ISKO Isco (MM)

Isco Reports Second Quarter Fiscal 2004 Results LINCOLN, Neb., March 4 /PRNewswire-FirstCall/ -- Isco, Inc. reported net income for the second quarter ended January 23, 2004, of $1.5 million or $0.26 per diluted share, on sales of $17.4 million, compared with a net loss of $10,000, or $0.00 per diluted share, on sales of $14.3 million for the same period last year. Net income during the first six months of fiscal 2004 was $2.1 million, or $0.36 per diluted share, on sales of $34.5 million, compared with net income of $0.4 million, or $0.07 per diluted share, on sales of $29.8 million for the same period a year ago. Reviewing the recent quarterly results, Doug Grant, president and chief operating officer, commented, "We are extremely pleased with our quarterly results. We were able to increase sales and drive a substantial amount of the increase to the bottom line. Our quarterly sales were boosted by pharmaceutical companies' spending that was delayed in the previous year by economic conditions. This directly benefited our chromatography line. We also experienced increased calendar year-end spending by various industries that benefited all product lines." Net sales from Isco's three major product lines of samplers, chromatography, and flow meters were $26.8 million for the six-month period, an increase of 17 percent over the prior year. Sales of chromatography and flow meter products drove this growth. Revenues from our other products and services were $7.7 million for the same period, up 13 percent over the prior year driven by international sales of process monitoring products. Domestic sales of $23.0 million were up 5.5 percent over the prior year and international sales of $11.5 million were up 45.2 percent over the prior year. Income from operations for the first six months was $2.8 million or 8.2% of net sales compared with $0.3 million or 1.0% of net sales for the same period a year ago. The improvement was driven by $2.1 million of additional gross margin dollars generated by increased sales and $0.4 million of reduced operating expenses. The gross margin, as a percentage of sales, decreased to 52.5% from 54.0% due to the impact of the first quarter write-off of inventory associated with the divestiture of the supercritical fluid extraction (SFE) product line. Excluding the impact of the SFE charge, the gross margin, as a percentage of sales, was 54.3%. The improvement over the prior year was due to favorable shifts in product line mix and benefits from manufacturing cost improvements. The reduction in operating expenses was driven by a $0.6 million decrease in selling, general, and administrative (SG&A) expenses. While both fiscal years included one-time charges, excluding the net impact of these charges,SG&A expenses decreased by $0.4 million due to benefits realized from the operational improvements and the reduction in force which occurred in the latter part of fiscal 2003, offsetting variable expense increases associated with increased sales and profitability. Cash and investments increased by $4.3 million to $19.0 million at January 23, 2004 from the beginning of the year. The increase in cash was driven by cash flows from operations of $5.6 million offset by debt repayments and cash dividend payments. Cash flows generated by operations of $5.6 million in the current year compares to cash flows generated of $0.9 million in the prior year. The improvement was driven by increased earnings, reduced investment in inventory which included the write-off of the SFE inventory, and changes in income taxes. Doug Grant further commented, "While we are very pleased with our improved performance on a quarter over quarter basis and for the full year compared to the prior year, we remain somewhat cautious about sustaining performance at this high level for the remainder of the year. Our operational expenses are expected to show a modest increase and our ability to repeat the recent strong quarterly sales performance may be limited by the vigor and sustainability of the global economic recovery. Relative to the SFE divestiture, we have communicated to our distribution channels our intent to complete this divestiture within the next fiscal quarter either via a sale of assets or a shutdown of operations. We do not expect any material negative impact to our future performance based on either outcome." Comments included in this News Release may include "forward-looking statements" within the meaning of the federal securities laws. These statements as to anticipated future results are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ markedly from those projected or discussed here. Such risks and uncertainties are detailed in Isco, Inc.'s Annual Report on Form 10-K filed with the SEC in November 2003 and are incorporated herein by reference. Isco, Inc. cautions readers not to place undue reliance upon any such forward- looking statements, which speak only as of the date hereof. News releases and other information regarding Isco, Inc. may be found at http://www.isco.com/ on the Internet. ISCO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three months ended Six months ended Jan 23 Jan 24 Jan 23 Jan 24 (Amounts in thousands, except 2004 2003 2004 2003 per share data) Net sales $17,426 $14,262 $34,540 $29,756 Cost of sales 7,733 6,745 16,393 13,690 9,693 7,517 18,147 16,066 Operating expenses: Selling, general, and administrative 5,780 6,134 11,967 12,537 Research and engineering 1,740 1,570 3,355 3,235 7,520 7,704 15,322 15,772 Income (loss) from operations 2,173 (187) 2,825 294 Other income (expense): Investment income 143 163 320 332 Interest expense (37) (68) (80) (127) Other, net 36 33 101 86 143 128 341 291 Income (loss) before income taxes 2,315 (59) 3,166 585 Provision for (benefits from) income taxes 784 (49) 1,024 164 Net income (loss) $1,531 $(10) $2,142 $421 Basic earnings per share $0.27 $ -- $0.37 $0.07 Diluted earnings per share $0.26 $ -- $0.36 $0.07 Cash dividends declared per share $0.06 $0.06 $0.12 $0.12 Weighted average number of shares outstanding (basic) 5,732 5,673 5,730 5,673 Additional shares assuming exercise of common stock equivalents and dilutive stock options 183 -- 170 218 Weighted average number of shares outstanding (diluted) 5,915 5,673 5,900 5,891 ISCO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) ASSETS Jan 23 Jul 25 (Amounts in thousands) 2004 2003 Current assets: Cash and cash equivalents $1,600 $5,383 Short-term investments 1,820 4,629 Accounts receivable (net) 10,012 10,590 Inventories 8,702 9,489 Refundable income taxes -- 303 Deferred income taxes 870 812 Other current assets 543 417 Total current assets 23,547 31,623 Property and equipment (net) 13,020 13,768 Long-term investments 15,530 4,717 Other assets 4,350 4,327 Total assets $56,447 $54,435 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $1,545 $1,222 Accrued expenses 3,527 3,698 Income taxes payable 414 -- Short-term borrowing 2,203 2,113 Current portion of long-term debt 32 503 Total current liabilities 7,721 7,536 Deferred income taxes 660 532 Long-term debt, less current portion 637 584 Shareholders' equity 47,429 45,783 Total liabilities and shareholders' equity $56,447 $54,435 DATASOURCE: Isco, Inc. CONTACT: Vicki L. Benne, Chief Financial Officer of Isco, Inc., +1-402-465-2097 Web site: http://www.isco.com/

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