Key Technology Reduces Loss On Lower Q1 Revenues; Domestic Orders Up 29% and Credit Facility Refinanced.Business Editors WALLA WALLA Walla Walla (wŏl`ə wŏl`ə), city (1990 pop. 26,478), seat of Walla Walla co., SE Wash., at the junction of the Walla Walla River and Mill Creek, near the Oregon line; inc. 1862. , Wash.--(BUSINESS WIRE)--Jan. 24, 2002 Key Technology, Inc. (Nasdaq:KTEC KTEC Kansas Technology Enterprise Corporation ) today announced sales and operating results for the first fiscal quarter of 2002 ended December 31, 2001. Sales for the three-month period ended December 31, 2001 totaled $13.9 million, compared with $18.8 million in the same quarter last year. The Company reported a net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $323,000, or $0.11 per common share, for the most recent quarter compared to a net loss from continuing operations of $391,000, or $0.13 per common share, in the corresponding quarter last year. The net loss reported from all operations for the quarter ended December 31, 2001 was $284,000, or $0.10 per common share, compared to a net loss of $290,000, or $0.11 per common share, for the same quarter last year. Except where noted, sales, expenses and operating results for both periods exclude the activities of a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. , Ventek, Inc., the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of which was completed in the quarter ended December 2001. Commenting on the quarterly results, Thomas C. Madsen, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. said, "As previously announced, we expected to report a loss for the first quarter of fiscal 2002. Although we incurred a loss, we were pleased with the improvements in both margins and cost management." The Company's backlog at the close of the December 31, 2001 quarter totaled $15.3 million compared to $12.2 million at the close of the same period last year, a year-over-year increase of 25%. New orders received during the first quarter totaled $16.7 million compared to $16.8 million for the same quarter last year. Orders from customers in 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. for the quarter ended December 31, 2001 increased by 29% compared to the same quarter last year. Madsen commented, "While the domestic fruit and vegetable markets continue to experience difficult economic conditions, we are hopeful that reductions in inventory positions and increased prices for our customers' products in certain key sectors will lead to increased capital equipment spending. We also anticipate continued strong orders for tobacco inspection systems in the China and Asia-Pacific markets." Gross profit for the first quarter of fiscal 2002 was $5.4 million compared to $7.2 million in the corresponding period last year. As a percentage of sales, gross profit improved to 39% compared to 38.1% in the first quarter of fiscal 2001, due to decreased overhead resulting from the move of manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. of SRC (SouRCe) Contrast with DST, which is an abbreviation of "destination." Vision products to Walla Walla in the second quarter of fiscal 2001 and the streamlining of the service organization. In addition, the parts and service business experienced significant improvements in margins over the same quarter last year to a level which the Company expects to continue throughout this fiscal year. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the quarter ended December 31, 2001 decreased 25% to $5.7 million compared to $7.6 million in the same quarter last year. During the second half of fiscal 2001 and the first quarter of fiscal 2002, Company management implemented a number of business adjustments to respond to a changing economic climate. The reductions in programs and workforce resulted in significant savings in all areas of the Company's operating expenses. This reduced level of spending is expected to continue in future quarters. Additionally, amortization expenses decreased as a result of the Company's early adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142, Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , which allows for the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of amortization on goodwill and certain other intangible assets. Key Technology also announced that it has completed the refinancing Refinancing An extension and/or increase in amount of existing debt. and 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). of its domestic credit facility with its principal lender. The credit accommodation includes a term loan and a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility that allows for borrowing up to $16.5 million. Additionally, the Company has retained a financial advisor to evaluate long-term financing Long-term financing Liabilities repayable in more than one year plus equity. and alternative strategies related to the Series B Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". issued in connection with the AMVC AMVC Atrophia Maculosa Varioliformis Cutis, Familial AMVC Archief en Musem voor het Vlaamse Cultuurleven (Dutch) AMVC Adaptive Multi Variable Controller merger, which becomes redeemable Redeemable Eligible for redemption under the terms of an indenture. by holders in July 2002. "In order to achieve our financial targets for fiscal 2002, we are focused on excellence in serving our customers, controlling expenses and managing our assets. We feel that we have made the necessary adjustments over the past year to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. our business with the opportunities available in the current business environment," said Madsen. The Company's conference call for the December quarter can be heard live on the Internet at 1:30 p.m. Pacific Time on Thursday, January 24th. To access the call, go to www.keyww.com/investor.cfm at least fifteen minutes prior to the call to download and install any necessary audio software. Key Technology, Inc., headquartered in Walla Walla, Washington Walla Walla is both the county seat of Walla Walla County, Washington, and the county's largest city. As of the 2000 census, the city population was 29,686GR6. , is a worldwide leader in the design and manufacture of process automation systems for the food processing Food processing is the set of methods and techniques used to transform raw ingredients into food for consumption by humans or animals. The food processing industry utilises these processes. and industrial markets. The Company's products integrate electro-optical inspection and sorting, specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. conveying and product preparation equipment, which allow processors to improve quality, increase yield and reduce cost. Key has manufacturing facilities in Washington, Oregon and the Netherlands, and worldwide sales and service coverage. This release contains 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 "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions 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. These statements are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements in this release address future financial and operating results. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: -- the ability of the Company to access new capital required to finance its potential preferred stock redemption obligation in July 2002; -- the effect of adverse economic conditions in markets served by the Company and the financial capacity of customers to purchase capital equipment; -- the ability of new products to compete successfully in either existing or new markets; -- increased competition and its effects on pricing and customer capital spending; -- risks involved in expanding international operations and sales; and -- risks associated with adverse fluctuations in foreign currency exchange rates. For a detailed discussion of these and other cautionary statements, please refer to the Company's filings with the Securities and Exchange Commission, particularly Exhibit 99.1 "Forward-Looking Statement Risk and Uncertainty Factors" to the Company's Annual Report on 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. for the fiscal year ended September 30, 2001 and the Risk Factors section of the Company's Registration Statement on Form S-4, Post-Effective Amendment No. 3, filed August 17, 2001. Note: News releases and other information on Key Technology, Inc. can be accessed at www.keyww.com on the Internet. -TABLES FOLLOW-
Key Technology, Inc. and Subsidiaries
Statement of Selected Operating Information
(Unaudited, in thousands, except per share data)
Three Months
Ended December 31,
-------------------------
2001 2000
------------ ------------
Net sales(1) $ 13,945 $ 18,767
Gross profit $ 5,445 $ 7,156
Operating expenses
Selling and marketing $ 2,606 $ 3,695
Research and development $ 1,199 $ 1,541
General and administrative $ 1,603 $ 1,864
Amortization of intangibles $ 331 $ 514
-------- --------
Total operating expenses $ 5,739 $ 7,614
Loss from operations $ (294) $ (458)
Loss from continuing operations
before income taxes $ (559) $ (610)
Net loss from continuing operations $ (323) $ (391)
Net earnings from discontinued
operation (net of tax)(2) $ 39 $ 101
Net loss $ (284) $ (290)
Net loss available to
common shareholders(3) $ (488) $ (525)
Net loss from continuing
operations per
common share - basic $ (0.11) $ (0.13)
- diluted(4) $ (0.11) $ (0.13)
Net earnings from
discontinued operations
per common share - basic $ .01 $ .02
- diluted(4) $ .01 $ .02
Net loss per common share
- basic $ (0.10) $ (0.11)
- diluted(4) $ (0.10) $ (0.11)
Weighted average common
and common equivalent
shares outstanding - basic 4,751 4,734
- diluted(4) 4,751 4,734
(1) Operating information (including net sales) for prior periods
has been restated to reflect the adoption of Emerging Issues Task
Force Issue No. 00-10, Accounting for Shipping and Handling Fees and
Costs. This change had no effect on reported net earnings (loss) or
earnings (loss) per share.
(2) Due to the sale of the Company's former subsidiary in the
forest products industry, Ventek, Inc., the Company has restated the
financial results, as required by generally accepted accounting
principles in the United States, for the reported periods to segregate
the results of operations of Ventek as a discontinued operation.
(3) Includes a charge for amortization of the discount on
mandatorily redeemable preferred stock of $204 and $235 for the
three-month periods ended December 31, 2001 and 2000, respectively.
(4) The weighted average diluted shares for the three-month period
ended December 31, 2001 includes only common stock equivalents that
are not anti-dilutive to reported EPS. Total diluted shares
outstanding for the three-month period ended December 31, 2001 is
5,597.
Key Technology, Inc. and Subsidiaries
Selected Balance Sheet Information
(Unaudited, in thousands)
Dec. 31, Sept. 30,
2001 2001
--------- ---------
(in thousands)
Cash and cash equivalents $ 3,462 $ 738
Trade accounts receivable, net 10,986 13,072
Inventories 14,911 14,461
Assets held for sale --- 8,460
Total current assets 31,951 39,439
Property, plant and equipment, net 10,870 11,436
Goodwill and other intangibles, net 18,804 18,482
Total assets 67,156 74,841
Liabilities held for sale --- 2,436
Total current liabilities 23,324 28,717
Long-term debt, less current portion 6,471 6,581
Mandatorily redeemable preferred
stock and warrants 11,805 13,531
Shareholders' equity 25,263 25,711
--30--DS/CER/se*
CONTACT: Key Technology, Inc.
Ted R. Sharp, 509/529-2161
KEYWORD: WASHINGTON
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS FOODS/BEVERAGES
MANUFACTURING CONFERENCE CALLS EARNINGS
SOURCE: Key Technology, Inc.
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