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RECOGNITION REPORTS IMPROVED THIRD QUARTER RESULTS

 RECOGNITION REPORTS IMPROVED THIRD QUARTER RESULTS
 DALLAS, Aug. 20 /PRNewswire/ -- Recognition Equipment Incorporated


(REI) (NYSE: REC) today reported income before an extraordinary item for its third quarter ended July 31, 1992, of $1,260,000, or 10 cents of earnings per share of common stock, which compares to a prior year third quarter loss of $974,000, or nine cents of loss per share before extraordinary items.
 Additionally, REI reported a third quarter 1992 extraordinary gain of $784,000, or six cents per share as a result of the company not being required to pay to The Prospect Group, Inc. (Prospect) a contingency payment under their 1991 agreement relating to the cancellation of the company's debt to Prospect. In the third quarter of 1991, REI reported extraordinary gains of $1,210,000, or 11 cents per share, as a result of the early extinguishment of the debt to Prospect, as well as $1,890,000, or 18 cents per share, of tax benefits from the utilization of operating loss carry forwards.
 Net income, including extraordinary items, for the quarters ended July 31, 1992 and July 31, 1991 was $2,044,000, or 16 cents per share, and $2,126,000, or 20 cents per share, respectively.
 Revenues for the quarter increased 16 percent to $48,767,000, compared to $41,773,000 for the same period last year. The increase is due primarily to product and customer service revenues resulting from REI's March 30, 1992, purchase of the Lundy Financial Systems Division of TransTechnology Corporation (Lundy).
 Robert Vanourek, REI chief executive officer, commenting on the results said, "Our first complete quarter of operations following our acquisition of Lundy has begun to yield the type of financial results we expected. Despite the worldwide recession, we were able to achieve a good earnings quarter. Our Canadian subsidiary received a significant add-on order from the Canadian government. Our Japanese subsidiary also received a major order from one of their valued customers. And, our Plexus Software Division released several new products and continues to experience rapid growth."
 Income before extraordinary item for the nine month period ended July 31, 1992, was $86,000, or one cent per share of common stock. These earnings included a one-time restructuring charge of $2,257,000, or 18 cents per share, during the second quarter for costs incurred, or anticipated, in order to effect the consolidation of REI and Lundy. Net income for the nine month period, including the $784,000 extraordinary gain, was $870,000, or 7 cents per share of common stock. By comparison, income before extraordinary items for the nine month period ended July 31, 1991, was $2,699,000, or 26 cents per share of common stock. This included a gain of $5,541,000 from the sale of the Wand Products Division during the first quarter of 1991. Net income for the nine month period of 1991 was $5,799,000, or 56 cents per share of common stock.
 Revenues for the nine month period of 1992 increased 21 percent to $141,716,000, compared to $116,246,000 for the corresponding period during 1991. The increase is due primarily to revenues associated with the sale and service of Lundy products and sales of Hybrid transport products.
 At July 31, 1992, the company's total backlog of orders believed to be firm increased 18 percent to $47,839,000, compared to $40,221,000 at July 31, 1991. The backlog increased primarily as a result of major orders received by REI's Canadian and Japanese subsidiaries.
 REI, headquartered in Dallas, manufactures, sells and services automated work processing systems for customers throughout the world.
 RECOGNITION EQUIPMENT INCORPORATED
 Consolidated Statement of Operations
 (Unaudited)
 Three months ended July 31: 1992 1991
 Revenues $ 48,767,000 $ 41,773,000
 Income before income taxes 2,105,000 1,130,000
 Provision for income taxes (845,000) (2,104,000)
 Income (loss) before extraordinary items 1,260,000 (974,000)
 Extraordinary items 784,000 3,100,000
 Net income 2,044,000 2,126,000
 Earnings (loss) per share:
 Income (loss) before extraordinary items $.10 $(.09)
 Extraordinary items .06 .29
 Net income $.16 $.20
 Nine months ended July 31: 1992 1991
 Revenues $141,716,000 $116,246,000
 Income before income taxes 4,194,000 6,392,000
 Provision for income taxes (4,108,000) (3,693,000)
 Income before extraordinary items 86,000 2,699,000
 Extraordinary items 784,000 3,100,000
 Net income 870,000 5,799,000
 Earnings per share(A):
 Income before extraordinary items $.01 $.26
 Extraordinary items .06 .30
 Net income $.07 $.56
 (A) -- The weighted average common shares outstanding for the nine-month periods ended July 31 are: (1992) 12,624,000 and (1991) 10,447,000. The computations of fully diluted earnings per share are anti-dilutive and, therefore, are not reported.
 RECOGNITION EQUIPMENT INCORPORATED AND SUBSIDIARIES
 Consolidated Statement of Operations
 (Unaudited, thousands, except per share)
 Periods ended: Three months Nine months
 July 31 1992 1991 1992 1991
 Revenues:
 Product $ 20,117 $ 20,615 $ 63,974 $ 52,376
 Customer service 28,650 21,158 77,742 63,870
 Total 48,767 41,773 141,716 116,246
 Cost of revenues:
 Product 10,626 11,013 36,155 28,146
 Customer service 20,205 15,412 55,455 46,432
 Total 30,831 26,425 91,610 74,578
 Gross profit 17,936 15,348 50,106 41,668
 Operating expenses:
 Research & development 3,336 2,684 7,893 7,904
 Marketing 7,637 6,434 20,445 18,945
 General & administrative 3,123 2,519 9,855 8,733
 Restructuring -- 975 2,257 (4,456)
 Other operating 618 813 2,722 2,194
 Operating income 3,222 1,923 6,934 8,348
 Interest income 753 1,466 3,129 4,737
 Interest expense,
 related party -- (306) -- (1,090)
 Interest expense, other (1,469) (1,214) (3,960) (3,677)
 Foreign exchange gains
 (losses), net 210 (399) (264) (738)
 Other expense (611) (340) (1,645) (1,188)
 Income before income
 taxes 2,105 1,130 4,194 6,392
 Provision for income taxes (845) (2,104) (4,108) (3,693)
 Income (loss) before
 extraordinary items 1,260 (974) 86 2,699
 Extraordinary items:
 Income tax benefit
 from operating
 losses carried
 forward -- 1,890 -- 1,890
 Gain on early
 extinguishment of
 debt, net of income
 taxes 784 1,210 784 1,210
 Total 784 3,100 784 3,100
 Net income $ 2,044 $ 2,126 $ 870 $ 5,799
 Weighted average
 shares outstanding 12,556 10,866 12,624 10,447
 Earnings (loss) per
 share:
 Income (loss) before
 extraordinary items $.10 $(.09) $.01 $.26
 Extraordinary items .06 .29 .06 .30
 Net income $.16 $.20 $.07 $.56
 -0- 8/20/92
 /CONTACT: Larry H. Lattig of Recognition Equipment, 214-579-6314/
 (REC) CO: Recognition Equipment Incorporated ST: Texas IN: SU: ERN


TS -- NY047 -- 1726 08/20/92 12:59 EDT
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Date:Aug 20, 1992
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