PHAZAR CORP Reports Second Quarter Fiscal 2013 Financial Results

  PHAZAR CORP Reports Second Quarter Fiscal 2013 Financial Results

Business Wire

MINERAL WELLS, Texas -- February 11, 2013

PHAZAR CORP (NASDAQ: ANTP) designs, manufactures and markets antennas, towers,
support structures, masts and communication accessories worldwide. Today,
PHAZAR CORP announces the unaudited results of operations for the three and
six month periods ended December 31, 2012.

Second Quarter Fiscal Year 2013

PHAZAR CORP’s consolidated sales from operations were $1,495,130 for the
quarter ended December 31, 2012 compared to sales of $2,092,367 for the
quarter ended December 31, 2011. The Company’s decline in revenues of
$597,237, or -29%, is attributed to a $1,116,454 non-recurring antenna
shipment to EID-Portugal in the second quarter in fiscal year 2012 offset by
an upturn in shipboard and safety climb product lines during the second
quarter in fiscal year 2013.

Cost of sales and contracts from operations were $931,556 for the quarter
ended December 31, 2012, compared to $1,273,062 for the quarter ended December
31, 2011, down $341,506, or -27%. Gross profit margin for the quarter, at 38%
is down one basis point from the 39% gross profit margin reported in the
comparable period last year.

Selling, general and administration expenses were up 193% for the quarter
ended December 31, 2012, to $2,109,890 from $719,588 in the prior year,
reflecting a $1,516,338 charge for an impairment on the Tracciare, Inc. note
receivable offset by a $126,036 decline in recurring expenses quarter over
quarter. The decline in selling, general and administration expense is related
to an increase in plant utilization overhead charged to cost of goods sold.
Discretionary product development spending for the quarter ended December 31,
2012 was $184,876, or 12% of sales, compared to $127,398, or 6% of sales for
the comparable period last year.

During the second quarter of the year ended December 31, 2012, PHAZAR CORP
reported large operating losses and projected cash flow shortfalls in the near
future. Based on those facts, it is unlikely the remaining net deferred tax
assets will be realized. Therefore, an additional valuation allowance of
$513,430 has been recorded as a deferred tax expense.

The Company recorded a net loss of $2,234,115, or $(0.96) per share for the
three month period ended December 31, 2012 compared to net income of $4,471 or
$0.00 per share for the comparable period in the prior year.

Six Month Period Ending December 31, 2012

Consolidated sales from operations for PHAZAR CORP were $2,654,966 for the six
months ended December 31, 2012 compared to $3,507,585 for the six months ended
December 31, 2011. The Company’s sales decreased by $852,619, or 24%
attributable to a $1,116,440 non-recurring shipment in fiscal year 2012 to
EID-Portugal offset by an upturn in our shipboard antenna product line.

Costs of sales and contracts from operations were $2,250,962 for the six
months ended December 31, 2012 compared to $2,052,381 for the six months ended
December 3, 2011, up $198,581, or 10% due to the $600,000 slow moving
inventory reserve recorded in the first quarter offset by the decline revenues
for the first two quarters of fiscal year 2013. The gross profit margin for
the six month period ended December 31, 2012, at 15% was down twenty six basis
points compared to the gross profit margin of 41% for the same period in the
prior year. The significant decline in gross profit margin is largely
attributed to the $600,000 reserve for slow moving inventory that was recorded
in the first quarter of fiscal year 2013.

Selling, general and administration expenses of $2,647,886 are up $1,182,928,
or 81% for the six months ended December 31, 2012 compared to $1,464,958 for
the six month period ended December 31, 2011. The increase in sales and
administration expense reflects a $1,516,338 impairment charge on the
Tracciare, Inc. note receivable offset by a $333,410 decline related to an
increase in plant utilization overhead charged to cost of goods sold for the
six month period ended December 31, 2012. Discretionary product development
spending for the six month period ended December 31, 2012 was $358,972, or 14%
of sales, compared to $226,860, or 7% of sales for the comparable period last
year. Year over year there is an increase of $132,112 in discretionary product
development spending. The increase represents continued product development
for the commercial wireless product line.

During the second quarter of the year ended December 31, 2012, PHAZAR CORP
reported large operating losses and projected cash flow shortfalls in the near
future. Based on those facts, it is unlikely the remaining net deferred tax
assets will be realized. Therefore, an additional valuation allowance of
$513,430 has been recorded as a deferred tax expense.

The Company recorded a net loss of $3,019,487, or $(1.30) per share for the
six month period ended December 31, 2012 compared to a net loss of $115,784,
or $(0.05) per share for the comparable period in the prior year.

Backlog of Orders

The Company’s backlog of orders on December 31, 2012, totaled $2,473,662, up
71% compared to backlog of $1,442,802 at December 31, 2011 and up 66% from
June 30, 2012. Incoming orders for the six month period ended December 31,
2012 totaled $3,657,481 versus $2,693,051 for the six month period ended
December 31, 2011, an increase of 36% year over year.

More information and analysis of PHAZAR CORP’s financial results will be
provided in the management discussion and analysis of financial condition and
results of operations in the Form 10-Q for the second quarter ended December
31, 2012, estimated to be filed with the Securities and Exchange Commission on
or about February 14, 2013.

The Form 10-Q will also be available at the SEC’s website at www.sec.gov and
PHAZAR CORP’s website at www.phazarcorp.com.

Product information is available at www.antennaproducts.com and
www.phazar.com.

The common stock of PHAZAR CORP is listed on the NASDAQ Capital Market under
the trading symbol “ANTP”. This press release contains forward-looking
information within the meaning of Section 29A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performances and underlying assumption and other statements,
which are other than statements of historical facts. Certain statements
contained herein are forward-looking statements and, accordingly, involve
risks and uncertainties, which could cause actual results, or outcomes to
differ materially from those expressed in the forward-looking statements. The
Company’s expectations, beliefs and projections are expressed in good faith
and are believed by the Company to have a reasonable basis, including without
limitations, management’s examination of historical operating trends, data
contained in the Company’s records and other data available from third
parties, but there can be no assurance that management’s expectations, beliefs
or projections will result, or be achieved, or accomplished.

 
 
PHAZAR CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                                
                                             December 31, 2012
                                                                 June 30, 2012
                                             (Unaudited)
CURRENT ASSETS
Cash and cash equivalents                    $  639,548          $ 528,876
Accounts receivable:
Trade, net of allowance for doubtful
accounts of $0
as of December 31, 2012 and June 30, 2012       429,117            880,342
Inventories (net of slow moving reserve)        2,041,634          2,376,427
Note receivable (net of impairment              -                  1,477,161
reserve)
Prepaid expenses and other assets               76,063             95,231
Income taxes receivable                         29,321             29,321
Deferred income taxes                           -                  211,674    
Total current assets                            3,215,683          5,599,032
                                                                  
Property and equipment, net                     931,819            997,426
Long-term deferred income tax                   -                  301,547    
TOTAL ASSETS                                 $  4,147,502        $ 6,898,005  
                                                                  
CURRENT LIABILITIES
Accounts payable                             $  348,345          $ 274,628
Accrued liabilities                             391,211            300,637
Deferred revenues                               68,226             19,619
Liabilities held for discontinued               114,571            114,571    
operations
Total current liabilities                    $  922,353          $ 709,455
                                                                  
TOTAL LIABILITIES                            $  922,353          $ 709,455    
                                                                  
COMMITMENTS AND CONTINGENCIES
                                                                  
SHAREHOLDERS’ EQUITY
Preferred Stock, $1 par, 2,000,000 shares
authorized, none issued
or outstanding, attributes to be                -                  -
determined when issued
                                                                  
Common stock, $0.01 par, 6,000,000 shares
authorized
2,323,537 issued and outstanding on
December 31, 2012 and 2,391,628
issued June 30, 2012                            23,236             23,917
                                                                              
Additional paid in capital                      4,576,649          4,735,800
Treasury stock, at cost, 0 and 74,691
shares on December 31, 2012
and June 30, 2012, respectively                 -                  (215,918  )
Retained earnings (deficit)                     (1,374,736  )      1,644,751  
Total shareholders’ equity                      3,225,149          6,188,550  
                                                                  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $  4,147,502        $ 6,898,005  

 
                                                   
PHAZAR CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                
                 Three Months Ended               Six Months Ended
                 December 31,                     December 31,
                 2012             2011            2012             2011
                 (Unaudited)                      (Unaudited)
Sales and
contract         $ 1,495,130      $ 2,092,367     $ 2,654,966      $ 3,507,585
revenues
Cost of sales      931,556          1,273,062       2,250,962        2,052,381  
and contracts
Gross profit       563,574          819,305         404,004          1,455,204
                                                                    
Selling,
general and        593,552          719,588         1,131,548        1,464,958
administration
expenses
Impairment of
note               1,516,338        -               1,516,338        -
receivable
Research and
development        184,876          127,398         358,972          226,860    
costs
Total
operating          2,294,766        846,986         3,006,858        1,691,818
expenses
                                                                    
Operating loss     (1,731,192 )     (27,681   )     (2,602,854 )     (236,614  )
                                                                    
Other income
Interest           34,448           29,585          51,767           67,877
income
Other income       (23,941    )     4,871           45,030           11,351     
(expense)
Total other        10,507           34,456          96,797           79,228
income
                                                                    
Income (loss)
from
operations         (1,720,685 )     6,775           (2,506,057 )     (157,386  )
before income
taxes
                                                                    
Income tax
expense            513,430          2,304           513,430          (53,511   )
(benefit)
                                                                    
Net income
(loss) before      (2,234,115 )     4,471           (3,019,487 )     (103,875  )
discontinued
operations
                                                                    
Loss from
discontinued       -                -               -                (18,044   )
operations
Income tax
benefit from       -                -               -                6,135      
discontinued
operations
Net loss from
discontinued       -                -               -                (11,909   )
operations
                                                                                
Net income       $ (2,234,115 )   $ 4,471         $ (3,019,487 )   $ (115,784  )
(loss)
                                                                    
Basic loss per
common share
Continuing       $ ( 0.96     )   $ -             $ (1.30      )   $ (0.04     )
operations
Discontinued       -                -               -                (0.01     )
operations
Net loss         $ (0.96      )   $ -             $ (1.30      )   $ (0.05     )
                                                                    
Diluted loss
per common
share
Continuing       $ (0.96      )   $ -             $ (1.30      )   $ (0.04     )
operations
Discontinued       -                -               -                (0.01     )
operations
Net loss         $ (0.96      )   $ -             $ (1.30      )   $ (0.05     )
                                                                    
Basic weighted
average of         2,322,578        2,313,569       2,320,319        2,312,346
common shares
outstanding
Diluted
weighted
average of         2,322,578        2,313,569       2,320,319        2,312,346
common shares
outstanding

 
 
PHAZAR CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                         Six Months Ended
                                         December 31, 2012   December 31, 2011
                                         (Unaudited)         (Unaudited)
                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                 $  (3,019,487  )    $   (115,784   )
Adjustments to reconcile net loss to
net cash

provided by operating activities:
Depreciation                                65,607               64,692
Provision for slow moving inventory         600,000              -
Impairment of note receivable               1,516,338            -
Loss from discontinued operations           -                    11,909
Stock based compensation                    56,086               27,114
Deferred federal income tax                 513,221              (33,512    )
Changes in operating assets and
liabilities:
Accounts receivable                         451,225              338,158
Inventories                                 (265,207    )        84,928
Income taxes receivable                     -                    (24,955    )
Prepaid expenses and other assets           19,168               62,996
Accounts payable                            73,717               22,498
Accrued liabilities                         90,574               170,493
Deferred revenues                           48,607               19,618
Net cash used in discontinued               -                    (75,398    )
operations
Net cash provided by operating              149,849              552,757
activities
                                                              
CASH FLOWS FROM INVESTING ACTIVITIES:
Funding of note receivable                  (39,177     )        (256,235   )
Purchase of property and equipment          -                    (37,250    )
Net cash used in investing activities       (39,177     )        (293,485   )
                                                              
Net increase in cash and cash               110,672              259,272
equivalents
CASH AND CASH EQUIVALENTS, beginning        528,876              1,169,318   
of period
CASH AND CASH EQUIVALENTS, end of        $  639,548          $   1,428,590   
period

Contact:

PHAZAR CORP
Kathy Kindle, 940-325-3301
Fax: 940-325-0716
kindle@phazarcorp.com