National Technical Systems Reports Results for Second Quarter; Six Months.CALABASAS, Calif.--(BUSINESS WIRE)--Sept. 9, 1999-- National Technical Systems Inc. (Nasdaq/NM:NTSC (National TV Standards Committee) The committee that developed the television standards for the U.S, which are also used in Canada, Japan, South Korea and several Central and South American countries. Both the committee and the standard are called "NTSC. ) (NTS NTS National Technical Systems NTS National Trust for Scotland NTS Nevada Test Site NTS NT Server (Microsoft Windows) nts Not the Same NTS National Traffic System (amateur radio) ), a leading provider of compliance testing and evaluation, quality registration and IT consulting and staffing services, Thursday Thursday: see week. announced results for its fiscal year 2000 second quarter and first six months ended July July: see month. 31, 1999. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the announcement by National Technical Systems President 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. Jack Lin Lin , Maya Ying Born 1959. American sculptor and architect whose public works include the Vietnam Veterans Memorial in Washington, D.C. (1982). Noun 1. , during the second quarter and first six months of fiscal year 2000, the company continued its strategic focus on pursuing more profitable contract opportunities wherever possible and investing in the future growth of the business. Gross profit in the second quarter and first six months of this fiscal year improved even though the focus on contract profitability resulted in a modest year-to-year decline in overall revenues in both periods. A portion of the overall revenue decline in this fiscal year's second quarter and first six months was partially offset by the company's increasing sales of its testing services in the telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. and computer markets. In addition to the higher margin contracts for testing telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and network equipment, NTS also saw gross margin improvements in contracts for computer hardware and software testing Software testing is the process used to measure the quality of developed computer software. Usually, quality is constrained to such topics as correctness, completeness, security, but can also include more technical requirements as described under the ISO standard ISO 9126, such . For the second quarter of this fiscal year, total revenues were $22.1 million, compared with total revenues of $23.2 million in last fiscal year's second quarter, with gross profit improving to $6.4 million from $6.3 million in the second quarter of last fiscal year. Principally as a result of investing in additional sales, marketing and other resources, which was partially offset by improvements in gross profit, net income for this fiscal year's second quarter was $685,000, or $0.08 per basic and 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 with $801,000, or $0.10 per basic share, and $0.09 per diluted share in the second quarter of last fiscal year. For the first six months of fiscal year 2000, total revenues were $43.9 million, compared with total revenues of $44.8 million for last fiscal year's first six months, with gross profit improving to $12.7 million from $12.3 million in the first six months of last fiscal year. Net income for this fiscal year's first six months was $1.4 million, or $0.17 per basic and diluted share, compared with $1.8 million, or $0.23 per basic share, and $0.22 per diluted share for the first six months of last fiscal year. Partially offset by improvements in gross profit, the decline in net income for the first six months of this fiscal year was due principally to a 15 percent increase in selling, general and administrative expense as the company continued to invest in the resources and programs needed to grow its higher margin businesses. Executive Vice President William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack C. McGinnis commented, "While total revenues in the first half of this fiscal year showed a slight year-to-year decline due to softness in our aerospace, defense and automotive testing business, the revenue decrease in these sectors was largely offset by $1.7 million in revenues resulting from our strategic focus on the telecommunications and computer hardware and software testing markets. "This compares with virtually no revenue from the telecommunications sector in the first six months of last fiscal year. Not only is our revenue in the telecommunications market increasing, but we also booked approximately $5 million of orders into the 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. during the first half of this year from a number of telecommunications companies See telecom company. , including such market leaders as Lucent Technologies, Harris Harris, Scotland: see Lewis and Harris. Corp., Cabletron Systems and Nortel. "The softness in aerospace, defense and automotive was mostly caused by delays in development progress on some major new projects." The integration of XXCAL into the NTS structure also continued during the second quarter of this fiscal year. The company transferred the XXCAL testing operations into the Engineering and Evaluation Group where the synergies will allow for more complete test coverage and client service, as well as greater administrative efficiency. According to NTS Senior Vice President and CFO See Chief Financial Officer. Lloyd Blonder, the balance sheet for the second quarter ended July 31, 1999, remains strong with cash of $2.3 million, a current ratio of 2.7-to-1, total assets of $52.8 million and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $25.3 million. Business Segment Analysis Revenues in the Engineering & Evaluation Group for the second quarter of this fiscal year were $13 million, compared with $13.2 million last year, due mostly to a $1.5 million decline in automotive and defense testing revenues, which was largely offset by increases in telecommunication and computer hardware testing revenues of $1.3 million. Even though revenue in the Engineering & Evaluation Group declined in the second quarter of this fiscal year, gross profit for the Group increased to $4.0 million, compared with $3.8 million last year. This resulted from a $700,000 increase in gross margin from telecommunication and computer hardware testing, which more than offset the $500,000 decrease in gross margin from automotive and defense testing. Revenues in the IT Solutions Group for this fiscal year's second quarter decreased to $9.0 million from $9.9 million in the same period last fiscal year primarily due to a softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. in temporary personnel placements. Gross profit for the IT Solutions Group was approximately the same in both periods. For the first six months of this fiscal year, Engineering & Evaluation Group revenues were $25.3 million, down from revenues of $26.4 million for the first half of last fiscal year. This decrease was attributable to a $2.8 million decline in automotive and defense testing revenue, which was partially offset by revenue increases of $1.7 million from telecommunications and computer hardware and software testing. Revenues in the IT Solutions Group for the first six months of this fiscal year were up 1 percent on a year-to-year basis to $18.5 million. Gross profit for the Engineering & Evaluation Group in the first six months of this fiscal year was $7.8 million, compared with $7.7 million for the same period last fiscal year. This includes the $1.4 million year-to-year decline in gross profit from automotive and defense testing in the first half of this fiscal year, which was offset by $1.5 million in gross profit derived from telecommunication and computer hardware and software testing. Gross profit for the IT Solutions Group in the first six months of this fiscal year increased to $4.9 million, from $4.7 million for the same period last fiscal year. National Technical Systems is an outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. services company providing organizations in the information technology (IT) and high-technology markets integrated testing, certification, quality registration, systems evaluation and IT consulting and staffing services. For further information about the company, visit its Web site at www.ntscorp.com. For investor relations Investor relations The process by which the corporation communicates with its investors. information visit the Allen Al·len , Edgar 1892-1943. American anatomist who is noted for his studies of hormones and for the discovery (1923) of estrogen. & Caron Web site at www.allencaron.com. The statements in this news release that relate to future plans, events or performance, are 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, including risks associated with uncertainties pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to operating new facilities, customer orders, demand for services and products, development of markets for the company's services and products and other risks identified in the company's SEC filings. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events. -0-
National Technical Systems Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
1999 1998 1999 1998
Revenues $22,063,000 $23,153,000 $43,882,000 $44,822,000
Cost of sales 15,640,000 16,833,000 31,206,000 32,477,000
Gross profit 6,423,000 6,320,000 12,676,000 12,345,000
Selling, general &
administrative
expense 4,996,000 4,245,000 9,663,000 8,402,000
Operating income 1,427,000 2,075,000 3,013,000 3,943,000
Other income (expense)
Interest expense, net (325,000) (315,000) (651,000) (603,000)
Merger costs -- (361,000) -- (361,000)
Other 32,000 19,000 26,000 17,000
Total other expense (293,000) (657,000) (625,000) (947,000)
Income before income
taxes and minority
interest 1,134,000 1,418,000 2,388,000 2,996,000
Income taxes 453,000 520,000 955,000 1,044,000
Income before
minority interest 681,000 898,000 1,433,000 1,952,000
Minority interest 4,000 (2,000) -- (9,000)
Income before
cumulative effect of
change for start-up
costs 685,000 896,000 1,433,000 1,943,000
Cumulative effect of
change for start-up
costs, net of tax -- (95,000) -- (95,000)
Net income $ 685,000 $ 801,000 $ 1,433,000 $ 1,848,000
Basic earnings per
common share
Before cumulative
effect of change
for start-up costs $ 0.08 $ 0.11 $ 0.17 $ 0.24
Cumulative effect of
change for start-up
costs, net of tax -- (0.01) -- (0.01)
Net income (a) $ 0.08 $ 0.10 $ 0.17 $ 0.23
Diluted earnings per
common share
Before cumulative
effect of change
for start-up costs $ 0.08 $ 0.11 $ 0.17 $ 0.23
Cumulative effect
of change for
start-up costs,
net of tax -- (0.01) -- (0.01)
Net income (a) $ 0.08 $ 0.09 $ 0.17 $ 0.22
Weighted average
common shares
outstanding 8,337,000 8,180,000 8,337,000 8,174,000
Dilutive effect of
stock options 261,000 291,000 235,000 369,000
Weighted average
common shares
outstanding,
assuming dilution 8,598,000 8,471,000 8,572,000 8,543,000
(a) Per-share data may not always add up to total for the periods
because each figure is independently calculated.
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