Exhibit 99
CompuDyne Reports GAAP Earnings Per Share of $0.04 for 2006 Second Quarter -
Adjusted Earnings Per Share, Excluding Stock Option Expense, Was $0.08 -
Company's Recovery Continuing
ANNAPOLIS, Md.--(BUSINESS WIRE)--Aug. 1, 2006--CompuDyne Corporation
(Nasdaq:CDCY), an industry leader in sophisticated security products,
integration and technology for the public security markets, today reported net
income of $0.04 per share for the second quarter of 2006, compared with a net
loss of $0.33 per share reported in the second quarter of 2005. Revenues in the
second quarter of 2006 were $38.4 million, up from $31.1 million in the second
quarter of 2005. Expenses in the second quarter of 2006 included $323 thousand
in non-cash stock option expense. Net income per share before this non-cash
charge was $0.08. Net income for the first six months of 2006 was $0.14 per
share, compared with a net loss of $0.36 per share reported in the first six
months of 2005. Revenues for the first six months of 2006 were $78.9 million, up
from $67.4 million in first six months of 2005. Expenses in the first six months
of 2006 included $578 thousand in non-cash stock option expense. Net income per
share for the six months, before this non-cash charge, was $0.21.
Institutional Security Systems ("ISS") revenue was $13.2 million in the
second quarter of 2006 compared with $11.7 million in the second quarter of
2005. Pre-tax results improved from a $0.5 million loss in the second quarter of
2005 to a $0.4 million loss in the second quarter of 2006. ISS results continue
to be negatively impacted by significant legal costs in pursuing claims and
recoveries on completed projects. While backlog has declined at ISS, pre-bid
activity is very strong and awards during the second half of 2006 are expected
to be significantly higher than the first half.
Attack Protection ("AP") revenue was $11.3 million in the second quarter of
2006, up 86.9% compared to $6.1 million in the second quarter of 2005. Pre-tax
income improved from a loss of $0.8 million in the second quarter of 2005 to a
pre-tax income of $1.5 million in the second quarter of 2006. The Norshield
brand business, which supplies bullet, blast and attack resistant windows and
doors as well as vehicle barrier systems, benefited from increased backlogs as
well as from significant progress made during 2005 in reducing costs and
improving quality. The Fiber SenSys ("FSI") brand business, which is one of the
world's largest suppliers of fiber optic based perimeter alarm systems,
continued to be negatively impacted by delays in military tests of important new
products. This process is now behind us and FSI is expected to have
significantly improved results during the balance of the year as evidenced by a
backlog of $2.2 million at the end of June 2006.
Public Safety & Justice ("PS&J") revenues declined to $10.9 million in the
second quarter of 2006 compared to $11.4 million in the second quarter of 2005.
Pre-tax results for PS&J in the second quarter of 2006 were a loss of $0.5
million compared to pre-tax income of $0.4 million in the second quarter of
2005. While PS&J started the year with improved backlogs, they are still not at
levels necessary for adequate profitability, although the pipeline of
prospective new business is high. In addition, the decision was made in 2005 to
significantly accelerate its research and development effort to migrate to a
full Service Oriented Architecture and .NET based product suite, a commitment
which is expected to negatively impact PS&J income in 2006 by $2.5 million but
which should materially improve future revenues and margins.
Integrated Electronic Systems ("IES") revenue was $3.0 million in the
second quarter of 2006 compared with $1.9 million in the second quarter of 2005
and resulted in pre-tax income of $0.2 million for the second quarter of 2006
compared with breakeven results for the second quarter of 2005. The re-bid of
the Bureau of Engraving & Printing contract, occasioned by a protest filed by
the previous incumbent, remains unresolved. In July CompuDyne purchased the
assets of Signami LLC, a company which makes signals intelligence software and
equipment which complements devices made by IES' Data Control Systems division.
While this acquisition is expected to be accretive to earnings, it will add
materially to the Company's non-cash intangible amortization charges.
In the second quarter of 2006, our corporate pre-tax loss totaled $0.5
million compared with a second quarter 2005 pre-tax loss of $1.7 million. Full
year audit costs and costs related to compliance with Section 404 of
Sarbanes-Oxley have been, and are expected to continue to be, considerably below
2005 levels.
While backlogs declined during the second quarter of 2006, by $16.9 million
to $111.5 million, quoting and bidding activity levels continue to be much
higher than in recent years.
Certain statements made in this press release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, including those statements concerning the Company's expectations with
respect to future operating results and other events. Although the Company
believes it has a reasonable basis for these forward-looking statements, these
statements involve risks and uncertainties that cannot be predicted or
quantified and consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Factors which could
cause actual results to differ from expectations include, among others, capital
spending patterns of the security market and the demand for the Company's
products, competitive factors and pricing pressures, changes in legislation,
regulatory requirements, government budget problems, the Company's ability to
secure new contracts, the ability to remain in compliance with its bank
covenants, delays in government procurement processes, inability to obtain bid,
payment and performance bonds on various of the Company's projects,
technological change or difficulties, the ability to refinance debt when it
becomes due, product development risks, commercialization difficulties, adverse
results in litigation, the level of product returns, the amount of remedial work
needed to be performed, costs of compliance with Sarbanes-Oxley requirements and
the impact of the failure to comply with such requirements, risks associated
with internal control weaknesses identified in complying with Section 404 of
Sarbanes-Oxley, the Company's ability to realize anticipated cost savings, the
Company's ability to simplify its structure and modify its strategic objectives,
and general economic conditions. Risks inherent in the Company's business and
with respect to future uncertainties are further described in its other filings
with the Securities Exchange Commission, such as the Company's Form 10-K, Form
10-Q, and Form 8-K reports.
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, December 31,
ASSETS 2006 2005
----------- -------------
(dollars in thousands)
Current Assets
Cash and cash equivalents $ 7,529 $ 6,938
Marketable securities 7,238 11,429
Cash and marketable securities -
pledged 440 -
Accounts receivable, net 30,496 39,625
Contract costs in excess of billings 11,053 13,764
Inventories 5,831 6,195
Prepaid expenses and other 2,642 2,809
----------- -------------
Total Current Assets 65,229 80,760
Cash and marketable securities - pledged 6,677 -
Property, plant and equipment, net 9,696 9,962
Goodwill 26,846 26,846
Other intangible assets, net 8,090 8,221
Other 779 903
----------- -------------
Total Assets $ 117,317 $ 126,692
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
liabilities $ 15,533 $ 23,030
Billings in excess of contract costs
incurred 12,309 13,847
Deferred revenue 6,664 8,094
Current portion of notes payable 440 440
----------- -------------
Total Current Liabilities 34,946 45,411
Notes payable 2,825 3,125
Convertible subordinated notes payable, net 39,399 39,305
Deferred tax liabilities 2,060 2,060
Other 289 369
----------- -------------
Total Liabilities 79,519 90,270
Commitments and Contingencies
Shareholders' Equity 37,798 36,422
----------- -------------
Total Liabilities and Shareholders'
Equity $ 117,317 $ 126,692
=========== =============
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
-------- --------- -------- ---------
(in thousands, except per share data)
Revenues $ 38,394 $ 31,104 $78,864 $ 67,410
Cost of sales 26,258 20,677 54,219 44,600
-------- --------- -------- ---------
Gross profit 12,136 10,427 24,645 22,810
Selling, general & administrative
expenses 9,342 10,295 19,078 20,322
Research and development 1,934 2,242 3,701 4,353
-------- --------- -------- ---------
Income (loss) from operations 860 (2,110) 1,866 (1,865)
Total other expense, net 548 529 931 1,093
-------- --------- -------- ---------
Income (loss) before taxes on
income 312 (2,639) 935 (2,958)
Income tax expense (benefit) 7 - (177) -
-------- --------- -------- ---------
Net income (loss) $ 305 $ (2,639) $ 1,112 $ (2,958)
======== ========= ======== =========
Income (loss) per share:
- -------------------------
Basic income (loss) per common
share $ .04 $ (.33) $ .14 $ (.36)
======== ========= ======== =========
Weighted average number of common
shares outstanding 8,119 8,118 8,119 8,141
======== ========= ======== =========
Diluted income (loss) per common
share $ .04 $ (.33) $ .14 $ (.36)
======== ========= ======== =========
Weighted average number of common
shares and equivalents 8,164 8,118 8,161 8,141
======== ========- ======== =========
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(in thousands, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
--------- -------- -------- --------
Revenues
Institutional Security Systems $ 13,220 $11,728 $26,575 $27,460
Attack Protection 11,333 6,065 23,017 12,963
Public Safety and Justice 10,858 11,423 22,702 23,080
Integrated Electronic Systems 2,983 1,888 6,570 3,907
--------- -------- -------- --------
$ 38,394 $31,104 $78,864 $67,410
========= ======== ======== ========
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
--------- -------- -------- --------
Pre-tax income (loss)
Institutional Security Systems $ (386) $ (532) $ (250) $ 698
Attack Protection 1,548 (840) 2,753 (341)
Public Safety and Justice (529) 400 (522) (82)
Integrated Electronic Systems 161 16 345 8
Corporate (482) (1,683) (1,391) (3,241)
--------- -------- -------- --------
$ 312 $(2,639) $ 935 $(2,958)
========= ======== ======== ========
June 30, December 31, June 30,
2006 2005 2005
--------- ------------ ---------
Backlog
Institutional Security Systems $ 51,173 $ 58,128 $ 56,492
Attack Protection 13,593 28,802 19,466
Public Safety and Justice 39,351 53,705 46,045
Integrated Electronic Systems 7,393 7,503 9,105
--------- ------------ ---------
$111,510 $ 148,138 $131,108
========= ============ =========
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
EBITDAS
(in thousands, except per share data; unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
-------- --------- ------- --------
Net income (loss) $ 305 $ (2,639) $1,112 $(2,958)
Interest expense 842 750 1,657 1,553
Income tax expense (benefit) 7 - (177) -
Depreciation and amortization 750 847 1,545 1,724
Non-cash stock option expense 323 - 578 -
-------- --------- ------- --------
EBITDA adjusted for non-cash stock
option expense (EBITDAS) $ 2,227 $ (1,042) $4,715 $ 319
======== ========= ======= ========
Income (Loss) Before Non-Cash Stock Option Expense
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
-------- --------- ------- --------
Net income (loss) $ 305 $ (2,639) $1,112 $(2,958)
Non-cash stock option expense 323 - 578 -
-------- --------- ------- --------
Income (loss) before non-cash
stock option expense $ 628 $ (2,639) $1,690 $(2,958)
======== ========= ======= ========
Diluted income (loss) per common
share before non-cash stock
option expense $ .08 $ (.33) $ .21 $ (.36)
======== ========= ======= ========
This press release contains unaudited financial information that is not
prepared in accordance with generally accepted accounting principles (GAAP).
Investors are cautioned that the non-GAAP financial measures are not to be
construed as an alternative to GAAP. The Company's management uses earnings
before interest, taxes, depreciation and amortization, as adjusted for non-cash
stock option expense (EBITDAS), in its internal analysis of results of
operations and monitors EBITDAS to evaluate the Company's compliance with
certain of its bank covenants. The Company's management also uses Income (Loss)
Before Non-Cash Stock Option Expense to allow it to compare its results of
operations between years. Management believes that EBITDAS and Income (Loss)
Before Non-Cash Stock Option Expense is useful to investors as a meaningful
comparison between periods and as an analysis of the critical components of the
Company's results of operations. Management also believes that EBITDAS is useful
to investors because it allows them to evaluate the Company's compliance with
certain of its bank covenants. Management believes that net income per share
excluding stock option expense is helpful to investors who are trying to compare
current results with prior periods.
CONTACT: CompuDyne Corporation
Geoffrey F. Feidelberg
Investor Relations
410-224-4415 ext.313
investors.relations@compudyne.com