Ampex Corporation Reports Third Quarter Net Income of $2.2 Million and Earnings of $0.04 Per Share
Business Wire - October 28, 1998 17:27
REDWOOD CITY, Calif.--(BUSINESS WIRE)--Oct. 28, 1998--Ampex Corporation (Amex:AXC) reported today net income of approximately $2.2 million and diluted earnings per share of $0.04 for the third quarter of 1998, compared to net income of $2.6 million and diluted earnings per share of $0.06 in the third quarter of 1997. Sales in the third quarter of 1998 were $16.0 million compared to $18.2 million in the third quarter of 1997.
During the third quarter, the Company recorded an income tax benefit of approximately $0.09 per share in connection with the final liquidation of its subsidiary in Italy. There were no tax credits in the third quarter of 1997. MicroNet Technology Inc., an acquisition completed in July 1998, incurred a small loss in the third quarter which impacted consolidated earnings by less than $.01 per share. Third quarter earnings were also negatively impacted, by approximately $0.01 per share, due to the issuance of Common Stock and the dilutive effect of a new series of 8% Noncumulative Convertible and Redeemable Preferred Stocks exchanged for previously outstanding 8% Noncumulative Preferred Stock.
Net sales in the third quarter of 1998 declined by $2.2 million (12.0%). A decline in shipments of instrumentation recorders and 19-millimeter data storage products compared to the third quarter of the prior year was partially offset by the inclusion of sales by MicroNet. Sales of television products declined due to the Company's substantial withdrawal from the product line. Instrumentation sales were affected by delays in spending at the end of the government fiscal year.
Gross profit in the third quarter of 1998 declined by $2.9 million (34.7%) primarily as a result of the decline in sales. Gross profit margins declined to 33.6% from 45.3% in the third quarter of the prior year principally due to the inclusion of MicroNet sales that are at lower margins than Ampex sales, a lower proportion of instrumentation product sales which have higher gross profit margins than other product lines, and a reduction in absorption of fixed costs due to lower sales volumes.
Selling and administrative expenses increased by $2.0 million (39.0%) from the third quarter of 1997. An actuarial valuation of certain supplemental pension plans resulted in a charge of $0.9 million, $0.02 per share, in the third quarter of 1998. The increase also reflects the inclusion of selling and administrative expenses of MicroNet in the consolidated results. Research, development and engineering expenses declined by $0.9 million (24.5%) due to the completion of certain projects.
Interest expense in the third quarter of 1998 increased by $1.4 million, $0.02 per share, compared to the third quarter of 1997, as a result of the issuance by the Company of $44.0 million of 12% Senior Notes in January and July 1998. The net proceeds are available for use in acquisitions of or investment in new businesses. In connection with the previously announced strategy, during the third quarter of 1998, the Company made a small cash investment and acquired an option to purchase a controlling interest in a web hosting company.
Ampex Corporation is one of the world's leading providers of technologies for the acquisition, storage and processing of visual information. Today Ampex is delivering digital image solutions for large-scale corporate, government, network, entertainment and telecommunications applications. During its more than 50-year history of innovation, Ampex has granted thousands of patents and numerous awards for technical achievement. Ampex's customers today include such leading organizations as AT&T, Boeing, CNN, Mobil Oil, HBO, Time Warner and NASA.
Any statements contained herein that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties. Information on potential factors which could affect the Company's actual results of operations are included in its filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the fiscal year ended December 31, 1997, and its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 1998 and June 30, 1998, and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1998, which is expected to be filed shortly.
AMPEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
September 30, December 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $ 7,703 $ 24,076
Short-term investments 53,537 17,685
Accounts receivable
(net of allowances of $2,114 and $1,484) 17,492 13,246
Inventories 20,676 16,380
Other current assets 1,394 1,347
------- ------
Total current assets 100,802 72,734
Property, plant and equipment 9,882 8,892
Intangible assets, net 4,599 --
Other assets 1,842 45
-------- --------
Total assets $117,125 $ 81,671
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 365 $ 933
Accounts payable 5,561 5,173
Income taxes payable 334 373
Accrued restructuring costs 3,088 1,706
Other accrued liabilities 17,219 19,942
------- -------
Total current liabilities 26,567 28,127
Long-term debt 44,590 2
Other liabilities 52,826 70,708
Deferred income taxes 1,236 1,267
Accrued restructuring costs 980 1,612
------- -------
Total liabilities 126,199 101,716
======= =======
Redeemable preferred of subsidiary 1,045 --
Redeemable nonconvertible preferred stock,
$1,000 liquidation value:
Authorized: 69,970 shares 1998 and 1997
Issued and outstanding -
none 1998; 69,970 shares 1997 -- 69,970
Redeemable preferred stock,
$2,000 liquidation value:
Authorized: 21,859 shares 1998 and none 1997
Issued and outstanding -
21,859 shares 1998; none 1997 43,718 --
Convertible preferred stock,
$2,000 liquidation value:
Authorized: 10,000 shares 1998 and none 1997
Issued and outstanding -
10,000 shares 1998; none 1997 20,000 --
Stockholders' deficit:
Preferred stock, $1.00 par value:
Authorized: 898,171 shares 1998 and 1997
Issued and outstanding - none 1998 and 1997 -- --
Common stock, $.01 par value:
Class A:
Authorized: 125,000,000 shares 1998 and 1997
Issued and outstanding -
49,782,547 shares 1998;
45,936,707 shares 1997 498 459
Class C:
Authorized: 50,000,000 shares 1998 and 1997
Issued and outstanding - none 1998 and 1997 -- --
Other additional capital 391,880 383,513
Note receivable from stockholder (4,994) (4,818)
Accumulated deficit (432,039) (440,068)
Accumulated other comprehensive income (29,182) (29,101)
------- ------
Total stockholders' deficit (73,837) (90,015)
------- -------
Total liabilities
and stockholders' deficit $ 117,125 $ 81,671
======== =======
AMPEX CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
Net sales $ 16,001 $ 18,182 $ 48,021 $ 60,562
Cost of sales 10,624 9,950 28,223 31,193
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Gross profit 5,377 8,232 19,798 29,369
Selling and
administrative 7,011 5,043 17,119 19,106
Research, development
and engineering 2,899 3,841 9,060 11,479
Royalty income (2,234) (1,786) (5,738) (9,130)
Restructuring
charges (274) (950) 2,526 (950)
Acquisition of
in-process
research and
development -- -- 2,940 --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Operating income
(loss) (2,025) 2,084 (6,109) 8,864
Interest expense 1,393 19 2,968 73
Amortization of debt
financing costs 133 -- 230 --
Interest income (836) (733) (2,572) (2,246)
Other (income)
expense, net 4 (2) 14 53
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income (loss) before
income taxes (2,719) 2,800 (6,749) 10,984
Provision for
(benefit of)
income taxes (4,944) 196 (14,778) 1,100
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income 2,225 2,604 8,029 9,884
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Other comprehensive
income, net of tax:
Foreign currency
translation
adjustments (76) 24 (81) (8)
------------ ------------ ------------ ------------
============ ============ ============ ============
Comprehensive
income $ 2,149 $ 2,628 $ 7,948 $ 9,876
============ ============ ============ ============
============ ============ ============ ============
Basic income per
share:
Income per
share $ 0.05 $ 0.06 $ 0.17 $ 0.22
============ ============ ============ ============
Weighted
average
number of
common
shares
outstanding 49,062,547 45,588,498 47,075,450 45,542,917
============ ============ ============ ============
Diluted income
per share:
Income per
share $ 0.04 $ 0.06 $ 0.16 $ 0.21
============ ============ ============ ============
Weighted average
number of common
shares
outstanding 59,782,547 46,368,024 50,976,537 46,509,963
============ ============ ============ ============
CONTACT: Ampex Corporation
Karen D. Schweikher, 650/367-4111
Director, Investor Relations |
