Eltek Ltd. (NASDAQ: ELTK), the leading Israeli manufacturer of advanced flex-rigid circuitry solutions, announced today its financial results for the quarter and year ended December 31, 2009.

Fiscal year 2009:

Revenues for fiscal year 2009 were $36.4 million, a decrease of 16% compared to revenues of $43.1 million for 2008. The decrease in revenues is primarily attributable to the impact of the global economic slowdown.

Gross profit for fiscal year 2009 was $5.6 million (15% of revenues) compared with gross profit of $5.9 million (14% of revenues) in fiscal year 2008. Gross profit margins increased despite the decrease in revenues, mainly due to cost-cutting measures the Company undertook, especially in payroll and raw material consumption, and the positive impact of the higher U.S. dollar exchange rate in 2009 compared to 2008.

Operating loss for fiscal year 2009 was $456,000 compared with an operating loss of $1.6 million in 2008.

Net loss for fiscal year 2009 was $880,000 or ($0.13) per fully diluted share, compared with a net loss of $2.4 million or ($0.37) per fully diluted share in the 2008.

Fourth Quarter 2009:

Revenues for the fourth quarter ended December 31, 2009 were $9.0 million, similar to the revenues recorded in the fourth quarter of 2008.

Gross profit for the fourth quarter of 2009 was $1.2 million (13% of revenues), compared with gross profit of $1.1 million (12% of revenues) in the fourth quarter of 2008.

Operating loss for the fourth quarter of 2009 was $542,000 compared with an operating loss of $1.1 million in the fourth quarter of 2008.

Net loss for the fourth quarter of 2009 was $729,000 or ($0.11) per fully diluted share, compared with a net loss of $1.3 million or ($0.2) per fully diluted share in the fourth quarter of 2008.

EBITDA:

In the fourth quarter ended December 31, 2009, Eltek had EBITDA of $14,000 compared with a negative EBITDA of $169,000 in the fourth quarter of 2008. Eltek’s EBITDA for the year ended December 31, 2009 was $1.6 million compared with EBITDA of $983,000 in 2008.

Eltek uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation and amortization. EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. Reconciliation between the company's results on a GAAP and non-GAAP basis is provided in a table following the Consolidated Statement of Operations.

Management Comments:

Arieh Reichart, President and Chief Executive Officer of Eltek, commented: "Despite the global economic crisis that took a toll on our business during the past year as reflected in the 16% decline in our revenues, we are encouraged by the fact that our sales in the U.S. market, as well as in Italy and the Netherlands, were not negatively influenced. We continue to see sales opportunities in the U.S. military market with regard to the ITAR (International Traffic in Arms Regulations) approval we received in 2009 and expect it to contribute to additional new orders in 2010."

“In 2010, we continue with our cost reduction plan that we initiated in 2009, mainly through a reduction in the number of employees and a salary cut for our management team. We are implementing a manufacturing program which includes efficiency measures through eliminating activities that do not provide added value to our products, and improving production yield, in order to achieve profitability in 2010,” Mr. Reichart concluded.

Amnon Shemer, CFO of Eltek, added: “2009 presented Eltek with great challenges due to the global economic crisis. Nevertheless, we managed to reduce our net loss in the fourth quarter as well as in the fiscal year in 2009 compared to 2008, despite the 16% decline in revenues, mainly through cost reduction and improved manufacturing measures. Our bottom line loss is primarily attributable to the decrease in revenues in 2009 compared to 2008, which decline was partially offset by the increase in the dollar exchange rate compared with the Israeli Shekel, and the savings resulting from our cost reduction plan."

About the Company

Eltek is Israel's leading manufacturer of printed circuit boards, the core circuitry of most electronic devices. It specializes in the complex high-end of PCB manufacturing, i.e., HDI, multilayered and flex-rigid boards. Eltek's technologically advanced circuitry solutions are used in today's increasingly sophisticated and compact electronic products. For more information, visit Eltek's web site at www.eltekglobal.com.

Forward-Looking Statement:

Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to statements regarding expected results in future quarters, risks in product and technology development and rapid technological change, product demand, the impact of competitive products and pricing, market acceptance, the sales cycle, changing economic conditions and other risk factors detailed in the Company's Annual Report on Form 20-F and other filings with the United States Securities and Exchange Commission.

Eltek Ltd.
Unaudited Consolidated Statements of Operations
(In thousands US$, except per share data)
       
Three months ended Year ended
December 31, December 31,
2009 2008 2009 2008
 
Revenues 8,971 8,982 36,442 43,138
Cost of revenues (7,802 ) (7,915 ) (30,882 ) (37,282 )
 
Gross profit 1,169 1,067 5,560 5,856
 
Research and development income, net 0 0 0 100
 
Selling, general and administrative expenses (1,711 ) (1,778 ) (6,016 ) (7,199 )
 
Impairment loss on goodwill 0   (379 ) 0   (379 )
 
Operating loss (542 ) (1,090 ) (456 ) (1,622 )
 
Financial expenses, net (165 ) (222 ) (424 ) (826 )
 
Other income, net 0   0   4   1  
 
Loss before income tax expenses (707 ) (1,312 ) (876 ) (2,447 )
 
Income tax (expenses), net (5 ) 0   (34 ) 0  
 
Net loss (712 ) (1,312 ) (910 ) (2,447 )
 
Net profit (loss) attributable to non controlling interest (17 ) 23   30   1  
 
Net loss attributable to Eltek Ltd. (729 ) (1,289 ) (880 ) (2,446 )
 

Earnings per share
 

Basic and diluted net loss per ordinary share attributable to Eltek Ltd. shareholders
(0.11 ) (0.20 ) (0.13 ) (0.37 )
 

Weighted average number of ordinary shares used to compute basic and diluted net loss per ordinary share attributable to Eltek Ltd. shareholders (in thousands)
6,610   6,610   6,610   6,610  
 
 

Eltek Ltd.
Unaudited Consolidated Balance Sheets
(In thousands US$)
   
December 31,
2009 2008
Assets
 
Current assets
Cash and cash equivalents 1,258 1,556
Receivables: Trade, net of provision for doubtful accounts 6,932 7,248
Inventories 3,938 4,429
Prepaid expenses and other current assets 463   410  
 
Total current assets 12,591   13,643  
 
Assets held for employees' severance benefits 1,432   1,166  
 
Fixed assets, less accumulated depreciation 9,175   10,090  
 
Goodwill 573   554  
 
Total assets 23,771   25,453  
 
 

Liabilities and Shareholders' equity
 
Current liabilities
Short-term credit and current maturities of long-term debts 5,638 5,898
Accounts payable: Trade 4,666 5,381
Related parties 713 561
Other 3,558   3,684  
 
Total current liabilities 14,575   15,524  
 
Long-term liabilities
Long term debt, excluding current maturities 2,617 2,607
Employee severance benefits 1,440   1,363  
 
Total long-term liabilities 4,057   3,970  
 
Equity
Ordinary shares, NIS 0.6 par value authorized 50,000,000 shares, issued and outstanding 6,610,107 as of September 30, 2009, 6,610,107 as of September 30, 2008 and 6,610,107 as of December 31, 2008 1,384 1,384
Additional paid-in capital 14,328 14,328
Cumulative translation adjustment related to change in reporting currency 2,635 2,596
Cumulative foreign currency translation adjustments 309 268
Capital reserve 695 695
Accumulated deficit (14,522 ) (13,642 )
Total Eltek Ltd. shareholders' equity 4,829 5,629
Non controlling interest 310   330  
Total equity 5,139   5,959  
Total liabilities and total equity 23,771   25,453  
 
 

Non-GAAP EBITDA Reconciliations
  Three months ended   Year ended
December 31, December 31,
2009   2008 2009   2008
Unaudited
 
GAAP net loss (729 ) (1,289 ) (880 ) (2,446 )

Add back items:
 
Financial expenses, net 165 222 424 826
Tax expenses (income) 5 0 34 0
Impairment loss on goodwill 0 379 0 379
Depreciation 573   519   2,030   2,224  
Adjusted EBITDA 14   (169 ) 1,608   983  

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