Beat estimates by 28%, pretty good quarter; and NEXT quarter is the heavy one. Looks to beat the annual estimate by a good margin.
Company Press Release
Applied Signal Technology, Inc. Announces Third Quarter Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--Aug. 13, 1998--Applied Signal Technology, Inc. (NASDAQ:APSG - news) announced its operating results for its third fiscal quarter ended July 31, 1998.
Revenues for the third quarter of fiscal 1998 were $27,373,000, which represents a 21% increase over third quarter fiscal 1997 revenues of $22,600,000. Net income for the quarter ended July 31, 1998 was $2,851,000 or $0.32 per share as compared to net income of $2,143,000 or $0.25 per share for the same period of fiscal 1997.
Revenues for the first nine months of fiscal 1998 were $79,467,000, which represents a 19% increase over the first nine months of fiscal 1997 revenues of $66,671,000. Year to date net income increased 61% to $7,620,000 or $0.86 per share for the nine months ended July 31, 1998 from $4,729,000 or $0.57 per share for the same period of fiscal 1997.
The earnings per share numbers for the quarter and first nine months are reported on a diluted basis. Prior period earnings per share have been restated to conform to the new accounting requirements.
The increase in revenues for the quarter and year-to-date are attributable to increased contract activity in the Company's engineering and operations divisions. The revenue increase reflects continuing demand for the Company's products and services. Further, the Company continues to be successful in meeting its contractual obligations, which are a direct result of our successes in attracting, and retaining staff.
Contract margins for the three month periods ended July 31, 1998 and August 1, 1997 were unchanged at 39%. Contract margins for the nine month period ended July 31, 1998 were 38% compared to 36% for the same period of fiscal 1997. The improvement in the year-to-date contract margins is the result of the Company recording a reserve during the first half of fiscal 1997 in anticipation of unfavorable indirect spending variances which resulted in a reduction to contract margins.
New order levels for the third quarter of fiscal 1998 were $25,079,000, a decrease of 10% from the $27,889,000 reported for the same period of fiscal 1997. Order levels for the first nine months of fiscal 1998 were $51,430,000, down 15% compared to the $60,764,000 reported for the same period of fiscal 1997. The Company believes that the decrease in orders experienced for the quarter and nine month periods of this fiscal year are due in part to delays experienced in the award of new development contracts and in part due to a reduced number of awards for off-the-shelf products. While the Company is experiencing a delay in new contract awards as compared to fiscal 1997, management does not believe the award level jeopardizes its ability to meet its growth objectives.
Gary Yancey, President and Chief Executive Officer of the Company, commented, ''We are quite pleased with our operating results through the third quarter of the fiscal year. The revenue growth is very much in line with our business model growth target of 15% - 20% year-over-year and the earnings are exceeding our model target of 7% of revenue. So far this year, we have been able to meet our staffing requirements and have observed a decline in our attrition rate. This has helped us stay on track with revenue growth and meet our contractual commitments.''
Regarding the year-over-year decrease in orders, Mr. Yancey went on to say, ''So far, the decreased order level seen through the first nine months of this fiscal year seems to be due to slippages in orders and not due to losses of expected orders.''
Applied Signal Technology designs, develops, manufactures and markets advanced digital signal processing equipment to collect and process a wide range of telecommunications signals for signal reconnaissance applications. For additional Company-related information, visit the Company's website located at appsig.com.
Except for historical information contained herein, matters discussed in this news release may contain forward looking statements that involve risks and uncertainties including customer concentration, competition, dependence upon personnel, volatility of operating results, use of estimates in program costs-to-complete, and other risks detailed from time to time in the Company's SEC reports including its latest Form 10-K filed for the fiscal year ended October 31, 1997.
APPLIED SIGNAL TECHNOLOGY, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE PERIODS ENDING JULY 31, 1998 AND AUGUST 1, 1997
(Unaudited)
(In thousands except per share data)
Three Months Ended Nine Months Ended
July 31, August 1, July 31, August 1,
1998 1997 1998 1997
Revenues from contracts $27,373 $22,600 $79,467 $66,671 $
Operating expenses:
Contract costs 16,695 13,793 49,118 42,672
Research and development 1,742 2,269 5,158 7,133
General and administrative 4,604 3,062 13,333 9,415
Total operating expenses 23,041 19,124 67,609 59,220
Operating income 4,332 3,476 11,858 7,451
Interest income/(expense), net 140 18 432 116
Income before provision
for taxes on income 4,472 3,494 12,290 7,567
Provision for taxes on income 1,621 1,351 4,670 2,838
Net income $ 2,851 $ 2,143 $ 7,620 $ 4,729
Earnings per share - basic (a) $ 0.34 $ 0.26 $ 0.90 $ 0.59
Average shares - basic 8,429 8,188 8,495 8,065
Earnings per share - diluted (b) $ 0.32 $ 0.25 $ 0.86 $ 0.57
Average shares - diluted 8,776 8,517 8,909 8,286
(a) "Basic " earnings per share is calculated by dividing net income
by weighted common shares outstanding. This replaces "primary"
earnings per share which included common stock equivalents in the
calculation.
(b) "Diluted" earnings per share is calculated by dividing net income
by weighted common shares outstanding plus the dilutive effect of
common shares issuable upon exercise of outstanding stock
options.
APPLIED SIGNAL TECHNOLOGY
CONDENSED BALANCE SHEETS
(Unaudited)
July 31 October 31
ASSETS 1998 1997
Current assets:
Cash and cash equivalents $ 8,232 $ 7,403
Short term investments 2,042 1,331
Accounts receivable 30,447 32,648
Refundable income taxes 90 90
Inventory 6,986 4,821
Prepaids and other current assets 2,346 2,086
Total current assets 50,143 48,379
Property and equipment, at cost 41,789 36,691
Accumulated depreciation and amortization (24,087) (20,980)
Net property and equipment 17,702 15,711
Other assets 43 71
Total assets $ 67,888 $ 64,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued
payroll and benefits $ 8,537 $ 10,000
Other accrued liabilities 2,013 1,877
Income taxes payable 2,253 1,567
Total current liabilities 12,803 13,444
Deferred income taxes 951 951
Shareholders' equity 54,134 49,766
Total liabilities and shareholders' equity $ 67,888 $ 64,161
------------------------------------------------------------------------
Contact:
Applied Signal Technology, Inc.
Brian M. Offi (Chief Financial Officer), 408/749-1888
Mary Rogge (Investor Relations), 408/749-1888 |
