Ampex Corporation Reports Second Quarter 2005 Financial Results.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 (Nasdaq:AMPX) today reported net income of $2.5 million or $0.64 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 second quarter of 2005, after deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of $3.7 million or $0.95 per diluted share for the cost of patent 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. . In the second quarter of 2004, the Company reported a net loss of ($4.2) million or ($1.15) per diluted share after deduction of $1.8 million or $0.51 per diluted share of patent litigation expense. Total revenues were $15.8 million in the second quarter of 2005 compared with $8.9 million in the second quarter of the prior year. Licensing revenue totaled $9.9 million in the second quarter of 2005, up from $1.4 million in the second quarter of 2004. During the second quarter of 2005, new patent licensing agreements were announced with four additional manufacturers of digital still cameras (Fuji Fuji (f  `jē), city (1990 pop. 222,490), Shizuoka prefecture, S central Honshu, Japan, on Suruga Bay. Photo
Film Ltd., Funai Electric Co., Ltd., Konica KONICA Konishiroku Shashin Kogyo K.k. Minolta Minolta Co., Ltd. was a Japanese worldwide manufacturer of cameras, camera accessories, photo-copiers, fax machines and laser printers. Minolta was founded in Osaka, Japan in 1928 as Nichi-Doku Shashinki Shōten Holdings, Inc. and
Nikon Nikon (nē`kōn), 1605–81, Russian churchman, patriarch of the Russian Orthodox Church (1652–66). He undertook an extremely vigorous reform of church discipline and ritual with a view to purging accretions and eccentricities from the Corporation). In the second quarter of 2005, $4.9 million of
licensing revenue reflected prepayments PrepaymentsPayments made in excess of scheduled mortgage principal repayments. of royalty obligations through the first quarter of 2006 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc digital still camera licenses. The balance of $5.0 million represented royalties in respect of past or current sales under licenses that provide for running royalties based on the licensee's revenues from products, including digital still cameras, digital camcorders 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) . In the second quarter of 2004, all of the Company's licensing revenue came from running royalties paid by manufacturers of digital video camcorders. During the second quarter of 2005, the Company's intellectual property costs included litigation costs of $3.7 million or $0.95 per diluted share related to lawsuits that it initiated in October October: see month. 2004 against Eastman Kodak Company alleging 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. . Litigation expense in the second quarter of 2004 totaled $1.8 million or $0.51 per diluted share related to suits brought against two other manufacturers of digital still cameras which were settled in the fourth quarter of 2004 upon successfully concluding licensing agreements. The Company may seek to enforce its digital imaging patents by instituting additional litigation against manufacturers of digital still cameras, digital video camcorders, DVD recorders, camera-equipped cellular phones or other products if the Company believes its patents are being infringed by such manufacturers and licensing agreements cannot be concluded on satisfactory terms. The Licensing segment contributed operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $5.6 million or $1.45 per diluted share in the second quarter of 2005 compared to an 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. of ($0.7) million or ($0.19) per diluted share in the second quarter of 2004. Product sales and service revenues from the Company's Recorders segment totaled $5.9 million for the second quarter of 2005 compared to $7.5 million in the second quarter of 2004. The sales decline is primarily attributed to 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. Such sales declines, coupled with increased research and development and selling and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. for the Recorders segment, which were partially offset by improved gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. , resulted in a drop in 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. in the second quarter of 2005 to $25,000 or $0.01 per diluted share compared to $0.8 million or $0.23 per diluted share in the second quarter of 2004. The Recorders segment has recently been awarded a contract from The Boeing Company for new disk and solid state-based data instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. recorders to be used in the development of the 787 airplane airplane, aeroplane, or aircraft, heavier-than-air vehicle, mechanically driven and fitted with fixed wings that support it in flight through the dynamic action of the air. . The recorders are scheduled to be delivered over the next 30 months and have a total contract value of approximately $6.3 million. This contract has been included in reported backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. as of June 30, 2005. Interest expense, net and other financing costs totaled $0.7 or $0.17 per diluted share in the quarter ended June 30, 2005, a reduction from $2.4 million or $0.66 per diluted share in the quarter ended June 30, 2004, reflecting repayment of $62.4 million of 12% Senior Notes in the fourth quarter of 2004 and a further $10.4 million in the second quarter of 2005. This has reduced the principal amount of 12% Senior Notes outstanding to $5.6 million at June 30, 2005. The Company's annual effective tax rate was less than the statutory rate in the quarter ended June 30, 2005 due to the ability to offset 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. with available net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. , which at December 31, 2004 totaled $178 million. On April 15, 2005, the Company sold a previously vacated manufacturing facility and received net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $3.1 million. The Company recognized a gain in other income (expense), net of $0.5 million on the sale in the second quarter of 2005. 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; 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 Company's limited liquidity and 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 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. and its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the fiscal quarter ended March 31, 2005 which have been filed with the SEC and its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005, which is 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)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
----------- ----------- ----------- -----------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(unaudited)
Licensing revenue $ 9,889 $ 1,441 $ 21,300 $ 3,102
Product revenue 3,824 5,367 8,070 11,377
Service revenue 2,108 2,105 4,382 4,323
----------- ----------- ----------- -----------
Total revenue 15,821 8,913 33,752 18,802
----------- ----------- ----------- -----------
Intellectual property
costs 4,241 2,139 7,269 2,942
Cost of product
revenue 2,451 3,770 4,987 7,235
Cost of service
revenue 762 727 1,451 1,305
Research, development
and engineering 1,080 942 2,112 1,831
Selling and
administrative 4,250 3,053 7,918 5,834
----------- ----------- ----------- -----------
Total costs and
operating expenses 12,784 10,631 23,737 19,147
----------- ----------- ----------- -----------
Operating income
(loss) 3,037 (1,718) 10,015 (345)
Media pension costs 194 322 387 643
Interest expense 669 2,419 1,410 4,778
Amortization of debt
financing costs 179 14 193 28
Interest income (44) (33) (113) (58)
Other (income)
expense, net (499) (2) (545) 4
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
equity in income of
limited partnership 2,538 (4,438) 8,683 (5,740)
Provision for income
taxes 39 81 260 248
Equity in income of
limited partnership - (338) - (1,558)
----------- ----------- ----------- -----------
Net income (loss) 2,499 (4,181) 8,423 (4,430)
Other comprehensive
income (loss), net
of tax:
Foreign currency
translation
adjustments (1) 46 52 44
----------- ----------- ----------- -----------
Comprehensive income
(loss) $ 2,498 $ (4,135) $ 8,475 $ (4,386)
=========== =========== =========== ===========
Basic income (loss)
per share $ 0.67 $ (1.15) $ 2.28 $ (1.20)
----------- ----------- ----------- -----------
Weighted average
number of basic
common shares
outstanding 3,705,382 3,642,517 3,701,790 3,680,099
=========== =========== =========== ===========
Diluted income (loss)
per share $ 0.64 $ (1.15) $ 2.16 $ (1.20)
----------- ----------- ----------- -----------
Weighted average
number of diluted
common shares
outstanding 3,893,376 3,642,517 3,891,512 3,680,099
=========== =========== =========== ===========
AMPEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June December
30, 31,
2005 2004
---------------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 14,613 $ 8,840
Short-term investments - 9,134
Accounts receivable (net of allowances of $75
in 2005 and $74 in 2004) 2,484 2,602
Inventories 5,102 5,187
Royalties receivable 2,903 -
Other current assets 1,965 2,071
Property held for sale - 2,670
---------------------
Total current assets 27,067 30,504
Property, plant and equipment 1,396 1,560
Other assets 362 555
---------------------
Total assets $ 28,825 $ 32,619
=====================
LIABILITIES, REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 117 $ 131
Accounts payable 5,289 1,577
Net liabilities of discontinued operations 1,347 1,042
Accrued restructuring costs 619 645
Other accrued liabilities 16,059 15,260
---------------------
Total current liabilities 23,431 18,655
Long-term debt 19,573 30,275
Other liabilities 71,038 77,993
Accrued restructuring costs 1,333 1,622
Net liabilities of discontinued operations 2,864 3,503
---------------------
Total liabilities 118,239 132,048
---------------------
Commitments and contingencies
Mandatorily redeemable nonconvertible preferred
stock, $1,000 liquidation value per share:
Authorized: 69,970 shares in 2005 and in 2004
Issued and outstanding - none in 2005 and in
2004 - -
Mandatorily redeemable preferred stock, $2,000
liquidation value per share:
Authorized: 21,859 shares in 2005 and in 2004
Issued and outstanding - none in 2005 and in
2004 - -
Convertible preferred stock, $2,000 liquidation
value per share:
Authorized: 10,000 shares in 2005 and in 2004
Issued and outstanding - none in 2005 and in
2004 - -
Stockholders' deficit:
Preferred stock, $1.00 par value:
Authorized: 898,171 shares in 2005 and in 2004
Issued and outstanding - none in 2005 and in
2004 - -
Common stock, $.01 par value:
Class A:
Authorized: 175,000,000 shares in 2005 and
in 2004
Issued and outstanding - 3,713,471 shares in
2005; 3,692,517 in 2004 37 37
Class C:
Authorized: 50,000,000 shares in 2005 and in
2004
Issued and outstanding - none in 2005 and in
2004 - -
Other additional capital 454,577 454,525
Accumulated deficit (455,257) (463,680)
Accumulated other comprehensive loss (88,771) (90,311)
---------------------
Total stockholders' deficit (89,414) (99,429)
---------------------
Total liabilities, redeemable preferred stock
and stockholders' deficit $ 28,825 $ 32,619
=====================
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