Tuesday April 22 9:28 AM EDT - Source: Microdyne Corporation
Microdyne Reports Second Quarter Results
Highlights: * Record revenue and earnings at Aerospace Telemetry and
Support Services Divisions * Company expects to be "solidly profitable"
in the quarter ending June 30 * Pro-forma loss of $2.8 million or $0.22
per share due to Networking Products 'shipping holiday' * Net loss of
$27.2 million or $2.11 per share, including a $26.6 million restructuring
charge * Company sees free cash flow per share of up to $1.50 over the
next twelve months
ALEXANDRIA, Va., April 22 /PRNewswire/ -- Microdyne Corporation (Nasdaq:MCDY)
today reported a net loss of $27.2 million, or $2.11 per share for the second
fiscal quarter of 1997 ended March 30, 1997. These results include a previously
reported pretax $26.6 million restructuring charge.
Microdyne's Aerospace Telemetry and Support Services divisions both posted record
revenue and operating results. Operating income at the two divisions was $2.7
million on revenue of $10.8 million.
Microdyne accomplished its restructuring objectives for the Networking Products
Division during the second quarter by writing down the value of goodwill and
certain inventory. The company also drew down inventories held by Networking
Products' stocking distributors to approximately 35 days of projected sales.
As a result of the ``shipping holiday,'' that division had revenues of just
$500,000 and incurred a substantial operating loss for the quarter.
Excluding the restructuring charge and associated tax benefits, but including
the impact of the Networking Products Division shipping holiday, Microdyne had
a pro-forma net loss of $2.8 million, or $0.22 per share.
Restoring Networking Products to Profitability
President and Chief Executive Officer Michael E. Jalbert said the restructuring
at the Networking Products Division accomplished a set of key objectives for the
company.
``We have taken the steps necessary to make the Networking Products Division
profitable,'' Mr. Jalbert said. ``Going forward, we expect the division to
contribute to corporate earnings and cash flow. Division expenses will be
tightly controlled and will be pegged to revenue which, for the third
quarter ending June 29, 1997 , we believe will exceed $10 million.''
``Based on anticipated sales going forward, we now have just over a month's inventory in our
distribution channel,'' Mr. Jalbert said. ``We plan to keep inventory at that level. We have reduced
our product lines to a set which we sell in quantity, where we are one of a limited number of
suppliers, or where we have contractual opportunities. The latter category includes OEM products
and government contracts. In early May, we will introduce a new family of EtherMAX* Ethernet
and Fast Ethernet products that will be priced to stay competitive and designed to yield acceptable
gross margins.''
Mr. Jalbert said he is taking additional steps in the third quarter to improve the division's profits.
``We will reduce staff where needed and are reviewing the division's facilities requirements. From
our present position, Microdyne now has the choice either to grow its Networking Products
business, or to divest it. We will explore all alternatives in that regard. I believe strongly that there
is growth and profit in this industry, and that the restructured division provides the vehicle to
capitalize on those opportunities. But, Networking Products must contribute every quarter. The
division's management team understands this imperative and is committed to succeeding.''
Opportunities in Support Services and Telemetry
Mr. Jalbert said the company's Aerospace Telemetry and Microdyne Support Services divisions
are both on track for record revenue, income, and cash flow.
``This quarter, Aerospace Telemetry saw revenues rise to a record as the division began
recognizing revenue from its systems contract with the Italian Ministry of Defense,'' Mr. Jalbert
said. ``We believe the projected $27 million of revenue produced by this division in FY1997 can
be equaled or bettered in FY1998. This can be accomplished through new product development,
additional systems business, and through acquisitions.
``Our Microdyne Support Services division should have $16 to $18 million in revenues this year;
growth in 1998 should come both from our current customer base and from new customers. We
have put in place a management team that understands the value of outsourced services. We are
pursuing new opportunities in our core competencies of telephone technical support, warranty and
repair services, and facilities management.
Substantial Free Cash Flow
``Our operating divisions should generate more than $12 million in cash this fiscal year. Coupled
with our net loss carry-forward and sales of excess inventory, Microdyne could throw off up to
$20 million of free cash over the next twelve months -- as much as $1.50 per share,'' Mr. Jalbert
said. ``We have further reduced bank debt to under $8 million. As we begin to build cash in the
coming quarters, we will have to choose among eliminating all bank debt, investing in attractive
businesses, or retiring shares.''
A Future With Reduced Risks, But Not Reduced Opportunity
Mr. Jalbert said the actions taken at the Networking Products Division reduce whatever risk
remains at that division to what exists in any business. ``That risk has hung over the company for
the past year, and has frightened away many prospective shareholders. What we have attempted
to do this quarter is to create a future with reduced risk, but without reduced opportunity for
growth.''
``There is new energy at Microdyne; a new focus on strategic growth, cost containment, and
shareholder value,'' Mr. Jalbert said. ``We expect to be solidly profitable in our third quarter.
Moreover, our intention is to improve those earnings each quarter by increasing revenue and
income at each of our divisions.''
``We also have an exceptionally clean balance sheet with no 'soft' assets. Shareholders equity is
now $10.1 million, but that number should rebuild rapidly because our multi-million-dollar offset to
taxable income will allow us to keep as cash substantially all of the operating profits we earn until it
is exhausted. Our inventories should turn faster and collections on receivables should be greatly
accelerated. Our return ratios -- return on equity, return on capital -- should be exceptionally high
in the coming year.''
About Microdyne
Headquartered in Alexandria, Virginia, and with offices and representatives around the world,
Microdyne Corporation is a diversified manufacturing, technology, and services company.
* Microdyne's Aerospace Telemetry Division, located in Ocala, Florida, is the global
premier developer and manufacturer of telemetry receivers; the specialized high-frequency
radios used in aerospace and satellite communications. The division has been responsible
for technical innovations in the design and application of telemetry products for nearly 30
years. Today, the division's products serve the needs of the aerospace industry, satellite
communications providers, and other users of high-precision, high- reliability long-range
monitoring and control equipment.
* Microdyne Support Services Division is a provider of outsourced services. The division
provides technical staff and management for telephone technical support centers, warranty
and after-warranty service depots, and facilities and special project staffing. The divisions'
employees are based in California, Indiana, and Virginia.
* Microdyne's Networking Products Division manufactures network connectivity products
and provides a broad range of workgroup-level solutions for Ethernet and Fast Ethernet
networks. The division designs, manufactures, markets, and sells EtherMAX-brand adapter
cards, hubs, and switches; as well as specialty products such as Mirrored Server Link and
minicomputer connectivity hardware. The division has operations in Virginia and California.
Microdyne reported $99.1 million in revenue in its fiscal year ended September 29, 1996.
Important Information for Investors
The preceding release contains forward-looking statements that involve risks and uncertainties.
Important factors that could cause actual results to differ materially include: uncertainty associated
with operating the restructured Networking Products Division; rapid changes in products and
technology that may displace products sold by Microdyne; the competitive industries within which
Microdyne operates; dependence upon licensees and suppliers; reliance upon distributors;
declining prices of networking products; limited product lines and service offerings relative to other
suppliers; the company's success in identifying, acquiring and incorporating commercially
successful technology, products or businesses, and in identifying and taking advantage of growth
opportunities; and the risk factors listed from time to time in the company's SEC reports and
filings, including but not limited to the company's registration statement dated November 9, 1995;
Reports on Form 10-Q filed during 1996 and 1997; and Report on Form 10-K for the fiscal year
ended September 29, 1996.
Microdyne's shares are traded on the Nasdaq Stock Market; symbol MCDY. For additional
information on the company, please visit Microdyne's web site at www.microdyne.com.
Microdyne Corporation
Consolidated Statements of Earnings
Three Months Ended
Dollars and shares in thousands, March 30, March 31,
except per share data, unaudited 1997 1996
Revenue:
Product $ 4,902 $ 13,939
Service 6,404 3,607
Total revenue 11,306 17,546
Cost of product sold and service provided:
Product 4,806 10,560
Service 4,447 2,504
Total cost of product sold and
service provided 9,253 13,064
Gross profit 2,053 4,482
Selling, general and administrative 5,193 6,376
Research and development 1,054 1,042
Amortization of intangibles -- 530
Restructuring charges 26,607 --
(Loss) earnings from operations (30,801) (3,466)
Other (expense) income, net (406) (502)
(Loss) earnings before income taxes (31,207) (3,968)
(Credit) provision for income taxes (4,030) (1,508)
Net (loss) $ (27,177) $ (2,460)
Net (loss) per share $ (2.11) $ (0.19)
Weighted average shares outstanding 12,864 12,806
Six Months Ended
Dollars and shares in thousands, March 30, March 31,
except per share data 1997 1996
Revenue:
Product $ 21,852 $ 43,287
Service 10,375 7,276
Total revenue 32,227 50,563
Cost of product sold and service provided:
Product 15,028 32,584
Service 7,243 4,885
Total cost of product sold and
service provided 22,271 37,469
Gross profit 9,956 13,094
Selling, general and administrative 9,934 12,354
Research and development 1,983 2,203
Amortization of intangibles 741 451
Restructuring charges 26,607 --
(Loss) earnings from operations (29,309) (2,444)
Other (expense) income, net (932) (947)
(Loss) earnings before income taxes (30,241) (3,391)
(Credit) provision for income taxes (3,674) (1,289)
Net (loss) $ (26,567) $ (2,102)
Net (loss) per share $ (2.07) $ (0.16)
Weighted average shares outstanding 12,852 12,799
Microdyne Corporation
Consolidated Balance Sheets
March 30 September 29,
Dollars in thousands 1997 1996
(unaudited) (audited)
ASSETS
CURRENT ASSETS
Cash $ 1,170 $ 1,791
Accounts receivable 14,471 30,954
Inventories 11,430 24,100
Income tax receivable 2,198 1,946
Prepaid expenses and other 580 1,231
Deferred income tax asset 3,017 1,053
Total current assets 32,866 61,075
PROPERTY AND EQUIPMENT, net 3,287 3,746
PRODUCT LINE ACQUISITION COST -- 14,417
OTHER ASSETS 219 756
$ 36,372 $ 79,994
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of
long-term obligations $ 11,634 $ 15,719
Accounts payable P trade 7,213 9,365
Accrued liabilities 3,159 7,315
Total current liabilities 22,006 32,399
LONG-TERM OBLIGATIONS
net of current maturities 4,227 11,071
DEFERRED INCOME TAX PAYABLE -- --
STOCKHOLDERS' EQUITY
Common stock, $.10 par value
authorized 50,000,000 shares,
12,842,275 shares issued and
outstanding at March 30, 1997,
and 12,832,203 shares issued and
outstanding at September 29, 1996 1,287 1,283
Additional paid-in-capital 10,195 10,016
Retained earnings (1,343) 25,225
Total Stockholders' Equity 10,139 36,524
$ 36,372 $ 79,994
Supplemental information for shareholders:
Microdyne Corporation
Pro-forma Operating Results
Quarter Ended March 30, 1997
Revenue $11,306
Cost of Goods Sold 9,253
Gross Profit 2,053
SG&A 5,193
R&D 1,054
Amortization --
Loss from Operations (4,194)
Interest expense (406)
Pre-tax loss (4,600)
Tax benefit (computed at 38.2%) 1,757
Net loss ($2,843)
Net loss per share ($0.22)
Weighted shares outstanding 12,864 |
