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Frequency Electronics, Inc. Announces Fiscal Year 2013 Results



Frequency Electronics, Inc. Announces Fiscal Year 2013 Results

MITCHEL FIELD, N.Y., July 18, 2013 (GLOBE NEWSWIRE) -- Frequency Electronics,
Inc. (Nasdaq:FEIM) reported revenues of $68.9 million for fiscal year 2013,
which ended April 30, 2013, an 8% year-over-year increase compared to revenues
of $63.6 million for fiscal 2012.

Operating profit for fiscal 2013 was $4.7 million, compared to operating
profit of $6.7 million for fiscal 2012. Fiscal year 2013 results include a
fourth quarter asset write down charge to earnings of $1.4 million.

Net income for fiscal 2013 was $3.7 million or $0.43 per diluted share
compared to net income of $7.4 million or $0.86 per diluted share for fiscal
2012. Fiscal year 2012 net income included a benefit from the $3.1 million
reversal of a deferred tax valuation allowance and recognition of a gain of
$700,000 from the step acquisition of Elcom Technologies.

Commenting on the Company's performance and business outlook, Chairman of the
Board General Joseph Franklin stated: "This past fiscal year we achieved
excellent gains in revenues and profits in our core satellite payload
business. Furthermore, we anticipate additional, sizable new contracts for
space products in the very near future. Accordingly, we are highly confident
in our positive outlook for the current fiscal year. We also achieved
increased revenues from other non-space US Government/DOD end-use business.
After the end of the past year, the Company determined to take a one-time
asset write down of 1.1 million Euros at our Gillam-FEI subsidiary. That write
down along with fourth quarter results at our FEI-Zyfer subsidiary prevented
consolidated operating income and EBITDA from reaching previously anticipated
record levels. Looking ahead, we expect increased operating income and EBITDA
as fiscal year 2014 progresses. In addition, after the end of fiscal 2013 we
established a new $25 million credit facility in support of our present strong
financial position and for potential acquisitions. We continue to aggressively
pursue opportunities for external growth."

Selected Fiscal 2013 Financial Metrics and Other Items

  * Satellite payloads, the Company's dominant and fastest growing business
    area, represented 50% of consolidated revenues and grew by 11% over prior
    year satellite revenues. More than 75% of year-end backlog represents
    satellite business, currently weighted more toward US Government/DOD
    programs than for commercial applications.
  * Sales for non-space U.S. Government/DOD end-use increased to 26% of
    consolidated revenues. Total sales for U.S. Government/DOD, including
    revenues on U.S. Government satellite programs and revenues from FEI-Elcom
    and FEI-Zyfer, accounted for more than 60% of consolidated revenues.
  * Spending on internal research and development (IR&D) increased by
    approximately $1.9 million compared to the prior year. These expenditures
    include increased efforts on the Company's expanded product line of
    satellite microwave receivers/converters. Excellent progress has been made
    on these new products and the Company expects prototypes to be available
    for customer appraisal by the fall of 2013 and to obtain orders prior to
    the end of fiscal year 2014.
  * For fiscal year 2013, operating profit plus depreciation and amortization,
    cashless contributions to employee benefit plans, stock-based compensation
    and add back of the year-end charge on Gillam-FEI ("modified EBITDA") was
    $10.5 million or 15% of revenues, compared to $11.0 million and 17% of
    revenues for fiscal year 2012.
  * Revenues from our network infrastructure business area accounted for 17%
    of consolidated revenues, down from 20% of consolidated revenues in the
    prior year.
  * FEI-Elcom results are included in the FEI-NY segment. In the first quarter
    of the year FEI-Elcom recorded a $900,000 operating loss. Since that
    quarter, FEI-Elcom has generated increased revenues and operating
    profits. The Company expects FEI-Elcom to make a positive contribution to
    fiscal year 2014 profits as well as contributing substantial engineering
    resources to new product development.
  * FEI-Zyfer's results for the fourth quarter of the fiscal year were
    negatively impacted by delays in orders and lower than anticipated
    revenues from U.S. Government and commercial customers. A fourth quarter
    operating loss of approximately $700,000 erased the operating profits that
    FEI-Zyfer had achieved during the first three quarters of fiscal year
    2013.
  * Gillam-FEI has participated for several years in designing hardware and
    creating software in connection with the French government's smart
    electrical grid initiative. Based on slower than anticipated rollout of
    this project, the Company has less visibility regarding the probable
    schedule for obtaining production-level orders, which are now anticipated
    to occur no earlier than fiscal year 2015. Accordingly, the Company
    elected to write down $1.4 million dollars of accumulated costs.
  * Subsequent to year end, the Company established a five-year, $25 million
    revolving credit facility with JPMorgan Chase Bank for working capital and
    acquisitions. The agreement calls for a floating interest rate of LIBOR
    plus 75 basis points and LIBOR plus 175 basis points on separate tranches.

Investor Conference Call

As previously announced, the Company will hold a conference call to discuss
these results on Thursday, July 18, 2013, at 12:00 Noon Eastern
Time. Investors and analysts may access the call by dialing
1-877-407-9210. International callers may dial 1-201-689-8049. Ask for the
Frequency Electronics conference call. 

The call will be archived on the Company's website through August 16,
2013. The archived call may also be retrieved at 1-877-660-6853 (domestic) or
1-201-612-7415 (international) using Conference ID #: 418220.

About Frequency Electronics

Frequency Electronics, Inc. is a world leader in the design, development and
manufacture of high precision timing, frequency control and synchronization
products for space and terrestrial applications.  Frequency's products are
used in satellite payloads and in other commercial, government and military
systems including C4ISR markets, missiles, UAVs, aircraft, GPS, secure radios,
energy exploration and wireline and wireless communication networks.
 Frequency has received over 100 awards of excellence for achievements in
providing high performance electronic assemblies for over 150 space and DOD
programs.  The Company invests significant resources in research and
development and strategic acquisitions world-wide to expand its capabilities
and markets.  

Frequency's Mission Statement: "Our mission is to provide precision time and
low phase noise frequency generation systems from 1 Hz to 42 GHz, for space
and other challenging environments."

Subsidiaries and Affiliates: Gillam-FEI provides expertise in network
synchronization and monitoring; FEI-Zyfer provides GPS and secure timing
("SAASM") capabilities for critical military and commercial applications;
FEI-Asia provides cost effective manufacturing capabilities; FEI-Elcom Tech
provides added resources for state-of-the-art RF microwave products.
 Frequency's Morion affiliate supplies high-quality, cost effective quartz
oscillators and components.  Additional information is available on the
Company's website: www.frequencyelectronics.com

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:

The Statements in this press release regarding the future constitute
"forward-looking" statements pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
inherently involve risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements. Factors that would
cause or contribute to such differences include, but are not limited to,
inability to integrate operations and personnel, actions by significant
customers or competitors, general domestic and international economic
conditions, consumer spending trends, reliance on key customers, continued
acceptance of the Company's products in the marketplace, competitive factors,
new products and technological changes, product prices and raw material costs,
dependence upon third-party vendors, competitive developments, changes in
manufacturing and transportation costs, the availability of capital, and other
risks detailed in the Company's periodic report filings with the Securities
and Exchange Commission. By making these forward-looking statements, the
Company undertakes no obligation to update these statements for revisions or
changes after the date of this release.

Frequency Electronics, Inc. and Subsidiaries
Consolidated Condensed Summary of Operations Data
                                                              
                               Quarter Ended       Year Ended
                               April 30,           April 30,
                               2013      2012      2013      2012
                               (unaudited)         (audited)
                               (in thousands except per share data)
Net Revenues                   $17,541   $17,153   $68,932   $63,595
Cost of Revenues               11,894    11,006    43,822    38,977
Gross Margin                   5,647     6,147     25,110    24,618
Selling and Administrative     3,821     4,038     14,704    14,055
Research and Development       1,996     907       5,727     3,860
Operating (Loss) Profit        (170)     1,202     4,679     6,703
Interest and Other, Net        127       648       407       111
Income before Income Taxes     (43)      1,850     5,086     6,814
Income Tax (Benefit) Provision  --       (2,330)   1,400     (560)
Net Income                     $(43)     $4,180    $3,686    $7,374
                                                              
Net Income per Share:                                         
Basic                          $(0.01)   $0.50     $0.44     $0.89
Diluted                        $(0.01)   $0.49     $0.43     $0.86
Average Shares Outstanding                                    
Basic                          8,446,489 8,357,106 8,412,633 8,329,081
Diluted                        8,446,489 8,551,046 8,604,651 8,540,955
                                                              

Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
                                                                   
                                                        April 30, April 30,
                                                        2013      2012
                                                        (in thousands)
ASSETS                                                             
Cash & Marketable Securities                            $21,730   $22,440
Accounts Receivable                                     7,889     10,866
Costs and Estimated Earnings in Excess of Billings, net 8,617     7,207
Inventories                                             37,150    34,299
Other Current Assets                                    5,367     4,550
Property, Plant & Equipment                             8,316     8,374
Other Assets                                            19,577    18,491
                                                        $108,646  $106,227
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                               
Current Liabilities                                     $9,309    $16,109
Long-term Obligations and Other                         17,130    10,986
Stockholders' Equity                                    82,207    79,132
                                                        $108,646  $106,227
                                                                   

Reconciliation of GAAP operating profit to modified EBITDA:
                                    
                                   Year Ended
                                   April 30,
                                   2013         2012
                                   (in thousands)
GAAP operating profit              $4,679       $6,703
Depreciation & amortization        2,413        2,241
Gillam-FEI year-end charge         1,400        --
Deferred compensation expense      1,072        1,156
Stock-based compensation           947          862
Modified EBITDA                    $10,511      $10,962
                                                 

"Modified EBITDA" consists of operating profit plus certain non-cash expenses,
including depreciation and amortization, contributions and accruals for
employee benefit programs and stock-based compensation expense as well as the
one-time charge to write off certain Gillam-FEI assets.  Modified EBITDA is a
non-GAAP operating metric used by the Company in assessing its operating
results. The Company's definition of modified EBITDA may differ from the
definition of EBITDA used by other companies and may not be comparable to
similarly titled measures used by other companies. The Company believes that
investors and analysts may use modified EBITDA along with other information
contained in its SEC filings, in assessing the Company's ability to generate
cash flow and service debt.

CONTACT: Alan Miller, CFO, or General Joseph P. Franklin, Chairman:
         TELEPHONE: (516) 794-4500
         WEBSITE: www.frequencyelectronics.com
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