EX-99.1 2 v103803_ex99-1.htm

 
Contact:
Mark Murphy, Chief Executive Officer
   
(714) 241-4411
     
   
Jeff Stanlis, Investor Relations
   
Hayden Communications, Inc.
   
(602) 476-1821
 
For Immediate Release      


PRO-DEX, INC. ANNOUNCES
SECOND QUARTER 2008 RESULTS

Sales increase 32% for the quarter
Backlog reaches $11.7 million as of December 31, 2007


SANTA ANA, CA, February 14, 2008 - PRO-DEX, INC. (NASDAQ: PDEX) a developer and manufacturer of embedded motion control, miniature rotary drive systems and fractional horsepower DC motors, which enables speed-to-market for customers who serve the medical, dental, factory automation, scientific research, aerospace and military markets, today announced financial results for the second fiscal quarter and six month period for fiscal 2008, the periods ending December 31, 2007.

Consolidated net sales for the second quarter were $6.1 million, an increase of 32% compared to the $4.6 million reported for the second quarter of fiscal 2007. For the six months ended December 31, 2007, consolidated net sales were $12.1 million, an increase of 23% compared to $9.9 million for the year ago period.

Net income for the second quarter was $305,000 or $0.03 per basic and diluted share (based on 9.7 and 9.9 million shares, respectively) compared to a net loss of $(138,000) or $(0.01) loss per basic and diluted share for the second quarter last year. The Company reported net income for the six months of $631,000 or $0.06 per basic and diluted share compared to net income of $103,000, or $0.01 per basic and fully diluted share for the year-ago period.

Mark P. Murphy, the Company’s President and Chief Executive Officer, commented, “We have completed a strong start to fiscal 2008 and significantly improved our financial performance compared to last year. I am confident we have set the stage for continued improvements, establishing a solid baseline of performance upon which we can build. In the short-term, we will complete our move into a new corporate headquarters, providing the space and efficiency to support our growth. The move is currently scheduled to occur in mid-April, impacting our fourth fiscal quarter by $250,000 to $350,000 in related non-recurring expenses and inefficiencies. Other than this anticipated one-time charge, we look forward to continued strength in our operating performance.”

Consolidated gross profit for the quarter ended December 31, 2007 increased $988,000 or 73% over the same quarter in the previous year. Gross profit for the second quarter was $2.4 million, or 38% gross profit margin, compared to gross profit of $1.4 million, or 30% gross profit margin last year, primarily due to the higher level of sales and increased profitability in medical products. Gross profit for the six months was $4.5 million, or 37% gross profit margin compared to gross profit of $3.4 million, or 34% gross profit margin for the year-ago period. Higher development fees as well as greater manufacturing efficiencies and cost controls had a positive impact on gross profit in the first half of fiscal 2008.

Second quarter operating expenses increased by 11% to $1.9 million, compared to $1.7 million in the second quarter last year, but as a percentage of sales was reduced from 36% to 30%. For the six months, operating expense increased 8% to $3.5 million from $3.2 million in the year-ago period, but as a percentage of sales, was reduced from 33% to 29%.
 
 
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Mr. Murphy continued, “Our backlog at the end of the second fiscal quarter was $11.7 million, unchanged from the backlog as of December 31, 2006. This demonstrates the progress we have made in landing new business, while increasing shipments. With our new Vice President of Engineering, Dick Corrington, on board we are fully staffed and ready to refine and grow our value proposition.”

The Company completed the December 31, 2007 quarter with cash and cash equivalents of $220,000 compared to cash and cash equivalents of $403,000 as of June 30, 2007. Total working capital was $6.4 million as of December 31, 2007. Shareholders’ equity increased 5.1 percent to $13.5 million from $12.9 million as of June 30, 2007.

Teleconference Information:

Investors and all others are invited to listen to a conference call discussing the second fiscal quarter 2008 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. 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 (866) 323-3543 U.S. and (706) 679-0672 international, conference I.D. 34459746. You may identify the call as the Pro-Dex Second Quarter Earnings Call. An online archive of the broadcast will be available within one hour of the completion of the call and will be accessible on the Company's website for 30 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 3459746.

Pro-Dex Inc., with operations in Santa Ana, California; Beaverton, Oregon; and Carson City Nevada, specializes in bringing speed to market in the development and manufacture of technology-based solutions that incorporate embedded motion control, miniature rotary drive systems 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, scientific research facilities, commercial and military aircraft, and high tech manufacturing operations globally.


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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PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
 
December 31, 2007 (unaudited)
 
June 30,2007 (audited)
  
ASSETS
          
Current assets:
          
     Cash and cash equivalents
 
$
220,000
  
$
403,000
  
     Accounts receivable, net of allowance for doubtful
             
       accounts of $135,000 at December 31 and $153,000 at June 30
    
3,059,000
   
3,436,000
 
     Inventories, net
   
5,007,000
   
4,622,000
 
     Prepaid expenses
   
284,000
   
205,000
 
     Deferred income taxes
    
1,178,000
   
1,091,000
 
Total current assets
    
9,748,000
   
9,757,000
 
 
              
Property, plant, equipment and leasehold improvements, net
   
4,355,000
   
3,778,000
 
Other assets:
              
Goodwill
    
2,997,000
   
2,997,000
 
Intangibles - Patents, net
    
1,271,000
   
1,321,000
 
Deferred income taxes
    
229,000
   
229,000
 
     Other
   
33,000
   
25,000
 
Total other assets
   
4,530,000
   
4,572,000
 
               
Total assets
  
$
18,633,000
  
$
18,107,000
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
Current liabilities:
              
Credit Line
  
$
-
  
$
300,000
  
Accounts payable
    
1,319,000
   
1,110,000
 
Accrued expenses
    
1,467,000
   
1,183,000
 
Income taxes payable
    
212,000
   
158,000
 
Current portion of term note
    
250,000
   
250,000
 
Current portion of real estate loan
    
29,000
   
26,000
 
Current portion of "patent" deferred payable
    
-
   
82,000
 
Total current liabilities
   
3,277,000
   
3,109,000
 
               
Long-term liabilities
              
Term note
    
271,000
   
396,000
 
Real estate loan
    
1,576,000
   
1,593,000
 
Patent deferred payable
    
-
   
158,000
 
Total long-term liabilities
   
1,847,000
   
2,147,000
 
Total liabilities
    
5,124,000
   
5,256,000
 
Commitments and contingencies
             
Shareholders' equity:
              
Common shares; no par value; 50,000,000 shares authorized;
              
9,718,366 shares issued and outstanding December 31, 2007,
              
9,718,366 shares issued and outstanding June 30, 2007,
    
16,443,000
   
16,340,000
 
Accumulated deficit
   
(2,934,000
)
  
(3,489,000
)
               
Total shareholders’ equity
    
13,509,000
   
12,851,000
 
               
Total liabilities and shareholders’ equity
  
$
18,633,000
  
$
18,107,000
  
 
 
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PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended December 31 (unaudited)
 
 
 
 
 
 
 
 
2007
 
2006
  
           
Net sales
 
$
6,123,000
  
$
4,631,000
  
               
Cost of sales
   
3,769,000
   
3,262,000
 
Gross profit
   
2,354,000
   
1,369,000
 
               
Operating expenses:
             
Selling
   
352,000
   
340,000
 
General and administrative expenses
   
866,000
   
746,000
 
Research and development costs
   
635,000
   
579,000
 
Total operating expenses
   
1,853,000
   
1,665,000
 
               
(Loss) income from operations
   
501,000
   
(296,000
)
               
Other income (expense):
             
Other income (expense), net
   
48,000
       
Royalty income
    
14,000
   
18,000
 
Interest income (expense)
    
(40,000
)
  
(58,000
)
Total
    
22,000
   
(40,000
)
               
(Loss) income before (benefit) provision for income taxes
    
523,000
   
(336,000
)
               
(Benefit) provision for income taxes
    
218,000
   
(198,000
)
Net (loss) income
  
$
305,000
  
$
(138,000
)
 
              
Net (loss) income per share:
              
Basic
  
$
0.03
  
$
(0.01
)
Diluted
  
$
0.03
  
$
(0.01
)
               
Weighted average shares outstanding - basic
    
9,718,366
   
9,550,521
 
Weighted average shares outstanding - diluted
    
9,888,356
   
9,550,521
 
 
 
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PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended December 31 (unaudited)
 
 
 
 
 
 
 
 
2007
 
2006
  
           
Net sales
 
$
12,114,000
  
$
9,864,000
  
               
Cost of sales
   
7,608,000
   
6,514,000
 
Gross profit
   
4,506,000
   
3,350,000
 
               
Operating expenses:
             
Selling
   
675,000
   
678,000
 
General and administrative expenses
   
1,601,000
   
1,316,000
 
Research and development costs
   
1,209,000
   
1,226,000
 
Total operating expenses
   
3,485,000
   
3,220,000
 
               
Income from operations
   
1,021,000
   
130,000
 
               
Other income (expense):
             
Other income (expense), net
   
48,000
   
-
 
Royalty income
   
20,000
   
25,000
 
Interest income (expense )
    
(82,000
)
  
(112,000
)
Total
    
(14,000
)
  
(87,000
)
               
Income before (benefit) provision for income taxes
    
1,007,000
   
43,000
 
               
(Benefit) provision for income taxes
    
376,000
   
(60,000
)
Net income
  
$
631,000
  
$
103,000
  
 
              
Net Income per share:
              
Basic
  
$
0.06
  
$
0.01
  
Diluted
  
$
0.06
  
$
0.01
  
               
Weighted average shares outstanding - basic
    
9,718,366
   
9,545,757
 
Weighted average shares outstanding - diluted
    
9,926,305
   
9,769,444
 
 
 
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PRO-DEX, INC. and SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
Six months ended December 31 (unaudited)
  
 
  
 
  
 
  
 
  
2007
  
2006
  
Cash Flows from Operating Activities:
         
Net Income
  
$
631,000
  
$
103,000
  
Adjustments to reconcile net income to net cash provided by operating activities:
              
Depreciation and amortization
   
243,000
   
232,000
 
Stock based compensation
    
103,000
   
85,000
 
(Recovery) provision for doubtful accounts
    
(18,000
)
  
77,000
 
Reserve reduction (provision) for obsolete inventory
    
(173,000
)
  
200,000
 
(Decrease) increase in deferred taxes
    
(87,000
)
  
(305,000
)
Changes in:
              
Decrease in accounts receivable
    
395,000
   
422,000
 
(Increase) in inventories
    
(212,000
)
  
(963,000
)
(Increase) in prepaid expenses
    
(79,000
)
  
(90,000
)
(Increase) in other assets
    
(8,000
)
  
(30,000
)
Increase in accounts payable and accrued expenses
    
417,000
   
346,000
 
Increase in income taxes payable
    
54,000
   
127,000
 
Net Cash provided by Operating Activities
   
1,266,000
   
204,000
 
               
Cash Flows From Investing Activities:
             
Additions to Astromec acquisition cost
    
-
   
(66,000
)
Additions to Intangible assets - Patents related to Intraflow
    
-
   
(2,000
)
Purchases of equipment and leasehold improvements
    
(770,000
)
  
(217,000
)
               
Net Cash used in Investing Activities
   
(770,000
)
  
(285,000
)
               
Cash Flows from Financing Activities:
              
Net (payments) borrowing on line of credit
   
(300,000
)
  
300,000
 
Principal (payments) on term note
    
(125,000
)
  
(125,000
)
Principal (payments) on mortgage
    
(14,000
)
  
(13,000
)
Principal (payment) on patent deferred payable
    
(240,000
)
  
(76,000
)
Proceeds from option exercise
   
-
   
3,000
 
               
Net Cash provided by Financing Activities
    
(679,000
)
  
89,000
 
               
Net Increase (decrease) in Cash and Cash Equivalents
   
(183,000
)
  
8,000
 
Cash and Cash Equivalents, beginning of period
   
403,000
   
358,000
 
               
Cash and Cash Equivalents, end of period
  
$
220,000
  
$
366,000
  
               
Supplemental Information
              
Cash payments for interest
  
$
95,000
  
$
150,000
  
               
Cash payments for income taxes
 
$
560,000
  
$
137,000
  
 
 
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