APPLIED SIGNAL TECHNOLOGY, INC.
ANNOUNCES THIRD QUARTER OPERATING RESULTS
Sunnyvale, CA. August 24, 2004 - Applied Signal Technology, Inc. (NASDAQ - APSG) announced its operating results for the third quarter of fiscal year 2004 ended July 30, 2004.
Revenues for the third quarter of fiscal year 2004 were $38,275,000 representing a 47% increase compared with revenues of $26,002,000 recorded during the third quarter of fiscal year 2003. Revenues for the first nine months of fiscal year 2004 were $103,380,000 up 56% from revenues of $66,261,000 recorded during the first nine months of fiscal year 2003.
Operating income for the third quarter of fiscal year 2004 was $5,602,000 compared with operating income of $1,915,000 recorded during the third quarter of fiscal year 2003. Operating income increased for the third quarter of fiscal year 2004 due, in part, to a growth in revenues and, in part, to improved program profitability that included finalizing all the terms of several of our larger cost-reimbursable, development contracts. The Company does not recognize profit on its contracts until all terms are finalized. The operating income for the first nine months of fiscal year 2004 was $13,490,000 compared with operating income of $6,435,000 recorded during the first nine months of fiscal year 2003. The increase in operating income for the first nine months of fiscal year 2004 is due, in part, to a growth in revenues and, in part, to an increase in program profitability generated from the sale of certain products.
Net income for the third quarter of fiscal year 2004 was $3,459,000 or $0.29 per diluted share, an increase of 100% when compared to the third quarter of fiscal year 2003 net income of $1,730,000 or $0.16 per diluted share. Net income for the first nine months of fiscal year 2004 was $9,552,000 or $0.83 per diluted share, an increase of 66% when compared to net income of $5,742,000 or $0.54 per diluted share for the first nine months of fiscal year 2003. Net income did not grow proportionately with operating income during the first nine months of fiscal year 2004 when compared to the same period of fiscal year 2003 because our tax rate increased significantly. Our tax rate for the first nine months of fiscal year 2003 was 15%. We estimate that our tax rate for the fourth quarter of fiscal year 2004 could be approximately 40% or greater resulting in an estimated annual tax rate between 34% and 35%.
New orders received during the third quarter of fiscal year 2004 were $35,417,000, down 14% compared to new orders received during the third quarter of fiscal year 2003 of $41,031,000. The Company believes this decline in new orders is within the typical fluctuations experienced in the U.S. Government procurement process. Order levels for the first nine months of fiscal year 2004 were $128,602,000, up 77% when compared to the $72,554,000 reported for the same period of fiscal year 2003. We believe the increase in new orders during the first nine months of fiscal year 2004, when compared to the first nine months of fiscal year 2003, is due to the U.S. Government’s emphasis on intelligence.
Regarding the third quarter operating results, Mr. Gary Yancey, President and Chief Executive Officer of the Company, commented, “The greatly increased level of orders compared to fiscal 2003 has challenged us to meet aggressive hiring requirements and to control capital expenditures. I am pleased that we have met these challenges and have been able to meet our contractual commitments. This has resulted in our increase in revenue compared to fiscal 2003.”
Mr. Yancey went on to say; “The program performance has been sufficiently good such that we have maintained good program profitability on our cost-reimbursable, development contracts. We have made decisions on inventory quantities of our equipment that have afforded good profitability on our equipment sales. We believe we have good visibility of requirements for equipments for the remainder of the fiscal year and this allows us to make the appropriate inventory decisions.”
Attached to this news release are unaudited condensed statements of operations and balance sheets for the third quarter and nine months ended July 30, 2004.
The Company will host a conference call on Tuesday, August 24, 2004 to discuss third quarter results. If you wish to participate in the conference call, please dial 1-877-407-8035 for domestic callers or 1-201-689-8035 for international callers on August 24, 2004 at 5:00 p.m. EST/2:00 p.m. PST. There is no pass code required. This call may be listened to over PrecisionIR’s Investor Distribution Network, located at www.vcall.com. A rebroadcast of the call will be available upon its completion and will remain available for a limited time.
pplied Signal Technology, Inc. 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 at www.appsig.com.
Except for historical information contained herein, matters discussed in this news release may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Forward-looking statements discussed in this release include statements as to the Company's continued growth throughout the year and into the foreseeable future; the future spending by the U.S. Government on intelligence gathering; the Company's ability to hire qualified personnel and such personnel's ability to obtain security clearances; the Company's plans for the future, including the steps it may take and the programs it will emphasize; the Company's beliefs concerning marketplace opportunities for its products and services; and beliefs concerning contractual opportunities for orders. The risks and uncertainties associated with these statements include whether orders will be issued by procurers, including the U. S. Government; the timing of any orders placed by procurers; whether the Company will be successful in obtaining contracts for these orders if they are forthcoming; whether any contracts obtained by the Company will be profitable and whether any such contracts might be terminated prior to completion; whether the Company will be able to hire additional qualified staff as needed; the ability to successfully enter new marketplaces; the Company's ability to maintain profitability; 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, 2003. The Company assumes no obligation to update the information provided in this news release.
|
APPLIED SIGNAL TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) ASSETS
|
|
|
July 30,
2004
----------
|
|
|
October 31,
2003
----------
|
|
|
|
(unaudited) |
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
25,585 |
|
$ |
5,372 |
Short term investments |
|
|
19,743 |
|
|
34,747 |
Accounts receivable |
|
|
35,955 |
|
|
26,562 |
Inventory |
|
|
6,209 |
|
|
6,875 |
Prepaids and other current assets |
|
3,532 |
|
|
3,545 |
|
|
|
---------- |
|
|
---------- |
Total current assets |
|
|
91,024 |
|
|
77,101 |
|
|
|
|
|
|
|
Property and equipment, at cost |
|
|
61,804 |
|
|
59,138 |
Accumulated depreciation and amortization |
|
(49,803) |
|
|
(46,897) |
Net property and equipment |
|
|
12,001 |
|
|
12,241 |
|
|
|
|
|
|
|
Other assets |
|
|
2,000 |
|
|
605 |
|
|
|
---------- |
|
|
---------- |
Total assets |
|
$ |
105,025 |
|
$ |
89,947 |
| |
|
|
========== |
|
|
========== |
LIABILITIES AND SHAREHOLDERS' EQUITY |
| |
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
Accounts payable, accrued payroll and
benefits |
$ |
12,225 |
|
$ |
10,579 |
| Other accrued liabilities |
|
|
3,546 |
|
|
2,833 |
| Income taxes payable |
|
|
1,052 |
|
|
134 |
| |
|
|
---------- |
|
|
---------- |
| Total current liabilities |
|
|
16,823 |
|
|
13,546 |
| |
|
|
|
|
|
|
| Other liabilities |
|
|
300 |
|
|
183 |
| |
|
|
|
|
|
|
| Shareholders' equity |
|
|
87,902 |
|
|
76,218 |
| |
|
|
---------- |
|
|
---------- |
| |
|
|
|
|
|
| Total liabilities and shareholders' equity |
$ |
105,025 |
|
$ |
89,947 |
| |
|
========== |
|
|
========== |
APPLIED SIGNAL TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIOD ENDING JULY 30, 2004 and AUGUST 1, 2003 (Unaudited)
(In thousands except per share data)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
July 30, 2004 |
|
|
August, 1 2003 |
|
|
July 30, 2004 |
|
|
August, 1 2003 |
|
|
|
---------- |
|
|
--------- |
|
|
---------- |
|
|
--------- |
Revenues from contracts |
|
$ |
38,275 |
|
$ |
26,002 |
|
$ |
103,380 |
|
$ |
66,261 |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Contract costs |
|
|
24,629 |
|
|
17,538 |
|
|
67,075 |
|
|
42,950 |
Research and development |
|
|
4,413 |
|
|
2,281 |
|
|
9,969 |
|
|
5,882 |
General and administrative |
|
|
3,631 |
|
|
4,268 |
|
|
12,846 |
|
|
10,994 |
|
|
|
---------- |
|
|
--------- |
|
|
--------- |
|
|
--------- |
Total operating expenses |
|
|
32,673 |
|
|
24,087 |
|
|
89,890 |
|
|
59,826 |
|
|
|
---------- |
|
|
--------- |
|
|
--------- |
|
|
--------- |
Operating income |
|
|
5,602 |
|
|
1,915 |
|
|
13,490 |
|
|
6,435 |
Interest income/(expense), net |
|
|
121 |
|
|
120 |
|
|
399 |
|
|
320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
--------- |
|
|
--------- |
|
|
--------- |
|
|
--------- |
Income before provision for income taxes |
|
|
5,723 |
|
|
2,035 |
|
|
13,889 |
|
|
6,755 |
Provision (benefit) for income taxes |
|
2,264 |
|
|
305 |
|
|
4,337 |
|
|
1,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
3,459 |
|
$ |
1,730 |
|
$ |
9,552 |
|
$ |
5,742 |
|
|
|
========== |
|
|
========== |
|
|
========== |
|
|
========== |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share - basic |
|
|
$0.31 |
|
|
$0.16 |
|
|
$0.87 |
|
|
$0.55 |
Average shares - basic |
|
|
11,120 |
|
|
10,579 |
|
|
10,988 |
|
|
10,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per share - diluted |
|
|
$0.29 |
|
|
$0.16 |
|
|
$0.83 |
|
|
$0.54 |
Average shares - diluted |
|
|
11,734 |
|
|
11,049 |
|
|
11,578 |
|
|
10,703 |
|
Contact:
James Doyle
Chief Financial Officer
or
Alice Delgado
Investor Relations
(408) 749-1888
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