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Microdyne Reports Third Quarter Results
ALEXANDRIA, Va., July 17 /PRNewswire/ -- Microdyne Corporation (Nasdaq:MCDY) today
reported net earnings from continuing operations for the third quarter of fiscal 1997 ended June 29,
1997, of $1,195,000, or $0.09 per share, on revenue of $12,525,000. These fully-taxed earnings
include the results of the company's Aerospace Telemetry and Support Services divisions.
The company's Networking Products Division, which is treated as a discontinued business, had a
loss of $5,169,000, consisting of operating losses of $947,000 on revenue of $6,770,000, and a
previously announced provision for losses on disposal of the business segment of $4,222,000.
``With this quarter's results, we have put our networking products business behind us,'' said Michael
E. Jalbert, Microdyne's President and Chief Executive Officer. ``We have two businesses that offer
excellent growth and a very bright future; we intend to fully capitalize on the opportunities these
businesses represent.''
Record revenue and income from continuing operations
Microdyne's Aerospace Telemetry Division had record revenue of $7,873,000. ``The division's
telemetry receiver products have been chosen for a wide range of programs this year,'' Mr. Jalbert
said. ``This business is both government and commercial, and the orders are from U.S. and
international sources. We have every reason to expect this division to continue to perform very well,
and we expect to see both the hardware and systems business continue to grow.'' The division
reported new bookings of approximately $6,200,000 during the quarter.
Microdyne's Support Services Division also had record revenue of $4,652,000 as the unit's new
Torrance, California call center went into full operation. ``We are providing high-quality,
value-added professional services in a market in which customer support frequently is what
differentiates vendors and provides the basis for consumer choice,'' Mr. Jalbert said. ``The Support
Services Division is now starting to tell its success story to prospective new customers. Our goal is
to significantly expand our presence in this industry.''
The two divisions' product- and service-based revenue yielded a gross margin of 39.0% in the
quarter and a contribution of $2,983,000, or 23.8% of revenue. Corporate G&A expense in the
quarter was $859,000, resulting in operating income of $2,124,000. Non-operating expense in the
quarter, principally interest expense, was $197,000, yielding $1,927,000 of pre-tax income. The
company accrued for taxes at a rate of 38%, or $732,000, on its continuing operations, producing
net earnings of $1,195,000.
Microdyne has a net operating loss carryforward in excess of $30 million available to offset future
income taxes, $3.6 million of which is recognized as of June 29, 1997. The company reported taxes
on continuing operations in the third quarter of FY1997, although those taxes were offset by benefits
at the discontinued operations line. Beginning no later than the first quarter of FY1998, however,
Microdyne does not expect to accrue taxes until such time as it exhausts those carryforwards. Had
Microdyne been able to utilize this accounting treatment in the third quarter of FY1997, reported
earnings from continuing operations would have been $0.15 per share.
Disposition of the networking products business
The company's charge of $4.8 million for loss on disposal of assets compares to the range of $5 to
$8 million reported by Microdyne on June 16, 1997. The $4.8 million figure includes anticipated
proceeds from the sale of certain of the division's assets. However, it excludes any royalty-based
future proceeds, or asset sales where negotiations were ongoing as of July 17, 1997.
Asset sales completed prior to the filing of the company's third quarter Form 10-Q will be reported
in that document. Any subsequent proceeds and income from royalties based on the disposition of
assets will be treated as income from discontinued operations in the quarter in which such income is
derived.
``We are very pleased with the progress toward selling the assets of the Networking Products
Division,'' said Massoud Safavi, Microdyne's Chief Financial Officer. ``Our goal is to complete these
transactions quickly, and we will report to shareholders as those sales are made.''
Balance sheet highlights
Microdyne's bank debt at June 29, 1997 was $5,973,000, and total short- and long-term debt was
$11,958,000. ``During the third quarter, Microdyne's bank line of credit was changed to provide the
company with greater flexibility while we exit the networking products business,'' Mr. Safavi said.
``Also during the quarter, Microdyne repaid on schedule the final installment of its $12 million term
note.''
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 is the world's premier developer and manufacturer of
telemetry receivers; the specialized high-frequency radios used in aerospace and satellite
communications. Microdyne's Support Services Division is a provider of value-added outsourced
services, including telephone technical support, and warranty and after-warranty service depots.
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 discontinued Networking Products Division; the likelihood that the Networking
Products Division's assets will be disposed of in a timely and economic fashion; dependence upon a
limited customer base at the Support Services Division; 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, June 29, June 30,
except per share data, unaudited 1997 1996
Revenue:
Product $4,017 $3,905
Service 8,508 3,633
Total revenue 12,525 7,538
Cost of product sold and service provided:
Product 1,751 1,779
Service 5,884 2,449
Total cost of product
sold and service provided 7,635 4,228
Gross profit 4,890 3,310
Selling, general and administrative 2,357 2,122
Research and development 409 377
Income from operations 2,124 811
Other (expense) income, net (197) (481)
Income before income taxes 1,927 330
Income tax expense 732 125
Net income from continuing operations $1,195 $205
Net income per share
from continuing operations $0.09 $0.02
Discontinued operations:
Loss from operations, net of tax effect (947) (1,395)
Loss on disposal, net of tax effect (4,222) --
Net loss from discontinued operations 5,169) (1,395)
Net loss (3,974) (1,190)
Net loss per share $(0.31) $(0.09)
Weighted average shares outstanding 12,877 12,811
Microdyne Corporation
Consolidated Statements of Earnings
(continued)
Nine Months Ended
Dollars and shares in thousands, June 29, June 30,
except per share data 1997 1996
Revenue:
Product $13,069 $11,851
Service 18,883 10,909
Total revenue 31,952 22,760
Cost of product sold and service provided:
Product 5,612 5,589
Service 13,327 7,334
Total cost of product
sold and service provided 18,939 12,923
Gross profit 13,013 9,837
Selling, general and administrative 6,518 6,311
Research and development 1,151 1,065
Income from operations 5,344 2,461
Other (expense) income, net (835) (1,429)
Income before income taxes 4,509 1,032
Income tax expense 1,716 392
Net income from continuing operations $2,793 $640
Net income per share
from continuing operations $0.22 $0.05
Discontinued operations:
Loss from operations, net of
tax effect (33,334) (3,932)
Loss on disposal, net of tax effect -- --
Net loss from discontinued operations (33,334) (3,932)
Net loss (30,541) (3,932)
Net loss per share $(2.37) $(0.26)
Weighted average shares outstanding 12,871 12,803
Microdyne Corporation
Consolidated Balance Sheets
June 29 September 29,
Dollars in thousands 1997 1996
(unaudited) (audited)
ASSETS
CURRENT ASSETS
Cash $1,017 $1,791
Accounts receivable 15,103 9,527
Inventories 4,546 3,604
Income tax receivable 1,541 1,946
Prepaid expenses and other 360 384
Current assets of
discontinued operations 6,285 42,770
Deferred income tax asset 3,603 1,053
Total current assets 32,455 61,075
PROPERTY AND EQUIPMENT, net 2,252 2,451
NON-CURRENT ASSET -
DISCONTINUED OPERATIONS 225 16,232
DEFERRED TAX ASSET 146 113
OTHER ASSETS 34 123
$35,112 $79,994
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of
long-term obligations $8,379 $15,119
Accounts payable - trade 2,243 1,579
Accrued liabilities 6,045 2,194
Current liabilities - discontinued
operation 8,229 13,507
Total current liabilities 24,966 32,399
LONG-TERM OBLIGATIONS
net of current maturities 3,579 10,539
NON-CURRENT LIABILITIES -
DISCONTINUED OPERATIONS 286 532
STOCKHOLDERS' EQUITY
Common stock, $.10 par value
authorized 50,000,000 shares,
12,898,564 shares issued and
outstanding at June 29, 1997,
and 12,832,203 shares issued and
outstanding at September 29, 1996 1,290 1,283
Additional paid-in-capital 10,308 10,016
Retained earnings (5,317) 25,225
Total Stockholders' Equity 6,281 36,524
$35,112 $79,994 |
