Cherokee International Reports Financial Results for Second Quarter 2006
Cherokee International Corp. announced its financial results for the second quarter ended July 2, 2006. Net sales for the second quarter of 2006 totaled $38.3 million, up 23.6% compared to $31 million for the second quarter of 2005, and up sequentially 6.1% compared to $36.1 million for the first quarter of 2006. Net income for the second quarter of 2006 was $0.4 million, or $0.02 per diluted share, compared to a net loss of $1.8 million, or $0.09 per diluted share for the second quarter a year ago, and was down sequentially from $0.8 million of net income in the first quarter or $0.04 per diluted share.
Second quarter net sales indicate a general improvement in end market demand, reflected in the 22% increase in the company's backlog for this quarter compared to the second quarter of 2005 and new design wins. Gross profit for the quarter was $8.1 million, up 29% compared to $6.3 million for the same period in 2005. Gross margin for the second quarter was 21.2%, up from 20.4% realized in the second quarter of 2005. The increase in gross profit was due primarily to the increase in company-wide revenues and better utilization of labor.
Operating expenses were $7.1 million for the second quarter 2006 compared to $7.3 million for the second quarter of 2005, and $6.6 million for the first quarter of 2006. During the second quarter, the company incurred $0.4 million of legal and professional fees related to the investigation of certain unauthorized payments by employees of the company's Indian subsidiaries. The company remains committed to actively managing its operating expenses.
"We were pleased with our top line sales growth in the quarter," commented Jeffrey M. Frank, Cherokee's Chief Executive Officer. "This represents our third quarter in a row of increased revenue growth. We continue to work hard to improve our gross margins with a variety of initiatives."