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Applied Signal Technology, Inc.
Announces Record Fiscal 2008 Revenues and Improved Profitability
Sunnyvale, CA. December 16, 2008 - Applied Signal Technology,
Inc. (NASDAQ - APSG) today announced operating results for the
fiscal fourth quarter and fiscal year which ended October 31, 2008.
During the fourth quarter, the Company reported $48.4 million in
revenue and $0.20 of earnings per diluted share, increases of 4.6%
and 5.3%, respectively, versus the fourth quarter of fiscal 2007.
For the full fiscal year, the Company reported that revenues increased
to a record level of $186.3 million versus the fiscal 2007 level
of $170.4 million. Diluted earnings per share for the fiscal year
increased 14.5% to $0.63 versus the fiscal 2007 level of $0.55
per diluted share.
Management Commentary
Mr. William Van Vleet, President and Chief
Executive Officer of Applied Signal Technology, Inc., commented “We
are pleased with our good financial performance in fiscal 2008.
Our revenue performance was driven primarily by continued demand
for our core SIGINT products. Our improved operating income resulted
primarily from a revenue mix shift towards development programs
and technology-driven licensing revenues offset by a decrease
in profits from our standard products. This improvement came
despite a $1.3 million write-down for obsolete inventory during
fiscal 2008. As we look ahead, we believe that spending levels
in our high-demand niche markets will increase, even if total
defense spending moderates. We are excited to compete on a variety
of programs, including the planned cyber security initiative
and the recapitalization of existing signal intelligence equipment.”
Mr. Van Vleet concluded, “Given these
opportunities, our mandate is clear. We will continue to improve
our cost structure to become incrementally competitive. We will
seek to capture organic growth opportunities across several categories
of existing and in-development products. We will also utilize
the strategic advantages provided to us by our strong capital
position to find new, complementary growth opportunities. Our
organization is motivated and focused on achieving each of these
goals, which we believe will drive value to our customers, our
partners, and our shareholders.”
Results of Operations
Revenues for the fourth quarter and fiscal year 2008 were $48,374,000
and $186,331,000, respectively, compared with revenues of $46,235,000
and $170,375,000 recorded during the same periods of fiscal year
2007. Fourth quarter and fiscal year 2008 revenues increased primarily
due to increased sales related to engineering development programs.
Operating income for the fourth quarter and fiscal year 2008 was
$4,354,000 and $12,787,000, respectively, compared with operating
income of $4,065,000 and $11,304,000 for the fourth quarter and
fiscal year 2007, respectively. Operating income increased for
the fourth quarter and fiscal year 2008 primarily due to greater
royalties associated with the licensing of intellectual property
into commercial satellite communications markets and to increased
profitability generated from engineering development contracts.
Net income for the fourth quarter and fiscal
year 2008 was $2,549,000, or $0.20 per diluted share, and $8,017,000,
or $0.63 per diluted share, respectively, compared with net income
for the fourth quarter and fiscal year 2007 of $2,392,000, or
$0.19 per diluted share, and $6,812,000, or $0.55 per diluted
share, respectively. The effective tax rate for fiscal year 2008
is estimated to be 40.8% compared to the Company’s fiscal year 2007 effective tax rate of 43.2%.
The fiscal 2008 effective tax rate decreased primarily because
of a combination of discrete events associated with research and
development credits and a change in the Company’s method
of calculating the depreciation of fixed assets for tax purposes.
New Orders
New orders received during the fourth quarter of fiscal year 2008
were $39,825,000, essentially unchanged when compared to new orders
of $40,332,000 received during the fourth quarter of fiscal year
2007. New orders received during fiscal year 2008 were $185,139,000
compared to new orders of $191,193,000 reported during fiscal year
2007.
Attached to this news release are condensed, consolidated statements
of income, balance sheets and statements of cash flows for the
fourth quarter and fiscal year ended October 31, 2008.
Conference Call
The Company will host a conference call on December 16, 2008 to
discuss fourth quarter and fiscal 2008 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 December 16, 2008 at 5:00 p.m. eastern time/2:00 p.m. pacific
time. There is no pass code required. This call may be listened
to simultaneously at the Web site www.InvestorCalendar.com.
A rebroadcast of the call will be available upon its completion
and will remain available for a limited time.
Applied Signal Technology, Inc. provides advanced intelligence,
surveillance and reconnaissance (ISR) products, systems and services
to enhance global security. For further information about Applied
Signal Technology visit our 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. Statements as to the Company’s future
orders and continued growth, the demand for our equipment, the
continued demand and increased spending levels for intelligence,
surveillance and reconnaissance solutions, and our ability to improve
our cost structure to become incrementally competitive and capture
organic growth opportunities across several categories of existing
and in-development products are forward-looking statements. 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
we will be successful in obtaining contracts for these orders if
they are forthcoming; whether any contracts obtained by us will
be performed well and be profitable and whether any such contracts
might be terminated prior to completion; whether we will be able
to hire qualified staff as needed; and other risks detailed from
time to time in our SEC reports including our latest Form 10-K
filed for the fiscal year ended October 31, 2007. The Company assumes
no obligation to update the information provided in this news release.
Applied Signal Technology, Inc.
Condensed Consolidated Statements of Income
for the Periods Ended October 31, 2008 and October 31, 2007
(in thousands, except per share data)
|
Three Months Ended
|
Twelve Months Ended
|
|
October 31,
2008
|
October 31,
2007
|
October 31,
2008
|
October 31,
2007
|
|
|
|
|
|
| Revenues from contracts |
$48,374 |
$46,235 |
$186,331 |
$170,375 |
| Operating expenses: |
|
|
|
|
| Contract costs |
34,400 |
31,628 |
129,835 |
116,133 |
| Research and development |
2,630 |
3,453 |
13,116 |
14,204 |
| General and administrative |
6,990
---------- |
7,089
---------- |
30,593
---------- |
28,734
---------- |
| Total operating expenses |
44,020
---------- |
42,170
---------- |
173,544
---------- |
159,071
---------- |
| |
|
|
|
|
| Operating income |
4,354 |
4,065 |
12,787 |
11,304 |
| Interest income/(expense), net |
223
---------- |
229
---------- |
761
---------- |
683
---------- |
| |
|
|
|
|
| Income before provisionfor income taxes |
4,577 |
4,294 |
13,548 |
11,987 |
| Provision for income taxes |
2,028
---------- |
1,902
---------- |
5,531
---------- |
5,175
---------- |
| |
|
|
|
|
| Net income |
$2,549
========
|
$2,392
======== |
$8,017
======== |
$6,812
======== |
| |
|
|
|
|
| Net income per share - basic |
$0.20 |
$0.20 |
$0.64 |
$0.56 |
| Average shares - basic |
12,622 |
12,218 |
12,475 |
12,100 |
| |
|
|
|
|
| Net income per share - diluted |
$0.20 |
$0.19 |
$0.63 |
$0.55 |
| Average shares - diluted |
12,844 |
12,397 |
12,681 |
12,314 |
Applied Signal Technology, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
|
October 31, 2008 |
October 31, 2007 |
| Assets |
|
|
|
|
|
| Current assets: |
|
|
| Cash and cash equivalents |
$4,668 |
$5,250 |
| Short term investments |
45,045
---------- |
29,683
---------- |
Cash, cash equivalents, and
short-term investments |
49,713
|
34,933
|
| Accounts receivable |
40,115 |
44,476 |
| Inventory |
8,141 |
5,944 |
| Refundable income tax |
— |
647 |
| Other current assets |
10,155
---------- |
9,760
---------- |
| Total current assets |
108,124 |
95,760 |
| |
|
|
| Property and equipment, at cost |
65,773 |
62,565 |
| Accumulated depreciation and amortization |
(50,660)
---------- |
(46,096)
---------- |
| Net property and equipment |
15,113 |
16,469 |
| |
|
|
| Goodwill |
19,964 |
19,964 |
| |
|
|
| Intangible assets, net |
162 |
616 |
| Long-term deferred tax asset, net |
4,410 |
5,021 |
| Long term investment |
9,381 |
4,114 |
| Other assets |
865
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789
---------- |
| |
|
|
| Total assets |
$158,019
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$142,733
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| |
|
|
Liabilities
and Shareholder's Equity |
|
|
| Current liabilities: |
|
|
| Accounts payable, accrued payroll and benefits |
$20,070 |
$16,983 |
| Notes payable |
1,429 |
1,429 |
| Income taxes payable |
498 |
14 |
| Other accrued liabilities |
3,513
---------- |
1,997
---------- |
| Total current liabilities |
25,510 |
20,423 |
| |
|
|
| Long-term liabilities: |
|
|
| Long-term notes payable |
3,929 |
5,357 |
| Other long-term liabilities |
3,847
---------- |
2,117
---------- |
| Total long-term liabilities |
$7,776 |
$7,474 |
| |
|
|
| Shareholders' equity |
124,733
---------- |
114,836
---------- |
| |
|
|
| Total liabilities and shareholders' equity |
$158,019
========= |
$142,733
========= |
Applied Signal Technology, Inc.
Consolidated Statements of Cash Flows
Increase
(decrease) in cash
(in thousands)
|
Year Ended October 31,
|
|
2008 |
2007 |
| Operating Activities: |
|
|
|
|
|
| Net income |
$8,017 |
$6,812 |
| |
|
|
| Adjustments to reconcile net income to net cash
provided by (used in) operating activities: |
|
|
| Depreciation and amortization |
6,508 |
5,649 |
| Stock-based compensation |
4,779 |
4,150 |
Excess tax benefits from
stock-based
payment arrangements |
(37)
|
(54)
|
| |
|
|
| Adjustments to reconcile net income to net cash provided |
|
|
| Accounts receivable |
4,361 |
(3,897) |
| Refundable income taxes |
752 |
— |
| Inventory, prepaids, and other current assets |
(2,697) |
2,680 |
| Other assets |
519 |
380 |
| Accrued lease incentives |
877 |
— |
| Accounts payable, taxes payable and accrued liabilities |
5,454
---------- |
(1,565)
---------- |
| |
|
|
| Net cash provided by operating activities |
28,533 |
14,155 |
| |
|
|
| Investing Activities: |
|
|
| Purchase of available-for-sale securities |
(109,964) |
(76,411) |
| Maturity of available-for-sale securities |
88,935 |
70,877 |
| Additions to property and equipment |
(4,170)
---------- |
(4,451)
---------- |
| |
|
|
| Net cash (used in) investing activities |
(25,199) |
(9,985) |
| |
|
|
| Financing Activities: |
|
|
| Issuance of Common Stock |
4,044 |
4,394 |
Shares repurchased for tax
withholding of
vested restricted stock awards |
(279)
|
(59)
|
Excess tax benefits from stock-based
payment arrangements |
37
|
54
|
| Term loan |
(1,428) |
(1,429) |
| Dividends Paid |
(6,290)
---------- |
(6,074)
---------- |
| |
|
|
| Net cash (used in) financing activities |
(3,916) |
(3,114) |
| |
|
|
| Net increase (decrease) in cash |
(582) |
1,056 |
| Cash, beginning of period |
5,250
---------- |
4,194
---------- |
| Cash, end of period |
$4,668
======== |
$5,250
======== |
| |
|
|
| Supplemental disclosure of cash flow information: |
|
|
| Interest paid |
382 |
556 |
| Income taxes paid |
7,005 |
3,873 |
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