2014

Pro-Dex, Inc. Announces Fiscal 2011 Fourth Quarter and Full-Year Results Year-Over-Year Revenues Up 17% and Comparable Operating Income Up 167%

IRVINE, Calif., Sept. 14, 2011 /PRNewswire/ -- PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal fourth quarter and full-year ended June 30, 2011.

Sales for the quarter ended June 30, 2011 were $7.5 million, 31% higher than sales of $5.7 million for the corresponding quarter in 2010, due primarily to increases in sales of the Company's medical device products to its three largest customers.  For the year ended June 30, 2011, sales were $27.1 million, 17% higher than sales of $23.2 million for fiscal year 2010, resulting primarily from increases in sales of medical device products to the Company's largest customer and from growth in sales of its motion control products.  

Operating income was $1.1 million for the quarter, a 283% increase from operating income of $296,000 before impairment charges in the corresponding 2010 period.  For the year ended June 30, 2011, operating income increased 167% to $3.2 million from operating income of $1.2 million before impairment charges in fiscal year 2010.  

Net income for the 2011 fourth quarter was $1.0 million, or $0.31 per diluted share, which represents a 498% improvement from net income of $172,000, or $0.05 per diluted share, before impairment charges in the corresponding 2010 quarter.  For the year ended June 30, 2011, net income was $2.6 million, or $0.80 per diluted share, a 111% improvement from net income of $1.2 million, or $0.38 per diluted share, before impairment charges in fiscal year 2010.  

Gross profit for the quarter ended June 30, 2011 increased to $3.1 million, a 41% gross profit margin, compared to gross profit of $2.2 million, a 38% gross profit margin, for the same year-ago period.  For the fiscal year ended June 30, 2011, gross profit was $10.5 million, a 39% gross profit margin, compared to gross profit and margin of $8.4 million and 36%, respectively, for fiscal year ended June 30, 2010.  The increase in gross profit as a percentage of sales during both periods was due to a change in mix toward sales of medical device and motion control products at relatively higher margins, and to cost reductions.    

Mark Murphy, the Company's President and Chief Executive Officer, commented, "Fiscal 2011 was a notable year.  Sales and profitability were significantly higher than the prior year, indicating the strength of our operating engine at a record high sales level.  In addition, we generated $2.9 million of operating cash, allowing us to further strengthen the balance sheet with $900,000 of increased cash and $1.7 million of reduced debt. We ended the year with $4.7 million in cash.  Looking forward, we anticipate a reduction in shipments to our largest customer, and our focus remains on managing our cost structure while we diversify our customer base. I am pleased to report that we have broadened and deepened our relationships with major medical device companies, and have experienced increased proposal activity.  Our task now is to convert those opportunities into backlog.  In the meantime, we will protect our balance sheet as we work toward our goal of systemically recreating this year's notable results on a new customer base."

Teleconference Information:

Investors and analysts are invited to listen to a broadcast review of the Company's fiscal 2011 fourth quarter and full-year financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting the Company's website at www.pro-dex.com.  The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S.

For those who cannot access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern Time) on September 28, 2011 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S., and then entering account number 286 and conference I.D. number 378851.  An online archive of the broadcast will be available on the Company's website www.pro-dex.com for a period of 365 days.

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 powered surgical device 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.

(tables follow)

PRO-DEX, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS





June 30, 2011

June 30, 2010

ASSETS



Current assets:



     Cash and cash equivalents

$     4,689,000

$     3,794,000

     Accounts receivable, net of allowance for doubtful accounts



      of $7,000 in 2011 and $25,000 in 2010

3,128,000

2,682,000

     Other current receivables

12,000

22,000

     Inventories

3,703,000

3,228,000

     Prepaid expenses

145,000

174,000

     Deferred income taxes

163,000

209,000

        Total current assets

11,840,000

10,109,000




Property, plant, equipment and leasehold improvements, net

3,661,000

4,092,000

Other assets

60,000

78,000

Total assets

$   15,561,000

$   14,279,000







LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:



    Accounts payable

$     1,207,000

$     1,279,000

    Accrued expenses

2,379,000

1,947,000

    Income taxes payable

78,000

79,000

    Current Portion of bank term loan

357,000

400,000

    Current portion of real estate loan

-

35,000

       Total current liabilities

4,021,000

3,740,000




Non-current liabilities:



   Bank term loan

774,000

967,000

   Real estate loan

-

1,493,000

   Deferred income taxes

163,000

209,000

   Deferred rent

279,000

255,000

       Total non-current liabilities

1,216,000

2,924,000




Total liabilities

5,237,000

6,664,000

Commitments and contingencies



Shareholders' equity:



    Common shares; no par value; 50,000,000 shares authorized;



          3,272,350 shares issued and outstanding June 30, 2011



          3,251,850 shares issued and outstanding June 30, 2010

16,744,000

16,675,000

    Accumulated deficit

(6,420,000)

(9,060,000)




     Total shareholders’ equity

10,324,000

7,615,000




    Total liabilities and shareholders’ equity

$   15,561,000

$   14,279,000









PRO-DEX, INC. and SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS





For The Years Ended June 30,



2011

2010






Net sales

$   27,109,000

$   23,211,000






Cost of sales

16,573,000

14,847,000


Gross profit

10,536,000

8,364,000






Operating expenses:




    Selling expenses

1,600,000

1,382,000


    General and administrative expenses

3,276,000

3,288,000


    Impairment of goodwill

-

2,997,000


    Impairment of patent

-

140,000


    Impairment of property value

-

1,307,000


    Research and development costs

2,416,000

2,480,000


Total operating expenses

7,292,000

11,594,000






Income (loss) from operations

3,244,000

(3,230,000)






Other income (expense):




    Royalty income

-

44,000


    Interest expense, net

(148,000)

(202,000)


Total other income (expense)

(148,000)

(158,000)






Income (loss) before provision for income taxes

3,096,000

(3,388,000)






Provision (benefit) for income taxes

456,000

(420,000)


Net income (loss)

$     2,640,000

$    (2,968,000)






Net income (loss) per share:




    Basic

$              0.81

$             (0.92)


    Diluted

$              0.80

$             (0.92)






Weighted average shares outstanding - basic

3,264,936

3,232,850


Weighted average shares outstanding - diluted

3,287,415

3,232,850





PRO-DEX, INC. and SUBSIDIARIES

RECONCILIATION of NON-GAAP RESULTS to GAAP RESULTS




For the Year Ended
June 30, 2010

For the Three
Months Ended
June 30, 2010

Income (Loss) From Operations




Income from operations before impairment charges

$           1,214,000

$       296,000

Impairment charges to:



Goodwill

2,997,000

2,997,000

Patent

140,000

-

Property

1,307,000

1,307,000




(Loss) from operations

$         (3,230,000)

$  (4,008,000)




Net Income (Loss)




Income from operations before impairment charges

$           1,214,000

$       296,000

Other (expense), net

(158,000)

(49,000)

Income before provision (benefit) for income taxes

1,056,000

247,000

Provision (benefit) for income taxes

(193,000)

75,000




Net income before impairment charges

$          1,249,000

$      172,000




Impairment charges to:



Goodwill

2,997,000

2,997,000

Patent

140,000

-

Property

1,307,000

1,307,000

Total impairment charges

4,444,000

4,304,000




Effect of impairment charges on provision for income taxes

(227,000)

(227,000)




Net (loss)

$          (2,968,000)

$   (3,905,000)




Net Income (Loss) Per Diluted Share Information




Net income per diluted share before impairment charges

$                    0.38

$             0.05

Net loss per diluted share

$                   (0.92)

$            (1.20)




Weighted average diluted shares outstanding



Used for net income per diluted share before impairment charges

3,252,959

3,272,805

Dilutive equivalent shares excluded from net loss per diluted share calculation

10,109

21,567

Used for net loss per diluted share

3,242,850

3,251,238







PRO-DEX, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



For The Years Ended June 30,


2011

2010

Cash flows from operating activities:



Net income (loss)

$   2,640,000

$   (2,968,000)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:



Depreciation and amortization

697,000

726,000

Impairment expense

-

4,444,000

(Decrease) in allowance for doubtful accounts

(18,000)

(27,000)

Stock based compensation

43,000

101,000

Deferred taxes

-

(91,000)

Changes in:



Accounts receivable

(418,000)

(146,000)

Inventories

(475,000)

137,000

Prepaid expenses

29,000

(57,000)

Other assets

18,000

9,000

Accounts payable and accrued expenses

383,000

1,086,000

Income taxes payable

(1,000)

26,000

Net cash provided by operating activities

2,898,000

3,240,000




Cash flows from investing activities:



Purchase of equipment and leasehold improvements

(265,000)

(137,000)




Net cash used in investing activities

(265,000)

(137,000)




Cash flows from financing activities:



Principal payments on bank loan

(236,000)

(400,000)

Principal payments on real estate loan

(1,528,000)

(33,000)

Proceeds from exercise of stock options

26,000

-




Net cash used in financing activities

(1,738,000)

(433,000)




Net increase in cash and cash equivalents

895,000

2,670,000

Cash and cash equivalents, beginning of year

3,794,000

1,124,000




Cash and cash equivalents, end of year

$   4,689,000

$     3,794,000




Supplemental Information

Cash paid for interest

$      148,000

$        204,000

Cash paid for income taxes

$      456,000

$        154,000






SOURCE Pro-Dex, Inc.



RELATED LINKS
http://www.pro-dex.com

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