Ampex Corporation Reports Preliminary Unaudited 2004 Financial Results; Company to Obtain 15-day Extension to File Financial Statements.REDWOOD CITY Redwood City, city (1990 pop. 66,072), seat of San Mateo co., W Calif., on San Francisco Bay; inc. 1868. Manufactures include commmunications, electrical, electronic, and medical equipment. , Calif. -- Ampex (Ampex Corporation, Redwood City, CA, www.ampex.com) A manufacturer of video storage and image processing products. Founded in 1944 by Alexander M. Poniatoff, Ampex pioneered the video recording industry, introducing the first videotape recorder in 1956 and providing innovative products Corporation (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :AEXCA) today announced that it intends to file Form 12b-25 with the Securities and Exchange Commission to obtain a 15-day extension to April 15, 2005 to file its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for 2004. As previously reported on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. , the Company will be restating its financial statements included in its Form 10-K for 2003 as well as financial statements included in its Form 10-Q Form 10-Q See 10-Q. for March, June June: see month. and September September: see month. 2004 to correct the accounting for the pension obligations of a former subsidiary that was sold in 1995. The amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. financial statements and Form 10-K for 2004 have not yet been completed due to the substantial amount of additional work associated with the restatements. Accordingly, results and related per share amounts discussed below are preliminary and subject to adjustment pending completion of the 2004 audit and prior period restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. processes. The Company currently expects to file the restated annual and quarterly reports as well as the 2004 Annual Report on or before April 15, 2005. Ampex also reported preliminary unaudited income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $48.5 million or $12.73 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the year ended December December: see month. 31, 2004. In 2003, the Company reported a loss from continuing operations as preliminarily restated of $1.8 million or ($0.53) per diluted share. The loss in 2003 included a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). provision related to previously vacated real estate of $3.1 million or ($0.94) per diluted share. The Company reported net income applicable to Common Stockholders of $12.35 per diluted share in 2004 compared to net income applicable to Common Stockholders as preliminarily restated of $6.30 per diluted share in 2003, which included a one-time, non-cash gain of $7.26 per share from the redemption of its Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . Net income in 2004 included approximately $9.7 million of interest expense. In 2004, the Company repaid $63.9 million of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. that accounted for $7.6 million of interest expense during 2004. Revenues from the Company's continuing operations increased to $101.5 million in 2004 from $43.4 million in 2003 as a result of increased revenues in the patent licensing business segment. The Company's patent licensing business segment reported preliminary unaudited operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $65.3 million or $17.15 per diluted share in 2004 compared to $8.4 million or $2.55 per diluted share in 2003. Revenues from this segment increased to $72.9 million in 2004 compared with $10.1 million in the prior year as a result of new licensing agreements covering use of the Company's patents in digital video camcorders, digital still cameras and DVD recorders (1) A recordable or rewritable DVD drive that is connected to the computer. It may be an internal or external device. See DVD drives, DVD-R, DVD-RW, DVD+R and DVD+RW. (2) . Intellectual property costs include litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. expense incurred in connection with suits initiated by Ampex for infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. of its patents and amounted to $4.9 million in 2004 compared to less than $200,000 in 2003. Litigation expense relates to patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. suits against Sanyo Electric Company and Sony Corporation which have been settled, and against Eastman Kodak Company (NYSE NYSE See: New York Stock Exchange :EK) which is continuing. A portion of royalties received in 2004 relates to non-refundable, non-forfeitable prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. by certain licensees of obligations through April 2006. The Company expects to realize significant income from additional new patent licenses during 2005 but is seeking to negotiate recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. royalties rather than prepayments. This may significantly reduce the amount of royalties received when agreements are initially concluded compared with amounts received in 2004. The Company's recorders business segment reported preliminary unaudited operating income of $1.5 million or $0.40 per diluted share, a decline from $6.5 million and $1.98 per diluted share respectively in 2003. The segment experienced a decline in revenues to $28.6 million in 2004 from $33.3 million in 2003, reflecting an ongoing transition from an older generation of tape-based image and data acquisition products to a newly introduced range of solid state and hard disk-based products. Unaudited operating income in 2004 was also negatively affected by an increase in research, development and engineering expenditures for the development of these new products and by approximately $2.2 million of writedowns of inventories of older products and other factors. The Company has shipped in 2004 and will continue to ship in 2005 evaluation units of its new products to customers in the intelligence gathering and aerospace markets who have large installed bases of Ampex's older equipment, and are seeking larger orders for delivery beginning in 2006. In 2004, unallocated administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. decreased unaudited operating results by $7.4 million or $1.95 per diluted share. In 2003, unallocated administrative costs decreased operating results by $5.9 million or $1.80 per diluted share. Pension costs associated with the former magnetic tape subsidiary amounted to $3.9 million in 2004 or $1.03 per diluted share versus $1.4 million or $0.42 per diluted share in 2003. Amounts in 2004 included a curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. loss of $2.5 million. Interest and other financing costs, net, totaled $2.53 per diluted share in 2004 compared to $2.71 per diluted share in 2003. In 2004, the Company's operations benefited from utilization of net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. (NOL NOL - Never Offline ) carryforwards Carryforwards Tax losses allowed to be applied to offset future income in some specified number of future years. that eliminated substantially all federal and state income taxes that would have been payable. The Company has NOL carryforwards totaling $178 million at December 31, 2004 which will be available to reduce future taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . In 2003, the non-cash reversal of reserves for foreign, federal, state and deferred income taxes totaled $4.2 million or $1.26 per diluted share. The Company also noted that it believes that it will satisfy the Nasdaq listing criteria in April 2005, at which time it will submit an application to have its Common Shares listed. (Amounts for 2003 have been preliminarily restated to correct the accounting for the obligations under a pension plan of the former magnetic tape manufacturing subsidiary ("Media") which the Company disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of in 1995, pursuant to SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 87, "Employers' Accounting for Pensions.") Ampex Corporation, www.ampex.com, headquartered in Redwood City, California Redwood City is a suburb located on the San Francisco Peninsula in the San Francisco Bay Area of California. Redwood City is the county seat of San Mateo County. As of the 2005 census, the city had a total population of 76,000. , is one of the world's leading innovators innovators people who will try new things. early innovators important figures in the farming or client community because they are the leaders in the introduction of new techniques and management systems. and licensors of technologies for the visual information age. This news release contains predictions, projections and other statements about the future that are intended to be "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of l995 (collectively, "forward-looking statements"). Forward-looking statements relate to various aspects of the Company's operations and strategies, including but not limited to the effects of having experienced significant losses in the past and the risk that the Company may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. losses in the future; the Company's limited liquidity and significant indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. and interest expense; its sales and royalty forecasts for future periods not being attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. , and the risk that the Company will not conclude additional royalty-bearing license agreements covering its digital technologies; the Company's marketing, product development, acquisition, investment, licensing and other strategies not being successful; possible future issuances of debt or equity securities; the possible incurrence In`cur´rence n. 1. The act of incurring, bringing on, or subjecting one's self to (something troublesome or burdensome); as, the incurrence of guilt, debt, responsibility, etc. s> Noun 1. of significant patent litigation expenses or adverse legal determinations finding the Company's patents not be valid or not to have been infringed; new business development and industry trends; the possible need to raise additional capital in order to meet the Company's obligations; reliance on a former affiliate to make contributions to the Company's pension plans which are substantially underfunded un·der·fund tr.v. un·der·fund·ed, un·der·fund·ing, un·der·funds To provide insufficient funding for. underfunded adj → infradotado (económicamente) ; and most other statements that are not historical in nature. Important factors that could cause actual results to differ materially from those described in the forward-looking statements are described in cautionary statements included in this news release and/or in the Company's 2004 Annual Report on Form 10-K and its restated Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2004, June 30, 2004, and September 30, 2004 expected to be filed shortly with the SEC. In assessing forward-looking statements, readers are urged to consider carefully these cautionary statements. Forward-looking statements speak only as of the date of this news release, and the Company disclaims any obligations to update such statements.
AMPEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share data)
Year Ended December 31,
-------------------------------------
2004 2003 2002
----------- ------------ ------------
Restated Restated
(unaudited)
Licensing revenue $ 72,869 $ 10,054 $ 3,969
Product revenue 19,843 23,972 24,477
Service revenue 8,739 9,333 8,543
----------- ------------ ------------
Total revenue 101,451 43,359 36,989
----------- ------------ ------------
Intellectual property costs 7,551 1,633 958
Cost of product revenue 14,017 14,669 17,660
Cost of service revenue 2,735 2,610 2,541
Research, development and
engineering 3,934 3,179 2,614
Selling and administrative 13,780 12,236 11,217
Restructuring charges (credits) (1,410) 3,098 2,245
----------- ------------ ------------
Total costs and operating
expenses 40,607 37,425 37,235
----------- ------------ ------------
Operating income (loss) 60,844 5,934 (246)
Media pension costs 3,936 1,383 67
Interest expense 9,732 9,000 8,465
Amortization of debt financing
costs 57 57 460
Interest income (161) (103) (360)
Other (income) expense, net (179) 74 236
----------- ------------ ------------
Income (loss) from continuing
operations before income
taxes and equity in loss
(income) of limited
partnership, including sale
of investment 47,459 (4,477) (9,114)
Provision for (benefit of) income
taxes 1,098 (3,172) (6,242)
Equity in loss (income) of
limited partnership, including
sale of investment (2,149) 459 -
----------- ------------ ------------
Income (loss) from continuing
operations 48,510 (1,764) (2,872)
Loss from discontinued operations
(net of taxes of nil in 2004) (1,448) - -
----------- ------------ ------------
Net income (loss) 47,062 (1,764) (2,872)
Benefit from extinguishment of
mandatorily redeemable preferred
stock - 23,951 4,192
Preferred dividends ascribed, but
not declared - (1,416) (1,320)
----------- ------------ ------------
Undistributed income
applicable to common
stockholders 47,062 20,771 -
Other comprehensive income
(loss), net of tax:
Foreign currency translation
adjustments 18 103 88
Minimum pension adjustment 1,844 (8,907) (33,011)
----------- ------------ ------------
Comprehensive income (loss) $ 48,924 $ 11,967 $ (32,923)
=========== ============ ============
Basic undistributed income (loss)
per share:
Income (loss) per share from
continuing operations $ 13.21 $ (0.53) $ (0.92)
Loss per share from
discontinued operations $ (0.39) $ 0.00 $ 0.00
Undistributed income per share
applicable to common
stockholders $ 12.82 $ 6.30 $ 0.00
----------- ------------ ------------
Weighted average number of basic
common shares outstanding 3,671,803 3,297,927 3,116,641
=========== ============ ============
Diluted undistributed income
(loss) per share:
Income (loss) per share from
continuing operations $ 12.73 $ (0.53) $ (0.92)
Loss per share from
discontinued operations $ (0.38) $ 0.00 $ 0.00
Undistributed income per share
applicable to common
stockholders $ 12.35 $ 6.30 $ 0.00
----------- ------------ ------------
Weighted average number of
diluted common shares
outstanding 3,809,514 3,297,977 3,116,641
=========== ============ ============
These statements are preliminary and subject to adjustment pending
completion of the audits of the 2004 financial statements and
restatement of prior period financial statements.
AMPEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31, December 31,
2004 2003
------------ ------------
Restated
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 8,840 $ 14,023
Short-term investments 9,134 -
Accounts receivable (net of allowances
of $74 in 2004 and $137 in 2003) 2,602 4,513
Inventories 5,187 6,343
Other current assets 2,071 4,366
------------ ------------
Total current assets 27,834 29,245
Property, plant and equipment 4,230 4,825
Other assets 555 1,127
------------ ------------
Total assets $ 32,619 $ 35,197
============ ============
LIABILITIES, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 131 $ 146
Accounts payable 1,577 1,511
Net liabilities of discontinued
operations 1,042 1,076
Accrued restructuring costs 645 1,300
Other accrued liabilities 15,260 24,844
------------ ------------
Total current liabilities 18,655 28,877
Long-term debt 30,275 74,022
Other liabilities 77,993 74,561
Accrued restructuring costs 1,622 3,450
Net liabilities of discontinued operations 2,803 2,071
------------ ------------
Total liabilities 131,348 182,981
------------ ------------
Commitments and contingencies
Mandatorily redeemable nonconvertible
preferred stock, $1,000 liquidation value
per share:
Authorized: 69,970 shares in 2004 and in
2003
Issued and outstanding - none in 2004 and
in 2003 - -
Mandatorily redeemable preferred stock,
$2,000 liquidation value per share:
Authorized: 21,859 shares in 2004 and in
2003
Issued and outstanding - none in 2004 and
in 2003 - -
Convertible preferred stock, $2,000
liquidation value per share:
Authorized: 10,000 shares in 2004 and in
2003
Issued and outstanding - none in 2004 and
in 2003 - -
Stockholders' deficit:
Preferred stock, $1.00 par value:
Authorized: 898,171 shares in 2004 and
in 2003
Issued and outstanding - none in 2004
and in 2003 - -
Common stock, $.01 par value:
Class A:
Authorized: 175,000,000 shares in
2004 and in 2003
Issued and outstanding - 3,692,517
shares in 2004; 3,728,017 in 2003 37 37
Class C:
Authorized: 50,000,000 shares in 2004
and in 2003
Issued and outstanding - none in 2004
and in 2003 - -
Other additional capital 454,525 454,394
Accumulated deficit (462,980) (510,042)
Accumulated other comprehensive loss (90,311) (92,173)
------------ ------------
Total stockholders' deficit (98,729) (147,784)
------------ ------------
Total liabilities, redeemable
preferred stock and stockholders'
deficit $ 32,619 $ 35,197
============ ============
These statements are preliminary and subject to adjustment pending
completion of the audits of the 2004 financial statements
and restatement of prior period financial statements.
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