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STAR TECHNOLOGIES REPORTS THIRD QUARTER RESULTS; COMPANY IMPLEMENTS COST CONTROL ACTIONS TO SAVE $2 MILLION A YEAR

           STAR TECHNOLOGIES REPORTS THIRD QUARTER RESULTS;


COMPANY IMPLEMENTS COST CONTROL ACTIONS TO SAVE $2 MILLION A YEAR
    STERLING, Va., Jan. 21 /PRNewswire/ -- Star Technologies, Inc. (NASDAQ: STRR) today reported revenue of $7,323,000 for the third quarter ended Dec. 31, 1991, an 8 percent decrease compared with the $7,997,000 reported for the same prior year quarter.  The company reported a net loss of $960,000, or a loss of 8 cents a share after deducting dividends on preferred stock, compared with net income of $85,000, or a loss of 2 cents a share after preferred dividends, for the same quarter a year ago.
    For the nine months, Star reported revenue of $26.1 million, a 6 percent increase over the $24.6 million reported for the same prior- year period.  The company reported a net loss of $389,000, or a loss of 10 cents a share after preferred dividends, compared with a net loss of $140,000, or a loss of 7 cents a share after preferred dividends, for the first nine months of last year.
    Robert C. Compton, Star's chairman, president and CEO, attributed the operating loss for the quarter to delayed receipt of certain significant contracts for its Graphicon(TM) 2000 (G2000) Image Generator, and to lower than expected revenue levels for Star's computational products.
    "Despite a slowdown in the high-performance computing market, we are encouraged by the market acceptance of Star's new G2000/STX Image Generator, which debuted in December.  The selection of the G2000/STX for prestigious simulation programs for both the U.S. Navy and the U.S. Army marks the Graphicon product's technical acceptance for large defense contracts," Compton said.  "In addition, we have taken further steps in our cost containment program to reduce operating expenses by more than $2 million."
    One of the key contracts which was delayed beyond the end of the quarter has since been awarded to Star.  In January, Star was selected for an approximate $800,000 contract to supply the G2000 image generator for the Army's Advanced Distributed Simulation Technology program. During the quarter, the G2000 was also selected for a large Navy helicopter simulator upgrade program.  The value of this contract to Star could approximate $15 million.  The award has been protested, but is expected to be resolved during the current quarter.
    Revenue for the quarter was also impacted by lower sales to GE Medical Systems (GEMS) under the company's five-year sole-source OEM contract, which runs through 1995.  Compared with the third quarter of last year, sales to GEMS declined as a result of reduced production requirements by GEMS.  In addition, computational product sales were lower than anticipated as a result of the weak economic environment.
    In response to the current economic conditions, the company implemented aggressive cost control actions during the third quarter to better balance operating expenses with current revenue levels.  These actions, which will result in annual savings of more than $2 million, included a workforce reduction, and a significant reduction of property lease expenses, among other actions.
    The company also announced that it has extended its current $4.5 million revolving line of credit through December 1995, subject to annual renewals.
    Star Technologies, Inc. is a manufacturer of high-performance computing products, including image generators, array processors and compute servers.  Star is headquartered at 515 Shaw Road, Sterling, Va. 22170.  Telephone: 703-689-4400.
    Graphicon is a trademark of Star Technologies, Inc.
                    STAR TECHNOLOGIES, INC.
                     Comparative Results
             (In thousands, except per share data)
                         (Unaudited)
     Periods ended:             Three months          Nine months
     Dec. 31;               1991        1990       1991       1990
    Revenue               $7,323      $7,997     $26,132    $24,609
    Net income (loss)       (960)         85        (389)      (140)
    Primary loss per
     common share           (.08)       (.02)       (.10)      (.07)
    Average common
     shares               18,329      16,681      18,054     16,660
    NOTE:  In May 1990, Star completed a $14.75 million private placement of preferred stock.  The dividends on those preferred shares are deducted from net income before calculating earnings per share.
    -0-           1/21/92
    /CONTACT:  Richard Gallagher or Helen Ryan of Star Technologies, 703-689-4400; or Lois Levin or Anne Lampert of Makovsky & Co., 212-532-6300, for Star Technologies/
    (STRR) CO:  Star Technologies, Inc. ST:  Virginia IN:  CPR SU:  ERN SH-FC -- NY100 -- 1986 01/21/92 15:40 EST
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Date:Jan 21, 1992
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