Mike C.:
Historical EPS
1992 - ($ 4.64) loss on about 15M shares
1993 - ($16.74) loss on about 18M shares
1994 - $ 0.36 income on about 23M shares
1995 - $ 0.46 income on about 47M shares
1996 - $ 0.30 income on about 46M shares *
*includes analysts consensus estimates for 1996 4Q
The increases in equity from 1992-1995 should clue you in to the way common shares were used in the process of converting dilutive and cash-draining debt/equity instruments which basically resulted in the balance sheet you see now.
You have to do a fair amount of adds and takeaways to isolate the growth. Some things to keep in mind:
1) The DST/DIS core business consists of products developed in the 1992-1995 timeframe. This relatively narrower product line share a common technology base (DST) and uses a fair amount of common components. This allows AXC to introduce new variations of its products quickly, e.g., a robotic library of instrumentation recorders targeted at new markets like telecomuunications.
2) The company's working capital position improved significantly after the late 1995 sale of its Redwood City campus and one of its Colorado Springs properties. Looking back, this allowed the company more room to expand its R&D and its marketing activities. This also allowed the company to take a stronger stance in its VHS/8mm licensing position, e.g., 1n 1995 they doubled the number of licensees + increased ability to pursue Mitsubishi. Prospectively, the sale of the properties will show savings year in the form of reduced SG&A since the company is now only leasing a portion of the campus.
3) Royalties fluctuate because it consists of non-recurring royalties resulting from settlements of patent disputes and recurring royalties that depend on the way its patents are used in seasonal VHS recorders and camcorders. I have a table somewhere showing the $100.0M+ in royalties collected since 1991 broken down into recurring and non-recurring components.
The 1996 4th quarter (est of $0.06 EPS) is the 11th straight profitable quarter. Assuming that AXC meets this number the adjusted 95-96 numbers below will show the growth that is relevant:
1996 1995
Fully diluted EPS 0.30 0.46
Non-recur royalties -0.04 -0.22
restructuring credits -0.01 -0.05
patent litigation +0.09 0
moving costs +0.03 0
Adjusted EPS $0.37 $0.19
KM promises some 1997 revenues and may ultimately be a 1999 full year earner, but Pennsylvania Merchant Group estimates AXC's non-KM business to grow in 1997 as follows:
Revenues - $119.50M (24.09% increase from 1996 revenue of $96-96M)
EPS - $ 0.54 (66.66% increase from 1996 EPS of $0.30)
AXC is in the best shape it has been for years. It has about $30-35 million in cash and there are encouraging signs that the DST/DIS storage business will grow more briskly than expected especially with an increased focus on marketing to Fortune 100 companies. At this point KM is a promising addition to a changing earnings stream. There are indications that AXC has made progress in commercializing other parts of their historically strong R&D in magnetic heads and media, of which KM is but a part.
Lastly, it is useful to remember that some of the largest owners of the common shares as well as convertible preferred stock due 12/97 are the...
Ampex Retirement Master Trust-2,618 preferred shares+2,407,480 common
Buffalo Color* Master Trust-323 preferreds+296,935 common
{* - a specialty chemicals company owned by Bramson's group)
Aside from the fact that Bramson has a considerable amount of his net worth in the company, he is also counting on the considerable appreciation of the AXC shares in the Ampex pension account to ultimately reduce the contingent pension liability of about $60+M. My understanding is that since part of the shortfall happened when Ampex was a private company on Bramson's watch, he is personally responsible for some if not all of the ultimate shortfall. Anybody more familiar with the Pension Benefit Guaranty Corporation rules?
Gus |
