the Company’s operations and success. These costs are expensed as they are incurred and as such are not matched to their future revenues and benefits. The timing of these expenses directly contributes to period to period fluctuations in operating results.
The Company’s growing presence in foreign markets and in the medical field is creating economic opportunities and generating sales for new programs and applications. The Company is exhibiting at the Paris Air Show in June. The ATG has developed and is now supplying initial quantities of control products for use in ophthalmic surgical equipment. Similarly, other new ATG programs and product application activities are aggressively moving forward in such areas as the Joint Strike Fighter, new generation of jet engines, program upgrades and new precision control markets. Certain of the Company’s products in addition to the ones identified herein have resulted in multi-year agreements while others are currently in negotiation for the purpose of arriving at similar multi-year commitments.
New programs and product opportunities have been enhanced by the Company’s expansion of its capabilities and its commitment for continuous improvement. The CPG will be completing a significant Government contract for a combination combat knife and bayonet system in 2005. New applications and custom designed special purpose knives such as the ASEK™ survival system are generating interest and resulting in initial contracts. Also, the CPG continues to expand its presence in the government, sporting, recreational and collectible markets.
The Company is composed of two groups – the Advanced Technology Group (ATG) and the Consumer Products Group (CPG). ATG primarily designs, develops and manufactures servo control and other components for various commercial and government applications (i.e., aircraft, jet engines, missiles, etc.). This group 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 TwinTurbo Fan aircraft, the Airbus 300 series and Boeing 700 series commercial aircraft, DeHavilland DHC8-40 and various other programs.
Servotronics’ CPG designs and manufactures cutlery, bayonets, machetes and combat, survival, sporting, agricultural, and pocket knives 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