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PERCEPTRONICS ANNOUNCES YEAR END RESULTS

 WOODLAND HILLS, Calif., July 14 /PRNewswire/ -- Perceptronics Inc. (NASDAQ: PERC) announced today that its financial results for fiscal year 1993 showed significantly reduced revenues and substantial losses from contracts, legal and restructuring expenses, product development costs and provision for potential future losses. Although the company is experiencing severe liquidity and cash flow problems, the company remains confident that significant markets exist for its products and services, and that the funds invested to date in its proprietary simulation technology and products can yield improved future revenues and income.
 Losses for the fiscal year ended March 31, 1993, totaled $9,524,000, or
$2.73 per share, on total revenues of $11,442,000. This compares with a net income of $535,000, or $.15 per share, on revenues of $25,457,672 a year ago. For the fiscal 1993 fourth quarter, Perceptronics' loss was $4,671,957, or
$1.34 per share, on total revenues of $1,940,103. A year ago, the company reported fourth quarter net income of $154,476, or $.04 per share, on total
revenues of $7,340,124. At March 31, 1993, firm contract backlog was approximately $3.9 million, and total contract backlog including options was $37.3 million, compared with $12.8 million and $47.2 million a year ago, respectively.
 Following is a summary of the fiscal year 1993 losses:
 Source Amount
 Losses from fixed price contracts $3,900,000
 Interest Expense 900,000
 Legal expenses from Tadiran/Simtech
 litigation/arbitration 700,000
 Expenses from restructuring
 convertible debentures 400,000
 Costs from development and
 marketing of CACE(R) Software 800,000
 Reserve for losses associated with
 completion of PGTS program under
 proposed settlement agreement 2,300,000
 Reserve for losses associated with
 rate adjustments by Government 500,000
 Total $9,500,000
 About half the losses resulted primarily from the need to maintain sufficient personnel and overhead resources to complete several large fixed-price development and production contracts despite the lack of anticipated follow-on work. These contracts have been completed, and the infrastructure has been scaled back accordingly, while still maintaining essential technical and management capabilities.
 Approximately $1.1 million of the losses came from legal and other expenses associated with the Simtech/Tadiran litigation and arbitration and with the restructuring of the $8.3 million convertible debentures into $4 million of new notes and $4.3 million of equity. In the opinion of management, both these undertakings improved the long-term financial situation of the company.
 Approximately $800,000 in losses were associated with development of the CACE(R) software technology and the initial CACE/PM(R) software product. An additional $261,000 has been recorded as deferred software development costs on the balance sheet. CACE/PM was introduced in June 1993 at the Design Automation Conference in Dallas and is now being actively marketed. The company believes that the investment in CACE(R) technology can provide substantial future benefits from product sales, consulting and R&D services, and licensing arrangements.
 Finally, approximately $2,800,000 was provisions for potential future losses associated with the PGTS production subcontract and with the effects of rate adjustment on past Government billings. The company has a pending sale to the U.S. Government under the PGTS program and is attempting to resolve disputed costs under Federal Acquisition Regulations, if the company is successful in resolving these two matters it expects to realize profits of approximately $1,500,000. There is no assurance that the sale will occur or that the company will prevail in the dispute.
 It should be noted that the Report of Independent Auditors contains a "going concern" modification addressing the problems the company is facing in attempting to bring costs in line with a reduced revenue level. The company's ability to continue as a going concern depends upon (a) receiving within 90 days from June 30, 1993, approximately $2 million in cash receipts to provide working capital for the next four months; and (b) achieving in fiscal 1994 an average monthly sales level sufficient to support current overhead costs. If the foregoing is not achieved the company would be required to make additional reductions in staffing and operating costs and possibly to seek protection under a bankruptcy proceeding.
 Dr. Gershon Weltman, chairman and chief executive officer said "We are of course very unhappy with the year's results. We were hit harder than expected by the international defense downturn, and the majority of our losses result directly from the 55 percent decrease in revenues. We adjusted our personnel and support structure accordingly, but were not able to move quickly enough because of obligations to complete ongoing production contracts.
 "At the same time," Weltman said, "a quarter of the year's losses result from CACE(R) software development costs and provision for future losses. Taking these charges in fiscal year 1993 puts the company in a better position to improve margins in fiscal year 1994 if sales of our CACE/PM software, PGTS gunnery trainers and TT150 truck driving simulators begin to meet their
potential. We continue to believe there is a large market for these products as well as for our R&D services."
 Weltman concluded, "It is important also to consider that the financial results now being reported reflect the situation almost three and a half months ago. While our financial situation has not improved, it has not gotten materially worse. We anticipate a first quarter loss of about $500,000 (including a $180,000 provision for income taxes under SFAS No. 109) on revenues of approximately $1.8 million, indicating that our cost-reduction program has markedly reduced our break-even point. While it will be a struggle to maintain operations until the contracts dry spell finally ends, we believe this can be accomplished on the basis of identified near-term prospects -- and that we can regain revenues, income and growth in the future."
 Perceptronics is engaged in research and development and in the manufacture and marketing of computer-based simulation software and systems for commercial and military training and decision support.
 PERCEPTRONICS INC. AND SUBSIDIARIES
 Consolidated Statements of Income
 (Unaudited)
 Year Ended Fourth Quarter Ended
 March 31, March 31,
 1993 1992 1993 1992
 Revenues $11,442,322 $25,457,672 $1,940,103 $7,340,124
 Costs and
 expenses 20,965,872 24,871,087 6,612,060 7,172,648
 Income (loss)
 before income
 taxes and
 extraordinary
 item (9,523,550) 586,585 (4,671,957) 167,476
 Provision for
 income taxes --- 237,000 --- 55,500
 Income loss
 before extra-
 ordinary
 credit (9,523,550) 349,585 (4,671,957) 111,976
 Extraordinary
 credit for
 utilization
 of NOL
 carryforward --- 185,000 --- 42,500
 Net income
 (loss) ($9,523,550) $534,585 (4,671,957) $154,476
 Per share
 amount
 Primary and
 fully diluted:
 Income (loss)
 before extra-
 ordinary item ($2.73) $.10 ($1.34) $.03
 Extraordinary
 item --- .05 --- .01
 Net income
 (loss) ($2.73) $.15 --- $.04
 Average number
 of common and
 common
 equivalent
 shares
 outstanding: 3,489,974 3,632,642 3,493,586 3,532,294
 -0- 7/14/93
 /CONTACT: Gershon Weltman, chairman and CEO of Perceptronics, 818-884-7470/
 (PERC)


CO: Perceptronics Inc. ST: California IN: CPR SU: ERN

EH-BP -- LA024 -- 0248 07/14/93 14:24 EDT
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Date:Jul 14, 1993
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