SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MARCH 24, 2004
MICROTEL INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 001-10346 77-0226211
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9485 HAVEN AVENUE, SUITE 100, RANCHO CUCAMONGA, CALIFORNIA 91730
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (909) 987-9220
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information contained in this Item 12 is being "furnished to" the
SEC in accordance with SEC Release Nos. 33-8216 and 34-47226 and shall not be
deemed "filed with" the SEC for purposes of Section 18 of the Securities
Exchange of 1934, as amended, or otherwise subject to the liabilities of that
section. The information contained in this Item 12 shall not be deemed
incorporated by reference into any registration statement, proxy statement or
other report except as shall be expressly set forth by specific reference in
such filing and regardless of any general incorporation language in such filing.
On March 24, 2004, MicroTel International Inc. (the "Company") issued a
press release describing selected financial results of the Company for the full
year and fourth quarter 2003. A copy of the press release is set forth below in
its entirety:
MICROTEL INTERNATIONAL, INC. REPORTS FULL YEAR AND
FOURTH QUARTER PROFIT FOR 2003
FULL YEAR PROFIT IS 304% OVER PREVIOUS YEAR AND FOURTH QUARTER IS 24% OVER
PRIOR YEAR FOURTH QUARTER ON SUBSTANTIALLY INCREASED REVENUE
RANCHO CUCAMONGA, CALIFORNIA, March 24, 2004, MicroTel International Inc.
(OTCBB: MCTL), an international manufacturer of defense and aerospace electronic
components and subsystems and communication equipment today reported for the
year ended December 31, 2003, a net income of $1,161,000 or $0.05 per share,
basic and diluted, which is a 304% improvement over the net loss of $570,000 or
$0.03 per share, basic and diluted, for the year ended December 31, 2002. Both
the electronic components segment and the communications equipment segment
reported substantial improvements in operating income in 2003 as compared to
2002. The increase in sales of electronic components and an increase of sales
and cost reductions in the production of communications equipment were the
primary reasons for the improvement.
For the fourth quarter, 2003 MicroTel reported net income of $254,000 or $0.01
per share, basic and diluted, a 25% increase over 2002 net income of $204,000 or
$0.01 per share basic and diluted. The fourth quarter of 2003 is MicroTel's
fifth consecutive profitable quarter.
Net sales in the year ended December 31, 2003 increased by $2,855,000 or 12.6%
to $25,519,000 in comparison to $22,664,000 of net sales in 2002. Net sales for
the fourth quarter of 2003 increased by $635,000, or 10.7%, to $6,597,000 as
compared to net sales of $5,962,000 for the fourth quarter of 2002. The increase
in net sales for the year ended December 31, 2003 as compared to 2002 primarily
resulted from improved sales of our electronic components segment, primarily
power supplies, which increased by $1,665,000, or 23.5%, in 2003 to $8,763,000
as compared to $7,098,000 in 2002. The Company's communications equipment
segment net sales showed a slight increase to $9,351,000 in 2003 as compared to
$9,274,000 in 2002. Within the communication equipment segment, the network
access products that serve the customer premises market experienced a sales
increase in 2003 of $740,000, or 13.7% to $6,139,000 as compared to $5,399,000
in 2002. The test equipment products of the communication equipment segment that
serve the public carrier and other customers incurred a decrease in net sales in
2003 by $528,000, or 18.3%, to $2,353,000 as compared to $2,881,000 in 2002. In
the 4th quarter of 2004, the electronic components segment increased its sales
by $426,000, or 12.2% to $3,917,000 as compared to $3,491,000 in the 4th quarter
of 2002. The telecommunications segment realized an increase in net sales of
$209,000, or 8.5% to $2,680,000 in the fourth quarter of 2003 as compared to
$2,471,000 in the 4th quarter of 2002.
RANDOLPH D. FOOTE, MicroTel's CFO, said, "Improved sales by our electronic
components segment, primarily due to our subsidiary, XCEL Power Systems, Ltd, of
Ashford, Kent, England, that produces power supplies for defense and aerospace
applications, was a major factor in our improved performance for both the fourth
quarter and full year of 2003. In addition, through our cost cutting efforts,
our telecommunications segment improved its net income substantially in 2003 as
compared to 2002 even though the sales level was approximately the same for both
years. Our gross profit as a percent of sales for 2003 improved to 41.9% as
compared to 37.6% in 2002. In addition we reduced our general, selling and
administrative expenses to 30.6% of sales in 2003 as compared to 34.1% in 2002.
We have further improved our financial position during 2003. Our working capital
increased to $5,696,000 as of December 31, 2003 as compared to $3,961,000 as of
December 31, 2002. We also improved working capital in the fourth quarter by
$451,000. Our net worth increased to $7,916,000 as of December 31, 2003 as
compared to $6,786,000 as of December 31, 2002. As of December 31, 2003, our
cash balance was $1,174,000, a $920,000, or 362%, increase over the cash balance
of $254,000 at December 31, 2002."
GRAHAM JEFFERIES, executive vice president and chief operating officer, Telecom
Group, stated: "Despite continued softness in public carrier telecommunications
capital spending, MicroTel has been able to return its telecommunications
business segment to profitability in 2003 and we expect to improve further in
2004. Our Electronic Components segment has produced outstanding results in 2003
and we expect it to continue to do so in 2004. New product and new market sales
in 2004 will provide the foundation for our continued improvement. Major
opportunities exist for our new patent pending rotary switches for military and
commercial aviation applications, our new power grid testers and especially
sales opportunities for our recently introduced TDM over IP product which allows
carriers and enterprises to run all TDM traffic irrespective of protocols or
signaling - over E-thernet and IP networks without replacing legacy TDM
equipment."
CARMINE T. OLIVA, chairman, president and CEO stated: "MicroTel has shown steady
and continued revenue and net income improvement throughout 2003 and we are very
pleased with our results. We expect this trend to continue in 2004, complemented
by certain potential acquisitions."
ABOUT MICROTEL
MicroTel International Inc. is an international manufacturer of defense and
aerospace electronic components and subsystems and communication equipment. Our
electronic components group, which includes XET Corporation and its
international subsidiaries, provides custom power conversion products, digital
and rotary switches and subsystem assemblies to the global electronic components
market and are primarily used for defense, aerospace and industrial
applications. Our communications group, consisting of CXR Telcom Corporation and
CXR Anderson Jacobson, provides network access, transmission and test equipment
to the North American and European communications industry. Founded in 1983,
MicroTel operates out of facilities in the United States, United Kingdom, France
and Japan. As of February 29, 2004, we had a total of 181 employees in our
various subsidiaries and divisions.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
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With the exception of historical information, the matters discussed in this
press release are forward looking statements that involve a number of risks and
uncertainties. The actual future results of MicroTel could differ from those
statements. Factors that could cause or contribute to such differences include,
but are not limited to, the ability of MicroTel to improve its sales and
profitability in 2004 as compared to 2003, to develop new products sales in
2004, to obtain sales in new markets in 2004, to benefit from new opportunities
of its patent pending rotary switches, power grid testers and TDM over IP, to
complete one or more acquisitions in 2004 and those factors contained in the
"Risk Factors" Section of the Company's Form 10-K for the year ended December
31, 2003.
MICROTEL INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
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(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Net sales $ 6,597 $ 5,962 $ 25,519 $ 22,664
COST OF SALES 3,598 3,568 14,835 14,147
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Gross profit 2,999 2,394 10,684 8,517
Operating expenses:
Selling, general and administrative 2,280 1,917 7,812 7,731
Engineering and product development 254 276 951 1,015
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Income (loss) from operations 485 201 1,921 (229)
Other income (expense)
Interest expense (99) (138) (416) (441)
Other income (62) 113 (58) 80
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Income (loss) before income taxes 304 176 1,447 (590)
INCOME TAX EXPENSE (BENEFIT) 50 (28) 286 (20)
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Net income (loss) 254 204 1,161 (570)
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Income (loss) per share:
Basic $ 0.01 $ 0.01 $ 0.05 $ (0.03)
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Diluted $ 0.01 $ 0.01 $ 0.05 $ (0.03)
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Weighted average number of
Outstanding shares
Basic 23,431 21,520 22,567 21,208
Diluted 24,431 23,433 23,811 21,208
MICROTEL INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
DECEMBER 31, DECEMBER 31,
2003 2002
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Current assets:
Cash and equivalents $ 1,174 $ 254
Accounts receivable 5,393 5,356
Inventories 6,683 7,505
Prepaid expenses and other 555 343
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Total current assets 13,805 13,458
322 588
Goodwill, net 2,447 2,346
Other assets 595 394
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$ 17,169 $ 16,786
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Liabilities and stockholders' equity:
Current liabilities:
Notes payable $ 2,882 $ 3,475
Current portion of long-term debt 316 318
Accounts payable 1,637 2,439
Accrued expenses 3,274 3,265
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Total current liabilities 8,109 9,497
Long term debt, less current portion 819 927
Other liabilities 325 348
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Total liabilities 9,253 10,772
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Convertible redeemable preferred stock -- 282
Stockholders' equity
Preferred stock 4 400
Common stock 77 71
Additional paid in capital 25,613 24,900
Accumulated deficit (17,886) (19,042)
Accumulated other comprehensive loss 108 (597)
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Total stockholders' equity 7,916 5,732
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$ 17,169 $ 16,786
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 26, 2004 MICROTEL INTERNATIONAL INC.
By: /s/ RANDOLPH D. FOOTE
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Randolph D. Foote, Chief Financial Officer