Firearms Training Systems, Inc. Reports Third Quarter Fiscal 1997 Results
SUWANEE, Ga.--Firearms Training Systems, Inc. (NASDAQ:FATS) today reported financial results for the three and nine months ended December 31, 1996. Highlights include:
Nine Months Ended December 31, 1996 versus 1995
-- Revenues increased 27.4% to a record $64,805,000 from $50,873,000
-- Pro forma net income increased 38.9% to a record $10,070,000 from $7,250,000
-- Pro forma earnings per share increased 35.3% to a record $0.46 from $0.34
Three Months Ended December 31, 1996 versus 1995
-- Revenues increased 7.9% to a record $25,667,000 from $23,784,000
-- Pro forma net income decreased 15.7% to $4,357,000 from a record $5,170,000
-- Pro forma earnings per share decreased 16.7% to $0.20 from a record $0.24
-- Completed an $84 million initial public offering
-- Reduced debt by $51.2 million
The record revenues for the three and nine month periods ended December 31, 1996 versus 1995 are attributable to the strong growth in sales to U.S. military customers.
Peter A. Marino, chief executive officer and president, attributes this growth to "A convergence of forces driving the growth of the small arms simulation market. Increasing customer demand continues to be fueled by budgetary limitations, environmental concerns and training needs combined with improved technologies and the recognition by our customers that the FATS(TM) system provides them a proven, cost effective training tool."
The pro forma net income for the nine months ended December 31, 1996 increased 38.9% to a record $10.1 million versus the $7.3 million for the comparable period in fiscal 1996. The record pro forma earnings are due to the 27.4% growth in revenues combined with slightly improved gross and operating margins.
The pro forma net income for the three months ended December 31, 1996 decreased 15.7% to $4.4 million versus a record $5.2 million for the comparable period in fiscal 1996. The decrease was primarily due to the revenue volume in third quarter fiscal 1996, which accounted for 36.3% of fiscal 1996 revenues, and the benefit of operating leverage achieved by spreading labor, overhead and operating expenses over the substantially higher revenue base. In addition, customer and product mix changes also contributed to this higher than normal gross and operating margins in the three months ended December 31, 1995.
Mr. Marino said, "The past three quarters of fiscal 1997 have been exciting for FATS, with the completion of the IPO, record revenues and pro forma earnings, and an increasing backlog. FATS is the leading player in interactive small arms simulation and these accomplishments testify to the power of the FATS(TM) brand name."
Backlog, representing customer orders that have been contracted for future delivery, has increased to $56.6 million at December 31, 1996. During the three months ended December 31, 1996 FATS signed five contracts with existing international customers totaling $20.3 million and was awarded a $1.7 million modification to its U.S. Marine Corps Contract 2014. The U.S. Marine Corps contract modification provides for delivery of additional spare simulators, simulated firearms, and auxiliary equipment to the U.S. Marine Corps Depot in order to support the service operation of the U.S. Marine Corps small arms simulation program.
Firearms Training Systems, Inc. is the leading worldwide producer of interactive simulation systems designed to provide training in the handling and use of small and supporting arms to military and law enforcement agencies and for hunter and sports training. Over its 12 year history, the Company's team of experts has developed over 180 types of simulated weapons, and approximately 100 laser discs containing more than 1,000 training scenarios. To date, the Company has sold more than 2,000 FATS systems in the U.S. and over 30 other countries.
On July 31, 1996 FATS consummated a set of transactions (the "Recapitalization") pursuant to a Recapitalization and Stock Purchase Agreement. As part of this Recapitalization FATS borrowed $76 million in senior debt and $40 million in senior subordinated bridge notes. A portion of the proceeds from the initial public offering were used to pay off the bridge notes and reduce the senior debt by $11.2 million. As a result of these transactions, FATS incurred additional interest expense in the three and nine months ended December 31, 1996, and an extraordinary loss on the early extinguishment of debt in the three months ended December 31, 1996. Therefore, the actual results of operations for the three and nine months ended December 31, 1996 differ from the pro forma results presented above.
The pro forma results give effect to the Recapitalization and the initial public offering as if it occurred at the beginning of the respective periods. |
