Newton Aycliffe Agreements signed with M/A-COM and BAE SYSTEMS, Provides Financial Update
3 December 2001
Filtronic plc ("Filtronic"), a leading global designer and manufacturer of customised microwave electronic subsystems, announces the signing of separate definitive agreements with two international companies for additional utilisation of its facility at Newton Aycliffe in County Durham.
Filtronic has 18 worldwide sites, 7 in the UK (North East England, Yorkshire, Midlands, Scotland), 6 in the US, 2 in Finland, 2 in China and 1 in Australia.
Newton Aycliffe Agreements An agreement has been signed with M/A-COM Inc., a unit of Tyco International Ltd., to supply large volumes of Gallium Arsenide ( GaAs ) products on 6" wafers for the mobile handset, cable communications and microwave tagging markets. Process development and design qualification has been ongoing since January 2001 ensuring that the supply of qualified product will be able to move into production towards the end of the current financial year.
A second, wider ranging agreement has been signed with BAE SYSTEMS Avionics Ltd ( BAE SYSTEMS ). Filtronic has granted BAE SYSTEMS a sole licence to use its design and process technology for compound semiconductors at Newton Aycliffe for defense applications. Additionally, Filtronic will supply BAE SYSTEMS with related semiconductor devices. This will enable BAE SYSTEMS to design and manufacture complex customised Monolithic Microwave Integrated Circuits ( MMICs ) using Filtronic s processes for applications in several of their defense products. BAE SYSTEMS will also benefit from being able to use the automated Microwave Factory at Newton Aycliffe, which Filtronic uses for the production of complex microwave assemblies in its own commercial activities.
Further, the BAE SYSTEMS agreement establishes a teaming relationship to address the worldwide opportunities for Transmit/Receive ( T/R ) modules for use in electronically scanned ( E-Scan ) radars.
These two agreements underpin the future of Newton Aycliffe. As a result, Filtronic is able to ensure the design, manufacture and volume supply of its own high performance transistors, MMICs and integrated compound semiconductor subsystems. The associated growth opportunities relate to proprietary designs for high efficiency, high power, linear amplifiers in 3G base stations and integrated microwave modules for radio point to point transceivers.
The combined effect of these two agreements will be to improve the cashflow and reduce the losses of the Newton Aycliffe operation significantly such that Newton Aycliffe s impact on the financial results of the group as a whole for the year ending 31 May 2002 is likely to be immaterial. The Newton Aycliffe site is expected to move into profitability on a monthly basis by the end of the following year.
Current Trading - Comments made by Professor David Rhodes, CBE FREng FRS, Executive Chairman
"As I stated at the Annual General Meeting on 28 September, results for the first quarter of Filtronic s financial year were satisfactory, says Professor David Rhodes, Executive Chairman. This level of financial performance has been sustained for the rest of the first half.
"In the Wireless Infrastructure business, which represented 70% of sales in the last financial year, initial supplies of product to our major customer for their previously announced rollout of 3G base stations have commenced. This customer has stated publicly that they expect the level of this activity to increase significantly in 2002. These 3G WCDMA shipments will be additional to our business in 2G and 2.5G systems. Continued support for program developments with customers has further strengthened Filtronic s position as the leading independent global supplier of transmit/receive subsystems for mobile base station applications. In our second largest business area, Cellular Handset Products, our market share has increased so that Filtronic is now recognised as the world s number one supplier of handset antennas.
"Overall, the Board expects that market expectations for financial results for the six months ending 30 November 2001 will be met. Our projections for an improved performance in the second half of the financial year remain unchanged. We have generated cash throughout the first half, independent of any benefit arising from the agreements with M/A-Com and BAE SYSTEMS, leading to a substantial reduction in short term borrowings.
Enquiries:
Filtronic plc
Tel: +44 01274 221 000
Professor David Rhodes, Executive Chairman
John Samuel, Finance Director
Chris Schofield, Director & Company Secretary
Binns & Co PR Ltd
Tel: +44 020 7786 9600
Peter Binns
Paul McManus
Carole Butcher
