CompuDyne Reports -$0.04 Loss Per Share for First Quarter; First Quarterly Loss in Eight Years Due to Weak Backlogs.Business Editors/High-Tech Writers HANOVER Hanover, city, Germany Hanover, Ger. Hannover, city (1994 pop. 524,820), capital of Lower Saxony, N Germany, on the Leine River and the Midland Canal. , Md.--(BUSINESS WIRE)--May 7, 2004 Orders Began an Upward Turn in February February: see month. , March and April 2004 CompuDyne Corp. (Nasdaq:CDCY) an industry leader in sophisticated security products, integration and technology for the public security markets, today reported a loss of ($0.04) per share in the first quarter of 2004, the first quarterly loss since 1995. The loss is largely attributed to depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. conditions in the company's Institutional Security Systems ("ISS ISS See Institutional Shareholder Services (ISS). ") business, and delays in awards in the Attack Protection ("AP") business, resulting in six straight quarters of declining backlogs. Budget deficits at the state and local government levels have resulted in a sharp curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. in new prison and jail construction awards, and have led to a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in awards for new software projects for the Public Safety & Justice business. Also impacting the first quarter were higher legal costs, the residual Residual See:Residual value impact of the previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). west coast regional office losses, and higher interest expense related to the January January: see month. 2004 issuance of $40.25 million in convertible subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes. Orders finally took a significant upward turn in February 2004, and the trend has continued through April 2004. The Company reported a ($0.04) loss per share for the three months ended March 31, 2004, down from earnings of $0.12 per share in the first quarter of 2003. Revenues in the first quarter of 2004 were $39.0 million, down from $46.8 million in the first quarter of 2003. The decline in revenue was a direct result of the decline in backlogs. Net loss for the first quarter of 2004 was ($0.3) million, compared to a profit of $0.9 million in the first quarter of 2003. Revenues increased slightly and pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income was flat in the Federal Security Systems business. Revenues were up 8% and pre-tax earnings increased six fold in the Public Safety & Justice business. However in the Attack Protection business, revenues were down 17% and pre-tax income swung from a positive $562 thousand during the first quarter of 2003 to a negative ($679) thousand during the first quarter of 2004. Institutional Security Systems, reflecting the severe decline in new contracts over the past five quarters, saw revenue decline by 32% and pre-tax income decline by 72% to $207 thousand. Corporate expenses were higher due to increased interest expense from the convertible subordinated notes and higher costs largely related to new legislation. While company backlogs continued to decline during the first quarter of 2004, by $7.7 million, to $131.7 million at March 31, 2004, a typically slow period, new order activity has picked up significantly in February, March, April and May of 2004. Quoting and bidding activity has been especially strong in the Attack Protection business. Because of the nature of the company's projects, especially in ISS and to a somewhat lesser extent in AP, there is a significant lag time between the receipt of an award and the generation of revenue from the award. The company expects continued weak results in the second quarter of 2004, potentially significantly improved results in the second half of 2004, and is planning for a return to normal levels of profitability and growth in 2005. The company announced that it has taken steps to expand the number of independent directors on its board. The company is also in the process of supplementing its senior management team to assure that as revenues resume their historical growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , and as the company identifies and consummates future acquisitions, operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: will also recover and improve to acceptable levels. 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, the Company's ability to secure new contracts and the risks inherent in CompuDyne's business and future uncertainties which are further described in its filings with the Securities and 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. About CompuDyne CompuDyne operates within four business segments; each with prominent positions in physical and electronic security and technology-based solutions for the public security market. The Institutional Security Systems segment is one of the largest suppliers of physical and electronic security products, as well as integration and maintenance services, to the corrections and courthouse markets. The Attack Protection segment is one of the largest providers of bullet, 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. and attack resistant products to U.S. embassies, banks, courthouses and other highly secured facilities in the U.S. and around the world. The segment also designs and manufactures fiber-optic sensors Fiber-optic sensor A sensor that uses thin optical fibers to carry light to and from a location to be probed. In performing the sensing, light can be lost from the fibers or modified in velocity by the action of the phenomena on the fiber. and related systems using optical fiber, proprietary optics and 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). . The Federal Security Systems segment is a supplier of security and specialty engineering In systems engineering, Specialty Engineering includes the engineering domains that are not typical of the main engineering effort. Hardware engineering, software engineering, and human factors engineering may be used as major elements in a majority of systems engineering efforts services and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. products to the military, intelligence and commercial markets. The Public Safety & Justice segment develops, implements, and supports automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. information solutions for public safety and justice agencies worldwide. This division serves government agencies throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , and is one of the largest companies dedicated to the public safety and justice software market. Public Safety and Justice also provides large-scale large-scale adj. 1. Large in scope or extent. 2. Drawn or made large to show detail. large-scale Adjective 1. wide-ranging or extensive 2. inmate INMATE. One who dwells in a part of another's house, the latter dwelling, at the same time, in the said house. Kitch. 45, b; Com. Dig. Justices of the Peace, B 85; 1 B. & Cr. 578; 8 E. C. L. R. 153; 2 Dowl. & Ry. 743; 8 B. & Cr. 71; 15 E. C. L. R. 154; 2 Man. & Ry. 227; 9 B. & Cr. management and institutional medical software systems.
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, December 31,
ASSETS 2004 2004
------ ------------ ------------
(in thousands)
Current Assets
Cash and cash equivalents $ 3,802 $ 1,869
Marketable securities 22,465 -
Accounts receivable, net 41,241 41,780
Contract costs in excess of billings 14,767 17,568
Inventories 5,874 6,704
Deferred tax assets 1,270 1,371
Prepaid expenses and other 1,859 2,322
------------ ------------
Total Current Assets 91,278 71,614
Property, plant and equipment, net 9,654 10,079
Goodwill 21,280 21,280
Other intangible assets, net 9,673 9,785
Other 754 904
------------ ------------
Total Assets $ 132,639 $ 113,662
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable and accrued
liabilities $ 17,229 $ 21,078
Billings in excess of contract costs
incurred 11,091 13,551
Deferred revenue 5,460 6,036
Current portion of notes payable 440 2,103
------------ ------------
Total Current Liabilities 34,220 42,768
Notes payable 4,005 15,555
Convertible subordinated notes payable 38,978 -
Deferred tax liabilities 1,654 1,592
Other 665 820
------------ ------------
Total Liabilities 79,522 60,735
Commitments and Contingencies
Total Shareholders' Equity 53,117 52,927
------------ ------------
Total Liabilities and Shareholders'
Equity $ 132,639 $ 113,662
============ ============
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
March 31,
2004 2003
------------ ------------
(in thousands, except
per share data)
Revenues $ 39,027 $ 46,767
Cost of sales 28,829 34,984
------------ ------------
Gross profit 10,198 11,783
Operating expenses 8,162 7,987
Research and development 1,755 1,862
------------ ------------
Income from operations 281 1,934
Total other expense 792 362
------------ ------------
(Loss) income before income taxes (511) 1,572
Income taxes (benefit) (204) 630
------------ ------------
Net (loss) income $ (307) $ 942
============ ============
Earnings per share:
-------------------
Basic (loss) earnings per common share $ ( .04) $ .12
============ ============
Weighted average number of common shares
outstanding 8,009 7,822
============ ============
Diluted (loss) earnings per common share $ ( .04) $ .12
============ ============
Weighted average number of common shares
and equivalents 8,009 8,073
============ ============
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(in thousands, unaudited)
Three Months Ended
March 31,
2004 2003
------------ ------------
Revenues
Public Safety and Justice $ 12,442 $ 11,487
Institutional Security Systems 16,057 23,448
Attack Protection 6,953 8,343
Federal Security Systems 3,575 3,489
------------ ------------
$ 39,027 $ 46,767
============ ============
Three Months Ended
March 31,
2004 2003
------------ ------------
Pre-tax income (loss)
Public Safety and Justice $ 435 $ 68
Institutional Security Systems 207 737
Attack Protection (679) 562
Federal Security Systems 200 207
Corporate (674) (2)
------------ ------------
$ (511) $ 1,572
============ ============
March 31, December 31,
2004 2003
------------ ------------
Backlog
Public Safety and Justice $ 57,332 $ 63,727
Institutional Security Systems 52,147 57,258
Attack Protection 12,905 10,043
Federal Security Systems 9,269 8,326
------------ ------------
$ 131,653 $ 139,354
============ ============
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Three Months Ended
March 31,
2004 2003
------------ ------------
Net (loss) income $ (307) $ 942
Interest expense 749 378
Tax expense (204) 630
Depreciation and amortization 704 751
------------ ------------
EBITDA $ 942 $ 2,701
============ ============
(1) This press release contains unaudited financial information
that is not prepared in accordance with generally accepted accounting
principals (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, (EBITDA) in its internal analysis of
net income and monitors it to ensure compliance with certain covenants
under the Company's credit facility. Management believes that EBITDA
provides useful information to investors for meaningful comparison to
prior periods and analysis of the critical components of its results
of its operations. Management also believes that EBITDA is a valuable
financial measure to investors because it allows them to monitor the
Company's compliance with certain covenants under its credit facility.
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