Exhibit 99.1
12701 Fair Lakes Circle, Fairfax, VA 22033
703.322.0881 Fax 703.322.0885
www.argonst.com
NEWS RELEASE
For Immediate Release
Argon ST, Inc. Announces Record Q4 and Fiscal Year 2005 Results
FAIRFAX, VA, December 14, 2005 / Business Wire / — Argon ST, Inc. (NASDAQ: STST), today announced revenues and earnings for its fourth quarter and fiscal year ended September 30, 2005.
Revenues for the fourth quarter ended September 30, 2005 increased $43,523,000 or 108% to $83,681,000 compared to $40,158,000 for the prior year quarter. Revenue for the fiscal year ended September 30, 2005 increased $142,570,000 or 110% to $271,754,000, compared to $129,184,000 for the prior fiscal year.
Net income for the fourth quarter ended September 30, 2005 was $6,062,000, or $0.29 per diluted share, an increase of 95% compared to net income of $3,116,000, or $0.23 per diluted share, for the prior year fourth quarter. For the fiscal year ended September 30, 2005, net income increased 119% to $21,781,000, or $1.06 per diluted share, compared to prior year net income of $9,949,000, or $0.74 per diluted share.
Terry Collins, Chairman, CEO and President, stated “Both our fourth quarter and our fiscal year 2005 results reflect record sales, profit, and earnings per share. Even with our record sales for the quarter, we continued to increase backlog and the subsequent acquisition of Radix Technologies on October 1, 2005 will add to our momentum going into 2006. Although the outcome of the Army’s stop-work order on the Aerial Common Sensor program is still uncertain, we reiterate guidance issued November 1, 2005 that we expect fiscal year 2006 revenue will be in the range of $330 million to $345 million, with operating income estimated to be in the range of $42 million to $45 million. In fiscal year 2005, our employees from the Sensytech/Argon Engineering merger took on significant integration challenges in many important facets of our business while we were simultaneously addressing Sarbanes-Oxley internal controls requirements. During this time, we were able to grow our company by over 100% (over 43% on a pro forma basis). I am very proud of the team’s accomplishment as we look forward to additional growth in 2006.”
Financial Highlights
| | n | | Revenue for the fourth quarter increased 108% over the prior year quarter to $83,681,000 |
| | n | | Revenue for the fiscal year increased 110% over the prior year to $271,754,000 |
| |
| | n | | Net Income for the fourth quarter of $6,062,000, or $0.29 per diluted share, up $0.06 per share, from the prior year quarter |
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| | n | | Net Income for the year of $21,781,000, or $1.06 per diluted share, up $0.32 per diluted share, from the prior year |
About Argon ST, Inc.
Argon ST designs, develops, and manufactures 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.
ARGON ST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | |
| | | September 30, | |
| ASSETS | | 2005 | | | 2004 | |
| CURRENT ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 4,064,000 | | | $ | 29,732,000 | |
| Accounts receivable, net | | | 103,577,000 | | | | 59,716,000 | |
| Inventory | | | 1,166,000 | | | | 1,574,000 | |
| Income taxes receivable | | | 2,464,000 | | | | — | |
| Deferred income tax asset | | | 1,742,000 | | | | 4,822,000 | |
| Prepaids and other | | | 888,000 | | | | 1,288,000 | |
| | | | | | | |
| TOTAL CURRENT ASSETS | | | 113,901,000 | | | | 97,132,000 | |
| Property, equipment and software, net | | | 14,896,000 | | | | 13,949,000 | |
| Advances and cash held in escrow | | | 10,900,000 | | | | — | |
| Goodwill | | | 107,956,000 | | | | 107,776,000 | |
| Intangibles, net | | | 1,219,000 | | | | 2,190,000 | |
| Other assets | | | 962,000 | | | | 694,000 | |
| | | | | | | |
| TOTAL ASSETS | | $ | 249,834,000 | | | $ | 221,741,000 | |
| | | | | | | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDER’S EQUITY | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Line of Credit | | $ | 11,000,000 | | | $ | — | |
| Accounts payable and accrued expenses | | | 26,857,000 | | | | 12,727,000 | |
| Accrued salaries and related expenses | | | 8,848,000 | | | | 10,606,000 | |
| Deferred revenue | | | 7,139,000 | | | | 28,336,000 | |
| Notes payable — current portion | | | 56,000 | | | | 226,000 | |
| Capital lease obligations — current | | | 19,000 | | | | — | |
| Income taxes payable | | | — | | | | 5,810,000 | |
| Deferred rent | | | 61,000 | | | | 200,000 | |
| | | | | | | |
| TOTAL CURRENT LIABILITIES | | | 53,980,000 | | | | 57,905,000 | |
| Deferred income tax liability, long term | | | 1,979,000 | | | | 1,901,000 | |
| Notes payable, net of current portion | | | — | | | | 56,000 | |
| Deferred rent | | | 1,799,000 | | | | 954,000 | |
| Capital lease obligations, net of current | | | 63,000 | | | | — | |
| Commitments and contingencies | | | — | | | | — | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock: | | | | | | | | |
| $.01 Par Value, 100,000,000 and 25,0000 shares authorized, 20,153,878 and 19,468,734 shares issued at September 30, 2005 and 2004 | | | 202,000 | | | | 195,000 | |
| Additional paid in capital | | | 158,458,000 | | | | 149,043,000 | |
| Treasury stock at cost, 126,245 shares | | | (534,000 | ) | | | (534,000 | ) |
| Retained earnings | | | 34,002,000 | | | | 12,221,000 | |
| Accumulated other comprehensive loss | | | (115,000 | ) | | | — | |
| | | | | | | |
| TOTAL STOCKHOLDERS’ EQUITY | | $ | 192,013,000 | | | $ | 160,925,000 | |
| | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 249,834,000 | | | $ | 221,741,000 | |
| | | | | | | |
ARGON ST, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
| | | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | | | For the Year Ended | |
| | | September 30, | | | September 30, | |
| | | 2005 | | | 2004 | | | 2005 | | | 2004 | |
| CONTRACT REVENUES | | $ | 83,681,000 | | | $ | 40,158,000 | | | $ | 271,754,000 | | | $ | 129,184,000 | |
| | | | | | | | | | | | | | | | | |
| COST OF REVENUES | | | 71,258,000 | | | | 33,977,000 | | | | 222,792,000 | | | | 107,307,000 | |
| GENERAL AND ADMINISTRATIVE EXPENSES | | | 3,273,000 | | | | 958,000 | | | | 14,578,000 | | | | 5,905,000 | |
| | | | | | | | | | | | | |
| INCOME FROM OPERATIONS | | | 9,150,000 | | | | 5,223,000 | | | | 34,384,000 | | | | 15,972,000 | |
| OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | |
| Interest income | | | 173,000 | | | | 77,000 | | | | 711,000 | | | | 167,000 | |
| Interest expense | | | (3,000 | ) | | | (3,000 | ) | | | (13,000 | ) | | | (13,000 | ) |
| | | | | | | | | | | | | |
| | | $ | 170,000 | | | $ | 74,000 | | | $ | 698,000 | | | $ | 154,000 | |
| | | | | | | | | | | | | | | | | |
| INCOME BEFORE INCOME TAXES | | | 9,320,000 | | | | 5,297,000 | | | | 35,082,000 | | | | 16,126,000 | |
| PROVISION FOR INCOME TAXES | | | 3,258,000 | | | | 2,181,000 | | | | 13,301,000 | | | | 6,177,000 | |
| | | | | | | | | | | | | |
| NET INCOME | | $ | 6,062,000 | | | $ | 3,116,000 | | | $ | 21,781,000 | | | $ | 9,949,000 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| EARNINGS PER SHARE | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.30 | | | $ | 0.25 | | | $ | 1.10 | | | $ | 0.81 | |
| Diluted | | $ | 0.29 | | | $ | 0.23 | | | $ | 1.06 | | | $ | 0.74 | |
| | | | | | | | | | | | | | | | | |
| WEIGHTED- AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | | | | | |
| Basic | | | 19,966,072 | | | | 12,522,871 | | | | 19,738,367 | | | | 12,308,412 | |
| Diluted | | | 20,825,447 | | | | 13,479,803 | | | | 20,616,024 | | | | 13,366,916 | |
Pro forma Financial Results of Operations
The following unaudited condensed combined pro forma results of operations reflect the pro forma combination of Argon Engineering and the acquired Sensytech business as if the combination had occurred at the beginning of fiscal year 2004, compared with the historical results of operations for Argon Engineering for the same period.
These unaudited pro forma condensed combined pro forma results of operations were prepared based on the historical financial statements of Argon Engineering. We believe that the assumptions used provide a reasonable basis for presenting the significant effects directly attributable to the merger transaction. The unaudited pro forma condensed combined results of operations do not purport to represent what Argon ST’s results of operations would have been if such transaction had occurred on the period presented, and are not necessarily indicative of Argon ST’s future results.
| | | | | | | | | |
| | | Twelve Months Ended September 30, | |
| | | 2004 | |
| | | Historical | | | Proforma | |
| Revenue | | $ | 129,184,000 | | | $ | 189,792,000 | |
| Income from operations | | | 15,972,000 | | | | 23,132,000 | |
| Net income | | | 9,949,000 | | | | 14,386,000 | |
| | | | | | | | | |
| Basic earnings per share | | $ | 0.81 | | | $ | 0.76 | |
| Diluted earnings per share | | $ | 0.74 | | | $ | 0.71 | |
| | | | | | | | | |
| Basic wt average shares | | | 12,308,000 | | | | 18,914,000 | |
| Diluted wt average shares | | | 13,367,000 | | | | 20,156,000 | |
Revenues acquired from Sensytech were $60,608,000 for fiscal year 2004.. Income from operations acquired from Sensytech was $6,033,000 for fiscal year 2004. Net income acquired from Sensytech was $3,749,000 for fiscal year 2004. Depreciation and amortization on the write up of tangible and intangible assets, in accordance with SFAS 141, was $82,000 and $971,000 respectively for fiscal year 2004 and the after tax effect was $50,000 and $592,000 respectively. The one time merger costs and expenses, incurred by Sensytech, of approximately $2,180,000 before tax and $1,330,000 after tax were added back to the pro forma results for 2004.
FOR MORE INFORMATION, CONTACT:
Victor F. Sellier, Chief Financial Officer
vic.sellier@argonst.com
URL:www.argonst.com
