Scientific Technologies (NASDAQ:STIZ)
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Scientific Technologies Incorporated (NASDAQ:STIZ), a
leading North American provider of automation safeguarding technology,
announced today the results of operations for the quarter and nine
months ended September 30, 2005. Sales for the third quarter of 2005
were $15,002,000, compared to sales of $14,604,000 in the third
quarter of 2004. Sales for the nine months ended September 30, 2005
were $44,241,000 compared to $44,876,000 for the comparable 2004
period.
Under generally accepted accounting principles (GAAP), the Company
reported net income of $1,660,000 for the third quarter of 2005, or
$.17 per share, compared to a GAAP net loss of $1,193,000, or $(.12)
per share, for the third quarter of 2004. Included in the GAAP net
income for the third quarter of 2005 was a realization of income tax
credits and related income tax benefits of $891,000. Included in the
GAAP net loss for the third quarter of 2004 was an intangible asset
impairment charge of $2,002,000. Excluding these one-time events, net
profit for the third quarter of 2005 would have been $769,000 or $.08
per basic and diluted share, compared to $48,000 or $.01 per basic and
diluted share in the same quarter of 2004. (See attached
reconciliation of actual net income to pro forma net income).
The GAAP net income for the first nine months of 2005 was
$2,190,000 or $.22 per basic and diluted share, compared to a GAAP net
loss for the first nine months of 2004 of $286,000, or $.03 per share.
Included in the GAAP net income for the nine months ended September
30, 2005 was a realization of income tax credits and related income
tax benefits of $891,000. Included in the GAAP net loss for the
comparable period in 2004 was an intangible asset impairment charge of
$2,002,000. Excluding these one-time events, net profit for the first
nine months of 2005 would have been $1,299,000 or $.13 per basic and
diluted share, compared to net income of $955,000 or $.10 per basic
and diluted share in the same period in 2004.
Joseph J. Lazzara, President and Chief Executive Officer
commented, "Even without regard for the income taxes recovered in this
period, overall, the third quarter of 2005 represents a fine
performance by STI, as we reported our best quarterly earnings per
share in nearly five years, a marked improvement over a loss for the
third quarter of 2004. On a sequential basis, our top line and
earnings have improved for the third consecutive quarter."
"Much of the operating income improvement during the third quarter
was the result of encouraging performance by our Automation Products
Group (APG) and our Machine Services Division (MSD). Both
organizations not only increased sales in the current quarter over the
same period in 2004, but each also regained profitability during this
period as compared to losses in the third quarter of 2004."
Third Quarter Highlights
Items of interest for the third quarter included:
-- STI announced a partnership with Allied Electronics, Inc., a
leading worldwide distributor of electronic components and
related products, for the distribution of STI safety products
throughout North America. Allied Electronics will sell STI's
most popular machine safety products including safety light
curtains and other optical-based safety devices, as well as
interlocking solutions tailored to MRO needs. Allied
Electronics offers a single-source based system catering to
user and facility operations environments.
-- STI Machine Services and Alcoa Safety and Health Services, a
unit of Alcoa (NYSE:AA), have formally partnered to create a
referral network for professional safety services to their
clients. Where client needs reach beyond each vendors' area of
expertise, this referral partnership promises to provide
clients a direct link to safety professionals, thus saving
time and frustration in sorting through the myriad of vendor
options. STI Machine Services provides comprehensive machine
safeguarding services for their clients, including risk
assessments and risk reduction planning, review of safety
system and circuit designs, project management, project
engineering and documentation, machine safety seminars and
training, and turn-key safety integration. Alcoa Safety and
Health Services assists clients with the creation and
modification of corporate or plant wide safety and health
programs. Their primary focus is on the overall safety and
health strategy and the supporting management system, with an
emphasis on reducing risk of serious injury or occupational
illness.
-- STI introduced our new, full color 2006-2007 Engineering Guide
to Machine and Process Safeguarding, which includes more than
850 pages of the most comprehensive machine and process safety
product and technical reference information available today.
More than 125 pages are dedicated to educational resource
material, including fully-illustrated articles on safety
regulations and directives, risk assessment, types of
protective measures, and background on safety technologies.
About Scientific Technologies Inc.
Scientific Technologies, Inc. (STI) is a North American leading
provider of automation safeguarding products and services through its
Safety Products Group. STI's Optical Sensor Division (OSD) provides
safety products that are used to protect workers around machinery,
automated equipment and industrial robots. Our products serve a wide
variety of applications and markets, including semiconductor,
automotive, electronics manufacturing, packaging and consumer markets.
STI's Machine Services Division (MSD) provides safety services such as
safeguarding equipment installations, machine safety assessments, and
the design and custom fabrication of guarding solutions. MSD
specializes in machinery services including the repair, relocation,
installation and service of fabricating machinery. MSD serves
customers in a variety of industries, including metal fabrication,
aerospace, electronics, building materials, automotive and food
processing. Our web site is located at www.sti.com.
STI's Automation Products Group serves the factory automation,
semiconductor, transportation, oil and gas, consumer and food
processing industries with a diversified offering of sensing
technologies. Products include level, flow, pressure sensing,
positioning transducers, vehicle separation, profiling and ultrasonic
sensors and controls. Further information is available at the Group's
web sites: www.automationsensors.com, and www.stiscanners.com.
Forward-Looking Statements
Certain statements in this press release, including statements
regarding future sales of STI's machine safety products and potential
benefits from a referral network, are forward-looking statements that
are subject to risks and uncertainties. These risks and uncertainties,
which could cause STI's results to differ materially from the
forward-looking statements, include: economic and political conditions
in domestic and international markets; declining market demand for
industrial safety and security products generally; introduction of or
increased demand for alternative products; potential errors, defects,
design flaws or other problems with our products; changes in
regulations relating to industrial safety and security products; and
the other risks detailed from time to time in STI's Securities and
Exchange Commission filings and reports, including STI's annual report
filed on Form 10-K and quarterly reports filed on Form 10-Q. STI
disclaims any obligation to update information contained in any
forward-looking statement.
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SCIENTIFIC TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Income Statement
(Amounts in thousands except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
-------- -------- --------- ---------
Sales $ 15,002 $ 14,604 $ 44,241 $ 44,876
Intangibles write down -- 727 -- 727
Cost of sales 8,585 9,176 26,176 26,946
-------- -------- --------- ---------
Gross profit 6,417 4,701 18,065 17,203
Intangibles write down -- 1,275 -- 1,275
Operating expenses 5,351 5,426 16,368 16,582
-------- -------- --------- ---------
Operating income
(loss) 1,066 (2,000) 1,697 (654)
Interest and other income 87 76 237 193
-------- -------- --------- ---------
Income (loss) before
taxes 1,153 (1,924) 1,934 (461)
Provision (benefit) for
income taxes (507) (731) (256) (175)
-------- -------- --------- ---------
Net income (loss) $ 1,660 $ (1,193) $ 2,190 $ (286)
======== ======== ========= =========
Basic and diluted net
income (loss) per
Share $ .17 $ (.12) $ .22 $ (.03)
======== ======== ========= =========
Shares used to compute
net income (loss)
per share 9,774 9,735 9,772 9,734
======== ======== ========= =========
Pro-Forma Condensed Consolidated Income Statement
(Amounts in thousands except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
-------- -------- --------- ---------
Sales $ 15,002 $ 14,604 $ 44,241 $ 44,876
Intangibles write down -- -- -- --
Cost of sales 8,585 9,176 26,176 26,946
-------- -------- --------- ---------
Gross profit 6,417 5,428 18,065 17,930
Intangibles write down -- -- -- --
Operating expenses 5,351 5,426 16,368 16,582
-------- -------- --------- ---------
Operating income (loss) 1,066 2 1,697 1,348
Interest and other income 87 76 237 193
-------- -------- --------- ---------
Income (loss) before taxes 1,153 78 1,934 1,541
Provision (benefit) for income
taxes 384 30 635 586
-------- -------- --------- ---------
Net income (loss) $ 769 $ 48 $ 1,299 $ 955
======== ======== ========= =========
Basic and diluted net income
(loss) per
Share $ .08 $ .01 $ .13 $ .10
======== ======== ========= =========
Shares used to compute net
income (loss)
per share 9,774 9,735 9,772 9,734
======== ======== ========= =========
Basis of Presentation: Pro-Forma operating results exclude the
write down of intangible assets in 2004 and the income tax recovered
in 2005.
Actual to Pro-Forma Net Income Reconciliation
(Amounts in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
------ ------- ------ ------
Net income (loss) $1,660 $(1,193) $2,190 $ (286)
Write down of intangible assets -- 2,002 -- 2,002
Tax benefit of intangible write down -- (761) -- (761)
------
Income tax credits and benefits
realized 891 -- 891 --
------ ------- ------ ------
Pro Forma net income $ 769 $ 48 $1,299 $ 955
====== ======= ====== ======
Condensed Consolidated Balance Sheet
(Amounts in thousands)
September December
30, 2005 31, 2004
----------- ----------
Assets
Current assets:
Cash and cash equivalents $ 2,928 $ 1,107
Short-term investments 2,441 2,350
Accounts receivable 8,235 7,746
Inventories 9,717 10,584
Other assets 4,801 5,161
---------- ---------
Total current assets 28,122 26,948
Property, plant and equipment, net
Goodwill, intangibles and other non-current 3,105 3,470
assets 2,813 2,918
---------- ---------
Total assets $ 34,040 $ 33,336
========== =========
Liabilities and shareholders' equity
Current liabilities:
Bank overdraft $ -- $ 517
Accounts payable 3,002 3,246
Accrued expenses 3,235 3,920
Current portion of capital lease with
Parent 68 68
---------- ---------
Total current liabilities 6,305 7,751
Capital lease with Parent 45 96
Long-term tax liability 118 118
---------- ---------
Total liabilities 6,468 7,965
Shareholders' equity 27,572 25,371
---------- ---------
Total liabilities and shareholders'
equity $ 34,040 $ 33,336
========== =========
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