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COMPANY CONFIDENTIAL Supporting Material
To Our
December 20, 2012
Conference Call
Introduction
At the outset of our December 20, 2012 conference call, you inquired as to whether we had materials for your reference, and our response was that we believed our publicly released information spoke for itself.
True enough. We pride ourselves on the fullness of our disclosure, and our culture of transparency.
However, we felt, upon the conclusion of that conference call, that furnishing you with such materials would have better facilitated a full understanding of Pro-Dex – with a focus on our new strategy: its articulation, implementation and execution.
We also are furnishing you with information regarding (a) Pro-Dex shareholder value during the tenure of our current Board nominees, (b) Mike Berthelot’s background and (c) the peer group of companies identified by the independent compensation consultant we engaged in 2011.
We appreciate your consideration and analysis, and welcome further questions as you proceed. Our contact information appears at the end of this presentation.
Genesis of the New Strategy
In six months, Pro-Dex:
oWelcomed Mike Berthelot, as its new CEO;
oAdopted the new strategy;
oImplemented the strategy; and
oAnnounced results that exceeded expectations in the first full quarter of the strategy’s execution
The Strategy Timeline – Public Transparency Throughout
?April 2012
?May 2012
?August 2012
?October 2012
?Mike Berthelot named CEO
?Fiscal Q3 (March 31) Results Conference Call – Strategy Articulation
?Update Conference Call –Strategy Implementation
?Fiscal Q1 (September 30) Results Conference Call – Strategy Execution
COMPANY CONFIDENTIAL
Strategy Articulation
The Four Pillars of
The New Strategy
Strategy Articulation
Two weeks after the CEO change, we articulated the new strategy in a conference call on May 4, 2012:
1.”We will improve our sales process so that we have resources dedicated to the identification and capture of new business.”
| 2.”We |
|
will focus on reducing our lead times so that we exceed customer expectations.” |
| 3.”We |
|
will focus on controlling our cost structure.” |
| 4.”We |
|
will increase our focus on quality and innovation.” |
— Transcript of Conference Call, May 4, 2012 (Appendix A-2)
Strategy Implementation
As discussed in our December 20 conference call with ISS, we could not fully implement the strategy—particularly with respect to cost control—until we had completed our product manufacturing and shipping obligations to our then-largest customer late in our fiscal year ended June 2012.
One month after the beginning of fiscal 2013 and the concurrent full implementation of the strategy, we conducted a conference call to report on our progress. Excerpts follow …
Strategy Implementation
1.”…our quoting and lead activity is gaining strength. We are working on our messaging and marketing materials. With more than 35,000 medical and dental hand pieces in the market, there are few who have our experience and expertise in the field of powered surgical and dental instruments.”
2.”We are also making progress in our efforts to reduce lead time…by entering into frame contracts with our major customers. These frame contracts amount to take or pay agreements covering specified quantities over specified time periods ranging from 12 to 18 months.”
Strategy Implementation
3.”…it is clearly necessary to reduce our cost structure…we have been able to lower the manufacturing direct and overhead cost structure such that we are not required to change our historical standard cost…we have reduced the number of associates by 20% since November and instituted a 5% across the board compensation reduction for every associate.
4.”Our engineers are hard at work developing new products and improving the quality and usefulness of existing products…our ability to spread the cost of research in sealing, motor, and battery technology across the broad spectrum of products is a competitive advantage for us.”
— Transcript of Conference Call, August 6, 2012 (Appendix B-2)
Strategy Execution
We all know that one quarter does not constitute a trend, but we believe that the results for the quarter ended September 30, 2012–
the first quarter of full implementation of the new strategy –
was a good start.
Strategy Execution
?”…we believe that the first quarter of fiscal 2013 marks the beginning of the beginning of Pro-Dex’s resurgence as the focused developer and manufacturer of powered surgical instruments.”
?”… the increase in our gross margin to 36%, the highest in four consecutive quarters even while quarterly sales were the lowest over the same period.”
?”Our increased sales efforts…yield 26% aggregate sales growth when compared to last year’s first quarter without the sales to our former largest customer.”
?”…our book to bill ratio for the first quarter was 1.14, our bookings for the first three weeks of October amounted to over $3.5 million for total bookings for the first four months almost of this fiscal year of $7.5 million.”
?”In addition to this strong level of bookings we have a solid pipeline of projects that present opportunities for the future.”
— Transcript of Conference Call, October 25, 2012 (Appendix C-2)
COMPANY CONFIDENTIAL Strategy Execution – Quarterly Data Q1 FY 13Q4 FY 12Q1 FY 12Sales3,461,024$ 3,655,975$ 5,044,749$ Gross profit1,235,938$ 857,541$ 2,108,117$ 35.7%23.5%41.8%Operating income (loss)—continuing ops(51,647)$ (698,853)$ 357,391$ -1%-19%7%Pre-tax income (loss)—continuing ops(58,008)$ (706,473)$ 347,121$ Income taxes410$ (152,810)$ 1,043$ Income (loss)—continuing ops(58,418)$ (553,663)$ 346,078$ Income (loss)—discontinued ops41,574$ 10,432$ 100,240$ Net income (loss)(16,844)$ (543,231)$ 446,318$ # Shares3,279,578 3,251,850 3,251,850 EPS(0.01)$ (0.17)$ 0.14$ EBITDA140,856$ (551,101)$ 626,557$
Shareholder Value
A minority of two of the Company’s five director nominees have served on our Board for the entire five-year period noted by the AO Group in its December 27, 2012 filing with the SEC of materials being presented to ISS
Mr. Berthelot and Mr. Holder joined the Company’s board of directors on January 9, 2009 on which date the Company’s closing reverse split adjusted share price was $1.41
Based on the Company’s closing share price on December 21, 2012 of $2.02, during the tenure of Mr. Berthelot and Mr.Holder as directors shareholders have realized a $0.61, or 43.3%, increase in per share value
Michael Berthelot’s Background
• Mr. Berthelot, then Vice Chairman of TransTechnology Corporation’s board of directors, was appointed CEO of TransTechnology on December 12, 1991 and a public announcement made shortly thereafter.
• On August 13, 1992 following his filing of a slate of directors in opposition to those of the company, he was terminated from that position. Eight weeks later on October 12, 1992 following the election of his slate of directors by the shareholders, he was reappointed CEO
• On January 16, 2003 TransTechnology announced that Mr. Berthelot would be stepping down as CEO upon the completion of its restructuring program. Mr. Berthelot resigned as CEO of the company on February 24, 2003.
• The exact tenure of Mr. Berthelot’s service as CEO of TT over the period 1991 through 2003 was 11 years and 1 month across a period of 13 calendar years
Michael Berthelot’s Background
• On the date prior to the announcement that Mr. Berthelot initially became CEO of
TransTechnology, December 11, 1991, that company’s shares traded on the NYSE at $5.50.
• On the date that Mr. Berthelot’s resignation as CEO was announced, January 16, 2003, the company’s closing price on the NYSE was $9.90, an increase of $4.40 or 80%. During that same time period TransTechnology also paid shareholders $4.50 per share of dividends. The total annual rate of return to shareholders over the entire time period was approximately 11%.
• At the time of Mr. Berthelot’s resignation from the position of CEO of TransTechnology, the company traded on the NYSE under the symbol “TT”. Because following its restructuring program it no longer met the net worth and market cap listing standards of the NYSE, the company transferred to the OTC in January 2005 (two years after Mr. Berthelot had stepped down as CEO) and then listed on the AMEX in August 2006, where it trades today.
• The reference on the Company’s website as TransTechnology having been “then” a $350 million revenue multinational manufacturing company should have read “prior to its restructuring” and relates to annualized revenues from both continuing and discontinued operations. For the fiscal year ended March 31, 2001, the last fiscal year prior to the Company’s restructuring, TransTechnology reported revenues of $328 million.
Compensation Peer Group
The following companies comprise the peer group identified by the independent compensation consultant engaged by Pro-Dex in 2011
• Atrion
• Allied Motion Technologies
• CAS Medical Systems
• Pro-Dex
• Anika Therapeutics
• UTMD
• Synergetics USA
• Angeion
• iCad
• IRIS International
• Rochester Medical
• Lemaitre Vascular
• Retractable Technologies
• Endologix
• Cirrus Logic
• Bovie Medical
Appendices
Attachments accompanying this presentation are:
?Strategy Articulation – May 4, 2012 ?Press Release – Appendix A-1
?Conference Call Transcript – Appendix A-2
?Strategy Implementation – August 6, 2012 ?Press Release – Appendix B-1
?Conference Call Transcript – Appendix B-2
?Strategy Execution – October 25, 2012 ?Press Release – Appendix C-1
?Conference Call Transcript – Appendix C-2
Contact Us
We are available to you for response to any questions you may have, and ask that you do not hesitate to contact us,
as follows:
Mike Berthelot, CEO
949.769.3299 (office)
858.504.0240 (mobile)
michael.berthelot@pro-dex.com
Hal Hurwitz, CFO
949.769.3250 (office)
714.270.3344 (mobile)
hal.hurwitz@pro-dex.com
Appendix A-1
Contact: Michael J. Berthelot, Chief Executive Officer
(949) 769-3200
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL THIRD QUARTER AND NINE MONTH RESULTS
IRVINE, CA, May 4, 2012—PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal third quarter and nine months ended March 31, 2012.
Pro-Dex, Inc. (the “Company”) reported a loss from continuing operations of $513,000, or $0.16 per diluted share, for the quarter ended March 31, 2012 compared to income from continuing operations of $909,000, or $0.28 per diluted share, in the same period of fiscal 2011. The net loss for the third quarter of fiscal 2012 was $487,000 or $0.15 per diluted share, compared to net income of $868,000 or $0.26 per diluted share in the third quarter of fiscal 2011. Sales for the quarter ended March 31, 2012 decreased 34% to $4.5 million from $6.9 million for the corresponding quarter in 2011, and decreased 21% to $13.6 million from $17.3 million for the nine months ended March 31, 2012 and 2011, respectively. For the nine months ended March 31, 2012, the net loss was $332,000, or $0.10 per diluted share, as compared to net income of $1.6 million, or $0.49 per diluted share for the corresponding period in 2011. As the Company has disclosed previously, the decrease in sales and the resulting net losses were primarily the result of the continuation of a reduction in purchases of the Company’s medical device products by its largest customer. The results from continuing operations for the 2012 and 2011 periods exclude the results of the Company’s former Astromec product line, which was sold in February 2012 as previously announced.
Gross profit for the quarter ended March 31, 2012 was $1.2 million, or 27%, compared to gross profit of $2.8 million, or 41%, for the year-ago period. For the nine months ended March 31, 2012 gross profit was $4.6 million, or 34%, compared to $7.2 million and 42%, respectively, for the corresponding nine-month period in 2011. These decreases resulted primarily from the year-over-year decrease in sales and a commensurate change in sales mix to products with lower gross margins. Also contributing to the 2012 gross margin decreases in the three-month period were reductions in manufacturing efficiencies due to the lower sales volume. In addition, higher warranty expenses contributed to the decreased gross margin in the 2012 nine-month period due to higher estimated per-unit repair costs for units that remain under warranty.
As previously announced by the Company, Mark P. Murphy, formerly the Company’s Chief Executive Officer and a director, resigned all of his positions with the Company and its subsidiary on April 20, 2012. Under the terms of the Separation Agreement entered into with Mr. Murphy, the Company agreed to pay him severance and to continue health insurance coverage for a period of one year, the aggregate cost of which was $339,000 and which was included in general and administrative expenses during the quarter ended March 31, 2012. The Company also entered into a six month consulting agreement with Mr. Murphy at a cost of $5,000 per month.
Operating expenses, which include selling, general and administrative, and research and development expenses, for the third fiscal quarter of 2012 increased 20% to $1,875,000 from $1,568,000 in the prior year’s quarter. The increase was primarily attributable to the payment of the severance costs associated with the previously noted change in chief executive officers and $58,000 of trade show and advertising expenses which were partially offset by reductions in employee related costs of $125,000. For the nine months ended March 31, 2012, operating expenses increased from the prior year’s nine month period by $330,000, or 7%. This increase was generally due to the previously noted severance costs in the third quarter of 2012, increases in advertising, trade show and travel expenses of $168,000, increased spending for small motor development of $65,000, and share-based compensation expense of $44,000, which were partially offset by reductions in website costs of $121,000 and employee related costs of $232,000.
The pre-tax loss from continuing operations was $680,000 for the quarter, compared to income from continuing operations of $1.2 million in the corresponding 2011 period.
Michael J. Berthelot, the Company’s President and Chief Executive Officer, commented, “I would like to thank Mark for all he has done for Pro-Dex over the past six years. He has left us with a strong balance sheet, a growing portfolio of new and under-development products, a solid management team and a top rate work force.”
“Our Company is at a transition point,” Mr. Berthelot continued, “We have a host of opportunities to pursue, but we must do so with care and excellence in execution. We have identified several initiatives which we believe will help us focus our resources on those actions that will provide significant and sustainable returns over both the short and long term. As we move forward we plan to emphasize the effectiveness of our sales process; our ability to exceed customer expectations for development and delivery; our commitment to innovation and quality; and, to constantly assess our cost structure.”
“I am very excited and proud to be part of Pro-Dex’s leadership team. We have a lot of hard work to do and a tight schedule within which to accomplish it, but I have confidence that our associates at every level are up to the challenge of providing sustainable value to our customers, our people and our shareholders.”
Teleconference Information:
Investors and analysts are invited to listen to a broadcast review of the Company’s fiscal 2012 third quarter financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting the Company’s website at www.pro-dex.com. The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S. or Canada.
For those who cannot access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern Time) on May 22, 2012 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S. or Canada, and then entering account number 286 and conference I.D. number 393235. An online archive of the broadcast will be available on the Company’s website www.pro-dex.com for a period of 365 days.
Pro-Dex, Inc., with operations in California and Oregon, specializes in bringing speed to market in the development and manufacture of technology-based solutions that incorporate powered surgical device drive and embedded motion control systems serving the medical, dental, semi-conductor and
scientific research markets. Pro-Dex’s products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world. 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| March 31, 2012 | June 30, 2011 | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 4,879,000 | $ | 4,689,000 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $13,000 at March 31, 2012 and $7,000 at June 30, 2011 |
2,228,000 | 3,128,000 | ||||||
| Other receivables |
88,000 | 12,000 | ||||||
| Inventories |
3,059,000 | 3,703,000 | ||||||
| Prepaid expenses |
193,000 | 145,000 | ||||||
| Income taxes receivable |
407,000 | — | ||||||
| Deferred income taxes |
162,000 | 163,000 | ||||||
|
|
|
|
|
|||||
| Total current assets |
11,016,000 | 11,840,000 | ||||||
| Property, plant, equipment and leasehold improvements, net |
2,597,000 | 3,661,000 | ||||||
| Real estate held for sale |
733,000 | — | ||||||
| Other assets |
54,000 | 60,000 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 14,400,000 | $ | 15,561,000 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,029,000 | $ | 1,207,000 | ||||
| Accrued expenses |
1,995,000 | 2,379,000 | ||||||
| Income taxes payable |
— | 78,000 | ||||||
| Current portion of bank term loan |
357,000 | 357,000 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
3,381,000 | 4,021,000 | ||||||
|
|
|
|
|
|||||
| Non-current liabilities: |
||||||||
| Bank term loan |
506,000 | 774,000 | ||||||
| Deferred income taxes |
162,000 | 163,000 | ||||||
| Deferred rent |
286,000 | 279,000 | ||||||
|
|
|
|
|
|||||
| Total non-current liabilities |
954,000 | 1,216,000 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
4,335,000 | 5,237,000 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Common shares; no par value; 50,000,000 shares authorized; 3,272,350 shares issued and outstanding at March 31, 2012 and at June 30, 2011 |
16,817,000 | 16,744,000 | ||||||
| Accumulated deficit |
(6,752,000 | ) | (6,420,000 | ) | ||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
10,065,000 | 10,324,000 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 14,400,000 | $ | 15,561,000 | ||||
|
|
|
|
|
|||||
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For The Three Months Ended March 31, |
||||||||
| 2012 | 2011 | |||||||
| Net sales |
$ | 4,539,000 | $ | 6,876,000 | ||||
| Cost of sales |
3,336,000 | 4,082,000 | ||||||
|
|
|
|
|
|||||
| Gross profit |
1,203,000 | 2,794,000 | ||||||
|
|
|
|
|
|||||
| Operating expenses: |
||||||||
| Selling expenses |
450,000 | 422,000 | ||||||
| General and administrative expenses |
939,000 | 675,000 | ||||||
| Research and development costs |
486,000 | 471,000 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
1,875,000 | 1,568,000 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before items below |
(672,000 | ) | 1,226,000 | |||||
|
|
|
|
|
|||||
| Other expense: |
||||||||
| Interest expense, net |
(8,000 | ) | (55,000 | ) | ||||
|
|
|
|
|
|||||
| Total other expense |
(8,000 | ) | (55,000 | ) | ||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before provision for income taxes |
(680,000 | ) | 1,171,000 | |||||
| Provision for (benefit from) income taxes |
(167,000 | ) | 262,000 | |||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations |
(513,000 | ) | 909,000 | |||||
| Income (loss) from discontinued operations |
26,000 | (41,000 | ) | |||||
|
|
|
|
|
|||||
| Net income (loss) |
$ | (487,000 | ) | $ | 868,000 | |||
|
|
|
|
|
|||||
| Net income (loss) per share: |
||||||||
| Basic |
$ | (0.15 | ) | $ | 0.27 | |||
| Diluted |
$ | (0.15 | ) | $ | 0.26 | |||
| Weighted average shares outstanding—basic |
3,272,350 | 3,272,350 | ||||||
| Weighted average shares outstanding—diluted |
3,272,350 | 3,289,324 | ||||||
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Nine Months Ended March 31, |
||||||||
| 2012 | 2011 | |||||||
| Net sales |
$ | 13,601,000 | $ | 17,314,000 | ||||
| Cost of sales |
9,043,000 | 10,092,000 | ||||||
|
|
|
|
|
|||||
| Gross profit |
4,558,000 | 7,222,000 | ||||||
|
|
|
|
|
|||||
| Operating expenses: |
||||||||
| Selling expenses |
1,192,000 | 1,197,000 | ||||||
| General and administrative expenses |
2,375,000 | 2,205,000 | ||||||
| Research and development costs |
1,555,000 | 1,390,000 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
5,122,000 | 4,792,000 | ||||||
|
|
|
|
|
|||||
| Income from operations |
(564,000 | ) | 2,430,000 | |||||
|
|
|
|
|
|||||
| Other income (expense): |
||||||||
| Interest expense, net |
(28,000 | ) | (135,000 | ) | ||||
|
|
|
|
|
|||||
| Total other income (expense) |
(28,000 | ) | (135,000 | ) | ||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before items below |
(592,000 | ) | 2,295,000 | |||||
| Provision for (benefit from) income taxes |
(165,000 | ) | 426,000 | |||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations |
(427,000 | ) | $ | 1,869,000 | ||||
| Income (loss) from discontinued operations |
95,000 | (258,000 | ) | |||||
|
|
|
|
|
|||||
| Net income (loss) |
$ | (332,000 | ) | $ | 1,611,000 | |||
|
|
|
|
|
|||||
| Net income (loss) per share: |
||||||||
| Basic |
$ | (0.10 | ) | $ | 0.49 | |||
| Diluted |
$ | (0.10 | ) | $ | 0.49 | |||
| Weighted average shares outstanding—basic |
3,272,350 | 3,262,474 | ||||||
| Weighted average shares outstanding—diluted |
3,272,350 | 3,270,549 | ||||||
PRO-DEX, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For The Nine Months Ended March 31, |
||||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | (332,000 | ) | $ | 1,611,000 | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
493,000 | 508,000 | ||||||
| Allowance for doubtful accounts |
7,000 | (17,000 | ) | |||||
| Share-based compensation |
73,000 | 28,000 | ||||||
| Changes in: |
||||||||
| Accounts receivable |
817,000 | (415,000 | ) | |||||
| Inventories |
644,000 | (188,000 | ) | |||||
| Prepaid expenses |
(48,000 | ) | (56,000 | ) | ||||
| Other assets |
8,000 | 17,000 | ||||||
| Accounts payable and accrued expenses |
(555,000 | ) | 166,000 | |||||
| Income taxes payable |
(486,000 | ) | 158,000 | |||||
|
|
|
|
|
|||||
| Net cash provided by (used in) operating activities |
621,000 | 1,812,000 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Purchases of equipment and leasehold improvements |
(245,000 | ) | (181,000 | ) | ||||
| Proceeds from sale of equipment |
82,000 | — | ||||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(163,000 | ) | (181,000 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Principal payments on term loan |
(268,000 | ) | (296,000 | ) | ||||
| Net proceeds from bank term loan refinancing |
— | 150,000 | ||||||
| Principal payments on mortgage |
— | (1,528,000 | ) | |||||
| Proceeds from exercise of stock options |
— | 27,000 | ||||||
|
|
|
|
|
|||||
| Net cash used in financing activities |
(268,000 | ) | (1,647,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
190,000 | (16,000 | ) | |||||
| Cash and cash equivalents, beginning of period |
4,689,000 | 3,794,000 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 4,879,000 | $ | 3,778,000 | ||||
|
|
|
|
|
|||||
| Supplemental Information | ||||||||
| Cash payments for interest |
$ | 25,000 | $ | 151,000 | ||||
| Cash payments for income taxes |
$ | 54,000 | $ | 205,000 | ||||
Appendix A-2
1
2
3
4
5
6
7
8
Appendix B-1
| Contact: Michael J. Berthelot, Chief Executive Officer (949) 769-3200 |
For Immediate Release
PRO-DEX PROVIDES INSIGHT INTO
FISCAL 2013 OPERATING PLAN AND PRELIMINARY RESULTS FOR FISCAL 2012
IRVINE, Calif., August 6, 2012 /PRNewswire-FirstCall/ —PRO-DEX, INC. (Nasdaq: PDEX) reported today that it had completed its budget and operating plan for the fiscal year beginning July 1, 2012 and ending June 30, 2013. The Company also reported that it expected to release results for the fourth quarter and fiscal year ended June 30, 2012 on or about August 31, 2012.
Michael J. Berthelot, Chief Executive Officer of Pro-Dex, said, “In light of the significant challenges facing the Company with the cessation of shipments to our largest customer having occurred in the fourth quarter of fiscal 2012 and the need for us to take fairly significant actions to offset that loss of business, we wanted to report to our shareholders what we are doing to strengthen our Company. We have anticipated this event for several quarters and while some responses could not be taken until we completed the work for that customer, we have acted quickly and directly.”
Mr. Berthelot continued, “As we said at our teleconference in May, we are focused on four critical areas of change which will lead the way for what we believe will be a resurgence in our Company. Of primary importance, we have focused 100% of our efforts on expanding our leadership in the field of powered rotary-driven surgical instruments for the medical and dental markets. This represents a change in direction for the Company, which had previously pursued growth in the contract manufacturing industry. We believe that the higher margins and intellectual property present in the surgical and dental instrument space present far higher value to our shareholders than does the lower margin non-IP centric contract business. To that end, we have reinvigorated our sales and marketing team with the addition of Frank Noone as our Vice President of Sales and Marketing. We have begun a program to update our corporate messaging and marketing materials, and expand our product offerings. We have seen a significant increase in the amount of quoting activity presented to us and we have begun to win new programs in our targeted space, which we believe confirms Pro-Dex’s position as the experts in the field of powered rotary drive surgical instruments. While we have attacked our cost structure in manufacturing and G&A, we have not diverted a significant amount of resources away from our sales, marketing, engineering and quality departments, as therein lies the base for the future growth of our Company.”
The Company reported that it had reduced its workforce by 20% over the past year, with the first major reduction in force taking place in November 2011 and a second in June 2012. In addition, remaining associates, including corporate officers, saw their base compensation reduced 5% effective July 1st. The headcount reductions, which included manufacturing and G&A staff, are expected to reduce costs by $665,000 from fiscal 2012 to 2013. The salary reduction plan, which is expected to be temporary, is expected to save approximately $50,000 each quarter it is in effect.
The Company also reported that it had conducted a line item review of every item in its budget, including manufacturing costs, as well as SG&A expenses, with the intent of reducing such expenditures as much as possible. Fiscal 2013 manufacturing costs, including personnel costs, are expected to be reduced
approximately 27% or $1.6 million from 2012’s level, which the Company believes is sufficient to meet its existing manufacturing commitments. In addition, the Company reported that it was undertaking several other manufacturing cost reduction measures, including a targeted 5% reduction in electricity usage, manufacturing cost analyses of major components, and re-evaluations of make/buy decisions. Accordingly, even though the Company anticipates a 40% reduction in throughput at its Irvine facility, the Company does not anticipate the need to adjust its standard manufacturing costs, due to the offsetting effect of these fiscal 2013 manufacturing cost reductions.
The Company reported that it expected to reduce its overall fiscal 2013 SG&A spending, including personnel costs, by 25%, or $1.7 million. The Company expects to achieve this level of savings as the result of the previously noted reduction in staffing levels, as well as from putting much of its professional service, insurance, IT, and HR management costs out for bid or price negotiation. In solidarity with the salary reductions of the workforce, the members of the Company’s Board of Directors reduced their retainer fees by 12% and elected to increase their individual workload by leaving one board position unfilled for the time being.
Mr. Berthelot commented, “One of the major changes in our approach to cost is reflected in our efforts to reduce lead times. In the past, we did not order component parts until we received a purchase order from a customer, even though that customer may have had a long-standing history of ordering the same product from us. This may have irritated our customers because of longer lead times for certain components and led to small batch processing for internally produced components and small lot purchasing of expensive outsourced parts, especially motors and cables, all of which increase our costs. We have recently begun to negotiate frame contracts with our larger customers which provide for 12-18 month purchasing commitments and which now permit us to “level-load” our shop over the long term and purchase outside parts in larger lots at lower prices. While we share these cost savings with our customers through volume discounts, we believe these longer term agreements not only strengthen our relationships with key customers by reducing our lead times but also serve as long-term cost reducers. This change in approach is reflected by our backlog of firm orders, which was $7.1 million after excluding orders from our then-largest customer at June 30, 2011, and which stands at $8.9 million as of July 31, 2012.”
Hal Hurwitz, the Company’s Chief Financial Officer, said, “While we do not ordinarily believe in providing guidance for future periods, we do believe that when a Company is undergoing the level of change that we are seeing, it is incumbent to share the Company’s plans and expectations with its shareholders. Accordingly, our fiscal 2013 operating plan is based on forecast revenues of $11.4 million and income from continuing operations before non-cash charges essentially at breakeven, which would generate a net loss of approximately $540,000. We expect our cash flow to be strong and our capital expenditures budget of $393,000 to be only slightly above fiscal 2012’s $345,000. Of course, many things can and will happen during the course of a year, some good and some not so good. It is our intent to maximize the former and avoid, to the extent possible, the latter. As a precaution, I refer you to the safe harbor statement relative to forward-looking statements which appears at the end of this release.”
Mr. Hurwitz continued, “We expect to release our final audited results for the fiscal year ended June 30, 2012 on or about August 31st. On a preliminary basis however, we expect the year to reflect approximately (i) revenues of $17.2 million, (ii) an operating loss from continuing operations before non-cash charges of $645,000, and (iii) a net loss of $850,000. It is important to note that fiscal 2012 included nearly $485,000 of severance costs associated with the replacement of our CEO and Vice President of Sales, and the two previously mentioned reductions in force.”
Mr. Berthelot said, “We finished fiscal 2012 with approximately $4.1 million of cash on hand and anticipate generating positive cash flow in fiscal 2013, which we currently believe will be in excess of our operational needs for the near future. We understand that this cash is our shareholders’ cash, and with that in mind we are evaluating plans to return some of that cash to our shareholders in the form of stock buy-backs,
dividends, or a combination of both. We will evaluate these alternatives during our fiscal first and second quarters and, with an eye towards the uncertain tax situation in calendar 2013, hope to make every effort to implement a cash return strategy during the fourth calendar quarter, subject of course to our actual operating results meeting or exceeding our plan.”
Teleconference Information:
Investors and analysts are invited to listen to a broadcast review of the Company’s fiscal 2013 operating plan today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting the Company’s website at www.pro-dex.com. The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S. or Canada.
For those who cannot access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern Time) on August 20, 2012 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S. or Canada, and then entering account number 286 and conference I.D. number 398515. An online archive of the broadcast will be available on the Company’s website www.pro-dex.com for a period of 365 days.
About Pro-Dex, Inc.:
Pro-Dex, Inc., with operations in California and Oregon, specializes in the design, development and manufacture of powered rotary drive surgical and dental instruments used primarily in the orthopedic, spine, maxocranial facial and dental markets. Its OMS division designs and manufactures embedded motion control systems serving the medical, dental, semi-conductor and scientific research markets. Pro-Dex’s products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world. 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.
PRO-DEX, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP DATA TO GAAP DATA
Loss From Continuing Operations
(in thousands)
(unaudited)
| Operating Plan for the Year Ending June 30, 2013 |
For The Year Ended June 30, 2012 |
|||||||
| Income (loss) from continuing operations before non-cash charges |
$ | 8 | ($ | 643 | ) | |||
| Non-cash charges |
||||||||
| Depreciation |
596 | 587 | ||||||
| Stock-based compensation |
161 | 108 | ||||||
|
|
|
|
|
|||||
| Loss from continuing operations |
($ | 749 | ) | ($ | 1,338 | ) | ||
|
|
|
|
|
|||||
Appendix B-2
1
2
3
4
5
6
Appendix C-1
Contact: Michael J. Berthelot, Chief Executive Officer
(949) 769-3200
For Immediate Release
PRO-DEX, INC. ANNOUNCES FISCAL 2013 FIRST QUARTER RESULTS
IRVINE, CA, October 25, 2012—PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal first quarter ended September 30, 2012.
Pro-Dex, Inc. (the “Company”) reported a loss from continuing operations of $59,000, or $0.02 per diluted share, for the quarter ended September 30, 2012 compared to income from continuing operations of $346,000, or $0.11 per diluted share, in the corresponding quarter in 2011. The net loss for the quarter was $17,000, or $0.01 per diluted share, compared to net income of $446,000, or $0.14 per diluted share, in the year-ago period. Sales for the quarter ended September 30, 2012 decreased 31% to $3.5 million from $5.0 million for the corresponding quarter in 2011. As the Company has disclosed previously, the decrease in sales and the resulting net loss was primarily the result of a reduction in purchases of the Company’s powered surgical products by its former largest customer. Excluding sales to the former customer from the comparison of 2012 to 2011, the Company’s surgical product sales increased $548,000 in 2012. In addition, motion control system sales increased $138,000 in the 2012 quarter, when compared to the corresponding period in 2011. The results from continuing operations for the 2012 and 2011 periods exclude the results of the Company’s former Astromec product line, which was sold in February 2012 as previously announced.
Gross profit for the quarter ended September 30, 2012 was $1.2 million, or 36%, compared to gross profit of $2.1 million, or 42%, for the year-ago period. This decrease resulted primarily from the year-over-year decrease in sales and the related effects on manufacturing at lower sales volumes.
Operating expenses, which include selling, general and administrative, and research and development expenses, for the quarter ended September 30, 2012 decreased 26% to $1.3 million from $1.8 million in the prior year’s corresponding quarter. The decrease reflects the broad-based effect of the Company’s cost-reduction efforts, evidenced by reductions of $100,000, or 27%, in selling expenses; $208,000, or 25%, in general and administrative expenses; and $155,000, or 28%, in research and development expenses. All of these departmental reductions reflected, among other items, a focus on the elimination of non-critical activities, and the previously announced reductions in force and Company-wide 5% decrease in base compensation.
The Company also announced that, on September 24, 2012, it repaid in full the $685,000 outstanding balance of its term loan with Union Bank pursuant to the Company’s previously announced termination of its credit facility agreement with the bank.
Michael J. Berthelot, the Company’s President and Chief Executive Officer, commented, “We believe that the results of the first quarter of fiscal 2013, which is also the first full quarter under our new leadership, is the beginning of the beginning for our refocused company. Several key programs came together quickly and have had immediate impact upon our business. First, our focus on sales and improving our relationships with existing customers through reduced lead times and frame contracts resulted in us recognizing increases in revenues from our powered instrument product line of 25%, and 26% in total sales, when the $2.4 million of sales to our former largest customer in last year’s first quarter are removed. Even further strengthening our backlog, the implementation of frame contracts resulted in us achieving a book-to-bill ratio of 1.14 for the first quarter. Our gross margin for fiscal 2013’s first quarter, at 36%, is the highest it has been since last year’s first quarter and represents significant strengthening in our manufacturing cost structure and efficiency, especially when compared to the preceding quarter’s gross margin of 23%. The implementation of strict cost reduction policies in every department resulted in the previously mentioned 26% reduction in selling, general and administrative costs for the quarter when compared to last year’s quarter and 17% when compared to the preceding quarter.”
Mr. Berthelot continued, “All of these factors combined to result in our achieving first quarter EBITDA of $141,000, of which almost $100,000 was generated by continuing operations and the remainder was attributable to royalty payments from the buyer of our Astromec division. This quarter was the first time in the last four quarters that we were able to achieve a positive EBITDA, even though our sales in the first quarter were lower than those of any of the three previous quarters. While one quarter makes neither a trend nor a year, we believe it shows that we are on the right path, and gives us the confidence to continue to pursue and execute our strategy.”
“Operationally, we have made good progress on the four pillars on which we are building our recovery, Mr. Berthelot continued. “Our sales efforts have increased, we have begun three new customer/new product development projects, and we have several proposals out to medical device OEM’s who could become significant customers if we are successful. Lined up behind those proposals we have a strong pipeline of projects in varying states of discussion. Our sales and marketing team, with the support of our engineering and operations staffs, have done a superb job in moving from a standing start to a run. Our lead times have been reduced significantly – to 6 weeks for our highest volume products from 16-18 weeks – and we believe we can continue to improve them. As reflected in our stronger gross margin and lower SG&A expenses, our cost structure has come down not only as a result of reduced spending, but also as the result of increased participation by all of our associates in our efforts to operate more effectively and efficiently. Lower power consumption, better scheduling, and identification of improved ways to do things all combine to benefit our customers, our associates, and our shareholders. A stepped up program of internal testing, the design and implementation of automated test equipment, and the allocation of increased resources to engineering have improved the quality of our products and the confidence of our customers.”
“During the first quarter we retired all of our outstanding debt, with the result that we now have a strong balance sheet with no debt and no intangible assets”, said Mr. Berthelot. “We will continue to pursue the sale of our former Astromec facility in Nevada and will increase our focus on working capital and cash flow generation as we consider the best means to deploy our cash balances to benefit all of our shareholders.”
Teleconference Information:
Investors and analysts are invited to listen to a broadcast review of the Company’s fiscal 2013 first quarter financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting the Company’s website at www.pro-dex.com. The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S. or Canada.
For those who cannot access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern Time) on November 8, 2012 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S. or Canada, and then entering conference I.D. number 402315. An online archive of the broadcast will be available on the Company’s website www.pro-dex.com for a period of 365 days.
About Pro-Dex, Inc.:
Pro-Dex, Inc., with operations in California and Oregon, specializes in the design, development and manufacture of powered rotary drive surgical and dental instruments used primarily in the orthopedic, spine, maxocranial facial and dental markets. Its OMS division designs and manufactures embedded motion control systems serving the medical, dental, semi-conductor and scientific research markets. Pro-Dex’s products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world. 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
(unaudited)
| September 30, 2012 | June 30, 2012 | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash |
$ | 3,125,000 | $ | 4,112,000 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $10,000 at September 30, 2012 and $16,000 at June 30, 2012 |
1,839,000 | 1,581,000 | ||||||
| Other current receivables |
83,000 | 123,000 | ||||||
| Inventories |
3,482,000 | 2,791,000 | ||||||
| Prepaid expenses |
152,000 | 172,000 | ||||||
| Income taxes receivable |
567,000 | 609,000 | ||||||
| Deferred income taxes |
109,000 | 109,000 | ||||||
|
|
|
|
|
|||||
| Total current assets |
9,357,000 | 9,497,000 | ||||||
| Property, plant, equipment and leasehold improvements, net |
2,429,000 | 2,539,000 | ||||||
| Real estate held for sale |
733,000 | 733,000 | ||||||
| Other assets |
53,000 | 53,000 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 12,572,000 | $ | 12,822,000 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,107,000 | $ | 633,000 | ||||
| Accrued expenses |
1,464,000 | 1,425,000 | ||||||
| Income taxes payable |
47,000 | 47,000 | ||||||
| Bank term loan |
— | 774,000 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
2,618,000 | 2,879,000 | ||||||
|
|
|
|
|
|||||
| Non-current liabilities: |
||||||||
| Deferred income taxes |
109,000 | 109,000 | ||||||
| Deferred rent |
282,000 | 284,000 | ||||||
|
|
|
|
|
|||||
| Total non-current liabilities |
391,000 | 393,000 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
3,009,000 | 3,272,000 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Common shares; no par value; 50,000,000 shares authorized; 3,307,350 and 3,272,350 shares issued and outstanding at September 30, 2012 and June 30, 2012, respectively |
16,876,000 | 16,846,000 | ||||||
| Accumulated deficit |
(7,313,000 | ) | (7,296,000 | ) | ||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
9,563,000 | 9,550,000 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 12,572,000 | $ | 12,822,000 | ||||
|
|
|
|
|
|||||
PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For The Three Months Ended September 30, | ||||||||
| 2012 | 2011 | |||||||
| Net sales |
$ | 3,461,000 | $ | 5,045,000 | ||||
| Cost of sales |
2,225,000 | 2,937,000 | ||||||
|
|
|
|
|
|||||
| Gross profit |
1,236,000 | 2,108,000 | ||||||
|
|
|
|
|
|||||
| Operating expenses: |
||||||||
| Selling expenses |
274,000 | 374,000 | ||||||
| General and administrative expenses |
608,000 | 816,000 | ||||||
| Research and development costs |
406,000 | 561,000 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
1,288,000 | 1,751,000 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before items below |
(52,000 | ) | 357,000 | |||||
|
|
|
|
|
|||||
| Other expense: |
||||||||
| Interest expense |
(6,000 | ) | (10,000 | ) | ||||
|
|
|
|
|
|||||
| Total other expense |
(6,000 | ) | (10,000 | ) | ||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations before provision for income taxes |
(58,000 | ) | 347,000 | |||||
| Provision for income taxes |
1,000 | 1,000 | ||||||
|
|
|
|
|
|||||
| Income (loss) from continuing operations |
(59,000 | ) | 346,000 | |||||
| Income from discontinued operations, net of provision for income taxes of $0 in 2012 and 2011 |
42,000 | 100,000 | ||||||
|
|
|
|
|
|||||
| Net income (loss) |
$ | (17,000 | ) | $ | 446,000 | |||
|
|
|
|
|
|||||
| Per share data: |
||||||||
| Income (loss) from continuing operations |
||||||||
| Basic |
$ | (0.02 | ) | $ | 0.11 | |||
| Diluted |
$ | (0.02 | ) | $ | 0.11 | |||
| Income from discontinued operations |
||||||||
| Basic |
$ | 0.01 | $ | 0.03 | ||||
| Diluted |
$ | 0.01 | $ | 0.03 | ||||
| Net income (loss) |
||||||||
| Basic |
$ | (0.01 | ) | $ | 0.14 | |||
| Diluted |
$ | (0.01 | ) | $ | 0.14 | |||
| Weighted average shares outstanding—basic |
3,279,578 | 3,272,350 | ||||||
| Weighted average shares outstanding—diluted |
3,279,578 | 3,280,045 | ||||||
PRO-DEX, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| For The Three Months Ended September 30, | ||||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | (17,000 | ) | $ | 446,000 | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
151,000 | 169,000 | ||||||
| Allowance for doubtful accounts |
(6,000 | ) | 1,000 | |||||
| Share-based compensation |
30,000 | 12,000 | ||||||
| Changes in: |
||||||||
| Accounts receivable and other current receivables |
(212,000 | ) | 785,000 | |||||
| Inventories |
(691,000 | ) | (338,000 | ) | ||||
| Prepaid expenses |
20,000 | (119,000 | ) | |||||
| Other assets |
— | 8,000 | ||||||
| Accounts payable and accrued expenses |
511,000 | (616,000 | ) | |||||
| Income taxes receivable and payable |
42,000 | 1,000 | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used in) operating activities |
(172,000 | ) | 349,000 | |||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Purchases of equipment |
(41,000 | ) | (42,000 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(41,000 | ) | (42,000 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Principal payments on term loan |
(774,000 | ) | (89,000 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in financing activities |
(774,000 | ) | (89,000 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in cash |
(987,000 | ) | 218,000 | |||||
| Cash, beginning of period |
4,112,000 | 4,689,000 | ||||||
|
|
|
|
|
|||||
| Cash, end of period |
$ | 3,125,000 | $ | 4,907,000 | ||||
|
|
|
|
|
|||||
| Supplemental Information |
||||||||
| Cash payments for interest |
$ | 9,000 | $ | 11,000 | ||||
| Cash payments for income taxes |
$ | — | $ | — | ||||
PRO-DEX, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP DATA TO GAAP DATA
Loss From Continuing Operations Before Provision For Income Taxes
(in thousands)
(unaudited)
| For The Three Months Ended September 30, 2012 |
||||
| Earnings before interest, taxes, depreciation and amortization (“EBITDA”) |
$ | 141 | ||
| Interest expense |
(6 | ) | ||
| Depreciation and amortization |
(151 | ) | ||
| Income from discontinued operations |
(42 | ) | ||
|
|
|
|||
| Loss from continuing operations before provision for income taxes |
($ | 58 | ) | |
|
|
|
|||
Appendix C-2
1
2
3
4
5
6
7