EXHIBIT 99.1
FOR IMMEDIATE RELEASE
| Contact: |
| David Almeida |
| Chief Financial Officer |
| Axsys Technologies, Inc. |
| (860) 257-0200 |
| www.axsys.com |
AXSYS TECHNOLOGIES ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS
• Annual Sales Increase 6.9% Over 2002
• Net Income Of $1.5 Million for the Quarter, $5.0 Million for the Year
• Backlog up 12.1% Over the Prior Year End and 14.1% Over Prior Quarter
ROCKY HILL, CONN. – February 17, 2004 – Axsys Technologies, Inc. (NASDAQ: AXYS), a global leader in the design, manufacture and distribution of precision opto-mechanical components and assemblies for the aerospace, defense and high-performance commercial markets, today announced results for the fourth quarter and year ended 2003.
Sales totaled $21.8 million in the quarter ended December 31, 2003, compared to $20.8 million in the fourth quarter of 2002, an increase of $1.0 million, or 4.8 percent. In the fourth quarter of 2003, Axsys reported net income of $1.5 million, or $0.31 per share, compared to net income of $0.6 million, or $0.12 per share, in the quarter ended December 31, 2002. The net income for the fourth quarter of 2002 included a net loss from discontinued operations of $0.3 million, or ($0.07) per share.
The income tax provision for the fourth quarter of 2003 reflects only state income tax expense due to the utilization of $536,000 of the previously established federal tax valuation allowance. Pre-tax income in the fourth quarter of 2003 was $1.5 million. Pre-tax income from continuing operations in the fourth quarter of 2002 was $1.4 million, which included $0.2 million of income related to the reversal of a restructuring and special charge.
Sales within the Aerospace and Defense Group during the quarter totaled $12.6 million, an increase of 2.6 percent from the fourth quarter of 2002. Sales within the Commercial Products Group totaled $3.2 million, a 13.5 percent decrease from the fourth quarter of 2002. The Distributed Products Group’s sales totaled $6.0 million, representing a 25.4 percent increase from the fourth quarter of 2002.
Gross margin in the fourth quarter of 2003 was 27.1 percent, which compares favorably to a 26.4 percent gross margin reported for the same period in 2002. The gross margin improvement over the prior year is primarily the result of an increase in shipments of higher margin optical products within the Aerospace and Defense Group.
For the twelve-month period ended December 31, 2003, sales totaled $85.1 million, compared to $79.6 million in 2002, an increase of $5.5 million, or 6.9 percent. In 2003, Axsys reported pre-tax income of $5.2 million and net income of $5.0 million, or $1.07 per share. Net income for the year reflects only state income tax expense due to the utilization of $1.8 million of the previously established valuation allowance. For the twelve months ended December 31, 2002, Axsys reported a net loss of $7.1 million dollars or ($1.50) per share. As previously reported, the net loss in 2002 included losses from discontinued operations, restructuring and special charges, an asset impairment charge related to the sale of Teletrac Inc., a significant income tax charge due to the establishment of a valuation allowance and income related to a change in accounting principle (see Schedule I for a pro-forma comparison of 2003 and 2002).
Stephen W. Bershad, Chairman and Chief Executive Officer of Axsys, commented: “We are pleased with the financial performance of the business over the past year. With fourth quarter bookings in excess of $30 million and record backlog of $68.9 million, we have never been better positioned to enter a new year. As we look forward, we expect continued growth in the Aerospace and Defense Group, which is supported by the segment’s backlog of $51.3 million at the end of 2003. We will continue to focus on the national missile defense market, homeland security initiatives, unmanned vehicle applications and new weapons platforms within the Group. In our Commercial Products Group, we anticipate a recovery in the semiconductor market and expect to expand our market position within the health imaging market. We also believe that our fast steering mirror technology will be disruptive to existing galvanometer technology in markets that utilize lasers for material processing. Although it is difficult to accurately forecast future performance due to the impact in timing of any single large order and unforeseen changes in customer requirements, we anticipate that Axsys’ revenue growth in 2004 will be between 5-7%, with operating income growth estimated to be between 18-20%.”
Axsys’ management invites you to listen to our conference call or our live audio webcast on February 18, 2004, at 10 a.m. ET regarding fourth quarter of 2003 financial results. The domestic dial-in number is (888) 433-1657, the international dial-in number is (212) 676-5264 and the access number is 21182014. This call is being webcast by CCBN and can be accessed at Axsys Technologies’ Web site at www.axsys.com.
A replay of the conference call will begin at 1:00 p.m. ET on February 18, 2004, and will be available until February 24, 2004, at 1:00 p.m. ET. The replay can be accessed by dialing (800) 633-8284 or, outside the U.S., (402) 977-9140, with an access number of 21182014. The webcast replay will be available until March 18, 2004.
Axsys Technologies, Inc. is a vertically integrated supplier of precision optical and motion control components and assemblies for high-technology applications, serving the aerospace, defense, semiconductor, graphic arts and health imaging markets. For more information, contact Axsys Technologies, Inc., at www.axsys.com.
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. One can identify these forward-looking statements by the use of the words such as “expect,” “anticipate,” “plan,” “may,” “will,” “estimate” or other similar expressions. Because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual results to differ materially. Important factors, which could cause actual results to differ materially, are described in Axsys’ reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.
1
AXSYS TECHNOLOGIES, INC.
Consolidated Balance Sheets
(Unaudited, in thousands)
|
| December 31, |
| December 31, |
| ||
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
| $ | 5,197 |
| $ | 9,920 |
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Short-term investments |
| 6,983 |
| — |
| ||
Accounts receivable – net |
| 10,197 |
| 10,068 |
| ||
Inventories – net |
| 24,786 |
| 22,080 |
| ||
Income taxes – deferred and current |
| 2,203 |
| 4,077 |
| ||
Other current assets |
| 1,223 |
| 1,046 |
| ||
TOTAL CURRENT ASSETS |
| 50,589 |
| 47,191 |
| ||
PROPERTY, PLANT AND EQUIPMENT – net |
| 11,315 |
| 11,263 |
| ||
EXCESS OF COST OVER NET ASSETS ACQUIRED |
| 3,600 |
| 3,600 |
| ||
OTHER ASSETS |
| 1,341 |
| 318 |
| ||
TOTAL ASSETS |
| $ | 66,845 |
| $ | 62,372 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
| $ | 4,240 |
| $ | 3,108 |
|
Accrued expenses and other liabilities |
| 7,955 |
| 9,285 |
| ||
Deferred income |
| 4,546 |
| 3,115 |
| ||
Current portion of capital lease obligation |
| 423 |
| 1,055 |
| ||
TOTAL CURRENT LIABILITIES |
| 17,164 |
| 16,563 |
| ||
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CAPITAL LEASES, less current portion |
| 568 |
| 1,191 |
| ||
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OTHER LONG-TERM LIABILITIES |
| 5,215 |
| 5,525 |
| ||
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COMMITMENTS AND CONTINGENCIES |
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SHAREHOLDERS’ EQUITY: |
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Common stock |
| 47 |
| 47 |
| ||
Capital in excess of par |
| 39,375 |
| 39,587 |
| ||
Accumulated other comprehensive loss |
| (39 | ) | — |
| ||
Retained earnings |
| 5,750 |
| 752 |
| ||
Treasury stock |
| (1,235 | ) | (1,293 | ) | ||
TOTAL SHAREHOLDERS’ EQUITY |
| 43,898 |
| 39,093 |
| ||
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $ | 66,845 |
| $ | 62,372 |
|
2
AXSYS TECHNOLOGIES, INC.
Consolidated Statements of Operations
(Unaudited, in thousands)
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| For the Three Months Ended |
| For the Twelve Months Ended |
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|
| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Net sales |
| $ | 21,840 |
| $ | 20,822 |
| $ | 85,109 |
| $ | 79,586 |
|
Cost of sales |
| 15,914 |
| 15,329 |
| 62,036 |
| 59,454 |
| ||||
Gross margin |
| 5,926 |
| 5,493 |
| 23,073 |
| 20,132 |
| ||||
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Selling, general and administrative expenses |
| 4,018 |
| 3,856 |
| 15,986 |
| 16,262 |
| ||||
Research, development and engineering expenses |
| 431 |
| 498 |
| 2,059 |
| 2,049 |
| ||||
Restructuring and special charges |
| — |
| (221 | ) | — |
| 1,854 |
| ||||
Operating income (loss) |
| 1,477 |
| 1,360 |
| 5,028 |
| (33 | ) | ||||
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Interest expense |
| (35 | ) | (55 | ) | (172 | ) | (212 | ) | ||||
Interest income |
| 38 |
| 51 |
| 115 |
| 190 |
| ||||
Other income, net |
| 52 |
| 81 |
| 263 |
| 10 |
| ||||
Income (loss) from continuing operations before tax and cumulative effect of change in accounting principle |
| 1,532 |
| 1,437 |
| 5,234 |
| (45 | ) | ||||
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Provision for income taxes |
| (69 | ) | (565 | ) | (236 | ) | (2,969 | ) | ||||
Income (loss) from continuing operations before cumulative effect of change in accounting principle |
| 1,463 |
| 872 |
| 4,998 |
| (3,014 | ) | ||||
Loss from discontinued operations |
| — |
| (316 | ) | — |
| (4,582 | ) | ||||
Cumulative effect of change in accounting principle |
| — |
| — |
| — |
| 535 |
| ||||
Net income (loss) |
| 1,463 |
| $ | 556 |
| $ | 4,998 |
| (7,061 | ) | ||
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BASIC INCOME (LOSS) PER SHARE: |
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Income (loss) from continuing operations before cumulative effect of change in accounting principle |
| $ | 0.31 |
| $ | 0.19 |
| $ | 1.07 |
| $ | (0.64 | ) |
Loss from discontinued operations |
| — |
| (0.07 | ) | — |
| (0.97 | ) | ||||
Cumulative effect of change in accounting principle |
| — |
| — |
| — |
| 0.11 |
| ||||
Total |
| $ | 0.31 |
| $ | 0.12 |
| $ | 1.07 |
| $ | (1.50 | ) |
Weighted average basic common shares outstanding |
| 4,660 |
| 4,667 |
| 4,657 |
| 4,691 |
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DILUTED INCOME (LOSS) PER SHARE: |
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Income (loss) from continuing operations before cumulative effect of change in accounting principle |
| $ | 0.31 |
| $ | 0.19 |
| $ | 1.06 |
| $ | (0.64 | ) |
Loss from discontinued operations |
| — |
| (0.07 | ) | — |
| (0.97 | ) | ||||
Cumulative effect of change in accounting principle |
| — |
| — |
| — |
| 0.11 |
| ||||
Total |
| $ | 0.31 |
| $ | 0.12 |
| $ | 1.06 |
| $ | (1.50 | ) |
Weighted average dilutive common shares outstanding |
| 4,770 |
| 4,680 |
| 4,716 |
| 4,691 |
| ||||
3
SCHEDULE I
AXSYS TECHNOLOGIES, INC.
Pro-Forma Financial Information
Reconciliation to GAAP
(Unaudited, in thousands)
|
| For the Twelve Months Ended |
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|
| 2003 |
| 2002 |
| ||
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Income (loss) from continuing operations before tax and cumulative effect of change in accounting principle |
| $ | 5,234 |
| $ | (45 | ) |
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Add back: |
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Relocation of OEM product lines (1) |
| — |
| 1,053 |
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Sale of Teletrac, Inc. (2) |
| — |
| 1,009 |
| ||
Segment reorganization (3) |
| — |
| 286 |
| ||
Adjusted income from continuing operations before tax and cumulative effect of change in accounting principle |
| 5,234 |
| 2,303 |
| ||
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Provision for income taxes (4) |
| (2,041 | ) | (898 | ) | ||
Pro-forma income from continuing operations before cumulative effect of change in accounting principle |
| $ | 3,193 |
| $ | 1,405 |
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Adjusted basic operating income per share |
| $ | 0.69 |
| $ | 0.30 |
|
Weighted average basic common shares outstanding |
| 4,657 |
| 4,691 |
| ||
(1) During the second quarter of 2002, the Santa Barbara, California facility was closed and several product lines were relocated to the Rochester Hills, Michigan facility. The total charge included $136 in cost of sales, $358 in selling, general and administrative expenses and $559 in restructuring and special charges.
(2) During the second quarter of 2002, Teletrac, Inc. (a wholly owned subsidiary) was sold to Storage Test Solutions in Colorado. All costs were recorded as restructuring and special charges.
(3) During the first quarter of 2002, Axsys reorganized its segments into the Aerospace and Defense Group, Commercial Products Group and Distributed Products Group. All costs were recorded as restructuring and special charges.
(4) The proforma effective tax rate for 2003 and 2002 is 39.0 %.
4