Globecomm Systems Inc. Announces
Record Fiscal 2000 First Quarter Revenues
Fiscal 2000 First Quarter Highlights -- Revenues increase 46.1% to $19.4
million, compared to fiscal 1999 first quarter revenues of $13.3 million -- Core
satellite business profitable for quarter -- Globix Corporation and Mr. George
Soros purchased a combined 25% equity interest in NetSat Express, Inc.
subsidiary -- Globecomm Systems acquires Matra Marconi Space UK Limited
Civil Ground Segment Division, now Globecomm Systems Europe Limited
HAUPPAUGE, N.Y., Oct. 26 /PRNewswire/ -- Globecomm Systems Inc. (Nasdaq: GCOM -
news), a leading provider of satellite ground segment systems, networks and satellite services, today
announced record revenues for the fiscal 2000 first quarter ended September 30, 1999.
Revenues increased 46.1% to $19.4 million for the three months ended September 30, 1999,
compared to $13.3 million for the comparable period in the prior year, reflecting increased shipments
for both international and domestic projects and an increase in revenues generated by NetSat
Express. The net loss for the three months ended September 30, 1999, was $739,000, or $0.08 per
share, compared to a net loss of $1.7 million, or $0.19 per share, for the comparable period in the
prior year. The prior year included a charge of $972,000, or $0.11 per share, related to legal,
accounting and other expenses associated with a terminated proposed acquisition. Excluding this
charge, the net loss would have been $752,000, or $0.08 per share.
For the three months ended September 30, 1999, NetSat Express contributed a net loss of
$808,000, or $0.09 per share, compared to a net loss of $455,000 or $0.05 per share, for the
comparable period in the prior year. This increased loss reflects higher expenses associated with the
expansion of NetSat Express' Internet services.
Excluding the loss contributed by NetSat Express, Globecomm Systems would have reported net
income of $68,000, or $0.01 per share, for the three months ended September 30, 1999.
According to David Hershberg, Chairman and CEO of Globecomm Systems, ``We are extremely
pleased with our fiscal first quarter results. The fact that our core business was profitable for this
three-month period demonstrates the implementation of a number of previously signed projects and
our ability to manage our cost structure. Even excluding the fiscal 1999 first quarter charge, we have
decreased our total operating expenses as a percentage of revenues.
``During the past quarter, we continued to execute our business plan through entering into new
strategic relationships and signing new contracts. Among our most recently announced contract
awards are a $5 million contract with Bezeq International and a $20 million contract with CD Radio,
one of our largest contracts to date. Importantly, the Bezeq contract demonstrates the successful
implementation of our Enterprise Service Solutions initiative, combining Globecomm Systems'
strength as a turnkey provider of end-to-end service solutions with the Internet access expertise of
NetSat Express. Despite these successes, our core satellite business faces challenges consistent with
those of previous quarters, including continued pricing pressures and economic difficulties in certain
of our emerging markets. As a result, we expect that quarter-to-quarter financial results will continue
to fluctuate,' said Mr. Hershberg.
``Also importantly, in August of 1999, Globix Corporation and Mr. George Soros each purchased a
12.5% equity interest in our NetSat Express subsidiary for a combined $10 million. This investment
not only strengthened Globecomm Systems' balance sheet but also brought a new strategic partner to
NetSat Express. Specifically, Globix and NetSat Express have also entered into a strategic
agreement to co-market NetSat Express' Internet access capability and Globix's private peering
services,' continued Mr. Hershberg.
``Other significant highlights of the past quarter include our July acquisition of Matra Marconi Space
UK Limited Civil Ground Segment Division, now Globecomm Systems Europe. This acquisition
strengthens our presence in the European marketplace,' concluded Mr. Hershberg.
Globecomm Systems designs, assembles and installs ground segment systems, networks and
enterprise service solutions which support a wide range of satellite communications applications,
including fixed, mobile and direct broadcast services as well as military applications. The Company's
customers include prime communications infrastructure contractors, government-owned PTTs, other
telecommunications carriers, producers and distributors of news and entertainment content and other
corporations.
Through its subsidiary, NetSat Express, Inc., the Company provides satellite based Internet access
services, digital media distribution services and integrated data, voice and video communications
services.
Based in Hauppauge, New York, Globecomm Systems also maintains offices in Atlanta, Georgia,
Hong Kong and the United Kingdom.
For more information contact Globecomm Systems Inc., 45 Oser Avenue, Hauppauge, NY
11788-3816, USA. TEL: +1 516 231-9800, FAX: +1 516 231-1557; email:
info@globecommsystems.com; or visit our web site at www.globecommsystems.com .
Statements in this press release that are not strictly historical are forward-looking statements
regarding potential future events or the future financial performance of the Company. These
statements are only predictions and reflect the current beliefs and expectations of the Company.
Actual events or results may differ materially. Some of the factors that could cause actual results to
differ materially from the forward-looking statements contained herein include, without limitation,
whether the Company can successfully implement the cost reduction program and whether that cost
reduction program will reduce operating expenses, whether the Company can win new projects and
whether new projects will generate revenue growth, whether increased backlog compared to the
prior fiscal year will result in improved operating results in fiscal 2000, whether the Company will
become profitable again, whether NetSat Express will become profitable and successfully pursue its
growth strategy, whether the ground satellite infrastructure market will grow, whether the Company
will experience a reduction, delay or cancellation of orders from significant customers, whether such
orders when completed will be profitable, whether increased competition in the Company's markets
will result in price reductions, continued pricing and margin pressures, decreases in gross profit, and
loss of market share for the Company, whether the satellite communication industry will continue to
develop, whether the Internet will continue to grow in international markets, whether the Company
will be able to capitalize on opportunities available to it, or whether continued international economic
difficulties and/or a decrease in the value of foreign currencies relative to the U.S. dollar will
adversely affect the demand for the Company's products and services. Please refer to the documents
the Company files from time to time with the Securities and Exchange Commission, specifically the
Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. These
documents contain and identify important factors that could cause the actual results to differ materially
from those contained in the projections or forward-looking statements.
Globecomm Systems Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended
September 30,
1999 1998
(Unaudited)
Revenues $19,425 $13,293
Costs of revenues 16,917 11,673
Gross profit 2,508 1,620
Operating expenses:
Network operations 276 98
Selling and marketing 1,045 1,031
Research and development 130 291
General and administrative 1,984 1,290
Terminated acquisition costs -- 972
Total operating expenses 3,435 3,682
Loss from operations (927) (2,062)
Interest income, net 112 338
Loss before minority interests in operations
of consolidated subsidiary (815) (1,724)
Minority interests in operations of
consolidated subsidiary 76 --
Net loss $(739) $(1,724)
Basic and diluted net loss per common share $(0.08) $(0.19)
Shares used in the calculation of basic and
diluted net loss per common share 9,229 9,161
Condensed Consolidated Balance Sheets
(In thousands)
September 30, June 30,
1999 1999
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $15,088 $11,944
Restricted cash 337 3,486
Accounts receivable, net 24,546 18,147
Inventories, net 5,237 6,419
Prepaid expenses and other current assets 1,434 1,207
Total current assets 46,642 41,203
Fixed assets, net 23,687 12,684
Investments 2,961 2,961
Other assets, net 1,207 1,162
Total assets $74,497 $58,010
Liabilities and stockholders' equity
Current liabilities $18,816 $21,753
Capital lease obligations 10,833 --
Minority interests in consolidated subsidiary 117 --
Preferred stock of consolidated subsidiary,
at redemption value 5,000 --
Stockholders' equity 39,731 36,257
Total liabilities & stockholders' equity $74,497 $58,010 |
