ISKO Isco (MM)

Isco Reports Third Quarter Fiscal 2004 Results LINCOLN, Neb., June 4 /PRNewswire-FirstCall/ -- Isco, Inc. (NASDAQ:ISKO) reported net income for the third quarter ended April 23, 2004, of $0.9 million or $0.16 per diluted share, on sales of $18.1 million, compared with net income of $0.2 million, or $0.04 per diluted share, on sales of $15.1 million for the same period last year. Net income during the first nine months of fiscal 2004 was $3.1 million, or $0.52 per diluted share, on sales of $52.6 million, compared with net income of $0.6 million, or $0.11 per diluted share, on sales of $44.8 million for the same period a year ago. Reviewing the recent results, Doug Grant, president and chief operating officer, commented, "We are extremely pleased with our quarter and year-to-date results. We reached record highs in both orders and sales this past quarter. Net orders and net sales for the quarter were $19.0 and $18.1 million, respectively. For the nine months, net orders were $51.5 million and net sales were $52.6 million, increases of 17.2 percent and 17.4 percent, respectively, over the previous year." Net sales from Isco's three major product lines of samplers, chromatography, and flow meters were $41.0 million for the nine-month period, an increase of 20 percent over the prior year. Sales from all three lines contributed to the increase. Revenues from our other products and services were $11.6 million for the same period, up 11 percent over the prior year driven by international sales of process monitoring products. Domestic sales of $35.9 million were up 11 percent over the prior year and international sales of $16.7 million were up 34 percent over the prior year. Income from operations for the first nine months was $4.1 million or 7.8% of net sales compared with $0.4 million or 0.9% of net sales for the same period a year ago. The improvement was driven by $4.5 million of additional gross margin dollars generated by increased sales. The gross margin, as a percentage of sales, increased to 53.7% from 53.0%. The improvement included the negative impact of the first quarter write-off of inventory associated with the divestiture of the supercritical fluid extraction (SFE) product line. The improvement over the prior year was due to favorable shifts in product line mix and benefits from manufacturing cost improvements. Operating expenses were $24.2 million for the nine-month period, an increase of $0.8 million over the prior year. The increase was driven by variable expenses associated with increased sales, as well as, $0.5 million of charges associated with the pending merger with Teledyne Technologies, Inc. On a percentage of sales basis, operating expenses were 45.9%, down 6.2% from the previous year's level. Cash and investments increased by $4.8 million to $19.5 million at April 23, 2004 from the beginning of the year. The increase in cash was driven by cash flows from operations of $6.9 million offset by debt repayments and cash dividend payments. Cash flows generated by operations of $6.9 million in the current year compares to cash flows generated of $0.3 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, "We are very pleased with our continued ability to out perform the previous year in both sales and operational income on a quarter over quarter basis and for the nine-month period. Our efforts have driven increased sales across all active product lines and our continued focus on operational improvements have contributed to improved gross margins and reduced operating expenses as a percentage of sales. We remain somewhat cautious about our ability to sustain the current year's growth in orders and operating income performance into the next quarter due to the potential impact of the continued pace of the global economic recovery and the short-term impact of activities and expenses associated with the pending merger with Teledyne Technologies, Inc." 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 Nine months ended Apr 23 Apr 25 Apr 23 Apr 25 (Amounts in thousands, 2004 2003 2004 2003 except per share data) Net sales $18,093 $15,057 $52,633 $44,813 Cost of sales 7,965 7,358 24,358 21,048 10,128 7,699 28,275 23,765 Operating expenses: Selling, general, and administrative 7,187 5,975 19,154 18,512 Research and engineering 1,661 1,602 5,016 4,837 8,848 7,577 24,170 23,349 Income from operations 1,280 122 4,105 416 Other income: Investment income 127 108 447 440 Interest expense (38) (52) (118) (179) Other, net 42 50 143 136 131 106 472 397 Income before income taxes 1,411 228 4,577 813 Provision for income taxes 470 6 1,494 170 Net income $941 $222 $3,083 $643 Basic earnings per share $0.16 $0.04 $0.54 $0.11 Diluted earnings per share $0.16 $0.04 $0.52 $0.11 Cash dividends declared per share $0.06 $0.06 $0.18 $0.18 Weighted average number of shares outstanding (basic) 5,739 5,704 5,733 5,686 Additional shares assuming exercise of common stock equivalents and dilutive stock options 180 139 166 158 Weighted average number of shares outstanding (diluted) 5,919 5,843 5,899 5,844 ISCO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) ASSETS Apr 23 Jul 25 (Amounts in thousands) 2004 2003 Current assets: Cash and cash equivalents $1,895 $5,383 Short-term investments 2,965 4,629 Accounts receivable (net) 10,882 10,590 Inventories 8,901 9,489 Refundable income taxes -- 303 Deferred income taxes 991 812 Other current assets 611 417 Total current assets 26,245 31,623 Property and equipment (net) 12,972 13,768 Long-term investments 14,659 4,717 Other assets 4,367 4,327 Total assets $58,243 $54,435 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $1,698 $1,222 Accrued expenses 3,700 3,698 Income taxes payable 980 -- Short-term borrowing 2,313 2,113 Current portion of long-term debt 32 503 Total current liabilities 8,723 7,536 Deferred income taxes 606 532 Long-term debt, less current portion 590 584 Shareholders' equity 48,324 45,783 Total liabilities and shareholders' equity $58,243 $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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