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. -0- *T
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 ========== ========= *T
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