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Measurement Specialties Announces FY05-Q4 and Fiscal Year Results HAMPTON, Va., June 13 /PRNewswire-FirstCall/ -- Measurement Specialties, Inc. (AMEX:MSS), a designer and manufacturer of sensors and sensor-based consumer products, announced results for the fourth quarter and fiscal year ended March 31, 2005. The Company reported net income for the 12 months ended March 31, 2005 of $14.8 million, or $1.05 per diluted share, as compared to $21.6 million, or $1.54 per diluted share for the same period last year. Pro forma net income from continuing operations for the 12 months ended March 31, 2004 was $11.7 million, or $0.83 per diluted share. FY04 pro forma net income, which is used in order to be comparable with FY05 results, excludes one-time charges for non-cash equity based compensation, legal settlement expenses, restructuring charges, gain on the sale of assets and normalized tax provisions. The effect of changes in tax planning strategies and the finalization of the year end accounting for global tax accruals accounted for the improvement in FY05 net income over previous guidance. Please refer to the notes and reconciliation regarding Non-GAAP financial measures contained in this release. Frank Guidone, Company CEO commented, "Last year we established a strategy to aggressively grow our Sensor division and position the Company as a global sensor solutions provider; our FY05 results were consistent with that strategy. Organically, we grew our Sensor division 23% and completed six acquisitions throughout the year that boosted total Sensor sales growth 53% over FY04. Companywide, we grew sales and earnings 25% and 27% respectively as compared to FY04 pro forma net income, and established a foundation for accelerated growth in FY06. Consistent with our previous FY06 guidance, we anticipate growth in sales and earnings of approximately 25% and 30%, respectively. We believe we are well positioned in the market, and are pleased with the progress made in FY05 toward our long-term vision and goals." For the three months ended March 31, 2005, net sales increased 54.3% to $40.7 million, as compared to $26.3 million for the three months ended March 31, 2004. For the three months ended March 31, 2005, net sales in the Sensor division increased 73.4% to $28.6 million, as compared to $16.5 million for the three months ended March 31, 2004, and net sales in the Consumer Products division increased 22.4% to $12.1 million for the current fiscal quarter, as compared to $9.9 million for the three months ended March 31, 2004. Gross margin for the three months ended March 31, 2005 declined to 40.8%, as compared to 43.1% for the three months ended March 31, 2004. Gross margin in the Sensor division declined to 47.2% for the three months ended March 31, 2005, as compared to 51.6% for the same period last year, largely due to automotive price concessions and sales mix shifting to lower margin products in automotive and disposable medical markets. Gross margin in the Consumer Products division declined to 25.2% for current fiscal quarter, as compared to 27% for the same period last year. For the fiscal year ended March 31, 2005, net sales increased 24.9% to $140.9 million, as compared to $112.8 million for the fiscal year ended March 31, 2004. For the fiscal year ended March 31, 2005, net sales in the Sensor division increased 53.1% to $92.3 million, as compared to $60.2 million for the fiscal year ended March 31, 2004, while net sales in the Consumer Products division decreased 7.4% to $48.7 million for the fiscal year ended March 31, 2005, as compared to $52.6 million for the fiscal year ended March 31, 2004. Gross margin for the fiscal period declined to 42.1% as compared to 44.6% for the same period last year. Gross margin in the Sensor division declined to 50.3% as compared to 54% for fiscal 2004, while gross margin in the Consumer Products division declined to 25.4% as compared to 32% for the same period last year. The Company anticipates filing its Form 10-K for the fiscal year ended March 31, 2005 on or before Tuesday, June 14th. Please refer to the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Form 10-K filed for a more complete discussion of sales, margin and expenses. The Company will host an investor conference call on June 14th at 2 pm 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, 2005. US dialers: (866) 253-6505; International dialers: (703) 639-1207. 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 784985, and on Vcall. About MSI. Measurement Specialties, Inc. designs and manufactures sensors and sensor-based consumer products. The Sensor division, also known as MSI Sensors, produces a wide variety of sensors and transducers to measure precise ranges of physical characteristics such as pressure, force, vibration, position, tilt, flow and humidity. MSI Sensors uses multiple advanced technologies -- including piezoresistive, electro-optic, electro-magnetic, capacitive, application specific integrated circuits (ASICs), micro-electromechanical systems (MEMS), piezoelectric polymers and strain gauges -- to engineer sensors that operate precisely and cost effectively. The Consumer division produces OEM bathroom scales, Accutire(R) brand tire pressure gauges and other products. Company Contact: Frank Guidone, CEO, (757) 766-4400 Investor Contact: Aimee Boutcher or Daniel Boutcher, (973) 239-2878 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. Forward looking statements may be identified by such words or phrases "should," "intends," "is subject to," "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; 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. 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, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended March 31, ($ in thousands, except per share amounts) 2005 2004 2003 Net sales Sensor $92,268 $60,247 $52,326 Consumer 48,673 52,566 55,350 Net sales 140,941 112,813 107,676 Cost of goods sold 81,535 62,513 69,680 Gross profit 59,406 50,300 37,996 Operating expenses (income): Selling, general and administrative 35,796 30,448 34,245 Non-Cash Equity based Compensation (Selling, general and administrative) - 6,483 - Litigation expense - 1,500 3,550 Research and development 3,468 3,468 3,594 Customer funded development (268) (4) (367) Amortization of acquired intangibles 774 30 30 Restructuring costs - 506 1,219 Total operating expenses 39,770 42,431 42,271 Operating income (loss) 19,636 7,869 (4,275) Interest expense, net 637 323 2,057 Gain on sale of Assets - (1,424) (159) Other expense (income) (77) (142) (333) Income (loss) from continuing operations before income taxes 19,076 9,112 (5,840) Income tax 4,250 (12,262) 483 Income (loss) from continuing operations 14,826 21,374 (6,323) Discontinued operations: Income (loss) from operations of discontinued units (net of income tax benefit) - 212 (3,910) Gain on disposition of discontinued units (net of income tax benefit) - - 1,136 Income (loss) from discontinued units - 212 (2,774) Net income (loss) $14,826 $21,586 $(9,097) Income (loss) per common share - Basic Income (loss) from continuing operations $1.11 $1.73 $(0.53) Income (loss) from discontinued units - 0.02 (0.23) Net income (loss) $1.11 $1.75 $(0.76) Income (loss) per common share - Diluted Income (loss) from continuing operations $1.05 $1.53 $(0.53) Income (loss) from discontinued units - 0.01 (0.23) Net income (loss) $1.05 $1.54 $(0.76) Weighted average shares outstanding - Basic 13,392 12,333 11,911 Weighted average shares outstanding - Diluted 14,095 13,997 11,911 MEASUREMENT SPECIALTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Quarter Ended March 31, ($ in thousands, except per share amounts) 2005 2004 2003 Net sales Sensor $28,564 $16,475 $12,192 Consumer 12,075 9,869 11,108 Net sales 40,639 26,344 23,300 Cost of goods sold 24,057 14,986 15,037 Gross profit 16,582 11,358 8,263 Operating expenses (income): Selling, general and administrative 11,011 7,429 7,638 Non-Cash Equity based Compensation (Selling, general and administrative) - 1,529 - Litigation expense - 1,100 3,550 Research and development 892 858 1,030 Customer funded development (50) (4) (7) Amortization of acquired intangibles 579 8 8 Restructuring costs - (39) - Total operating expenses 12,432 10,881 12,219 Operating income (loss) 4,150 477 (3,956) Interest expense, net 392 1 286 Gain on sale of Assets - (1,424) (50) Other expense (income) (26) (166) (372) Income (loss) from continuing operations before income taxes 3,784 2,066 (3,820) Income tax (108) (13,034) 367 Income (loss) from continuing operations 3,892 15,100 (4,187) Discontinued operations: Income (loss) from operations of discontinued units (net of income tax benefit) - 100 - Gain on disposition of discontinued units (net of income tax benefit) - - 226 Income (loss) from discontinued units - Net income (loss) $3,892 $15,200 $(3,961) Income (loss) per common share - Basic Income (loss) from continuing operations $0.29 $1.19 $(0.35) Income (loss) from discontinued units - 0.01 - Net income (loss) $0.29 $1.20 $0.02 Income (loss) per common share - Diluted Income (loss) from continuing operations $0.27 $1.07 $(0.35) Income (loss) from discontinued units - 0.01 0.02 Net income (loss) $0.27 $1.08 $(0.33) Weighted average shares outstanding - Basic 13,532 12,620 11,917 Weighted average shares outstanding - Diluted 14,277 14,069 11,917 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, legal settlement expenses, restructuring charge, gain on the sale of assets and adjustments to the tax provision. Please refer to the notes to the Consolidated financial Statements in the Annual Report on Form 10-K to be filed with the Securities and Exchange Commission during the week June 13, 2005. For Three Months For Twelve Months Ended March 31, Ended March 31, 2005 2004 2005 2004 NET INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $3,785 $2,066 $19,076 $9,112 Non-cash equity based compensation - 1,529 - 6,483 SEC Settlement - - - 1,000 Class action settlement - 1,100 - 1,100 Hibernia litigation - - - (600) Restructuring charges - (39) - 506 Gain on the sale of assets - (1,424) - (1,424) NON-GAAP INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $3,785 $3,232 $19,076 $16,177 For Three Months For Twelve Months Ended March 31, Ended March 31, 2005 2004 2005 2004 NET INCOME $3,893 $15,200 $14,826 $21,586 Non-cash equity based compensation - 1,529 - 6,483 SEC Settlement - - - 1,000 Class action settlement - 1,100 - 1,100 Hibernia litigation - - - (600) Restructuring charges - (39) - 506 Gain on the sale of assets - (1,424) - (1,424) Tax provision adjustment (1) - (14,037) - (16,987) NON-GAAP NET INCOME BEFORE DISCONTINUED OPERATIONS $3,893 $2,329 $14,826 $11,664 NON-GAAP INCOME PER COMMON SHARE - BASIC: Non-GAAP Income before discontinued operations $0.29 $0.18 $1.11 $0.95 Income from discontinued units - 0.01 - $0.02 Non-GAAP Net income $0.29 $0.19 $1.11 $0.97 NON-GAAP INCOME PER COMMON SHARE - DILUTED Non-GAAP Income before discontinued operations $0.27 $0.17 $1.05 $0.83 Income from discontinued units - 0.01 - 0.02 Non-GAAP Net income $0.27 $0.18 $1.05 $0.85 Weighted Average Share Outstanding - Basic 13,532 12,620 13,392 12,333 Weighted Average Share Outstanding - Diluted 14,277 14,069 14,095 13,997 Notes: (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 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., +1-757-766-4400; or Investor: Aimee Boutcher or Daniel Boutcher, both of Boutcher & Boutcher Investor Relations, +1-973-239-2878, for Measurement Specialties, Inc. Web site: http://www.msiusa.com/

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