CompuDyne Reports $0.65 Loss for Third Quarter; Backlogs Increase to $135 Million, Cost Reductions in Place; Outlook is Significantly Improved.ANNAPOLIS Annapolis, river, Canada Annapolis, river, c.75 mi (120 km) long, rising in W Nova Scotia, Canada, and flowing SW past Annapolis Royal to Annapolis Basin, an arm of the Bay of Fundy. , Md. -- CompuDyne Corporation (Nasdaq:CDCY), an industry leader in sophisticated security products, integration and technology for the public security markets, today reported a loss of $5.2 million or $0.65 per share for the third quarter of 2005 compared to a loss of $1.9 million or $0.23 per share for the third quarter of 2004. The third quarter 2005 loss included a $500 thousand tax benefit, while the third quarter 2004 loss included a $1.2 million tax benefit. Revenues for the third quarter of 2005 were $33.5 million, essentially unchanged from revenues of $33.4 million for the third quarter of 2004. Combined backlogs increased by 3% to $135.2 million at September September: see month. 30, 2005. These backlogs do not include the recently announced $14.3 million project now underway at our Attack Protection segment. Institutional Security Systems ("ISS ISS See Institutional Shareholder Services (ISS). ") had a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss of $170 thousand in the third quarter of 2005 compared to a pre-tax loss of $806 thousand in the third quarter of 2004. Revenues in the third quarter of 2005 were $15.5 million, up 32% from $11.8 million in the third quarter of 2004. ISS is beginning to benefit from its increasing backlogs and from the elimination of its West Coast regional office problems. This business remains challenged by substantial legal costs related to pursuing claims and change orders related to substantially completed contracts. Legal costs for ISS were $150 thousand in the third quarter of 2005 and are expected to remain at relatively high levels for the next few quarters. Bidding activity is strong in ISS' traditional corrections business due to pent up demand for additional capacity that has been building during the past three years of low new project starts. ISS is also beginning to see positive results from its move into non-corrections markets. Attack Protection ("AP") had a pre-tax loss of $1.8 million in the third quarter of 2005 compared to a pre-tax loss of $2.1 million in the third quarter of 2004. Revenues were $5.9 million in the third quarter of 2005, down 9.5% from $6.5 million in the third quarter of 2004. While sales of blast 1. blast - BLT, used especially for large data sends over a network or comm line. Opposite of snarf. Usage: uncommon. The variant "blat" has been reported. 2. blast - [HP/Apollo] Synonymous with nuke. Sometimes the message "Unable to kill all processes. protection products increased slightly in the third quarter of 2005, sales of perimeter The boundary of a system or network, which defines the inside and outside. It is typically determined by firewalls and addresses. See DMZ. sensors
A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: at AP have improved significantly due to a combination of cost reduction efforts through a reduction in personnel and the implementation of Lean Manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. and due to the elimination of the losses related to a major contract in 2004. AP also is experiencing heavy legal expense related to several ongoing lawsuits, with third quarter 2005 legal expenses totaling $150 thousand. During the quarter Fiber SenSys SenSys is the acronym for the ACM Conference on Embedded Networked Sensor Systems About SenSys ACM SenSys is a highly selective, single-track forum for the presentation of research results on systems issues in the area of embedded networked sensors. introduced its revolutionary new "SPIDeR" point detection perimeter 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. that is expected to contribute importantly to revenues and profits in 2006. CompuDyne Public Safety & Justice ("CPS&J") had a pre-tax loss of $3.2 million in the third quarter of 2005 compared to a profit of $370 thousand in the third quarter of 2004. Revenues were $9.2 million, a decline of 22% from $11.8 million for the third quarter of 2004. The decline in revenue is the result of a relatively low 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. going into 2005 and the delay in signing contracts for two major projects during 2005 (the larger of which is now signed and the other is expected to be signed shortly). The decline in revenue is also reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of a diversion A turning aside or altering of the natural course or route of a thing. The term is chiefly applied to the unauthorized change or alteration of a water course to the prejudice of a lower riparian, or to the unauthorized use of funds. of engineering resources during the year to new product and software architecture activities, at the expense of billable project activity. Gross margins contracted during the third quarter of 2005 due to a concentration of old, low billable rate projects that were completed to achieve milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. billing points, and due to costs related to a major "right-sizing" process during the third quarter which is expected to result in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. savings in excess of $3 million. Selling, general and administrative expenses as well as research and development costs have increased due to the program, instituted this year, to outsource outsource verb To assign specific work to a 3rd party for a specific length of time at an set price and service level Managed care To use outside labor to perform functions–billing and collections, accounting, janitorial services, ER a substantial amount of software development work in order to accelerate the implementation of the businesses' transition to .NET architecture, a process that continues at a strong pace. Operating margins were further impacted by the Xanalys acquisition that is anticipated to lose money through the end of 2005 and the period costs for staging the businesses' annual User's Group conference. CPS&J had a very successful User's Conference in September, with over 450 attendees. The businesses' roadmap A roadmap may refer to:
Integrated Electronic Systems ("IES") had a pre-tax profit of $172 thousand in the third quarter of 2005 compared to a pre-tax profit of $137 thousand in the third quarter of 2004. Profits suffered from an unusually high level of legal costs at IES, totaling $57 thousand in the third quarter of 2005. Revenues were $2.9 million, a decline of 12% from $3.3 million in the third quarter of 2004. Two important revenue sources ramped up in the third quarter: a major project for the Navy, and the five-year $25 million contract for the Bureau of Engraving engraving, in its broadest sense, the art of cutting lines in metal, wood, or other material either for decoration or for reproduction through printing. In its narrowest sense, it is an intaglio printing process in which the lines are cut in a metal plate with a & Printing (which remains under protest by the prior contractor contractor n. 1) a person or entity that enters into a contract. 2) commonly, a person or entity that agrees to construct a building or to provide or install specialized portions of the construction. ). Prospective new business activity has picked up throughout the year. Excellent progress was made on the signals intelligence products manufactured by IES' Data Control Systems ("DCS (1) See also DSC. (2) Digital Cross-connect System) A network switching and grooming device used by telecom carriers. See digital cross-connect. ") division and deliveries are expected to increase in the fourth quarter and beyond. Corporate expenditures remained at a very high level, $1.3 million, during the third quarter of 2005, equal to the $1.3 million in the third quarter of 2004. Total third party spending on audit, Sarbanes Oxley Oxley refers to several things: People
The Company ended the third quarter of 2005 with cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has of $18.3 million, basically unchanged from the $18.1 million at the end of the second quarter of 2005. While third quarter results were worse than expected, and certainly disappointing, the Company believes that due to sharply increased activity levels, recent contract signings and project activity releases, the absence of certain unusual costs, and cost reduction actions taken during the third quarter, that fourth quarter and 2006 results will be significantly improved. The Company continues to explore alternatives to simplify and focus its operations due to the increased costs of doing business as a public company. Certain statements made in this press release constitute "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 1995, including those statements concerning the Company's expectations with respect to future operating results and other events. Although the Company believes it has a reasonable basis for these forward-looking statements, these statements involve risks and uncertainties that cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Factors which could cause actual results to differ from expectations include, among others, capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. patterns of the security market and the demand for the Company's products, competitive factors and pricing pressures, changes in legislation, regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. , government budget problems, the Company's ability to secure new contracts, the ability to successfully grow the Company by completing acquisitions, the ability to remain in compliance with its bank covenants, delays in government procurement Government procurement, also called public tendering, is the procurement of goods and services on behalf of a public authority, such as a government agency. With 10 to 15% of GDP in developed countries, and up to 20% in developing countries, government procurement accounts processes, ability to obtain bid, payment and performance bonds on various of the Company's projects, technological change or difficulties, the ability to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. debt when it becomes due, product development risks, commercialization difficulties, adverse results in 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. , the level of product returns, the amount of remedial REMEDIAL. That which affords a remedy; as, a remedial statute, or one which is made to supply some defects or abridge some superfluities of the common law. 1 131. Com. 86. The term remedial statute is also applied to those acts which give a new remedy. Esp. Pen. Act. 1. work needed to be performed, costs of compliance with Sarbanes-Oxley requirements and the impact of the failure to comply with such requirements, risks associated with internal control weaknesses identified in complying with Section 404 of Sarbanes-Oxley, the Company's ability to realize anticipated cost savings, the Company's ability to simplify its structure and modify its strategic objectives, and general economic conditions. Risks inherent in the Company's business and with respect to future uncertainties are further described in its other filings with the Securities Exchange Commission, such as the Company's 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. , Form 10-Q Form 10-Q See 10-Q. , and 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. reports.
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, December 31,
2005 2004
------------- -------------
(dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 10,299 $ 5,198
Marketable securities - 19,577
Cash and marketable securities -
pledged 489 -
Accounts receivable, net 31,985 34,291
Contract costs in excess of billings 14,384 16,087
Inventories 5,740 5,165
Prepaid expenses and other 4,162 5,412
------------- -------------
Total Current Assets 67,059 85,730
Cash and marketable securities - pledged 7,555 -
Property, plant and equipment, net 10,718 12,094
Goodwill 25,971 25,894
Other intangible assets, net 8,211 8,460
Other 716 713
------------- -------------
Total Assets $ 120,230 $ 132,891
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
liabilities $ 18,238 $ 21,771
Billings in excess of contract costs
incurred 12,099 13,497
Deferred revenue 7,656 5,998
Current portion of notes payable 440 440
------------- -------------
Total Current Liabilities 38,433 41,706
Notes payable 3,125 3,565
Convertible subordinated notes payable,
net 39,258 39,118
Deferred tax liabilities 2,072 2,072
Other 501 599
------------- -------------
Total Liabilities 83,389 87,060
------------- -------------
Commitments and Contingencies
Total Shareholders' Equity 36,841 45,831
------------- -------------
Total Liabilities and
Shareholders' Equity $ 120,230 $ 132,891
============= =============
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
--------- --------- --------- ---------
(in thousands, except per share data)
Revenue $ 33,499 $ 33,360 $100,909 $110,170
Cost of sales 24,982 24,552 69,582 80,017
--------- --------- --------- ---------
Gross profit 8,517 8,808 31,327 30,153
Selling, general &
administrative expenses 10,587 9,288 30,909 26,119
Research and development 3,149 2,051 7,502 5,680
--------- --------- --------- ---------
Loss from operations (5,219) (2,531) (7,084) (1,646)
--------- --------- --------- ---------
Total other expense, net 558 540 1,651 1,783
--------- --------- --------- ---------
Loss before income taxes (5,777) (3,071) (8,735) (3,429)
Income tax benefit (500) (1,221) (500) (1,362)
--------- --------- --------- ---------
Net loss $ (5,277) $ (1,850) $ (8,235) $ (2,067)
========= ========= ========= =========
Loss per share:
---------------
Basic loss per common share $ (.65) $ (.23) $ (1.01) $ (.26)
========= ========= ========= =========
Weighted average number of
common shares outstanding 8,116 8,171 8,132 8,085
========= ========= ========= =========
Diluted loss per common share $ (.65) $ (.23) $ (1.01) $ (.26)
========= ========= ========= =========
Weighted average number of
common shares and equivalents 8,116 8,171 8,132 8,085
========= ========= ========= =========
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(in thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues
Institutional Security
Systems $ 15,548 $ 11,783 $ 43,008 $ 41,794
Attack Protection 5,892 6,510 18,855 20,204
Integrated Electronic
Systems 2,898 3,296 6,805 11,242
Public Safety and
Justice 9,161 11,771 32,241 36,930
---------- ---------- ---------- ----------
$ 33,499 $ 33,360 $ 100,909 $ 110,170
========== ========== ========== ==========
Three Months Ended Nine Months Ended
June 30, June 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Pre-tax income (loss)
Institutional Security
Systems $ (170) $ (806) $ 528 $ (683)
Attack Protection (1,800) (2,101) (2,141) (3,236)
Integrated Electronic
Systems 172 137 180 551
Public Safety and
Justice (3,188) 370 (3,270) 1,765
Corporate (791) (671) (4,032) (1,826)
---------- ---------- ---------- ----------
$ (5,777) $ (3,071) $ (8,735) $ (3,429)
========== ========== ========== ==========
Backlog September 30, June 30, December 31,
2005 2005 2004
-------------- -------------- --------------
Institutional
Security
Systems $ 52,557 $ 56,492 $ 49,324
Attack
Protection 16,210 19,466 20,803
Integrated
Electronic
Systems 8,146 9,105 8,299
Public Safety
and Justice 58,270 46,045 48,434
-------------- -------------- --------------
Total $ 135,183 $ 131,108 $ 126,860
============== ============== ==============
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net loss $ (5,277) $ (1,850) $ (8,235) $ (2,067)
Interest expense 748 849 2,301 2,443
Tax benefit (500) (1,221) (500) (1,362)
Depreciation and
amortization 872 732 2,596 2,099
---------- ---------- ---------- ----------
EBITDA $ (4,157) $ (1,490) $ (3,838) $ 1,113
========== ========== ========== ==========
This press release contains unaudited financial information that is not prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principals (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). Investors are cautioned that the non-GAAP financial measures are not to be construed as an alternative to GAAP. The Company's management uses earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
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