Lecroy Reports Record Operating Income and Gross Margin in Fourth
Quarter of Fiscal 2004
Serial Data Test Solutions Drive Strong Revenue and Margin Growth
CHESTNUT RIDGE, N.Y., Aug. 4 /PRNewswire-FirstCall/ -- LeCroy Corporation
(NASDAQ:LCRY), a leading supplier of oscilloscopes and serial data test
solutions, today announced financial results for its fourth quarter and fiscal
year ended June 30, 2004.
* Orders increased 23 percent to $34.6 million compared with
$28.2 million in the fourth quarter last year. For fiscal year 2004,
product orders, which comprised 96 percent of total orders, grew
21 percent to $121.5 million from $100.2 million a year ago. * Revenues for the year grew 16 percent to $124.9 million from
$107.9 million last year. Revenues for the fourth quarter rose
17.6 percent to $34.9 million from $29.7 million in the fourth quarter
of fiscal 2003. * Gross margins for the fourth quarter increased to 58.7 percent from
57.8 percent in the fourth quarter last year. * Operating income for the fourth quarter nearly quadrupled to
$4.0 million from $1.1 million in the same period last year, which
included a charge of $800,000 for net severance and plant closing
costs. * Income from continuing operations for the fourth quarter rose to
$2.6 million compared with $726,000 in the fourth quarter of fiscal
2003. * Income from continuing operations applicable to common stockholders
for the fourth quarter increased to $0.22 per diluted share from $0.02
per diluted share in the fourth quarter of 2003.
Comments on the Fourth Quarter
"The fourth quarter was a great ending to the most successful year in LeCroy's
history," said President and Chief Executive Officer Tom Reslewic. "Our
operating performance reached record levels in a number of key areas, and our
balance sheet is strong with no bank debt and $38.1 million in cash and
marketable securities. We delivered three new oscilloscope platforms to the
market during the year, thereby successfully executing our strategy to increase
our addressable share of the oscilloscope market. With 94 percent of
fourth-quarter product orders coming from products introduced during the last
two years, LeCroy has clearly illustrated its product generation ability. Most
important during the course of the year, LeCroy has seen serial data test
applications become the dominant drivers of our business." "In the fourth quarter, total orders grew 23 percent from the same period last
year," added Reslewic. "Gross margins increased to 58.7 percent from 57.8
percent a year ago as we posted our sixth consecutive profitable quarter and
sixth consecutive quarter of year-over-year gross margin growth. Operating
margin improved to 11.5 percent -- the highest level in more than four years --
and we concluded the fiscal year with $38.1 million in cash and marketable
securities." "We saw strong top-line results across all of our geographic regions in the
fourth quarter," said Reslewic. "We posted our eighth consecutive quarter of
year-over-year order growth in North America as orders in this region increased
nearly 14 percent from the fourth quarter of fiscal 2003. European orders in
the fourth quarter were up 16 percent from last year. It was also another
strong quarter in Japan and the Asia Pacific region. In Japan, orders grew 35
percent from the fourth quarter last year, and orders from customers in the
Asia Pacific region rose 11 percent from the fourth quarter last year." LeCroy's Growth Strategy "Having nearly completed our three-year plan to enter new segments of the
oscilloscope market at the high and low ends and to transform the operational
performance of LeCroy, we are now charting our course beyond oscilloscopes and
into a broader range of test tools to solve a more complete range of serial
data test problems," said Reslewic. "LeCroy's future Wide-Band Oscilloscopes
and Ultra-Wide-Band Oscilloscopes will set the pace for making the critical
signal integrity measurements that are of fundamental importance to serial data
systems designers. We also will introduce new versions of dedicated Serial
Data Analyzers at the highest end of the market that will include extensive
capabilities far beyond those of today's time domain instruments. Of course,
LeCroy will continue to innovate across its entire oscilloscope line to deepen
the penetration of our mid-range and low-end products into the overall market.
We expect to continue to deploy Serial Data test tools in the form of hardware
and software packages that can be fitted to our entire oscilloscope product
line to enable Serial Data conformance testing and signal integrity analysis." "The market for serial data test solutions is largely driven by expanding
consumer interest in digital audio, video and imaging," continued Reslewic. "Storing, sharing and using these digital files require high-speed and low-
cost transport of digital data. New and existing serial data standards and
devices are being rapidly developed and deployed every day in numerous industry
segments, including Computers, Semiconductors, Consumer Electronics, Data
Storage Devices and Automotive Electronics. Developers need to test their
devices for compliance and compatibility with these standards and must employ
various test tools to diagnose the performance of their designs. Because the
signals racing through the devices are long and highly complex, LeCroy's
expertise in WaveShape Analysis is uniquely applicable to solving these
problems." "Today, a significant portion of LeCroy's revenue comes from serial data test
solutions, led by sales of our highly successful families of Serial Data
Analyzers (SDAs) and Disk Drive Analyzers (DDAs)," said Reslewic. "During the
fourth quarter, we released two new products for the serial data market,
including the industry's most complete PCI Express conformance test package. This product has received exceptionally positive reviews from customers. The
automotive market's reception to our new CANbus serial data solution for the
WaveRunner family also has exceeded our expectations. Our CANbus analyzer is
the premier serial data solution in the automotive electronics test market." "In summary, we see the development and deployment of Serial Data standards and
devices to be the most important trend in our markets for the foreseeable
future," added Reslewic. "Today, we are squarely positioned as a technology
leader in this space and we intend to capture a significant share of this
growing market in the future." Twelve-Month Results For the twelve months ended June 30, 2004, LeCroy reported revenues of $124.9
million and operating income of $12.6 million. For the twelve months ended June
30, 2003, the Company reported revenues of $107.9 million and an operating loss
of ($2.8) million, which included charges of $3.5 million for net severance and
plant closing costs and $2.3 million for impaired intangible assets.
Income from continuing operations for the twelve months ended June 30, 2004,
was $7.9 million, or $0.02 per diluted share applicable to common stockholders
after the $7.7 million premium paid to repurchase all outstanding shares of the
Series A Redeemable Convertible Preferred Stock in the first quarter of 2004.
For the twelve months ended June 30, 2003, the Company reported a loss from
continuing operations of ($1.8) million, or ($0.37) per diluted share
applicable to common stockholders after $2.1 million in charges related to the
convertible Preferred Stock.
Business Outlook and Financial Guidance "LeCroy entered fiscal 2005 with strong market momentum," continued Reslewic.
"Product orders in July, the first month of the new fiscal year, were the
highest for that month in our history. Looking ahead, we expect customer
demand to continue to increase throughout our product line and across all
geographies," continued Reslewic. "We began the year with the most impressive
list of innovations, the most appropriate technology and the industry's widest
array of serial data solutions. We plan to leverage these advantages in fiscal
2005 to continue to drive LeCroy's growth. Our product roll-out plan for
fiscal 2005 is highly focused on serial data solutions in all of our target
industry segments: Computers and Semiconductors, Data Storage, and Automotive
Electronics. We expect to launch some of the most exciting innovations in
LeCroy's history, including several products that we anticipate will
demonstrate unqualified technology leadership in serial data analysis." "In the first quarter of fiscal 2005, we expect to continue producing top- line
growth with improved margins and profitability. First quarter fiscal 2005
revenues are anticipated to increase -- in what is historically our weakest
quarter -- by about 15 percent to approximately $31 to $32 million. We expect
to report year-on-year operating income increases in the range of 35 to 50
percent, bringing operating income to approximately $2.7 to $3.0 million,"
concluded Reslewic.
Important Changes in Equity-Based Compensation LeCroy anticipates that in the future, companies will be required to recognize
compensation expense for the fair value of stock options granted. In the past,
LeCroy has used stock options to provide long term incentives (LTI) for
management and employees. During the past two years of re-shaping LeCroy's
management team and operating results, and despite the establishment of a new
stock option plan in October 2003, the company has not issued a significant
number of stock options. As it moves forward, LeCroy recognizes the importance
of creating strong alignment between LeCroy employees and its shareholders and
the Company strongly believes in the value of equity-based compensation to
create that alignment. However, LeCroy believes it is likely that option
expense methodologies will make conventional stock option grants consistent
with the Company's past practices rather expensive relative to the compensation
benefit seen by the employees. In addition, LeCroy is highly sensitive to the
dilutive impact of granting a large number of stock options. Therefore, the
Company has elected to use restricted shares as its primary vehicle to provide
LTI for management and employees. LeCroy anticipates using a mix of programs
ranging from time-vested share grants, comprising both graded and longer-term
cliff vesting conditions, as well as performance-based share grants. Further
information regarding the details of this program including any significant
awards will be filed with the Company's Proxy statement. Consequently, in
FY2005 LeCroy expects to incur non-cash expenses as a result of this
equity-based incentive program of approximately $2.0 million. All guidance and
projections relative to earnings and expenses (beginning with the guidance
included in this press release) will include these charges, but LeCroy will
identify the expenses on a quarterly basis to assist investors and industry
analysts in evaluating its comparative business trends. In the first quarter
of fiscal 2005 LeCroy expects to recognize a non-cash LTI charge of
approximately $422,000.
Conference Call Information LeCroy Corporation will conduct a conference call to discuss the information
contained in this news release today, Wednesday, August 4, 2004 at 10:00 a.m. (ET). Investors who want to hear a webcast of the call should log onto
http://www.lecroy.com/ and select "Investor Relations" at least 15 minutes
prior to the broadcast. Investors should then follow the instructions provided
to assure that the necessary audio applications are downloaded and installed. The call will be archived on the Investor Relations section of
http://www.lecroy.com/ through August 30, 2004.
About LeCroy Corporation LeCroy Corporation is a worldwide leader in serial data solutions, creating
advanced instruments that drive product innovation by quickly measuring,
analyzing and verifying complex electronic signals. The Company's core
products are high-performance oscilloscopes and Serial Data Analyzers (SDAs)
used by design engineers in the computer and semiconductor, data storage
device, automotive and industrial, and military and aerospace markets. LeCroy's
40-year heritage of technical innovation is the foundation for its recognized
leadership in "WaveShape Analysis" -- capturing, viewing and measuring the
high-speed signals that drive today's information and communications
technologies. Targeting a growing billion-dollar global market, LeCroy meets a
broad spectrum of customer needs with four product families distributed
primarily through a worldwide direct sales organization. LeCroy is
headquartered in Chestnut Ridge, New York, and Company information is available
at http://www.lecroy.com/.
Safe Harbor This release contains forward-looking statements, including those pertaining to
the Company's business outlook and financial guidance for the first quarter of
fiscal 2005, LeCroy's ability to deploy Serial Data test tools that extend the
Company's entire oscilloscope product line, the Company's ability to leverage
its technology advantage and serial data solutions to drive its growth, its
ability to introduce new products that enhance its leadership position in
serial data analysis, and its expectations regarding future changes related to
its equity-based incentive program.
All such forward-looking statements are only estimates of future results, and
there can be no assurance that actual results will not materially differ from
expectations. Actual performance and results of operations may differ
materially from those projected or suggested in the forward-looking statements
due to certain risks and uncertainties including, without limitation, volume
and timing of orders received, changes in the mix of products sold, competitive
pricing pressure, the Company's ability to anticipate changes in the market,
the availability and timing of funding for the Company's current products, the
development of future products and the Company's ability to use intellectual
property and protect its patent portfolio. LeCroy undertakes no obligation to
publicly update forward-looking statements, whether because of new information,
future events or otherwise. Further information on potential factors that
could affect LeCroy Corporation's business is described in the Company's
reports on file with the SEC.
LeCROY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) Three months Twelve months
ended ended
June 30, June 30,
In thousands, except per share data 2004 2003 2004 2003 Revenues:
Oscilloscopes and related products $31,830 $27,144 $113,422 $95,008
Service and other 3,090 2,551 11,518 12,851
Total revenues 34,920 29,695 124,940 107,859 Cost of sales 14,420 12,518 52,594 50,989
Gross profit 20,500 17,177 72,346 56,870 Operating expenses:
Selling, general and administrative 12,312 11,413 43,997 41,422
Research and development 4,175 4,689 15,760 18,226
Total operating expenses 16,487 16,102 59,757 59,648 Operating income (loss) 4,013 1,075 12,589 (2,778) Other income (expense), net 84 77 (11) (84)
Income (loss) from continuing
operations before income taxes 4,097 1,152 12,578 (2,862)
Provision for (benefit from)
income taxes 1,516 426 4,653 (1,059)
Income (loss) from
continuing operations 2,581 726 7,925 (1,803)
Gain on sale from discontinued
operations, net of tax 119 129 119 129
Net income (loss) 2,700 855 8,044 (1,674) Charges related to convertible
preferred stock - 519 - 2,069
Redemption of convertible preferred stock - - 7,665 -
Net income (loss) applicable to
common stockholders $2,700 $336 $379 $(3,743) Income (loss) per common share - basic:
Income (loss) from continuing
operations applicable to common
stockholders $0.23 $0.02 $0.03 $(0.37)
Gain on sale from discontinued
operations 0.01 0.01 0.01 0.01
Net income (loss) applicable to
common stockholders $0.24 $0.03 $0.04 $(0.36) Income (loss) per common share - diluted:
Income (loss) from continuing
operations applicable to common
stockholders $0.22 $0.02 $0.02 $(0.37)
Gain on sale from discontinued
operations 0.01 0.01 0.01 0.01
Net income (loss) applicable to
common stockholders $0.23 $0.03 $0.03 $(0.36) Weighted average number of common shares:
Basic 11,387 10,392 10,754 10,364
Diluted 11,807 10,439 11,074 10,364
LeCROY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) June 30, June 30,
In thousands 2004 2003 ASSETS
Current assets:
Cash and cash equivalents $28,566 $30,851
Marketable securities 9,534 -
Accounts receivable, net 24,675 20,523
Inventories, net 21,978 24,720
Other current assets 11,921 10,012
Total current assets 96,674 86,106 Property and equipment, net 19,778 20,021
Other assets 13,341 16,025 TOTAL ASSETS $129,793 $122,152 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease $107 $94
Accounts payable 12,097 10,937
Accrued expenses and other liabilities 14,554 12,244
Total current liabilities 26,758 23,275 Deferred revenue and other
non-current liabilities 1,427 3,028
Total liabilities 28,185 26,303 Redeemable convertible preferred stock - 15,335 Stockholders' equity 101,608 80,514 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $129,793 $122,152
DATASOURCE: LeCroy Corporation CONTACT: Scott D. Kantor, Vice President, Finance of LeCroy Corporation, +1-845-425-2000 Web site: http://www.lecroy.com/ Company News On-Call: http://www.prnewswire.com/comp/112071.html
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