Inrad Optics, Inc. Announces FY 2011 Financial Results

Apr 02, 2012, 17:26 ET from Inrad Optics, Inc.

NORTHVALE, N.J., April 2, 2012 /PRNewswire/ -- Inrad Optics, Inc. (formerly Photonic Products Group, Inc.) (OTC Bulletin Board: PHPG) has released its consolidated financial results for the year ended December 31, 2011.

Sales for the fourth quarter were $3.4 million, a decrease of 6% from $3.6 million in the corresponding quarter of 2010.  However, sales for the year ended December 31, 2011 were $13.2 million, up 19%, from $11.1 million, last year.

The Company ended 2011 with bookings of $12.9 million compared to $12.3 million in 2010, up 5%.  Bookings in the fourth quarter of 2011 were $2.7 million compared to $3.4 million in the fourth quarter of 2010, as new orders expected in the period were pushed out into 2012.  The Company's year-end backlog was $5.0 million, down 7.4% versus $5.4 million at the end of 2010.

Net income, applicable to common shareholders was $142,000 for the fourth quarter of 2011 compared to $471,000 in the fourth quarter of 2010.  Fourth quarter earnings per share were $0.01 basic and diluted versus $0.04 basic and diluted in 2010.

For the year  ended December 31, 2011, the Company reported net income of $165,000 which compares favorably with a net loss of $(734,000) for the previous year.  For the year, basic and diluted earnings per share were $0.01.  Basic and diluted net loss per share was $(0.06) in 2010.  

Fourth quarter gross profit for 2011 was $998,000 or 29.5% of sales, down from $1.2 million or 33.8% of sales, in the same quarter last year.  For the twelve months ended December 31, 2011, gross profit improved to $3.6 million or 27.0% of sales, an increase of $1.1 million from $2.5 million or 22.7% of sales, in 2010.

EBITDA(1) for 2011 was $1.3 million versus EBITDA of $514,000 in 2010.  

During the year, the Company paid $1,125,000 in accrued interest on convertible notes and an additional $150,000 in current interest related to the same notes.  As a result, net cash flow from operating activities for 2011 decreased to $(358,000) compared to $576,000 in the previous year.  Cash flow in 2011 was also impacted by increases in inventory as management built inventory ahead of scheduled shipments.  The Company ended the year with cash of $3.4 million, down from $4.4 million at the end of 2010, reflecting two offsetting events;   the Company's aggressive debt repayment and strong cash flow generated from improved profitability.

Joe Rutherford, President and CEO of Inrad Optics stated, "I am pleased to announce improved sales and earnings results for 2011.  We achieved a sales increase of more than 19% for the year, and showed a significant improvement in profitability over the previous two years.  Although our fourth quarter results were down compared to the fourth quarter of last year, I feel the results reflect the ongoing economic volatility and subdued nature of both the semi-conductor and worldwide defense markets.  Bookings for the year grew by 5% despite a push-out of several large expected fourth quarter orders into 2012, and bookings activity to-date in 2012 has been very positive.

During 2011, we maintained our focus on reducing debt and repaid approximately $1.3 million in accrued and current interest on convertible debt and ended the year with a cash position of over $3.4 million.  In early 2012, our board and shareholders approved a name change to Inrad Optics, Inc.  This significant and distinctive change will allow us to leverage the positive historical and current brand equity of the Inrad name. This will allow us to more clearly communicate the Company's principal business activities. We are now executing on a well-considered strategic marketing plan designed to create an ongoing memory in the marketplace for Inrad Optics' unique products and capabilities."

(1)  Note Regarding Use of Certain Non-GAAP Financial Measures:

The Company defines EBITDA(1) as earnings (loss) before non-cash, stock-based compensation, net interest, income taxes, depreciation, and amortization.  EBITDA is presented herein because we consider these numbers an important measure of the Company's ability to internally fund capital expenditures and service debt.  EBITDA should not be considered an alternative to cash flow as an indicator of the Company's financial performance, or liquidity.  The reader is referred to the Supplemental Financial Data set forth below for a reconciliation of net income (loss) to EBITDA.  

The reconciliation follows:

Years ended December 31,

Reconciliation of EBITDA and adjusted

EBITDA to Net Income (Loss)

2011

2010

(In thousands)

Net income (loss), as reported

$

165

$

(734)

Income tax provision

11

Interest expense, net

131

138

Depreciation and amortization

836

942

Non-cash, stock-based compensation

171

168

EBITDA

$

1,314

$

514

Inrad Optics, Inc. (formerly Photonic Products Group, Inc.) was incorporated in New Jersey in 1973. In January 2012, the Company's Board of Directors and shareholders approved the name change to Inrad Optics, Inc. The Company develops, manufactures and markets products and services for use in photonics industry sectors via three distinct but complimentary product areas -   "Crystals and Devices", "Custom Optics" and "Metal Optics".  

The Company is a vertically integrated organization specializing in crystal-based optical components and devices, custom optical components from both glass and metal, and precision optical and opto-mechanical assemblies.  Manufacturing capabilities include solution and high temperature crystal growth, extensive optical fabrication capabilities, including precision diamond turning and the ability to handle large substrates, optical coatings and in-process metrology expertise.    Inrad Optics' customers include leading corporations in the defense, aerospace, laser systems, process control and metrology sectors of the photonics industry, as well as the U.S. Government, National Laboratories and Universities worldwide.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These statements may be identified by their use of forward-looking terminology such as "believes", "expects", "should", "will", "plan", "anticipate", "probably", "targeting" or similar words.  Such forward-looking statements, such as our expectation for revenues, new orders, and improved results involve risks and uncertainties that could cause actual results to differ materially from those projected. Risks and uncertainties that could cause actual results to differ materially from such forward looking statements are, but are not limited to, uncertainties in market demand for the company's products or the products of its customers, future actions by competitors, inability to deliver product on time, inability to develop new business, inability to retain key employees or hire new employees, and other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission including our Annual Report on Form 10-K for the year ended December 31, 2011. The forward looking statements made in this news release are made as of the date hereof and Inrad Optics, Inc. does not assume any obligation to update publicly any forward looking statement.

INRAD OPTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,

2011

2010

Assets

Current assets:

Cash and cash equivalents

$

3,400,205

$

4,365,045

Accounts receivable (net of allowance for doubtful accounts of $15,000 in 2011 and 2010)

2,052,887

2,224,592

Inventories, net

2,909,520

2,390,876

Other current assets

185,298

119,243

Total Current Assets

8,547,910

9,099,756

Plant and equipment:

Plant and equipment at cost

15,172,428

14,879,508

Less: Accumulated depreciation and amortization

(13,629,311)

(12,876,163)

Total plant and equipment

1,543,117

2,003,345

Precious Metals

474,960

157,443

Deferred Income Taxes

408,000

408,000

Goodwill

311,572

311,572

Intangible Assets, net of accumulated amortization

515,888

594,452

Other Assets

36,556

47,235

Total Assets

$

11,838,003

$

12,621,803

Liabilities and Shareholders' Equity

Current Liabilities:

Current portion of notes payable -other

$

9,800

$

9,000

Accounts payable and accrued liabilities

877,757

836,190

Customer advances

266,818

441,987

Total Current Liabilities

1,154,375

1,287,177

Related Party Convertible Notes Payable

2,500,000

2,500,000

Accrued Interest on Related Party Convertible Note Payable

1,125,000

Notes Payable – Other, net of current portion

325,633

335,874

Total Liabilities

3,980,008

5,248,051

Commitments

Shareholders' equity:

   Common stock: $.01 par value; 60,000,000 authorized shares 11,713,564 issued

   at December 31, 2011 and 11,562,656 issued at December 31, 2010

117,137

115,626

   Capital in excess of par value

17,720,514

17,402,528

   Accumulated deficit

(9,964,706)

(10,129,452)

7,872,945

7,388,702

Less - Common stock in treasury, at cost (4,600 shares)

(14,950)

(14,950)

Total Shareholders' Equity

7,857,995

7,373,752

Total Liabilities and Shareholders' Equity

$

11,838,003

$

12,621,803

INRAD OPTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31,

2011

2010

2009

Revenues

Net sales

$

13,177,194

$

11,054,178

$

11,051,127

Cost and expenses

Cost of goods sold

9,614,875

8,545,153

8,896,539

Selling, general and administrative expense

3,255,073

3,105,063

3,278,161

Goodwill Impairment

1,558,074

12,869,948

11,650,216

13,732,774

Operating income (loss)

307,246

(596,038)

(2,681,647)

Other income (expense)

Interest expense, net

(130,497)

(137,775)

(130,387)

Gain (loss) on sale of plant and equipment

(1,003)

4,671

Gain on sale of precious metals

7,371

(131,500)

(137,775)

(118,345)

Income (loss) before income taxes

175,746

(733,813)

(2,799,992)

Income tax provision

11,000

Net income (loss)

$

164,746

$

(733,813)

$

(2,799,992)

Net income (loss) per share - basic

$

0.01

$

(0.06)

$

(0.25)

Net income (loss) per share - diluted

$

0.01

$

(0.06)

$

(0.25)

Weighted average shares outstanding - basic

11,658,891

11,522,297

11,331,258

Weighted average shares outstanding – diluted

11,753,669

11,522,297

11,331,258

INRAD OPTICS, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,

2011

2010

2009

Cash flows from operating activities:

Net income (loss)

$

164,746

$

(733,813)

$

(2,799,992)

Adjustments to reconcile net income (loss) to net cash (used in)

  provided by operating activities:

Depreciation and amortization

835,788

941,941

1,008,310

Goodwill impairment charge

1,558,074

401K common stock contribution

129,998

154,535

179,068

Accrued interest on Related Party Convertible Note Payable

150,000

150,000

Loss (gain) on sale of plant and equipment

1,003

(4,671)

(Gain) on sale of precious metals

(7,371)

Stock-based compensation expense

171,239

168,054

112,950

Change in inventory reserve

55,174

(154,326)

94,628

Changes in operating assets and liabilities:

Accounts receivable

171,705

(296,920)

882,930

Inventories

(573,818)

29,423

371,735

Other current assets

(66,055)

44,838

24,003

Other assets

10,679

(2,043)

34,107

Accounts payable and accrued liabilities

41,567

178,540

(678,015)

Customer advances

(175,169)

95,558

(110,325)

Accrued interest on Related Party Convertible Note Payable

(1,125,000)

Total adjustments

(522,889)

1,309,600

3,615,423

Net cash (used in) provided by operating activities

(358,143)

575,787

815,431

Cash flows from investing activities:

       Proceeds from sale of certificates of deposit

800,000

       Purchase of plant and equipment

(303,999)

(278,241)

(210,563)

       Purchase of precious metals

(317,517)

(53,538)

       Proceeds from disposal of plant and equipment

6,000

4,671

       Proceeds from disposal of precious metals

16,317

Net cash (used in) provided by investing activities

(615,516)

(278,241)

556,887

Cash flows from financing activities:

Net proceeds from issuance of common stock

18,260

7,261

161,514

Principal payments of notes payable-other

(9,441)

(9,072)

(136,609)

            Net cash provided by (used in) financing activities

8,819

(1,811)

24,905

Net (decrease) increase in cash and cash equivalents

(964,840)

295,735

1,397,223

Cash and cash equivalents at beginning of the year

4,365,045

4,069,310

2,672,087

Cash and cash equivalents at end of the year

$

3,400,205

$

4,365,045

$

4,069,310

Supplemental Disclosure of Cash Flow Information:

Interest paid

$

1,289,000

$

14,000

$

19,000

Income taxes (refund) paid

$

18,000

$

(74,000)

$

(8,000)

SOURCE Inrad Optics, Inc.