Applied Signal Technology, Inc. Announces Fiscal 2004 Operating Results, Record Orders, Continuation of Dividends and Appointment of Officers.SUNNYVALE, Calif. -- Applied Signal Technology, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :APSG APSG Antisymmetrized Product of Separated Geminals ) announced its operating results for the fourth quarter of fiscal year 2004 and the fiscal year ended October 31, 2004. The Company announced that it received a record $202.1 million in new orders during fiscal 2004. In addition, the Company announced that the Board of Directors has approved the continuation of the annual dividend payments to shareholders of $0.50 per share. The Company also announced the appointment of three officers. New Orders New orders received during the fourth quarter of fiscal year 2004 were $73,478,000 compared to new orders of $67,242,000 received during the fourth quarter of fiscal year 2003. Orders for fiscal year 2004 were $202,080,000 compared to $139,796,000 reported for fiscal year 2003. It should be noted that new orders and backlog are expected to be reduced by approximately $11 to $13 million when the company completes negotiations of a stop-work order related to a portion of its largest contract. The Company anticipates the completion of these negotiations during the first or second quarter of fiscal 2005. The Company estimates that our opportunity to generate revenues from this contract was reduced by approximately $3 to $4 million in fiscal 2004, and will be reduced by approximately $6 to $7 million during fiscal year 2005 and the balance in fiscal 2006. Results of Operations Revenues for the fourth quarter of fiscal year 2004 were $39,456,000 representing a 35% increase compared with revenues of $29,123,000 recorded during the fourth quarter of fiscal year 2003. Revenues for fiscal year 2004 were $142,836,000 up 50% from revenues of $95,384,000 recorded during fiscal year 2003. 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. for the fourth quarter of fiscal year 2004 was $3,880,000 compared to operating income of $2,751,000 recorded during the fourth quarter of fiscal year 2003. Operating income increased for the fourth quarter of fiscal year 2004 due primarily to a growth in revenues, offset in part by a charge to operating income taken by the Company in the fourth quarter as a result of disposing of approximately $811,000 of obsolete OBSOLETE. This term is applied to those laws which have lost their efficacy, without being repealed, 2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. products. The operating income for fiscal year 2004 was $17,370,000 compared to operating income of $9,186,000 recorded during fiscal year 2003. The increase in operating income for 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 fourth quarter of fiscal year 2004 was $2,422,000 or $0.21 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 compared to the fourth quarter of fiscal year 2003 net income of $2,923,000 or $0.26 per diluted share. Net income for fiscal year 2004 was $11,974,000 or $1.03 per diluted share compared to net income of $8,665,000 or $0.80 per diluted share for fiscal year 2003. Net income did not grow proportionately pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. with operating income for the fourth quarter and fiscal year 2004 when compared to the same periods in fiscal year 2003 because our tax rate increased significantly. Our tax rate for the fourth quarter and fiscal year 2004 was 40% and 33%, respectively, compared to 1% and 11%, respectively, for the same periods of fiscal year 2003. Dividend The Company announced the continuation of its current dividend. The Company will pay an annual dividend of $0.50 per share, payable quarterly at a rate of $0.125 per share, to shareholders over the next twelve months. The quarterly dividends will be payable on February 11, 2005, May 13, 2005, August 12, 2005 and November 11, 2005 to shareholders of record at January 28, 2005, April 29, 2005, July 29, 2005 and October 31, 2005. Appointment of Officers The Company promoted Mr. Ben Scribner to Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. reporting to Mr. Gary Yancey, President and Chief Executive Officer. Mr. Fred Roscher was elected Executive Vice President of the newly formed Communications Systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. Group reporting to Mr. Scribner and Mr. Robert Blanchard was elected Vice President of the newly formed Electronic Systems Division also reporting to Mr. Scribner. Management Commentary Mr. Gary Yancey, President and Chief Executive Officer of the Company, commented, "As we reviewed our five-year strategic plan at the beginning of fiscal year 2004, we believed that our core business of communications intelligence Noun 1. communications intelligence - technical and intelligence information derived from foreign communications by other than the intended recipients COMINT or COMINT n. 1. an abbreviation for communications intelligence ltname>; technical and intelligence information derived from foreign communications by other than the intended recipients. Noun 1. had strong year-over-year growth potential for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. As a result, we felt that we had an opportunity to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. into other areas of signal intelligence to complement our core business. We felt that one area of signal intelligence in which the U.S. Government will be budgeting increased investments was electronic intelligence or ELINT Noun 1. ELINT - intelligence derived from electromagnetic radiations from foreign sources (other than radioactive sources) electronics intelligence . Since ELINT and COMINT involve similar processing technologies, we felt that this diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. would be synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. with our core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
Mr. Yancey concluded his remarks, "To better manage our investment in the future, we promoted Ben Scribner to Chief Operating Officer responsible for all technical operations. We formed the Communications Systems Group, managed by Fred Roscher, as Executive Vice President, to continue to grow our core COMINT business area. We formed the Electronic Systems Division managed by Bob Blanchard as Vice President to expand our SIGINT Noun 1. SIGINT - intelligence information gathered from communications intelligence or electronics intelligence or telemetry intelligence signals intelligence business into ELINT. Fred has over seventeen years tenure with the Company, most recently as deputy General Manager of the Technical Operations Group. He has over twenty-five years experience in COMINT and I am confident he will lead his group to continued growth. Bob has over twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. experience in the ELINT business and founded Plano Microwave in 1992 to provide ELINT equipments. He joined Applied Signal Technology on November 22, 2004. His division will be located in Plano, Texas Plano (IPA: /ˈpleɪnoʊ/) is a wealthy suburb of Dallas, Texas, located to the north, mainly within Collin County, but also extending into Denton County. According to the 2000 U.S. . I am very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the continued success of our core COMINT business area and the opportunities provided by our move into the ELINT business area. I believe that diversifying into other areas of SIGINT and potentially other areas of defense electronics will be beneficial to the Company and its shareholders in the future." Attached to this news release are audited condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. statements of operations and balance sheets for the fourth quarter and fiscal year ended October 31, 2004. Conference Call The Company will host a conference call on Tuesday, December 21, 2004 to discuss operating results for fiscal 2004. 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 21, 2004 at 5:00 p.m. EST/2:00 p.m. PST PST Paroxysmal supraventricular tachycardia, see there . 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. Applied Signal Technology, Inc. designs, develops, manufactures and markets advanced digital signal processing See DSP. Digital Signal Processing - (DSP) Computer manipulation of analog signals (commonly sound or image) which have been converted to digital form (sampled). equipment to collect and process a wide range of telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. signals for signal reconnaissance  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. 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 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. that involve risks and uncertainties that could cause actual results to differ materially. Forward-looking statements discussed in this release include statements concerning the magnitude of the stop work order and our ability to negotiate a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. outcome, the potential future year over year growth of our COMINT business, U.S. investment into the ELINT business, the continued success of our COMINT business and opportunities provided by our entry into the ELINT business, and the benefits of this diversification to our shareholders. 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 us will be profitable and whether any such contracts might be terminated prior to completion; whether we will be able to hire additional qualified staff as needed as needed prn. See prn order. ; the ability to successfully enter new marketplaces; and other risks detailed from time to time in the Company's SEC reports including its latest 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. 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, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDING OCTOBER 31, 2004 AND OCTOBER 31, 2003
(In thousands except per share data)
Three Months Twelve Months
Ended Ended
---------------- -----------------
October October October October
31, 31, 31, 31,
2004 2003 2004 2003
------- ------- -------- -------
Revenues from contracts $39,456 $29,123 $142,836 $95,384
Operating expenses:
Contract costs 27,630 20,385 94,705 63,335
Research and development 4,191 1,644 14,160 7,526
General and administrative 3,755 4,343 16,601 15,337
------- ------- -------- -------
Total operating expenses 35,576 26,372 125,466 86,198
------- ------- -------- -------
Operating income 3,880 2,751 17,370 9,186
Interest income/(expense), net 177 190 576 510
------- ------- -------- -------
Income before provision
for income taxes 4,057 2,941 17,946 9,696
Provision (benefit) for income taxes 1,635 18 5,972 1,031
------- ------- -------- -------
Net income $ 2,422 $ 2,923 $ 11,974 $ 8,665
======= ======= ======== =======
Net income per share - basic $0.22 $0.27 $1.08 $0.83
Average shares - basic 11,201 10,735 11,042 10,459
Net Income per share - diluted $0.21 $0.26 $1.03 $0.80
Average shares - diluted 11,800 11,307 11,638 10,863
APPLIED SIGNAL TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
October October
31, 31,
2004 2003
-------- --------
Current assets:
Cash and cash equivalents $ 11,227 $ 5,372
Short term investments 32,615 34,747
Accounts receivable 43,768 26,562
Inventory 5,392 6,875
Prepaids and other current assets 4,340 3,545
-------- --------
Total current assets 97,342 77,101
Property and equipment, at cost 63,105 59,138
Accumulated depreciation and amortization (50,682) (46,897)
-------- --------
Net property and equipment 12,423 12,241
Other assets 1,687 605
-------- --------
Total assets $111,452 $ 89,947
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued payroll and benefits $ 18,319 $ 10,579
Other accrued liabilities 3,462 2,967
-------- --------
Total current liabilities 21,781 13,546
Other liabilities 305 183
Shareholders' equity 89,366 76,218
-------- --------
Total liabilities and shareholders' equity $111,452 $ 89,947
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