Applied Signal Technology, Inc. Announces Plans to Acquire Dynamics Technology, Inc. and Second Quarter Operating Results.SUNNYVALE Sunnyvale, city (1990 pop. 117,229), Santa Clara co., W Calif., near San Francisco; settled 1849, inc. 1912. A city in Silicon Valley, its many manufactures include semiconductors; machinery and instruments; electrical, electronic, and aerospace products; , 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 it has entered into a definitive agreement to acquire Dynamics Technology, Inc. ("DTI Diffusion tensor imaging (DTI) A refinement of magnetic resonance imaging that allows the doctor to measure the flow of water and track the pathways of white matter in the brain. "), a privately-held company headquartered in Torrance Torrance, industrial and residential city (1990 pop. 133,107), Los Angeles co., SW Calif.; inc. 1921. It has large aircraft and electronics industries. Among its many manufactures are aircraft, electronics, communications equipment, aluminum products, steel, and , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). with offices in Anaheim, California “Anaheim” redirects here. For Annaheim, see Annaheim, Saskatchewan. Anaheim is a city in Orange County, California, located 28 miles southeast of Los Angeles. and Arlington Arlington, county, United States Arlington, county (1990 pop. 170,936), N Va., across the Potomac River from Washington, D.C. Arlington is a residential and commercial suburb of Washington. , Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). . DTI is a world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. provider of advanced sensor A device that measures or detects a real-world condition, such as motion, heat or light and converts the condition into an analog or digital representation. An optical sensor detects the intensity or brightness of light, or the intensity of red, green and blue for color systems. and signal processing See DSP. products for advanced space-based, airborne airborne /air·borne/ (ar´born) suspended in, transported by, or spread by air. airborne, adj carried through the air. In health care settings, viruses or bacteria may become airborne, e.g. , terrestrial Dealing with the earth. See terrestrial link. and undersea sensor technologies. The combined company will be a provider of signal processing products and services in support of intelligence, surveillance and reconnaissance Intelligence, Surveillance and Reconnaissance may refer to:
Applied Signal Technology also announced its operating results for the second quarter of fiscal year 2005 ended April 29, 2005. Acquisition Plans Applied Signal Technology has entered into a definitive agreement to acquire DTI for $30 million in cash subject to adjustment based upon DTI's closing balance sheet, plus all cash received by DTI prior to the closing from the exercise of options to acquire DTI common stock. Applied Signal Technology will fund the purchase price from its current investments and from a $10 million term loan from Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. Bank. The acquisition is expected to close on or about July July: see month. 1, 2005 subject to DTI shareholder approval. Regarding the acquisition, Mr. Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. Yancey, President and Chief Executive Officer of Applied Signal Technology, commented, "The acquisition of Dynamics Technology is a first for our company. It fits in with our strategic plan as we believe that 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. into other areas of defense electronics will provide better stability for our company and opportunity for more growth. DTI has a rich technology development pipeline and this acquisition will expand our support of Department of Defense and intelligence community missions, while providing entry to emerging homeland defense missions with practical technology and advanced systems solutions. "Of course, we started this diversification at the beginning of fiscal year 2005 when we formed the Electronic Systems Division in Allen, Texas Allen is a city in Collin County and a northern suburb of Dallas, Texas (USA). As of the 2000 census, the city had a total population of 43,554. As of April 2007, the city's population is estimated at 77,465. to pursue opportunities in Electronics Intelligence or ELINT Noun 1. ELINT - intelligence derived from electromagnetic radiations from foreign sources (other than radioactive sources) electronics intelligence . We are pleased with the progress we are making with our investments in this ELINT marketplace. "In our strategic plan, we have set an aggressive goal to enter into new defense electronics business areas that may become a key aspect of our future revenues. Our goal has been to find a business that has opportunities in a marketplace to which 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):
"We believe that, with this acquisition, we are on our way to meeting these strategic goals. DTI brings very good technical solutions to certain intelligence requirements and with our ability to bring state-of-the-art technological signal processing solutions to practical solutions, we believe that DTI's solutions can become fielded solutions." Mr. Yancey concluded with, "There are no redundancies in staff, facilities, or capital and no 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). will be required. Both companies are in a growth mode that is anticipated to continue and therefore we anticipate continued growth for the new APSG." Mr. William Van Vleet, President and Chief Executive Officer of Dynamics Technology, who plans on joining Applied Signal Technology as the Executive Vice-President of the Sensor Signal Processing Group said he sees this acquisition as fulfilling what had been planned in the company's evolution. "We believe this acquisition increases the value to our customers by ensuring sustained access to key technology innovation and enhancing our ability to deliver integrated hardware and software products. APSG has the mature engineering design, development, production and support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services to successfully transition our advanced technologies to the user community." Operating Results Revenues for the second quarter of fiscal year 2005 were $32,053,000 compared with revenues of $36,811,000 for the second quarter of fiscal year 2004. Revenues for the first six months of fiscal year 2005 were $62,163,000 compared to revenues of $65,105,000 for the first six months of fiscal year 2004. The decrease in revenues for the second quarter and the first six months of fiscal year 2005 when compared to the same period of fiscal year 2004 is due, in part, to less product sales and in part, to a reduction in revenues from our largest contract primarily as a result of the stop work notice we received on a portion of the contract during fiscal year 2004. 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 second quarter of fiscal year 2005 was $3,727,000 compared with operating income of $4,712,000 for the second quarter of fiscal year 2004. The operating income for the first six months of fiscal year 2005 was $6,999,000 compared with operating income of $7,888,000 for the first six months of fiscal year 2004. The decrease in operating income during the second quarter and the first six months of fiscal year 2005 when compared with the same periods in fiscal year 2004 is due, in part, to a decrease in revenues and in part, to greater program profitability generated from the completion of certain production programs during the second quarter of fiscal year 2004. Net income for the second quarter of fiscal year 2005 was $2,327,000 or $0.20 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 net income for the second quarter of fiscal year 2004 of $3,937,000 or $0.34 per diluted share. Net income for the first six months of fiscal year 2005 was $4,354,000 or $0.37 per diluted share compared to net income of $6,093,000 or $0.53 per diluted share for the first six months of fiscal year 2004. The decline in net income during the second quarter and the first six months of fiscal 2005 when compared to the same periods of fiscal 2004 is primarily due to a significantly higher tax rate in fiscal year 2005. During the second quarter of fiscal year 2004, we determined that the valuation allowance against our deferred tax assets was no longer required. This resulted in a credit to our tax provision that lowered our tax rate for the second quarter of fiscal year 2004 to 18.8%. Our effective tax rate for the second quarter of fiscal year 2005 is 41%. New orders received during the second quarter of fiscal year 2005 were $21,284,000 compared to new orders received during the second quarter of fiscal year 2004 of $28,636,000. Order levels for the first six months of fiscal year 2005 were $32,410,000 compared to order levels of $93,185,000 for the same period of fiscal year 2004. The level of new orders for the first six months of fiscal year 2004 were significantly higher than the same period in fiscal year 2005 as a result of a major modification resulting in an increase to our largest contract of approximately $48,524,000 received during the first quarter of fiscal year 2004. Regarding the operating results, Mr. Yancey commented, "The stop work on our largest contract that we announced previously did contribute to the decrease in revenue for the second quarter of fiscal year 2005 compared to the same period for fiscal year 2004. We do feel that this effect will be offset by the recently announced award of a new development program. As was announced, this initial $5 million award was a letter contract to start the development effort and we expect to negotiate the final terms of the contract, which was proposed at $35 million, in the near future. We are still observing a strong demand from our U.S. Government customers for intelligence capabilities. We continue to have strong proposal activities and a large portion of these proposals are for sole source opportunities. We are in an aggressive hiring mode because a majority of our 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. is engineering development work which is manpower intensive. We have been successful in being able to attract technical talent at all of our locations." Attached to this news release are unaudited 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. The Company will host a conference call on Tuesday, May 24, 2005 to discuss second 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 May 24, 2005 at 9:00 a.m. Eastern (6:00 a.m. Pacific). There is no pass code required. This call is being web cast by Vcall and can be accessed at Applied Signal Technology, Inc.'s website at www.appsig.com. Investors can also access the web cast 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 as to our ability to complete the acquisition of DTI and achieve expected benefits of the acquisition, including the expansion of products and services offered by the combined company; the ability to cause DTI solutions to become fielded solutions; benefits that may be obtained from a strategy of diversification of our core business and generate expected revenues from new defense electronics business areas; continued progress in the ELINT market; the completion of negotiations on recently announced new development programs and the funding of such program at expected levels; continued strong demand from our U.S. Government customers and the future spending by the U.S. Government on intelligence gathering; and the Company's ability to hire qualified personnel and such personnel's ability to obtain security clearances. The risks and uncertainties associated with these statements include the risks that the acquisition will close; and if completed, will be successful and achieve the expected benefits; the success of our strategic plan, including our plans 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. ; whether our ELINT business will generate revenues and become successful in its market; 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; the possibility that product sales could be declining; whether the Company 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, 2004. The Company assumes no obligation to update the information provided in this news release.
APPLIED SIGNAL TECHNOLOGY, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE PERIODS ENDING APRIL 29, 2005 AND APRIL 30, 2004
(Unaudited)
(In thousands except per share data)
Three Months Ended Six Months Ended
------------------- ----------------
April, April, April, April,
29 30 29 30
2005 2004 2005 2004
-------- -------- -------- --------
Revenues from contracts $32,053 $36,811 $62,163 $65,105
Operating expenses:
Contract costs 20,646 24,146 40,485 42,446
Research and development 3,139 3,419 6,316 5,556
General and administrative 4,541 4,534 8,363 9,215
-------- -------- -------- --------
Total operating expenses 28,326 32,099 55,164 57,217
-------- ------- ------- -------
Operating income 3,727 4,712 6,999 7,888
Interest income/(expense), net 217 137 380 278
-------- ------- ------- -------
Income before provision
for income taxes 3,944 4,849 7,379 8,166
Provision for income taxes 1,617 912 3,025 2,073
-------- ------- ------- --------
Net income $ 2,327 $ 3,937 $ 4,354 $ 6,093
======== ======== ======== ========
Net income per share - basic $0.20 $0.36 $0.38 $0.56
Average shares - basic 11,364 10,990 11,329 10,922
Net income per share - diluted $0.20 $0.34 $0.37 $0.53
Average shares - diluted 11,770 11,565 11,823 11,500
APPLIED SIGNAL TECHNOLOGY
CONDENSED BALANCE SHEETS
(in thousands)
ASSETS
April 29, October 31,
2005 2004
------------ -----------
(unaudited)
Current assets:
Cash and cash equivalents $ 26,013 $ 11,227
Short term investments 25,654 32,615
Accounts receivable 29,377 43,768
Inventory 10,617 5,392
Prepaids and other current assets 4,528 4,340
------------- ------------
Total current assets 96,189 97,342
Property and equipment, at cost 65,277 63,105
Accumulated depreciation and amortization (52,367) (50,682)
------------- ------------
Net property and equipment 12,910 12,423
Other assets 1,715 1,687
------------- ------------
Total assets $ 110,814 $ 111,452
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued payroll and
benefits $ 13,765 $ 18,319
Other accrued liabilities 2,350 2,336
Income taxes payable 320 28
--------------------------
Total current liabilities 16,435 20,683
Long-Term Liabilities:
Other liabilities 333 305
Accrued Rent 1,119 1,098
--------------------------
Total Long-Term liabilities $ 1,452 $ 1,403
Shareholders' equity 92,927 89,366
------------- ------------
Total liabilities and shareholders' equity $ 110,814 $ 111,452
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