Exhibit 99
CompuDyne Reports EPS Loss of $0.28 for
First Quarter 2007
ANNAPOLIS, Md.--(BUSINESS WIRE)--May 11, 2007--CompuDyne
Corporation (Nasdaq:CDCY), an industry leader in sophisticated
security products, integration and technology for the public security
markets, today reported a net loss of $0.28 per share for the first
quarter of 2007, compared to a profit of $0.10 per share reported in
the first quarter of 2006. Revenues in the first quarter of 2007 were
$31.1 million, down from $40.5 million in the first quarter of 2006.
EBITDAS for the first quarter of 2007 was negative $0.4 million, down
from a positive $2.5 million in the first quarter of 2006. First
quarter 2007 results were negatively impacted by low backlogs entering
2007, and a delay in the award of new projects, resulting in flat
backlogs rather than the increasing backlogs that had been
anticipated. While results in the first quarter were somewhat worse
than we had anticipated, we continue to believe that these are
temporal impacts and that high levels of new business activity should
eventually translate into increasing backlogs and increasing revenues
in the coming quarters.
Institutional Security Systems ("ISS") revenue was $11.2 million
in the first quarter of 2007 compared with $13.4 million in the first
quarter of 2006. Pre-tax loss was $1.3 million in the first quarter of
2007 compared to a $0.1 million pre-tax income in the first quarter of
2006. ISS revenues and earnings were negatively impacted by low
backlogs, and delays in planned project starts already in backlog.
Recent increases in new business activity, as evidenced by strong
award levels in March, and a significant amount of business that is
pending formal award, suggests that backlogs will improve throughout
the year. Pipeline activity is the strongest it has ever been,
reflecting strong latent demand for additional jail and prison
capacity at all levels of the market - local, state and federal.
Especially encouraging is the increasing acceptance of ISS' "MaxWall"
modular steel jail cell product, which has the potential of
significantly expanding ISS' market. ISS backlog declined by $0.8
million to $63.9 million during the quarter.
Attack Protection ("AP") revenue was $4.4 million in the first
quarter of 2007, down significantly from $11.7 million in the first
quarter of 2006. Pre-tax loss was $0.9 million in the first quarter of
2007, compared to pre-tax income of $1.2 million in the first quarter
of 2006. AP's Norshield business, which produces bullet, blast and
attack resistant doors and windows and vehicle barrier systems,
completed a very large embassy order in 2006. Norshield continues to
work to replace this volume, however backlogs declined sharply during
2006 while working on this project and have only recently started to
recover, presaging continuing low volumes in this business in the
coming months of 2007. The delayed receipt of a substantial change
order request materially impacted results. Norshield has undergone
significant "right-sizing" efforts during 2007 resulting in cost
reductions of $1.2 million on an annual basis, and has adopted a
strategy of offering to install its products for customers rather than
just sell the products. This new strategy, combined with a closer
integration with ISS, is expected to expand Norshield's market
potential while improving its efficiency. AP's Fiber SenSys ("FSI")
brand business, which is one of the world's largest supplier of fiber
optic based perimeter alarm systems, almost doubled its revenues in
the first quarter of 2007 compared to the first quarter of 2006. FSI
is expected to continue to improve revenues throughout the year and
produce significant earnings in 2007. AP backlogs increased by $3.6
million to $9.3 million during the quarter, reflecting some success in
generating new business both in the traditional embassy market and in
other markets where high levels of protection are required.
Public Safety & Justice ("PS&J") revenues declined to $10.6
million in the first quarter of 2007 compared to $11.8 million in the
first quarter of 2006. PS&J had a pre-tax loss of $0.2 million in the
first quarter of 2007 compared to break-even in the first quarter of
2006. Spending by PS&J's Tiburon business on its "Next Generation"
suite of .NET based software products, which is being fully expensed,
continues to impact current results and will impact future results.
During the first quarter PS&J very successfully took live one of the
largest installations they have ever undertaken. PS&J backlogs
declined slightly during the quarter, from $39.1 million at the
beginning of the quarter to $37.7 million at the end of the quarter.
Integrated Electronic Systems ("IES") revenue was $5.0 million in
the first quarter of 2007 compared to $3.6 million in the first
quarter of 2006 and resulted in a doubling of pre-tax income to $0.4
million for the first quarter of 2007 compared to $0.2 million for the
first quarter of 2006. We have been advised that the Bureau of
Engraving and Printing ("BEP") will put its contract out to bid again
as a result of internal reorganizations. Results of this planned
re-bid are expected to become known late this year. We are optimistic
that it will be re-awarded to IES due to our outstanding performance.
IES' Quanta subsidiary continues to perform this BEP contract. IES'
newly combined Signami DCS business, made up of our Signami
acquisition and our DCS signals intelligence business, contributed
$1.8 million to IES' first quarter 2007 revenues. Signami DCS
continues to spend heavily on the refinement of its existing signals
intelligence product and on the new integrated platform of Signami and
DCS technologies - with the introduction of the new product later this
year we expect both revenues and margins in this business to improve
substantially.
In the first quarter of 2007, corporate had a pre-tax loss of $0.3
million, compared to a pre-tax loss of $0.9 million in the first
quarter of 2006. This included $0.4 million of net interest cost in
the first quarter of 2007, down from $0.5 million in the first quarter
of 2006. Corporate expense was reduced despite incurring $0.2 million
on legal matters and $0.2 million on Audit/SOX (down from $0.4 million
in the first quarter of 2006) related costs in the first quarter of
2007. We ended the quarter with cash and marketable securities of
$24.2 million, working capital of $29.7 million, and only $1.5 million
of debt maturities prior to 2011.
Company-wide backlogs were essentially flat during the first
quarter of 2007, ending the quarter at $117.1 million, down $0.2
million. This remains an unacceptably low level, however pipeline,
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)
March 31, December 31,
ASSETS 2007 2006
------------- ------------
(dollars in thousands)
Current Assets
Cash and cash equivalents $ 10,694 $ 7,740
Marketable securities 6,001 8,687
Accounts receivable, net 25,584 25,534
Contract costs in excess of billings 12,231 12,031
Inventories 6,152 5,577
Prepaid expenses and other 2,031 4,595
------------- ------------
Total Current Assets 62,693 64,164
Cash equivalents pledged 7,500 7,500
Property, plant and equipment, net 9,281 9,630
Goodwill 13,275 13,274
Other intangible assets, net 7,282 7,428
Other 1,841 1,954
------------- ------------
Total Assets $ 101,872 $ 103,950
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
liabilities $ 12,933 $ 14,155
Billings in excess of contract costs
incurred 9,444 9,221
Deferred revenue 10,145 9,305
Current portion of notes payable 440 440
------------- ------------
Total Current Liabilities 32,962 33,121
Notes payable 2,685 2,685
Convertible subordinated notes payable, net 39,539 39,492
Deferred tax liabilities 1,425 1,425
Other 392 388
------------- ------------
Total Liabilities 77,003 77,111
------------- ------------
Commitments and Contingencies
Shareholders' Equity 24,869 26,839
------------- ------------
Total Liabilities and
Shareholders' Equity $ 101,872 $ 103,950
============= ============
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended March 31,
2007 2006
-------------- --------------
(in thousands, except per
share data)
Revenues $ 31,132 $ 40,470
Cost of sales 21,354 27,961
-------------- --------------
Gross profit 9,778 12,509
Selling, general and administrative
expenses 9,299 9,736
Research and development 2,371 1,767
-------------- --------------
(Loss) income from operations (1,892) 1,006
Total other expense, net 442 383
-------------- --------------
(Loss) income before taxes on income (2,334) 623
Income tax benefit - (184)
-------------- --------------
Net (loss) income $ (2,334) $ 807
============== ==============
Earnings (loss) per share:
- ----------------------------------------
Basic (loss) income per common share $ (.28) $ .10
============== ==============
Weighted average number of common
shares outstanding 8,436 8,119
============== ==============
Diluted (loss) income per common share $ (.28) $ .10
============== ==============
Weighted average number of common
shares and equivalents 8,436 8,159
============== ==============
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(in thousands, unaudited)
Three Months Ended
March 31,
2007 2006
--------- --------
Revenues
Institutional Security Systems $11,155 $13,355
Attack Protection 4,437 11,684
Public Safety and Justice 10,583 11,844
Integrated Electronic Systems 4,957 3,587
--------- --------
$31,132 $40,470
========= ========
Three Months Ended
March 31,
2007 2006
--------- --------
Gross Profit
Institutional Security Systems $ 986 $ 2,173
Attack Protection 967 3,292
Public Safety and Justice 6,517 6,538
Integrated Electronic Systems 1,308 506
--------- --------
$ 9,778 $12,509
========= ========
Three Months Ended
March 31,
2007 2006
--------- --------
Pre-tax income (loss)
Institutional Security Systems $(1,275) $ 136
Attack Protection (926) 1,205
Public Safety and Justice (200) 7
Integrated Electronic Systems 413 184
Corporate (346) (909)
--------- --------
$(2,334) $ 623
========= ========
March 31, December 31, March 31,
2007 2006 2006
----------- ------------ ---------
Backlog
Institutional Security Systems $ 63,868 $ 64,687 $ 57,030
Attack Protection 9,299 5,686 20,961
Public Safety and Justice 37,707 39,067 43,874
Integrated Electronic Systems 6,208 7,902 6,590
----------- ------------ ---------
$ 117,082 $ 117,342 $128,455
=========== ============ =========
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
EBITDAS
(in thousands, except per share data; unaudited)
Three Months Ended
March 31,
2007 2006
--------- --------
Net loss $(2,334) $ 807
Interest expense 792 815
Income tax (benefit) - (184)
Depreciation and amortization 841 795
Non-cash stock option expense 263 255
--------- --------
EBITDA adjusted for non-cash stock option expense
(EBITDAS) $ (438) $2,488
========= ========
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 its
bank covenant for a fixed charge coverage ratio. 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 its bank covenant for a fixed charge coverage ratio.
CONTACT: CompuDyne Corporation
Investor Relations:
Geoffrey F. Feidelberg, 410-224-4415 ext.313
investors.relations@compudyne.com