ISKO Isco (MM)

Isco Reports First Quarter Fiscal 2004 Results LINCOLN, Neb., Dec. 4 /PRNewswire-FirstCall/ -- Isco, Inc. reported net income for the first quarter ended October 24, 2003, of $611,000, or $0.10 per diluted share, on sales of $17.1 million, compared with net income of $431,000, or $0.07 per diluted share, on sales of $15.5 million for the same period last year. "Our first quarter sales were extremely strong and hit an all-time high," said Doug Grant, president and COO. "The increase in sales of $1.6 million over the prior year was due primarily to shipments from our year-end backlog as well as an increased order level on a quarter-over-quarter basis. Sales of $13.8 million from our largest product lines of samplers, flow meters, and chromatography increased by $1.8 million and drove the overall sales increase. The combined sales of our other products and services were down slightly due to lower sales of syringe pumps offsetting the increases in other products and services. Domestic sales of $11.3 million were down 3.9% over the prior year and international sales of $5.8 million were up 55.6%." Income from operations for the first quarter was $652,000 or 3.8% of net sales compared with $481,000 or 3.1% of net sales for the same period a year ago. Quarter-over-quarter, the gross margin, as a percentage of sales, decreased from 55.2% to 49.4% while operating expenses of $7.8 million decreased by $266,000 due to decreased selling, general, and administrative (SG&A) expenses. The first quarter results included non-cash charges of $714,000 to cost of goods sold and $153,000 to selling, general, and administrative (SG&A) associated with impairments in inventory and property associated with the planned divestiture of the supercritical fluid extraction (SFE) product line. Excluding the impact of the SFE charges, the decline in the gross margin, as a percentage of sales, from the prior year was due to shifts in sales mix in both products and geographic areas while the decrease in operating expenses resulted from the reduction in force and associated expenses that occurred in the latter half of fiscal 2003. Cash and investments increased by $2.0 million to $16.7 million at October 24, 2003 from the beginning of the year. The increase in cash was driven by cash flows from operations of $2.6 million offset primarily by cash dividend payments. Cash flows generated by operations of $2.6 million in the current year compares to a use of cash of $0.2 million in the prior year. First quarter fiscal 2004 reductions in accounts receivable and inventory were the primary factors in the operating cash flow improvement over the same period of last year. Doug Grant further commented, "While we are very pleased with our strong quarterly results, excluding the charge associated with the SFE divestiture, we remain cautious about our ability to sustain this performance level. Looking to the remaining quarters of our fiscal year, our performance will be somewhat dependent on the pace of recovery of the global economy and in the short term will be influenced by the cyclical nature of our environmental business. Relative to the SFE divestiture, while we are still evaluating exit alternatives, we believe the write-down of assets, primarily inventory, is appropriate based on the current options under consideration. We intend to make a final decision within the next several months. 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 Oct 24 Oct 25 (Amounts in thousands, except per share data) 2003 2002 Net sales $17,114 $15,494 Cost of sales 8,660 6,945 8,454 8,549 Operating expenses: Selling, general, and administrative 6,187 6,403 Research and engineering 1,615 1,665 7,802 8,068 Income from operations 652 481 Other income (expense): Investment income 177 169 Interest expense (43) (59) Other, net 65 53 199 163 Income before income taxes 851 644 Provision for income taxes 240 213 Net income $611 $431 Basic earnings per share $0.11 $0.08 Diluted earnings per share $0.10 $0.07 Cash dividends declared per share $0.06 $0.06 Weighted average number of shares outstanding (basic) 5,728 5,673 Additional shares assuming exercise of common stock equivalents & dilutive stock options 171 253 Weighted average number of shares outstanding (diluted) 5,899 5,926 ISCO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) ASSETS Oct 24 July 25 (Amounts in thousands) 2003 2003 Current assets: Cash and cash equivalents $1,823 $5,383 Short-term investments 3,621 4,629 Accounts receivable (net) 9,669 10,590 Inventories 8,770 9,489 Refundable income taxes -- 303 Deferred income taxes 994 812 Other current assets 601 417 Total current assets 25,478 31,623 Property and equipment (net) 13,291 13,768 Long-term investments 11,287 4,717 Other assets 4,310 4,327 Total assets $54,366 $54,435 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $1,443 $1,222 Accrued expenses 3,021 3,698 Income taxes payable 181 -- Short-term borrowing 2,277 2,113 Current portion of long-term debt 217 503 Total current liabilities 7,139 7,536 Deferred income taxes 522 532 Long-term debt, less current portion 587 584 Shareholders' equity 46,118 45,783 Total liabilities and shareholders' equity $54,366 $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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