Winland Electronics, Inc. (NYSE Amex: WEX) today reported sales
of Proprietary Environmental Monitoring products of $920,000 for
the first quarter ended March 31, 2011 up $73,000, or 8.6 percent,
from the $847,000 that the Company reported in the comparable
period in 2010. Net loss from the quarter totaled $206,000, or
$0.06 per share, an improvement over a loss of $539,000 in the
first quarter of 2010. The loss for the current quarter was
attributable primarily to increased product costs and significant
non-recurring financing fees.
The Company reported an operating loss of $161,000 for the three
months ended March 31, 2011 compared to an operating loss of
$374,000 for the same period in 2010. Gross margins for the three
months ended March 31, 2011 decreased to 29.6 percent from 40.1
percent compared to the comparable period in 2010. The decline in
margins was forecasted, based on the terms of the manufacturing
agreement signed with Nortech Systems Incorporated, which purchased
the Company’s Electronic Manufacturing Services business segment on
January 1, 2011.
“We were encouraged by our sales trends in the first quarter,”
said Brian Lawrence, Winland’s Chief Financial Officer and Senior
Vice President. “Our year-over-year increase in sales was
attributable primarily to increased sales of approximately $158,000
to our largest distributor, offset by moderate sales declines among
a number of smaller customers.”
In early 2011 the Company’s largest customer completed a
restructuring of its stocking program. As a result, the Company
received non-customary stocking orders in January for $350,000 to
be delivered throughout the balance of the first quarter and April
2011. In addition to these non-customary stocking orders, the
Company continues to receive regular weekly stocking orders,
reinforcing the demand our products have in the markets served.
During the quarter, the Company continued to benefit from the
lower cost structure that has resulted from the restructuring of
its business. General and administrative expenses for the quarter
were $207,000, down $253,000, or 55 percent, versus the comparable
period in 2010. Sales and marketing expenses totaled $226,000 for
the three months ended March 31, 2011, a decrease of $28,000
compared to the same time period a year ago.
“During the quarter we continued our progress of increasing
market awareness and subsequent sales for our products,” Mr.
Lawrence continued. “Market awareness and lower cost structure are
critical to our future profitability.”
About Winland
Electronics
Winland Electronics, Inc. (www.winland.com), is an industry
leader of critical condition monitoring devices. Products including
EnviroAlert, WaterBug, TempAlert, Vehicle Alert and more are
designed in-house to monitor critical conditions for industries
including health/medical, grocery/food service,
commercial/industrial, as well as agriculture and residential.
Proudly made in the USA, Winland products are compatible with any
hard wire or wireless alarm system and are available through
distribution world wide. Headquartered in Mankato, MN, Winland
trades on the NYSE Amex Exchange under the symbol WEX.
Cautionary Statements
Certain statements contained in this press release and other
written and oral statements made from time to time by the Company
do not relate strictly to historical or current facts. As such,
they are considered forward-looking statements, which provide
current expectations or forecasts of future events. The statements
included in this release with respect to the following matters are
forward looking statements; (i) that the Company’s investment in
sales and marketing continued to increase market awareness of the
solutions its products offer in monitoring critical environments
and (ii) that market awareness and lower cost structure are
critical to the Company’s future profitability. These statements
involve a variety of risks and uncertainties, known and unknown,
including among other risks that (i) the Company’s investment in
sales and marketing does not in fact increase market awareness of
the solutions its products offer in monitoring critical
environments and (ii) that increased market awareness and a lower
cost structure do not in fact result in the Company being
profitable. Consequently, no forward-looking statement can be
guaranteed and actual results may vary materially.
WINLAND ELECTRONICS, INC. CONDENSED STATEMENTS OF
OPERATIONS For the Three Months Ended March 31, 2011 and
2010 (In Thousands, Except Share and Per Share Data)
March 31, 2011 2010 Net
sales
$ 920 $ 847 Cost of sales
648
507
Gross profit 272
340 Operating expenses: General and
administrative
207 460 Sales and marketing
226
254
433 714
Operating loss (161 ) (374 )
Other income (expenses): Interest expense
(24 ) (12 )
Other, net
2 2
(22
) (10 )
Loss from continuing operations
before income taxes (183 ) (384 ) Income
tax benefit
(9 ) (2 ) Loss from
continuing operations
(192 ) (386 ) Loss from
discontinued operations, net of tax
(14 )
(153 )
Net loss $ (206 )
$ (539 ) Loss per common share data: Basic and diluted
$ (0.06 ) $ (0.15 ) Loss from continuing
operations per common share data: Basic and diluted
$
(0.06 ) $ (0.11 ) Loss from discontinued operations
per common share data: Basic and diluted
$ (0.00
) $ (0.04 ) Weighted-average number of common shares
outstanding: Basic and diluted
3,699,230 3,686,435
WINLAND ELECTRONICS, INC. CONDENSED BALANCE SHEETS
(In Thousands, Except Share Data)
ASSETS
March 31,2011
December 31,2010
(Unaudited) Current Assets Cash and cash equivalents
$ 747 $ 318 Accounts receivable, less allowance for
doubtful accounts of $10 as of March 31, 2011 and December 31, 2010
768 547 Receivable due from EMS asset sale
882 -
Refundable income taxes
205 277 Inventories
143 112
Prepaid expenses and other assets
90 87 Current assets of
discontinued operations
715
4,649 Total current assets
3,550 5,990
Property and Equipment, at cost
Property and equipment
3,755 3,750 Less accumulated
depreciation and amortization
1,480
1,447 Net property and
equipment 2,275 2,303 Property and equipment of
discontinued operations, net
-
1,151 Total assets
$ 5,825
$ 9,444 LIABILITIES AND
STOCKHOLDER'S EQUITY Current Liabilities Revolving
line-of-credit
$ - $ 1,249 Current maturities of
long-term debt
421 448 Accounts payable
414 381 Other
short-term tax liabilities
- 68 Accrued liabilities:
Compensation
348 410 Other
26 35 Current liabilities
of discontinued operations
128
2,084 Total current liabilities
1,337 4,675
Long-Term Liabilities Deferred revenue
112 114 Long-term liabilities of discontinued operations
- 29
Total long-term liabilities 112
143 Total liabilities
1,449 4,818
Stockholders’ Equity Common stock, par value
$0.01 per share; authorized 20,000,000 shares; issued and
outstanding 3,701,630 as of March 31, 2011 and 3,699,230 shares as
of December 31, 2010
37 37 Additional paid-in capital
4,981 5,025 Accumulated deficit earnings
(642 )
(436 ) Total stockholders’ equity
4,376 4,626
Total liabilities and stockholders’ equity
$ 5,825
$ 9,444 WINLAND
ELECTRONICS, INC. CONDENSED STATEMENTS OF CASH FLOWS (In
Thousands) (Unaudited) For the Three Months Ended March 31,
2011 2010
Cash Flows From Operating Activities
Net loss
$ (206 ) $ (539 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization
33 200 Non-cash stock based
compensation
(46 ) 18 Increase in allowance for
doubtful accounts
- 6 Gain on disposal of equipment
-
(6 ) Loss on sale of EMS business unit
14 - Changes in
assets and liabilities: Accounts receivables
(371 )
(35 ) Refundable income taxes
72 2 Inventories
(31
) (826 ) Prepaid expenses
(3 ) (31 ) Accounts
payable and checks written in excess of bank balances
33 913
Accrued expenses, including deferred revenue and other short and
long term tax liabilities
(194 ) 159
Net cash used in operating activities
(699 ) (139 )
Cash Flows From
Investing Activities Purchases of property and equipment
(5 ) (9 ) Proceeds from sale of property and
equipment
- 6 Sale of inventory from discontinued operations
1,753 - Cash from sale of EMS business unit, net of
transaction costs
654 -
Net
cash provided by (used in) investing activities 2,402
(3 ) Cash flows From Financing
Activities Net borrowings (payments) on revolving credit
agreement
(1,249 ) 179 Net principal payments on
long-term borrowings, including capital lease obligations
(27 ) (92 ) Cash received from exercise of stock
options
2 -
Net cash provided
by (used in) financing activities (1,274 )
87
Net increase (decrease) in cash
429 (55 ) Cash Beginning
318
55 Ending
$ 747 $ -
Supplemental Disclosures of Cash Flow Information Cash
payments for interest
$ 24 $ 21 Cash
payments for income taxes
$ 10 $ -
Non-cash investing activities
Receivable recorded for sale of EMS
Business unit
$ 500 $ - Accrued transaction costs for
sale of EMS business unit
$ 100 $ -