Consolidated Statements of Income (unaudited)
(dollars in thousands, except share data)
Three Months Nine Months
1999 1998 1999 1998
Revenues, principally
from contracts $36,609 $44,203 $122,848 $123,419
Costs and expenses
of contracts 35,385 42,759 119,364 119,464
Gross profit 1,224 1,444 3,484 3,955
Selling, general
and administrative
expenses 36 183 528 479
Loss on CMstat operations 0 307 1,499 1,815
Interest expense 64 42 91 57
Pretax income 1,124 912 1,366 1,604
Provision for
income taxes 449 239 462 564
Net income $675 $673 $904 $1,040
Weighted average
shares
outstanding 2,115,061 2,122,517 2,114,967 2,128,002
Basic and diluted
earnings per share $.32 $.32 $.43 $.49
Financial Results
Consolidated results shown in the table above include VSE's engineering,
logistics, management and technical services business (engineering services)
and its software subsidiary CMstat, which was sold in May, 1999.
Revenues from engineering services for the three month period were $36.6
million compared to $44.2 million for the same three month period last year, a
decrease of about 17%. VSE engineering services revenues for the nine month
period were $122.8 million compared to $123.4 million last year, a decrease of
less than 1%.
Net income from engineering services for the three month period was $675
thousand ($.32 a share) compared to $847 thousand ($.40 a share) for the same
three month period last year, a decrease of about 20%. Net income for
engineering services segment for the nine month period was $1.7 million ($.81
a share) compared to $2.1 million ($.99 a share) last year, a decrease of
about 18%.
VSE CEO Don Ervine said, "The decline in revenue during the third quarter
this year compared to the same time last year principally reflects a decline
in the revenues of our BAV Division, which provides ship transfer services and
follow-on technical support in connection with a U. S. Navy foreign military
sales program. Such sales require Congressional approval on a country
specific basis, and are also subject to negotiation and other timing
differences which can lead to large revenue differences from quarter to
quarter. However, there is a significant backlog of program work that could
result in an increased level of effort next year and the year thereafter.
We are firmly focused on marketing, and that focus has begun to bear
fruit. A highlight of the quarter was our win of a U. S. Navy contract to
test the feasibility of a pilot program to dismantle excess ships through an
environmentally sound recycling process. VSE has been involved with this
project in the planning stages for more than two years. While the current
contract award reflects a small pilot project, we are optimistic that
outstanding performance could result in substantial future awards. In
addition, we have several proposals outstanding, as well as many other new
bidding initiatives in the pipeline.
Finally, coinciding with the sale of CMstat, we are undertaking a
comprehensive review and repositioning of the entire company to reduce costs
and exit unprofitable contracts. These efforts should strengthen our
competitiveness in the federal market place. I am pleased with our progress
thus far and intend to continue these initiatives into next year and beyond." |
