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| 8-K - PRO DEX INC | v197659_8k.htm |
Pro-Dex, Inc. Announces Fiscal Year 2010 Fourth Quarter and Full-Year Results
IRVINE, Calif., Sept. 28 /PRNewswire-FirstCall/ -- PRO-DEX, INC. (Nasdaq: PDEX) today announced financial results for the fiscal fourth quarter and full-year ending June 30, 2010.
Sales for the full fiscal year ended June 30, 2010 increased 10% to $23.2 million compared to $21.1 million in fiscal year 2009, driven by medical products sales to our largest two customers that were up by 30% compared to the previous year. Sales for the fourth quarter ended June 30, 2010 increased 2% to $5.7 million compared to $5.6 million reported for the fourth quarter of fiscal 2009. Operating income before recognition of impairments to goodwill and property value reductions was $1.2 million for the full year of fiscal 2010 compared to a loss of $495 thousand for fiscal year ended June 30, 2009. Operating Income before the recognition of impairments to goodwill and real property increased 24% to $296 thousand for the fourth quarter compared to $239 thousand in the same period of the prior year. Impairments and real property value reductions amounted to $4.3 million in the fourth quarter of fiscal 2010, $4.4 million for the full 2010 fiscal year, $0 in the fourth quarter of fiscal 2009 and $997 thousand for the full fiscal year of 2009.
The net loss for the full fiscal year 2010 was $2,968,000 or $0.92 per share compared to net loss for the full fiscal year 2009 of $2,845,000 or $0.88 per share. The net loss for the fourth quarter of fiscal year 2010 was $3,905,000 or $1.20 per share (based on 3.2 million shares) compared to net income of $202,000 or $0.06 per share for the three months ended June 30, 2009 (based on 3.2 million shares).
Gross profit for the full 2010 fiscal year was $8.4 million, a 36% gross profit margin, compared to gross profit of $6.7 million or 32% gross profit margin, for the year-ago period. For the full year, margins benefited from higher volumes of our more profitable medical and motion control products. Gross profit for the quarter ended June 30, 2010 increased to $2.2 million, a 38% gross profit margin, compared to gross profit of $1.9 million or 35% gross profit margin in last year's fourth quarter, as a result of higher sales levels in the motion control business.
There were $4.4 million of non-cash impairment and real property value reduction charges in fiscal year 2010. Impairments recognized consisted of $140,000 from the remaining IntraFlow patent (in the second quarter), $1.9 million from the Astromec business goodwill, and $1.1 million from Micro Motors goodwill (both in the fourth quarter). In addition, in the fourth quarter of fiscal 2010 we recognized a $1.3 million reduction in the value of the real property used at our Astromec operation in Carson City, Nevada. In the third quarter of fiscal year 2009 we recognized $997 thousand of impairment charges associated with the IntraFlow patent. Following the recognition of these items, our balance sheet has no remaining intangible assets.
Mark Murphy, the Company's President and Chief Executive Officer, commented, "Fiscal 2010 was an encouraging year for Pro-Dex, as we grew the top line and returned to profitable operations on a pre-impairment basis. I recognize the disappointment of another year of significant write-offs, and know that it detracts from our strong operating performance during fiscal year 2010. However, focusing on our fundamental operating results excluding these charges, our sales increased by 10% over last year, our gross margins improved by 4 percentage points from 32% to 36%, and our operating expenses remained stable at last year's reduced levels, all resulting in an operating profit of $1.2 million. In fiscal year 2010, we generated $3.2 million in operating cash, the highest level achieved in the last 10 years, after generating $1.7 million in fiscal year 2009 and $2.0 million in fiscal year 2008. As a fundamental operating business, Pro-Dex has again produced solid results."
During both the fourth quarter and the entire fiscal year 2010, we continued to strengthen the balance sheet. In Q4, we generated an additional $570,000 of cash from operations and, for all of fiscal year 2010, we generated $3.2 million in cash from operations. The full-year cash generation includes $549,000 in cash received in the third quarter for collection of a claim for federal income taxes due to enhanced net operating loss carryback rules implemented by the IRS in 2009. At June 30, 2010, we had cash and cash equivalents of $3,794,000 compared to cash and cash equivalents of $1,124,000 as of June 30, 2009. The Company had net cash of $899,000 compared to net debt of $2.2 million at June 30, 2009, a $3.1 million total improvement.
Teleconference Information:
Investors and all others are invited to listen to a conference call discussing the fourth fiscal quarter and year end 2010 results, today at 4:30 p.m. Eastern Time. The call is scheduled to be broadcast live over the Internet and may be accessed by visiting the Company's website at http://www.pro-dex.com or directly at http://www.videonewswire.com/event.asp?id=72574. Mark Murphy, Chief Executive Officer and Jeff Ritchey, Chief Financial Officer, plan to host the call. If you would like to join the call, dial (877) 356-8625 U.S. and (706) 634-9779 International, conference I.D. 13203491. You may identify the call as the Pro-Dex Fourth Quarter Earnings Call. An online archive of the broadcast will be available within two hours of the completion of the call and will be accessible on the Company's website for 365 days. Additionally, a telephone replay will be available 2 hours after the call for 48 hours by dialing (800) 642-1687 U.S. or (706) 645-9291 for international callers, conference I.D. number 13203491.
Pro-Dex, Inc., with operations in California, Oregon and Nevada, specializes in bringing speed to market in the development and manufacture of technology-based solutions that incorporate miniature rotary drive systems, embedded motion control and fractional horsepower DC motors, serving the medical, dental, semi-conductor, scientific research and aerospace markets. Pro-Dex's products are found in hospitals, dental offices, medical engineering labs, commercial and military aircraft, scientific research facilities and high tech manufacturing operations around the world. For more information, visit the Company's website at www.pro-dex.com.
Statements herein concerning the Company's plans, growth and strategies may include 'forward-looking statements' within the context of the federal securities laws. Statements regarding the Company's future events, developments and future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The Company's actual results may differ materially from those suggested as a result of various factors. Interested parties should refer to the disclosure concerning the operational and business concerns of the Company set forth in the Company's filings with the Securities and Exchange Commission.
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(tables follow) |
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PRO-DEX, INC. and SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
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30-Jun-10 |
30-Jun-09 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ 3,794,000 |
$ 1,124,000 |
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Accounts receivable, net of allowance for doubtful accounts of $25,000 in 2010 and $52,000 in 2009 |
2,682,000 |
2,515,000 |
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Other Current Receivables |
22,000 |
16,000 |
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Inventories |
3,228,000 |
3,365,000 |
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Prepaid expenses |
174,000 |
117,000 |
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Prepaid income taxes |
- |
118,000 |
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Deferred income taxes |
209,000 |
- |
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Total current assets |
10,109,000 |
7,255,000 |
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Property, plant, equipment and leasehold improvements, net |
4,092,000 |
5,981,000 |
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Other assets: |
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Goodwill |
- |
2,997,000 |
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Intangibles - Patents, net |
- |
147,000 |
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Other |
78,000 |
87,000 |
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Total other assets |
78,000 |
3,231,000 |
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Total assets |
$ 14,279,000 |
$ 16,467,000 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
$ 1,279,000 |
$ 827,000 |
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Accrued expenses |
1,947,000 |
1,394,000 |
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Income taxes payable |
79,000 |
53,000 |
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Current Portion of T.I. Loan |
400,000 |
400,000 |
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Current portion of real estate loan |
35,000 |
33,000 |
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Total current liabilities |
3,740,000 |
2,707,000 |
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Long-term liabilities: |
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Notes Payable - T.I. Loan |
967,000 |
1,367,000 |
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Real estate loan |
1,493,000 |
1,528,000 |
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Deferred income taxes |
209,000 |
171,000 |
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Deferred rent |
255,000 |
212,000 |
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Total long-term liabilities |
2,924,000 |
3,278,000 |
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Total liabilities |
6,664,000 |
5,985,000 |
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Commitments and contingencies |
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Shareholders' equity: |
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Common shares; no par value; 50,000,000 shares authorized; 3,251,850 shares issued and outstanding June 30, 2010 3,222,890 shares issued and outstanding June 30, 2009 |
16,675,000 |
16,574,000 |
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Accumulated deficit |
(9,060,000) |
(6,092,000) |
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Total shareholders’ equity |
7,615,000 |
10,482,000 |
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Total liabilities and shareholders’ equity |
$ 14,279,000 |
$ 16,467,000 |
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See notes to consolidated financial statements. |
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PRO-DEX, INC. and SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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Years ended June 30 |
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2010 |
2009 |
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Net sales |
$ 23,211,000 |
$ 21,122,000 |
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Cost of sales |
14,847,000 |
14,374,000 |
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Gross profit |
8,364,000 |
6,748,000 |
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Operating expenses: |
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Selling expense |
1,382,000 |
1,295,000 |
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General and administrative expenses |
3,288,000 |
3,157,000 |
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Impairment of intangible assets |
3,137,000 |
997,000 |
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Impairment of property value |
1,307,000 |
- |
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Research and development costs |
2,480,000 |
2,791,000 |
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Total operating expenses |
11,594,000 |
8,240,000 |
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(Loss) from operations |
(3,230,000) |
(1,492,000) |
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Other: |
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Royalty income |
44,000 |
14,000 |
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Interest income |
2,000 |
2,000 |
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Interest (expense) |
(204,000) |
(228,000) |
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Total |
(158,000) |
(212,000) |
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(Loss) Income before provision for income taxes |
(3,388,000) |
(1,704,000) |
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Benefit for Income Taxes |
1,130,000 |
1,100,000 |
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Allowance for deferred tax asset |
(710,000) |
(2,241,000) |
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Total Benefit (Provision) for Income taxes |
420,000 |
(1,141,000) |
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Net (Loss) |
$ (2,968,000) |
$ (2,845,000) |
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Net (Loss) per share: |
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Basic |
$ (0.92) |
$ (0.88) |
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Diluted |
$ (0.92) |
$ (0.88) |
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Weighted average shares outstanding - basic |
3,232,850 |
3,236,918 |
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Weighted average shares outstanding - diluted |
3,232,850 |
3,236,918 |
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See notes to consolidated financial statements. |
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PRO-DEX, INC. and SUBSIDIARIES |
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RECONCILIATION of NON-GAAP RESULTS to GAAP RESULTS |
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$ in thousands, except EPS |
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FY2010 |
FY2009 |
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Q4 2010 |
Q4 2009 |
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Operating Income/(Loss) before impairments and property value reductions |
$ 1,214 |
$ (495) |
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$ 296 |
$ 239 |
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Impairments |
3,137 |
997 |
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2,997 |
- |
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Property Value reduction |
1,307 |
- |
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1,307 |
- |
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Income (Loss) from Operations |
$ (3,230) |
$ (1,492) |
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$ (4,008) |
$ 239 |
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Net interest and Other Income (Loss) |
(158) |
(212) |
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(49) |
(45) |
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Income before provision for taxes |
(3,388) |
(1,704) |
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(4,057) |
194 |
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Benefit/(Provision) for taxes |
420 |
(1,141) |
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152 |
8 |
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Net (Loss)/Income |
$ (2,968) |
$ (2,845) |
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$ (3,905) |
$ 202 |
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EPS (Basic & diluted) |
$ (0.92) |
$ (0.88) |
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$ (1.20) |
$ 0.06 |
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PRO-DEX, INC. and SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Years ended June 30 |
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2010 |
2009 |
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Cash Flows from Operating Activities: |
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Net Income |
$ (2,968,000) |
$ (2,845,000) |
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Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation and amortization |
726,000 |
810,000 |
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Impairment of intangible asset and property value |
4,444,000 |
997,000 |
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Loss on Disposal |
- |
25,000 |
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(Recovery of) Provision for doubtful accounts |
(27,000) |
(92,000) |
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Stock based compensation |
101,000 |
166,000 |
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Deferred taxes |
(91,000) |
1,058,000 |
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Changes in: |
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(Increase) Decrease in accounts receivable |
(146,000) |
609,000 |
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Decrease in inventories |
137,000 |
1,737,000 |
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(Increase) Decrease in prepaid expenses |
(57,000) |
97,000 |
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Decrease (Increase) in other assets |
9,000 |
(20,000) |
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Increase (Decrease) in accounts payable and accrued expenses |
1,086,000 |
(1,505,000) |
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Increase in income taxes payable |
26,000 |
681,000 |
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Net Cash provided by Operating Activities |
3,240,000 |
1,718,000 |
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Cash Flows From Investing Activities: |
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Purchase of equipment and leasehold improvements |
(137,000) |
(269,000) |
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Net Cash used in Investing Activities |
(137,000) |
(269,000) |
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Cash Flows from Financing Activities: |
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Principal payments of patent deferred payable |
- |
(45,000) |
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Net (payments) on Line of Credit |
- |
(2,000,000) |
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Principal (payments) on Term Note |
(400,000) |
(396,000) |
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Net Principal borrowing on TI Loan |
- |
1,767,000 |
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Principal payments on Real Estate Loan |
(33,000) |
(31,000) |
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Stock Repurchases |
- |
(137,000) |
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Net Cash (used in) Financing Activities |
(433,000) |
(842,000) |
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Net increase in Cash and Cash Equivalents |
2,670,000 |
607,000 |
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Cash and Cash Equivalents, beginning of year |
1,124,000 |
517,000 |
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Cash and Cash Equivalents, end of year |
$ 3,794,000 |
$ 1,124,000 |
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Supplemental Information |
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Cash paid for interest |
$ 204,000 |
$ 230,000 |
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Cash paid for income taxes |
$ 154,000 |
$ - |
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CONTACT: Mark Murphy, Chief Executive Officer of Pro-Dex, Inc., +1-949-769-3200