Frequency Electronics, Inc. Announces Third Quarter Fiscal Year 2014 Results

Frequency Electronics, Inc. Announces Third Quarter Fiscal Year 2014 Results

MITCHEL FIELD, N.Y., March 10, 2014 (GLOBE NEWSWIRE) -- Frequency Electronics,
Inc. (Nasdaq:FEIM) reported revenues for the third quarter of fiscal 2014,
which ended January 31, 2014, of $18.2 million, up from $17.0 million recorded
in the preceding quarter and compared to $17.1 million recorded in the third
quarter of fiscal 2013. Revenues for the first nine months of fiscal 2014 were
$52.1 million compared to $51.4 million recorded in the same period of fiscal
year 2013.

Operating profit was $1.3 million for the quarter ended January 31, 2014,
compared to $1.3 million in the preceding quarter and $1.7 million in the
third quarter of the prior year. Operating profit for the first nine months of
fiscal year 2014 was $3.5 million compared to $4.8 million in the same period
of fiscal year 2013. Net income for the third quarter of fiscal 2014 was $1.2
million or $0.14 per diluted share, compared to $1.4 million or $0.16 per
diluted share in the preceding quarter, which included $736,000 in net
proceeds from the sale of equipment under a license agreement and compared to
$1.5 million or $0.18 per diluted share for the third quarter of the prior
year. For the year to date, net income was $3.3 million or $0.37 per diluted
share compared to the prior year's $3.7 million or $0.43 per diluted share.

Commenting on these results, Chairman of the Board General Joseph Franklin
said: "FEI's largest and fastest growing business area, satellite payloads,
continued its solid growth. For the first nine months of our current fiscal
year, revenues were up over 20% from last year. Overall results were impacted
by higher R&D spending on our new products and higher than anticipated
engineering costs in our non-space business areas.Based on our strong backlog
we anticipate further gains in revenues and higher operating profits from our
space business for the balance of this full fiscal year and beyond.We also
see great new opportunities for our non-space subsidiaries in the emerging
cyber security market involving Homeland Security, DOD, commercial and other
government applications.There is a critical need to safeguard U.S. secure
communication assets worldwide on land, sea and in air."

Fiscal 2014 Selected Financial Metrics and Other Items:

  *For the nine months ended January 31, 2014, satellite payload revenues
    approached 60% of consolidated revenues. Satellite payloads account for
    over three-fourths of consolidated backlog more than half of which is for
    Commercial end-use.
  *Spending on internal research and development (IR&D) for the nine months
    ended January 31, 2014, increased by approximately $850,000 compared to
    the same period of the prior year.These expenditures reflect the
    Company's IR&D spending on the next expansion of its satellite payload
    product line and other new products.
  *Gross margins for the quarter ended January 31, 2014, were impacted by
    lower sales volume in the FEI-Zyfer segment, higher engineering design
    costs at Gillam-FEI and weather-related production interruptions in our
    FEI-New York segment.
  *For the quarter ended January 31, 2014, the Company generated operating
    cash flow in excess of $3.0 million and is now cash flow positive through
    nine months of fiscal year 2014.Capital expenditures for the nine months
    ended January 31, 2014 were $3.5 million.
  *Inventory increased by approximately $4.5 million from the end of the last
    fiscal year primarily in preparation for the production phase of the
    multi-satellite Iridium program as well as for other multi-satellite
    constellation programs.Consuming this inventory will result in increased
    revenues and additional operating cash flow going forward.
  *For the nine months ended January 31, 2014, total sales for U.S.
    Government/DOD end-use, including revenues on U.S. Government satellite
    programs, continued to account for more than half of consolidated
    revenues.

Investor Conference Call

As previously announced, the Company will hold a conference call to discuss
these results on Monday, March 10, 2014, at 4:30 PM Eastern Time.Investors
and analysts may access the call by dialing 1-877-407-9205.International
callers may dial 1-201-689-8054.Ask for the Frequency Electronics conference
call.

The call will be archived on the Company's website through April 11, 2014.The
archived call may also be retrieved at 1-877-660-6853 (domestic) or
1-201-612-7415 (international) using Conference ID #: 13577985.

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 46 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
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
Condensed Consolidated Statement of Operations
                                                     
                          Quarter Months ended Nine Months Ended
                          January 31,          January 31,
                          2014       2013      2014     2013
                          (unaudited)
                          (in thousands except per share data)
                                                     
Net Revenues               $18,218    $17,137   $52,052  $51,391
Cost of Revenues           12,107     10,387    33,443   31,928
Gross Margin               6,111      6,750     18,609   19,463
Selling and Administrative 3,488      3,887     10,534   10,883
Research and Development   1,363      1,113     4,589    3,731
Operating Profit           1,260      1,750     3,486    4,849
Interest and Other, Net    378        70        1,369    280
Income before Income Taxes 1,638      1,820     4,855    5,129
Income Tax Provision       420        300       1,570    1,400
Net Income                 $1,218     $1,520    $3,285   $3,729
                                                     
Net Income per Share:                                 
Basic                      $0.14      $0.18     $0.39    $0.44
Diluted                    $0.14      $0.18     $0.37    $0.43
Average Shares Outstanding                            
Basic                      8,537      8,424     8,516    8,401
Diluted                    8,857      8,604     8,806    8,584
                                                     
                                                     

Frequency Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
                                                                   
                                                        January 31, April 30,
                                                        2014        2013
                                                        (in thousands)
                                                                   
ASSETS                                                              
Cash & Marketable Securities                             $22,632     $21,730
Accounts Receivable                                      12,124      7,781
Costs and Estimated Earningsin Excess of Billings, net 3,857       8,617
Inventories                                              42,076      37,521
Other Current Assets                                     5,371       5,367
Property, Plant & Equipment                              10,193      8,316
Other Assets                                             20,122      19,577
                                                        $116,375    $108,909
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current Liabilities                                      $7,544      $9,327
Long-term debt                                           10,100      6,000
Other Long-term Obligations                              11,309      11,130
Stockholders' Equity                                     87,422      82,452
                                                        $116,375    $108,909
                                                                   

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