Preliminary Q1 figures for MFLEX

The company expects net sales in the first quarter of fiscal 2013 to be above the company's guidance range at approximately USD 290 million, up 21% from net sales of USD 239.3 million in the same quarter last year. Gross margin during the first quarter of fiscal 2013 is expected to be approximately 8.5%, below the Company's guidance range, compared to 12.2% for the same period in the prior year. Reza Meshgin, Chief Executive Officer of MFLEX commented, "We generated record revenues during the first quarter reflecting strong demand from both our existing and new customers. Sales to new customers more than doubled sequentially." Mr. Meshgin continued, "We had strong operational performance throughout the quarter however toward the end of the quarter, we scaled back production. While this prudent business decision enabled us to successfully manage our working capital, including a reduction in work in process and finished goods inventory and an increase in our cash balance to over USD 92 million, the idled labor costs and manufacturing capacity were expensed rather than capitalized as inventory. This, coupled with unfavorable product mix, impacted our gross margin. Looking ahead to the second quarter, we expect a seasonal decline in revenue. Although we continue to work on cost improvements, including reduced headcount levels, we also anticipate a sequential decline in gross margin based on the lower anticipated revenues and overhead absorption, resulting in break-even or slightly negative net earnings."