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Measurement Specialties Announces Fiscal 2004 Results Posts Net Income of $21.6 million (Proforma Net Income of $11.7 million) - REVISED FAIRFIELD, N.J., May 27 /PRNewswire-FirstCall/ -- Measurement Specialties, Inc. (AMEX:MSS), a designer and manufacturer of sensors and sensor-based consumer products, today reported financial results for its three and twelve month periods ended March 31, 2004. The proforma net income reported below corrects and supersedes proforma net income information contained in the Company's press release dated May 26, 2004. The Company reported net income for the 12 months ended March 31, 2004 of $21.6 million, or $1.54 per diluted share, as compared to a net loss of $9.1 million, or $0.76 per diluted share for the same period last year. Proforma net income from continuing operations (which excludes non-cash equity based compensation, legal settlement expenses, restructuring charge, gain on the sale of assets and adjustments in tax provisions) was $11.7 million, or $0.83 per diluted share as compared to a proforma net loss of $4.5 million, or $0.38 per diluted share for the same period last year. As a result of the recognition of the previously deferred tax benefit, the Company recorded a $12.3 million tax credit in the period. Proforma results are adjusted for this credit and accordingly, are presented on a fully taxed basis (at the projected effective tax rate of 27.9%). Please refer to the notes and reconciliation regarding Non-GAAP financial measures contained in this release. "We accomplished a tremendous amount this year," commented Frank Guidone, Company CEO. "Aside from dramatic change in financial results, we made great progress towards settling the outstanding litigation (and associated contingent liabilities), eliminated all funded debt, established a three year plan that includes the addition of strategic acquisitions, divested certain consumer assets to generate cash in support of our sensor growth plans, and enjoyed record sales and earnings in our Sensor division. We have established a solid foundation for growth in revenue and profitability, and look forward to continued success in FY05." For the three months ended March 31, 2004, net sales increased 12.9% to $26.3 million, as compared to $23.3 million for the three months ended March 31, 2003. For the three months ended March 31, 2004, net sales in the Sensor division increased 35.2% to $16.5 million, as compared to $12.2 million for the three months ended March 31, 2003, while net sales in the Consumer Products division decreased 10.8% to $9.9 million for the current fiscal quarter, as compared to $11.1 million for the three months ended March 31, 2003. For the fiscal year ended March 31, 2004, net sales increased 4.8% to $112.8 million, as compared to $107.7 million for the fiscal year ended March 31, 2003. For the fiscal year ended March 31, 2004, net sales in the Sensor division increased 15.1% to $60.2 million, as compared to $52.3 million for the fiscal year ended March 31, 2003, while net sales in the Consumer Products division decreased 5.0% to $52.6 million for the fiscal year ended March 31, 2004, as compared to $55.4 million for the fiscal year ended March 31, 2003. Please refer to the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K filed with the SEC for a more complete discussion of sales, margin and expenses. The Company will host an investor conference call on May 27th at 10am EDT to answer questions regarding the quarterly and yearly results reported in our Annual Report on Form 10-K for fiscal year ended March 31, 2004. US dialers: (888) 428-4479; International dialers: (651) 291-0900. Interested parties may also listen via the Internet at: http://www.vcall.com/. The call will be available for replay for 30 days through AT&T by dialing 800 475-6701 (US dialers), and entering access code 732167, and on Vcall. Company contact: Frank Guidone, CEO - 973 808-3020 Investor/media contact: Aimee Boutcher - 973 239-2878 Non-GAAP Financial Measures Regulation G, "Conditions for Use of Non-GAAP Financial Measures," promulgated under the Securities and Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We believe that certain of our financial measures which meet the definition of a non-GAAP financial measure are important supplemental information to investors. The Company uses pro forma measures of operating income, net income, and basic and diluted earnings per share. These pro forma measures exclude non-cash equity based compensation from the Company's statement of operations, as well as non-ordinary items relating to litigation matters and restructuring charges. The non-cash equity based compensation results from warrants issued to Four Corners Capital Partners LP, a limited partnership of which Mr. Guidone, our Chief Executive Officer, is a principal. Excluding these items is useful for illustrating and explaining operating results and comparisons to prior periods. These items are excluded from our internal operating plans and measurement of financial performance, and we believe this is an important measure for investors to consider in order to better understand the trends in our operating results. The warrants that comprise the non-cash compensation have the same basic attributes of an incentive stock option, for which the Company uses the intrinsic value method allowed for under Financial Accounting Standards Board Statement No. 148. Under the intrinsic value method, there is no charge to the statement of operations for incentive stock options. Because of the structure of the arrangement with Mr. Guidone, the Company was not able to issue incentive stock options and, therefore, issued warrants to Four Corners Capital Partners LP. Although the basic attributes of the warrants issued are similar to those of incentive stock options, the intrinsic value method is not acceptable under generally accepted accounting principles for valuing warrants, therefore resulting in the non-cash equity based compensation charge. These non-GAAP financial measures are used in addition to and in conjunction with the results presented in accordance with GAAP. These non-GAAP financial measures should not be relied upon to the exclusion of GAAP financial measures. These non-GAAP financial measures provide an additional way of viewing aspects of our operation that, when viewed with our GAAP results and the accompanying reconciliation's to the corresponding GAAP financial measures, provide an understanding of certain factors and trends relating to our business. The company strongly encourages investors to review our financial statements and publicly filed reports in their entirety and to not rely on any single financial measure. Measurement Specialties is a designer and manufacturer of sensors, and sensor-based consumer products. Measurement Specialties produces a wide variety of sensors that use advanced technologies to measure precise ranges of physical characteristics, including pressure, motion, force, displacement, angle, flow, and distance. Measurement Specialties uses multiple advanced technologies, including piezoresistive, application specific integrated circuits (ASICs), micro-electromechanical systems (MEMS), piezopolymers, and strain gages to allow their sensors to operate precisely and cost effectively. This release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, including but not limited to, statements regarding non-recurring expenses, and resolution of pending litigation. Forward looking statements may be identified by such words or phases "should," "intends," "expects," "will," "continue," "anticipate," "estimated," "projected," "may," "we believe," "future prospects," or similar expressions. The forward-looking statements above involve a number of risks and uncertainties. Factors that might cause actual results to differ include, but are not limited to, success of any reorganization; ability to raise additional funds; the outcome of the class action lawsuits filed against the Company; the outcome of the current SEC investigation of the Company; conditions in the general economy and in the markets served by the Company; competitive factors, such as price pressures and the potential emergence of rival technologies; interruptions of suppliers' operations affecting availability of component materials at reasonable prices; timely development and market acceptance, and warranty performance of new products; success in integrating prior acquisitions; changes in product mix, costs and yields, fluctuations in foreign currency exchange rates; uncertainties related to doing business in Hong Kong and China; and the risk factors listed from time to time in the Company's SEC reports. The Company from time-to-time considers acquiring or disposing of business or product lines. Forward-looking statements do not include the impact of acquisitions or dispositions of assets, which could affect results in the near term. Actual results may differ materially. The Company assumes no obligation to update the information in this issue. MEASUREMENT SPECIALTIES, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) ($ in thousands, except share For the Year Ended March 31, and per share amounts) 2004 2003 2002 Net sales $112,813 $107,676 $97,273 Cost of goods sold 62,513 69,680 69,516 Gross profit 50,300 37,996 27,757 Operating expenses (income): Selling, general and administrative 30,448 34,245 35,681 Litigation Settlement expense 1,500 3,550 - Research and development 3,468 3,594 7,596 Customer funded development (4) (367) (1,784) Non-Cash Equity Based Compensation 6,483 - - Goodwill and other impairments - - 4,417 Restructuring costs 506 1,219 955 Total operating expenses 42,401 42,241 46,865 Operating income (loss) 7,899 (4,245) (19,108) Interest expense, net 323 2,057 2,371 Gain on Sale of Assets (1,424) (159) - Other expense (income) (112) (303) 243 Income (loss) from continuing operations before income taxes and cumulative effect of accounting change 9,112 (5,840) (21,722) Income tax (12,262) 483 2,512 Income (loss) from continuing operations before cumulative effect of accounting change 21,374 (6,323) (24,234) Discontinued operations: Income (loss) from operations of discontinued units (net of income tax benefit) 212 (3,910) (4,565) Gain on disposition of discontinued units (net of income tax benefit) - 1,136 - Income (loss) from discontinued units 212 (2,774) (4,565) Income (loss) before cumulative effect of accounting change 21,586 (9,097) (28,799) Cumulative effect of accounting change, net of taxes - - (248) Net income (loss) $21,586 $(9,097) $(29,047) Income (loss) per common share - Basic Income (loss) from continuing operations $1.73 $(0.53) $(2.30) Income (loss) from discontinued units 0.02 (0.23) (0.43) Cumulative effect of accounting change - - (0.03) Net income (loss) $1.75 $(0.76) $(2.76) Income (loss) per common share - Diluted Income (loss) from continuing operations $1.53 $(0.53) $(2.30) Income (loss) from discontinued units 0.01 (0.23) (0.43) Cumulative effect of accounting change - - (0.03) Net income (loss) $1.54 $(0.76) $(2.76) Weighted average shares outstanding - Basic 12,333 11,911 10,531 Weighted average shares outstanding - Diluted 13,997 11,911 10,531 MEASUREMENT SPECIALTIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) March 31, March 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $19,274 $2,694 Accounts receivable, trade, net of allowance for doubtful accounts of $327 and $1,038, respectively 14,010 10,549 Inventories 10,170 14,275 Assets held for sale Prepaid expenses and other current assets 15,856 1,885 Total current assets 59,310 29,403 Property and equipment, net 10,628 11,818 Other assets: Goodwill 4,191 4,191 Deferred income taxes 2,214 - Other assets 657 756 Total other assets 7,062 4,947 Total Assets $77,000 $46,168 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long term debt $ - $3,260 Accounts payable 7,919 9,846 Accrued compensation 3,224 1,207 Income taxes payable - Accrued expenses and other current liabilities 4,686 5,744 Accrued litigation expenses 2,100 3,550 Total current liabilities 17,929 23,607 Other liabilities: Long term debt - 2,000 Deferred gain on sale of assets 6,744 Other liabilities 1,487 1,615 Total liabilities 26,160 27,222 Commitments and contingencies Shareholders' equity Serial preferred stock; 221,756 shares authorized; none outstanding - - Common stock, no par; 20,000,000 shares authorized; 13,257,084 and 11,922,958 shares issued and outstanding, respectively 5,502 5,502 Additional paid-in capital 53,509 43,197 Accumulated deficit (8,097) (29,683) Accumulated other comprehensive loss (74) (70) Total shareholders' equity 50,840 18,946 $77,000 $46,168 The following table shows the Company's non-GAAP results reconciled to the Generally Accepted Accounting Principles ("GAAP") Consolidated Statements of Operations. The Company's non-GAAP results do not include non-cash compensation (please refer to the note titled "Non-Cash Compensation" under the Critical Accounting Policies Section of the Management Discussion and Analysis portion of the Company's Annual Report on Form 10-K). For The Three Months For The Twelve Months Ended March 31, Ended March 31, 2004 2003 2004 2003 Income (loss) from continuing operations before income taxes $2,065 $(3,814) $9,112 $(5,840) Non-cash equity based compensation 1,530 - 6,483 - SEC settlement - - 1,000 - Class action settlement 1,100 2,800 1,100 2,800 Hibernia litigation - 750 (600) 750 Restructuring charges (39) 96 506 1,219 Gain on sale of assets (1,424) - (1,424) (159) Non-GAAP income (loss) from continuing operations before income taxes $3,232 $(168) $16,177 $(1,230) For The Three Months For The Twelve Months Ended March 31, Ended March 31, 2004 2003 2004 2003 Net income (loss) $ 15,200 $(3,961) $ 21,586 $(9,097) Non-cash equity based compensation 1,530 - 6,483 - SEC settlement - - 1,000 - Class action settlement 1,100 2,800 1,100 2,800 Hibernia litigation - 750 (600) 750 Restructuring charges (39) 96 506 1,219 Gain on sale of assets (1,424) - (1,424) (159) Tax provision adjustment (1) (14,037) - (16,987) - Non-GAAP Net Income before discontinued operations $2,330 $(315) $ 11,664 $(4,487) Non-GAAP Income (loss) per common share - Basic Non-GAAP Income (loss) before discontinued operations $0.18 $(0.05) $0.95 $(0.15) Income (loss) from discontinued units 0.01 0.02 0.02 (0.23) Non-GAAP Net income (loss) $0.19 $(0.03) $0.97 $(0.38) Non-GAAP Income (loss) per common share - Diluted Non-GAAP Income (loss) before discontinued operations $0.17 $(0.05) $0.83 $(0.15) Income (loss) from discontinued units 0.01 0.02 0.02 (0.23) Non-GAAP Net income (loss) $0.18 $(0.03) $0.85 $(0.38) Weighted average shares outstanding - Basic 12,620 11,917 12,333 11,911 Weighted average shares outstanding - Diluted 14,069 11,917 13,997 11,911 (1) This non-GAAP measure adjusts the Company's as reported tax credit for fiscal year 2004 to provide for taxes at the expected effective tax rate of 27.9% for fiscal 2005, and includes adjustment for discontinued operations. DATASOURCE: Measurement Specialties, Inc. CONTACT: Frank Guidone, CEO of Measurement Specialties, Inc., +1-973-808-3020; or Aimee Boutcher of Boutcher & Boutcher Investor Relations, +1-973-239-2878, for Measurement Specialties, Inc. Web site: http://www.msiusa.com/

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