Cherokee Reports Fourth Quarter & Year End 2007 Financial Results
Cherokee International Corp. announced its financial results for the fourth quarter and year ended December 30, 2007. Net sales for the fourth quarter of 2007 were $38.5 million, up over 2% compared to $37.6 million for the fourth quarter of 2006. Sequentially, net sales for the fourth quarter 2007 were up $8.1 million or 27% when compared to $30.4 million for the third quarter of 2007.
The net loss for the fourth quarter of 2007 was $4.0 million, or $0.21 per diluted share. Excluding a non-cash impairment charge, related to the company’s European operation, for goodwill under SFAS 142 of $5.2 million, or $0.27 per diluted share, the company had net income on a non-GAAP basis during the fourth quarter of 2007 of $1.2 million, or $0.06 per share. This compares to GAAP net income of $0.3 million, or $0.01 per diluted share, for the fourth quarter a year ago and a GAAP net loss of $1.3 million, or $0.07 per diluted share, for the third quarter of 2007.
Gross profit for the fourth quarter was $8.6 million, up over 13.6% compared to $7.6 million for the same period in 2006, and up over 49.9% sequentially from the third quarter of 2007. The gross margin of 22.3% for the fourth quarter of 2007 was up from the 20.1% realized in the fourth quarter of 2006 and also up sequentially from the 18.9% realized in the third quarter of 2007.
Operating expenses for the fourth quarter of 2007 were $13.0 million. Excluding the non-cash impairment charge for goodwill of $5.2 million, operating expenses on a non-GAAP basis were $7.8 million for the fourth quarter of 2007. This compares to GAAP operating expenses of $7.1 million for the fourth quarter of 2006, and $6.7 million for the third quarter of 2007. Operating expenses, as a percentage of net sales, were 33.7% on a GAAP basis and 20.2% on a non-GAAP basis in the fourth quarter of 2007, compared to 18.8% on a GAAP basis in the same quarter of 2006 and 22.1% on a GAAP basis in the third quarter of 2007.
For the year ended December 30, 2007, net sales decreased 11% to $128.5 million, compared to $145.0 million for the year ended December 31, 2006. The decrease in net sales for the year was mainly due to $13.7 million of lower net sales from two large European customers in the telecom sector. One customer placed a large order in 2006 and had lower production volumes in 2007. The other customer’s product reached its end of life.
The net loss for the year ended December 30, 2007 was $9.0 million, or $0.46 per diluted share, including a non-cash fourth quarter impairment charge for goodwill under SFAS 142 of $5.2 million, or $0.27 per diluted share, compared to net income of $0.1 million, or $0.00 per diluted share, for the year ended December 31, 2006. Gross profit was $25.6 million, compared to $30.6 million for 2006. Gross margin for the year ended December 30, 2007 decreased to 19.9%, compared to 21.1% the prior year.
