Exhibit 99.1
12701 Fair Lakes Circle, Fairfax, VA 22033
703.322.0881 Fax 703.322.0885
www.argonst.com
NEWS RELEASE
For Immediate ReleaseArgon ST, Inc. Announces Q2 Results
FAIRFAX, VA, May 11, 2005 / Business Wire / — Argon ST, Inc. (NASDAQ: STST), today announced revenues and earnings for its second quarter ended April 3, 2005.
HISTORICAL RESULTS OF OPERATIONS
Revenues for the three months ended April 3, 2005 increased $33,269,000 to $55,952,000 up 147%, compared to $22,683,000 for the prior year quarter. Revenues for the six months ended April 3, 2005 increased $62,486,000 to $112,462,000 up 125%, compared to $49,976,000 for the prior year period.
Net income for the three months ended April 3, 2005 was $4,944,000 or $0.24 per diluted share, an increase of 154% compared to $1,949,000 or $0.14 per diluted share for the prior year quarter. For the six months ended April 3, 2005 net income was $9,864,000 or $0.48 per diluted share, an increase of 190% compared to the prior year period of $3,406,000 or $0.25 per diluted share.
CEO’s comments
Terry Collins, President and CEO of Argon ST stated, “Our second quarter and six month performance levels reflect our strong and growing position in the Intelligence, Surveillance, and Reconnaissance (ISR) markets. New orders in the second quarter afforded a respectable second quarter increase in backlog of approximately $5.4M or a book to bill ratio of 1.1 for the second quarter. The increase in backlog was the result of a significant number of new contractual actions and does not include our recently announced award of the Aerial Common Sensor (ACS) contract for $73.5M as this booking was a third quarter event.”
Financial Highlights
| n | Revenue for the second quarter increased 147% over the prior year quarter to $55,952,000 |
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| n | Revenue for the six months period increased 125% over the prior year period to $112,462,000 |
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| n | Net Income for the second quarter of $4,944,000 or $0.24 per diluted share up 154% from the prior year quarter |
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| n | Net Income for the six month period of $9,864,000 or $0.48 per diluted share up 190% from the prior year period |
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| n | Funded and unfunded backlog for the second quarter was $225,262,000 an increase of 19% from the prior year second quarter funded and unfunded backlog of $188,706,000 |
ARGON ST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
| | | | | | | | | |
| | | April 3, 2005 | | | September 30, 2004 | |
| ASSETS | | | | | | | | |
| CURRENT ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 32,221,000 | | | $ | 29,732,000 | |
| Accounts receivable, net | | | 64,794,000 | | | | 59,716,000 | |
| Inventory | | | 1,921,000 | | | | 1,574,000 | |
| Deferred income tax asset | | | 5,008,000 | | | | 4,822,000 | |
| Prepaids and other | | | 1,482,000 | | | | 1,288,000 | |
| | | | | | | |
| TOTAL CURRENT ASSETS | | | 105,426,000 | | | | 97,132,000 | |
| Property, equipment and software, net | | | 14,668,000 | | | | 13,949,000 | |
| Goodwill | | | 107,776,000 | | | | 107,776,000 | |
| Intangibles, net | | | 1,704,000 | | | | 2,190,000 | |
| Other assets | | | 686,000 | | | | 694,000 | |
| | | | | | | |
| TOTAL ASSETS | | $ | 230,260,000 | | | $ | 221,741,000 | |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 12,017,000 | | | $ | 12,727,000 | |
| Accrued salaries and related expenses | | | 9,775,000 | | | | 10,606,000 | |
| Deferred revenue | | | 27,326,000 | | | | 28,336,000 | |
| Notes payable – current portion | | | 170,000 | | | | 226,000 | |
| Income taxes payable | | | 839,000 | | | | 5,810,000 | |
| Deferred rent | | | 61,000 | | | | 200,000 | |
| | | | | | | |
| TOTAL CURRENT LIABILITIES | | | 50,188,000 | | | | 57,905,000 | |
| Deferred income tax liability, long term | | | 1,591,000 | | | | 1,901,000 | |
| Notes payable, net of current portion | | | — | | | | 56,000 | |
| Deferred rent | | | 1,382,000 | | | | 954,000 | |
| Commitments and contingencies | | | — | | | | — | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common Stock: | | | | | | | | |
$.01 Par Value, 100,000,000 shares authorized
19,928,214 and 19,468,734 share issued at
April 3, 2005 and September 30, 2004 | | | 199,000 | | | | 195,000 | |
| Additional paid-in capital | | | 155,349,000 | | | | 149,043,000 | |
| Treasury stock at cost, 126,245 shares | | | (534,000 | ) | | | (534,000 | ) |
| Retained earnings | | | 22,085,000 | | | | 12,221,000 | |
| | | | | | | |
| TOTAL STOCKHOLDERS’ EQUITY | | $ | 177,099,000 | | | $ | 160,925,000 | |
| | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 230,260,000 | | | $ | 221,741,000 | |
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ARGON ST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
| | | | | | | | | | | | | | | | | |
| | | Second Quarter Ended | | | Six Months Ended | |
| | | April 3, 2005 | | | March 28, 2004 | | | April 3, 2005 | | | March 28, 2004 | |
| CONTRACT REVENUES | | $ | 55,952,000 | | | $ | 22,683,000 | | | $ | 112,462,000 | | | $ | 49,976,000 | |
| COST OF REVENUES | | | 43,641,000 | | | | 17,887,000 | | | | 88,979,000 | | | | 41,146,000 | |
| GENERAL AND ADMINISTRATIVE EXPENSES | | | 4,496,000 | | | | 1,744,000 | | | | 7,831,000 | | | | 3,478,000 | |
| | | | | | | | | | | | | |
| INCOME FROM OPERATIONS | | | 7,815,000 | | | | 3,052,000 | | | | 15,652,000 | | | | 5,352,000 | |
| OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | |
| Interest income | | | 205,000 | | | | 42,000 | | | | 345,000 | | | | 50,000 | |
| Interest expense | | | (7,000 | ) | | | (4,000 | ) | | | (9,000 | ) | | | (4,000 | ) |
| | | | | | | | | | | | | |
| | | | 198,000 | | | | 38,000 | | | | 336,000 | | | | 46,000 | |
| INCOME BEFORE INCOME TAXES | | | 8,013,000 | | | | 3,090,000 | | | | 15,988,000 | | | | 5,398,000 | |
| PROVISION FOR INCOME TAXES | | | 3,069,000 | | | | 1,141,000 | | | | 6,124,000 | | | | 1,992,000 | |
| | | | | | | | | | | | | |
| NET INCOME | | $ | 4,944,000 | | | $ | 1,949,000 | | | $ | 9,864,000 | | | $ | 3,406,000 | |
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| PER SHARE AMOUNT | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.25 | | | $ | 0.16 | | | $ | 0.50 | | | $ | 0.28 | |
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| Diluted earnings per share | | $ | 0.24 | | | $ | 0.14 | | | $ | 0.48 | | | $ | 0.25 | |
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| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | | | | | |
| Basic average shares outstanding | | | 19,751,000 | | | | 12,214,000 | | | | 19,584,000 | | | | 12,241,000 | |
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| Diluted average shares outstanding | | | 20,676,000 | | | | 13,328,000 | | | | 20,537,000 | | | | 13,322,000 | |
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On September 29, 2004, a wholly-owned subsidiary of Sensytech, Inc. (“Sensytech”) merged with and into Argon Engineering Associates, Inc. (“Argon Engineering”) in a merger whereby each outstanding share of Argon Engineering common stock was exchanged for two shares of Sensytech common stock. As a result of the merger, the former Argon Engineering stockholders acquired approximately 65.6% of the issued and outstanding shares of Sensytech common stock. In accordance with Statement of Financial Accounting Standards No. 141 “Business Combinations”, the merger was accounted for as a reverse acquisition, whereby Argon Engineering was deemed to have acquired Sensytech for financial reporting purposes. Consistent with the reverse acquisition accounting treatment, the historical financial statements presented for periods prior to the acquisition date are the statements of Argon Engineering except for stockholders’ equity which has been retroactively restated for the equivalent number of shares of the legal acquirer.
The following unaudited condensed pro forma results of operations reflect the pro forma combination of Argon Engineering and Sensytech as if the combination had occurred at the beginning of the period presented, compared with the actual results of operations of Argon Engineering for the same period.
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| | | Second Quarter Ended | | | Six Months Ended | |
| | | March 28, 2004 | | | March 28, 2004 | |
| | | Historical | | | Pro forma | | | Historical | | | Pro forma | |
| Revenue | | $ | 22,683,000 | | | $ | 36,702,000 | | | $ | 49,976,000 | | | $ | 76,660,000 | |
| Income from operations | | | 3,052,000 | | | | 4,341,000 | | | | 5,352,000 | | | | 7,741,000 | |
| Net income | | | 1,949,000 | | | | 2,759,000 | | | | 3,406,000 | | | | 4,868,000 | |
| Basic earnings per share | | $ | 0.16 | | | $ | 0.15 | | | $ | 0.28 | | | $ | 0.26 | |
| Diluted earnings per share | | $ | 0.14 | | | $ | 0.14 | | | $ | 0.25 | | | $ | 0.24 | |
| Basic wt average shares | | | 12,214,000 | | | | 18,749,000 | | | | 12,241,000 | | | | 18,758,000 | |
| Diluted wt average shares | | | 13,328,000 | | | | 20,025,000 | | | | 13,322,000 | | | | 20,006,000 | |
Pro forma revenues attributable to Sensytech were $14,019,000 and $26,684,000, respectively for the second quarter and six months ended March 28, 2004. Pro forma income from operations attributable to Sensytech was $1,647,000 and $3,105,000, respectively, for the second quarter and six months ended March 28, 2004. Pro forma net income attributable to Sensytech was $1,031,000 and $1,904,000, respectively, for the second quarter and six months ended March 28, 2004. Pro forma depreciation and amortization on the write up of tangible and intangible assets, in accordance with SFAS 141, was $358,000 and $716,000, respectively, for the second quarter and six months ended March 28, 2004 and the after tax effect was $221,000 and $442,000, respectively.
About Argon ST, Inc.
Argon ST designs, develops, and manufacturers systems and sensors for the Command and Control Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) markets including SIGINT (Signals Intelligence), ESM (Electronic Support Measures), EW (Electronic Warfare), imaging, and acoustic systems serving domestic and worldwide markets.
Statements in this press release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. The Company wishes to caution readers that certain factors can cause the Company’s actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. The Company undertakes no obligation and does not intend to update, revise or otherwise publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances.
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| CONTACT: | Donald F. Fultz, Chief Financial Officer
don.fultz@argonst.com
URL:www.argonst.com
703.995.5695 |
