EX-99.1 2 v131965_ex99-1.htm
 
Contact:  Mark Murphy, Chief Executive Officer
(949) 769-3200
 
Jeff Stanlis, Investor Relations
Hayden Communications, Inc.
(602) 476-1821         
For Immediate Release      


PRO-DEX, INC. ANNOUNCES
FISCAL FIRST QUARTER 2009
RESULTS AND $4.0 MILLION IN
NEW ORDERS FROM EXISTING
CUSTOMERS


IRVINE, CA, November 13, 2008 - PRO-DEX, INC. (NASDAQ: PDEX) today announced financial results for the first fiscal quarter 2009, the period ending September 30, 2008. In addition, Pro-Dex announced receiving new purchase commitments subsequent to the end of the quarter from existing customers for $4.0 million of product to be delivered throughout calendar year 2009.

Consolidated net sales for the fiscal first quarter decreased 6% to $5.7 million compared to $6.0 million reported for the fiscal first quarter of 2008. Consolidated gross profit for the quarter decreased 19% over the same quarter in the previous year to $1.7 million, a 31% gross profit margin, compared to gross profit of $2.2 million or 36% gross profit margin last year.

Commenting on top line performance, Mark P. Murphy, the Company’s President and Chief Executive Officer, said, “It’s important to understand the specifics of our top line changes when making year-to-year comparisons. Sales to our largest customer increased 14% compared to last year and, subsequent to the end of the quarter, this customer placed a new $1.0 million purchase order for delivery in early 2009. Conversely, sales to our second-largest customer decreased year-over-year, accounting for almost the entire consolidated decrease in sales for the quarter. A year ago, this customer was purchasing a significant amount of component inventory from us in preparation for manufacturing their own surgical handpieces. However, given improved relations between our companies, this customer aborted their own manufacturing efforts, increased their finished product purchases from us, and hired Pro-Dex to design a next generation product for them.”

As a result, total sales to this customer decreased given the elimination of last year’s component sales. Subsequent to the end of the Q1, this customer placed a new $3.0 million purchase order for delivery in calendar year 2009.

Inclusive of the $4.0 million addition, the Company ended October with an $11.2 million backlog of orders to be shipped over the next 12 months. Pro-Dex also has an additional $3.2 million in contractual purchase commitments related to new product development projects, order commitments not reflected in current backlog numbers. The Company anticipates receipt of purchase orders for this new product by the end of 2008. Historically, step-function increases in backlog have been a reliable leading indicator to future increases in sales.

Consolidated operating expenses for the fiscal first quarter 2009 increased by 17% to $1.9 million, compared to $1.6 million in the first fiscal quarter 2008, primarily driven by increased labor expenditures, higher costs associated with Sarbanes Oxley compliance, and increased costs associated with new corporate facilities.

Commenting on the company’s expenses, Mr. Murphy noted, “In the last year, we have built a significant amount of infrastructure to respond to new product development opportunities. Although significant contracts have been won and the development of the associated new products is under way, the increased shipments from these investments have not yet been realized. While we remain confident that these sales will begin this fiscal year, we are taking immediate actions to align our cost structure with existing revenues to ensure profitability and positive cash flow during the interim.”
 
 
 
 
 
Net loss for the first fiscal quarter 2009 was $118,000 or $(0.01) per basic and diluted share compared to net income of $326,000 or $0.03 per share on a basic and diluted basis for the three months ended September 30, 2007.

Mr. Murphy concluded, “We’ve reduced our borrowing under our credit lines by $300,000 since the end of Q1, leaving a total of $3.7 million of borrowing capacity remaining, if necessary. In addition, the Company repurchased almost 65,000 shares during the first quarter, at a total cost of approximately $60,000, and we have repurchased an additional 40,000 shares during the early part of the second quarter. Moving forward, we believe we will post another consecutive year of top line growth. With current development projects nearing completion and with a filled pipeline of project proposals, we are cautiously optimistic that we are nearing the inflection point and believe we will make continued progress during the coming quarters.”
 
 
 
Teleconference Information:

Investors and all others are invited to listen to a conference call discussing the first fiscal quarter 2009 results, today at 4:30 p.m. Eastern Time. The call is scheduled to be broadcast live over the Internet and may be accessed by visiting the Company's website at http://www.pro-dex.com. Mark Murphy, Chief Executive Officer and Jeff Ritchey, Chief Financial Officer, plan to host the call. If you would like to join the call, dial (866) 323-3543 U.S. and (706) 679-0672 International, conference I.D. 73154118. You may identify the call as the Pro-Dex First Quarter Earnings Call. An online archive of the broadcast will be available within one hour of the completion of the call and will be accessible on the Company's website for 30 days. Additionally, a telephone replay will be available 2 hours after the call for 48 hours by dialing (800) 642-1687 U.S. or (706) 645-9291 for international callers, conference I.D. number 73154118.

Pro-Dex Inc., with operations in Irvine, California, Beaverton, Oregon and Carson City, Nevada, specializes in bringing speed to market in the development and manufacture of technology-based solutions that incorporate embedded motion control, miniature rotary drive systems 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, scientific research facilities, commercial and military aircraft, and high tech manufacturing operations globally.

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
        
   
September 30, 2008 (unaudited)
  
June 30,2008
(audited)
  
ASSETS
          
Current assets:
          
     Cash and cash equivalents
 
$
384,000
  
$
517,000
  
     Accounts receivable, net of allowance for doubtful accounts
              
       of $130,000 at September 30, 2008 and $144,000 at June 30, 2008
    
3,183,000
   
2,842,000
 
Other current receivables
    
-
   
205,000
 
     Inventories
    
4,640,000
   
5,101,000
 
     Prepaid expenses
   
265,000
   
214,000
 
     Prepaid income taxes
    
869,000
   
860,000
 
     Deferred income taxes
    
1,182,000
   
1,176,000
 
Total current assets
   
10,523,000
   
10,915,000
 
 
              
Property, plant, equipment, net
   
6,416,000
   
6,470,000
 
Other assets:
              
Goodwill
    
2,997,000
   
2,997,000
 
Intangibles - Patents, net
    
1,197,000
   
1,221,000
 
     Other
   
62,000
   
68,000
 
Total other assets
   
4,256,000
   
4,286,000
 
               
Total assets
  
$
21,195,000
  
$
21,671,000
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
Current liabilities:
              
Credit Line
  
$
2,600,000
  
$
2,000,000
  
Accounts payable
    
1,303,000
   
1,736,000
 
Accrued expenses
    
1,712,000
   
2,053,000
 
Income taxes payable
    
-
   
114,000
 
Current portion of term note
    
333,000
   
396,000
 
Current portion of real estate loan
    
31,000
   
30,000
 
Total current liabilities
   
5,979,000
   
6,329,000
 
Long-term liabilities
              
Real estate loan
    
1,553,000
   
1,560,000
 
Patent deferred payable
    
44,000
   
44,000
 
Deferred income taxes
    
290,000
   
290,000
 
Deferred rent
    
167,000
   
150,000
 
Total long-term liabilities
   
2,054,000
   
2,044,000
 
Total liabilities
    
8,033,000
   
8,373,000
 
Commitments and contingencies
             
Shareholders' equity:
              
Common shares; no par value; 50,000,000 shares authorized;
              
9,738,437 shares issued and outstanding September 30, 2008,
              
9,803,366 shares issued and outstanding June 30, 2008,
    
16,527,000
   
16,545,000
 
Accumulated deficit
   
(3,365,000
)
  
(3,247,000
)
               
Total shareholders’ equity
    
13,162,000
   
13,298,000
 
               
Total liabilities and shareholders’ equity
  
$
21,195,000
  
$
21,671,000
  

 
 
 

PRO-DEX, INC. and SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF OPERATIONS
  
Three months ended September 30 (unaudited)
  
           
   
2008
  
2007
  
           
Net sales
 
$
5,656,000
  
$
5,992,000
  
               
Cost of sales
   
3,902,000
   
3,839,000
 
Gross profit
   
1,754,000
   
2,153,000
 
               
Operating expenses:
             
Selling expenses
    
344,000
   
323,000
 
General and administrative expenses
   
835,000
   
735,000
 
Research and development costs
   
731,000
   
575,000
 
Total operating expenses
   
1,910,000
   
1,633,000
 
               
Income (loss) from operations
   
(156,000
)
  
520,000
 
               
Other income (expense):
             
Other expense, net
   
-
   
6,000
 
Royalty income
    
2,000
   
6,000
 
Interest expense
    
(61,000
)
  
(47,000
)
Total
    
(59,000
)
  
(35,000
)
               
Income (loss) before provision (benefit) for income taxes
    
(215,000
)
  
485,000
 
               
Provision (benefit) for income taxes
    
(97,000
)
  
159,000
 
Net income (loss)
  
$
(118,000
)
$
326,000
  
 
              
Net income (loss) per share:
              
Basic
  
$
(0.01
)
$
0.03
  
Diluted
  
$
(0.01
)
$
0.03
  
               
Weighted average shares outstanding - basic
    
9,783,407
   
9,718,366
 
Weighted average shares outstanding - diluted
    
9,783,407
   
9,947,884
 
 
 
 
 
 
 

PRO-DEX, INC. and SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
Three months ended September 30 (unaudited)
  
           
   
2008
  
2007
  
Cash Flows from Operating Activities:
         
Net Income (Loss)
  
$
(118,000
)
$
326,000
  
Adjustments to reconcile net income to net cash provided by operating activities:
              
Depreciation and amortization
   
222,000
   
120,000
 
Stock based compensation
    
42,000
   
48,000
 
(Recovery of) provision for doubtful accounts
    
(14,000
)
  
(12,000
)
Provision for slow moving and obsolete inventory
    
-
   
15,000
 
(Decrease) in deferred taxes
    
(5,000
)
  
-
 
Changes in:
              
(Increase) decrease in accounts receivable
    
(122,000
)
  
481,000
 
Decrease in inventories
    
461,000
   
172,000
 
(Increase) in prepaid expenses
    
(50,000
)
  
(51,000
)
(Increase) decrease in other assets
    
5,000
   
(12,000
)
(Decrease) Increase in accounts payable and accrued expenses
    
(756,000
)
  
58,000
 
(Decrease) in income taxes payable
    
(124,000
)
  
(53,000
)
Net Cash (used by) provided by Operating Activities
   
(459,000
)
  
1,092,000
 
               
Cash Flows From Investing Activities:
             
Purchases of equipment and leasehold improvements
    
(144,000
)
  
(344,000
)
               
Net Cash used in Investing Activities
   
(144,000
)
  
(344,000
)
               
Cash Flows from Financing Activities:
              
    Net borrowing (payments) on line of credit
   
600,000
   
(300,000
)
    Principal payments on term note
    
(63,000
)
  
(63,000
)
    Principal payments on mortgage
    
(7,000
)
  
(7,000
)
Stock Repurchases
    
(60,000
)
  
-
 
               
Net Cash provided by (used by) Financing Activities
    
470,000
   
(370,000
)
               
Net Increase (decrease) in Cash and Cash Equivalents
   
(133,000
)
  
378,000
 
Cash and Cash Equivalents, beginning of period
   
517,000
   
403,000
 
               
Cash and Cash Equivalents, end of period
 
$
384,000
  
$
781,000
  
               
Supplemental Information
              
Cash payments for interest
  
$
56,000
  
$
45,000
  
               
Cash payments for income taxes
 
$
-
  
$
215,000