Exhibit 99.1
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ENVIRONMENTAL TECTONICS CORPORATION
ANNOUNCES FOURTH QUARTER AND FISCAL 2004 RESULTS
Southampton, PA: May 28, 2004 - ENVIRONMENTAL TECTONICS CORPORATION (AMEX: ETC)
(the "Company") today announced financial results for the fiscal fourth quarter
and year ended February 27, 2004.
For the fiscal fourth quarter ended February 27, 2004, ETC realized
net income of $463,000, or $.06 per share (diluted), versus net income of
$736,000, or $.10 per share (diluted) for the corresponding period of fiscal
2003. Sales for the fourth quarter of fiscal 2004 were $7,998,000, down $715,000
or 8.2% from the fourth quarter of fiscal 2003. Decreased sales were evidenced
in all business groups except Aircrew Training Systems (ATS), which was up
primarily in international sales.
Gross profit for the fourth quarter increased by $323,000 or 8.6% over
the corresponding fourth quarter of fiscal 2003 as the aforementioned sales
decreases were completely offset by higher gross profit rates as a percent of
sales for most business groups and the impact of a settlement on an
international claim in the ATS group.
For the fiscal year ended February 27, 2004, the Company experienced a
net loss of $793,000, or $(.11) per share (diluted), versus net income of
$2,493,000 or $.33 per share (diluted) for fiscal 2003. Sales were $25,995,000,
a decrease of $17,128,000 or 39.7% from the prior year. Sales decreases were
evidenced in entertainment (down $16,998,000), which suffered from the
completion in fiscal 2003 of the Mission: Space project for Epcot Center in
Orlando, Florida, (down $17,032,000), hyperbaric (down $1,519,000), on reduced
effort on a large US government submarine decompression chamber project, and
environmental (down $1,701,000), as fiscal 2003 included significant sales for
large chamber projects in China. Providing partial offsets were increased
domestic sales for sterilizers (up $1,662,000) and higher international ATS
sales (up $1,702,000) primarily for International Logistics Services including
upgrades and maintenance on various aeromedical equipment. Geographically,
domestic sales were down $14,835,000 or 62.6% from fiscal 2003, primarily
reflecting the decrease in entertainment sales; U.S. Government sales decreased
to $1,717,000, as compared to $4,626,000 in fiscal 2003; and international
sales, including those from the Company's foreign subsidiaries, were up $616,000
or 4.2% from fiscal 2003.
Gross profit for the fiscal year ended February 27, 2004 decreased by
$4,255,000 or 30.0% from fiscal 2003 reflecting the overall sales decrease which
was only partially offset by a 5.3 percentage point increase in the gross profit
rate as a percent of sales. Product development costs, both to enhance
functionality of existing products and to develop product extensions, negatively
impacted gross profit as these costs are primarily charged directly to the cost
of sales for specific orders. The favorable rate as a percent of sales reflected
higher rates in all business groups except environmental and entertainment, but
the primary positive impact came from the ATS group which settled an
international claim in the fiscal period.
SELECTED FINANCIAL DATA
(THOUSANDS, EXCEPT SHARE
AND PER SHARE INFORMATION) FISCAL QUARTER ENDED FISCAL YEAR ENDED
FEBRUARY 27, FEBRUARY 28, FEBRUARY 27, FEBRUARY 28,
2004 2003 2004 2003
Sales $ 7,998 $ 8,713 $ 25,995 $ 43,123
Gross Profit $ 4,096 $ 3,773 $ 9,943 $ 14,198
Operating Income $ 706 $ 1,059 $ 131 $ 4,116
Pre-tax income/(loss) $ 111 $ 909 $ (1,605) $ 3,260
Minority interest $ 6 $ -- $ (2) $ (38)
Net income/(loss) $ 463 $ 736 $ (793) $ 2,493
Net income avail./(loss) applic.
to common shareholders $ 463 $ 736 $ (793) $ 2,493
EARNINGS PER SHARE
Basic $ .06 $ .10 $ (.11) $ .35
Average shares 7,169,000 7,153,000 7,163,000 7,153,000
Diluted $ .06 $ .10 $ (.11) $ .33
Average shares 7,202,000 7,513,000 7,163,000 7,497,000
William F. Mitchell, ETC's President and Chairman, stated,
"The results for fiscal 2004 reflected the negative impact of the following
significant factors:
o unfavorable global economic and political conditions
o a decrease in expected revenues from the Mission:Space project
due to a reduction in scope of the project that is the subject
of ongoing litigation with the customer
o increased product development costs
o integration costs of new personnel in our environmental
business
o higher costs of capital, and
o customer induced shipping delays.
However, despite the disruptions created by these conditions,
ETC still managed to meet some important milestones in fiscal 2004. First and
foremost, we successfully introduced our Advanced Tactical Flight Simulator to
an array of US and international fighter pilots, US Congressmen and Senators,
and foreign dignitaries. This technology, based on our high performance human
centrifuge, allows a fighter pilot to practice air combat maneuvers such as
dodging enemy missiles, ground fire and aircraft obstacles while experiencing
the real life environment of a high G-force fighter aircraft. These flight
trainers provide a low cost and extremely less risky alternative to actual air
flight. We believe that armed forces agencies of various governments will
appreciate the efficiency of these technologies, especially in this time of
fiscal conservatism and budgetary constraints throughout the world.
Additionally, in the ATS line, we successfully integrated
advanced spatial disorientation features into our Gyro-IPT and GAT line of
disorientation and flight trainers.
Another milestone was achieved when we successfully launched
our new line of entertainment products. In February 2004, our first offering,
Wild Earth: African Plains was installed at the Whitaker Center in Harrisburg,
PA. Also in April 2004, we obtained an order for four Monster Truck simulator
rides from the Incredible Pizza Company. One of our goals this year is to expand
on themes available family amusements.
Fiscal 2004 finally saw the culmination of many years of sales
and marketing effort in the monoplace hyperbaric chamber line. We booked eight
units from both domestic and international customers in the year and expect
order flow to remain strong this year.
Our Advanced Disaster Management Systems (ADMS) line received
a contract to supply an interactive, virtual-reality based airport ground
vehicle driving simulator for Nashville International Airport and a contract to
perform airport certification and emergency drill training at the Baltimore
Washington International Airport.
Our sterilization division had a record sales year while our
environmental business continued to expand.
Given the complexity of the global marketplace, it is always
risky to predict when business momentum will accelerate, but I can say I have
seen the first cautious signs that fiscal 2005 should be better than fiscal 2004
for our Company."
ETC designs, develops, installs and maintains aircrew training
systems, public entertainment systems, process simulation systems (sterilization
and environmental), clinical hyperbaric systems, environmental testing and
simulation systems, and related products for domestic and international
customers.
This press release may include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 as amended, and
Section 21E of the Securities Exchange Act of 1934. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to known and unknown
risks, uncertainties and assumptions about the Company that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any other future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such
as "may","will","should',"could","would","expect","plan","anticipate","believe",
"estimate", "continue", or the negative of such terms or similar expressions.
Factors that might cause or contribute to such a discrepancy include, but are
not limited to, contract cancellations, failure to obtain new contracts,
political unrest in customer countries, unfavorable results in litigation,
general economic conditions, and those issues identified from time to time in
our Securities and Exchange Commission filings and other public documents,
including, without limitation, our Annual Report on Form 10-K for the fiscal
year ended February 27, 2004.
Contact: Duane D. Deaner, CFO TEL: 215-355-9100(ext. 1203) FAX: 215-357-4000
ETC-INTERNET HOME PAGE: http://www.etcusa.com