Applied Signal Technology, Inc. Announces Second Quarter Operating Results and Near-Term Plans.Business Editors/High-Tech Writers SUNNYVALE, Calif.--(BUSINESS WIRE)--May 21, 2001 Applied Signal Technology, Inc. (Nasdaq:APSG) announced its operating results for the second quarter of fiscal 2001 ended May 4, 2001. Revenues for the second quarter of fiscal year Fiscal year (FY) Accounting period covering 12 consecutive months over which a company determines earnings and profits. The fiscal year serves as a period of reference for the company and does not necessarily correspond to the calendar year. 2001 were
$17,590,000 representing a 36% decrease compared with revenues of
$27,287,000 recorded during the second quarter of fiscal 2000. The net
loss for the second quarter of fiscal year 2001 was $3,128,000 or $0.33
per share compared to net income of $2,303,000 or $0.25 per share for
the same period of fiscal 2000.Revenues for the first six months of fiscal year 2001 were $39,287,000 down 27% from revenues of $53,815,000 recorded during the first six months of fiscal year 2000. The net loss for the first six months of fiscal year 2001 was $5,947,000 or $0.64 per share compared to net income of $4,419,000 or $0.49 per share for the same period of fiscal year 2000. The decline in revenues for the second quarter of fiscal year 2001 is primarily due to a lower average backlog during the first and second quarters of fiscal year 2001 when compared to the comparable period in fiscal 2000. The lower average backlog during the first six months of fiscal 2001 is primarily due to the impact of what the company believes to be continued delays in the awarding of certain significant engineering development contracts and to a lower backlog for the company's standard products. The net losses for the second quarter of fiscal 2001 and year-to-date are due to a decline in sales of the company's products and services, increased research and development spending and to subsidiary losses of $2,382,000 and $5,225,000 for the second quarter of fiscal 2001 and year-to-date, respectively. The company believes its anticipated revenues for fiscal year 2001 could be 25 to 35% lower than fiscal year 2000. The decline in anticipated revenues is due, in part, to what the company believes to be continued delays in the awarding of certain significant engineering development contracts and, in part, to the unanticipated contract closeout of some significant engineering development contracts. In order to reduce infrastructure costs to better align costs with anticipated revenues, the company reduced its workforce by 69 employees in April 2001 and in May reduced its workforce by an additional 61 employees. The total staff reductions from April 18, 2001 are 130 employees or approximately 25% of the staff. As a result of the staff reductions, research and development spending, overhead spending and marketing expenditures will be reduced. In addition, the company is currently trying to sublease a portion of its Sunnyvale, Calif. facilities. Management believes that the cost reduction actions being taken during fiscal year 2001 will position the Company to be able to return to profitability in fiscal year 2002. In an effort to reduce future cash expenditures, the board of directors voted on May 17, 2001 to suspend the dividend payment. New orders received during second quarter of fiscal year 2001 were $29,113,000, up 57% from the $18,558,000 of orders received during the second quarter of fiscal year 2000. Order levels for the first six months of fiscal year 2001 were $41,431,000, up 22% compared to the $33,978,000 reported for the same period of fiscal year 2000. The increase in new orders during the second quarter is due to the award of new engineering work and certain delayed engineering orders. Regarding the operating results, Mr. Gary Yancey, president and chief executive officer of the company commented, "We have discussed the delays in orders for several quarters. We felt that a significant amount of these delayed orders would be placed by the middle of fiscal year 2001 but this did not occur. Although our orders are up year-over-year, they were not to the level we had anticipated." "We feel that the second quarter increase in order level supports our belief that these are delays and not necessarily lost opportunities. We have received contract closeout notifications on three development contracts of significance and it is too early to determine the future status of these efforts. Currently they are contributing to the delays and attendant reduced revenue." Mr. Yancey went on to say, "We started fiscal year 2001 with a plan that would maintain a cost structure that would be high for the projected revenue but would be appropriate for the revenue run-rate projected at year end. With the reduced revenue and additional delays we are experiencing, we have no choice but to reduce our cost structure to be more in line with where we believe we will be at year end. With 10 to 15% revenue growth in fiscal year 2002 over fiscal year 2001, we should be able to return to a profitable business model that is more consistent with our typical business model." "We are continuing to diversify into the military marketplace. We feel this marketplace, as well as other diversified marketplaces, are required to provide us a more stable business base in the future." Applied Signal Technology, Inc., designs, develops, manufactures and markets advanced digital signal processing equipment to collect and process a wide range of telecommunications signals for signal reconnaissance 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 that involve risks and uncertainties. Statements as to beliefs concerning delays in awarding contracts, the impact of such order delays, anticipated revenue reductions, the impact of fiscal year 2001 cost reductions, the Company's return to profitability, including the steps it may take, the programs and markets it will emphasize, when a return to profitability might occur, where the Company will be at year end, and beliefs concerning contractual opportunities for engineering development orders are forward-looking statements. These risks and uncertainties include whether engineering development orders will be issued by procurers, including the U.S. Government, whether the Company will be successful in obtaining contracts for these orders if they are forthcoming and when such orders may be forthcoming and awarded; the effect that staff reductions will have on the Company's costs; the effect that contract closeout notifications will have on future programs or contracts; the Company's ability to experience revenue growth in fiscal year 2002 and what the rate of any revenue growth might be; the ability to develop and commercialize new products; and other risks detailed from time to time in the Company's SEC reports including its latest Form 10-K filed for the fiscal year ended October 31, 2000.
APPLIED SIGNAL TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDING MAY 4, 2001 AND APRIL 28, 2000
(Unaudited)
(In thousands except per share data)
Three Months Ended
------------------
May, 4 April 28,
2001 2000
Revenues from contracts $ 17,590 $ 27,287
Operating expenses:
Contract costs 12,743 16,809
Research and development 4,745 3,213
General and administrative 4,527 3,769
Total operating expenses 22,015 23,791
-------- --------
Operating income (loss) (4,425) 3,496
Interest income/(expense), net 125 218
Income (loss) before provision
for taxes on income (loss) (4,300) 3,714
Provision for taxes on income (loss) (1,172) 1,411
Net income (loss) $ (3,128) $ 2,303
======== =======
Earnings per share -- basic (a) ($ 0.33) $ 0.26
Average shares -- basic 9,337 8,747
Earnings per share -- diluted (b) ($ 0.33) $ 0.25
Average shares -- diluted 9,337 9,154
Six Months Ended
----------------
May, 4 April 28,
2001 2000
Revenues from contracts $ 39,287 $ 53,815
Operating expenses:
Contract costs 27,791 33,203
Research and development 9,398 5,555
General and administrative 10,616 8,472
Total operating expenses 47,805 47,230
-------- --------
Operating income (loss) (8,518) 6,585
Interest income/(expense), net 259 542
Income (loss) before provision
for taxes on income (loss) (8,259) 7,127
Provision for taxes on income (loss) (2,312) 2,708
Net income (loss) $ (5,947) $ 4,419
======== ========
Earnings per share -- basic (a) ($ 0.64) $ 0.51
Average shares -- basic 9,280 8,649
Earnings per share - diluted (b) ($ 0.64) $ 0.49
Average shares - diluted 9,280 9,002
(a) "Basic" earnings per share is calculated by dividing net
income (loss) applicable to common shares by weighted average common
shares outstanding.
(b) "Diluted" earnings per share is calculated by dividing net
income (loss) by weighted common shares outstanding plus the dilutive
effect of common shares issuable upon exercise or conversion of
outstanding options, warrants, and convertible securities.
APPLIED SIGNAL TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
May 4, October 31,
2001 2000
(unaudited)
Current assets:
Cash $ 10,114 $ 14,478
Short term investments -- 2,029
Accounts receivable 25,783 32,223
Inventory 14,804 10,376
Prepaids and other
current assets 3,487 3,474
-------- --------
Total current assets 54,188 62,580
Property and equipment,
at cost 58,571 54,385
Accumulated depreciation
and amortization (36,674) (33,871)
-------- --------
Net property and equipment 21,897 20,514
Long Term Investments -- 1,997
Other assets 222 58
-------- --------
Total assets $ 76,307 $ 85,149
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued
payroll and benefits $ 7,706 $ 9,352
Other accrued liabilities 3,133 2,464
Income taxes payable 463 2,506
------- -------
Total current liabilities 11,302 14,322
Deferred income taxes 70 70
Shareholders' equity 64,935 70,757
------- -------
Total liabilities and
shareholders' equity $76,307 $85,149
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