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Galileo Corporation Reports Third Quarter Fiscal Year 1999 Results

Galileo Corporation Reports Third Quarter Fiscal Year 1999 Results

STURBRIDGE, Mass.–(BUSINESS WIRE)–July 22, 1999–

Galileo Corporation (NASDAQ National Market:GAEO) today reported results for the third quarter of fiscal year 1999.

Net income for the three months which ended June 30, 1999, amounted to $345,000, or $0.03 per share, versus a net loss of ($3,259,000), or ($0.41) per share, for the corresponding quarter of the previous fiscal year. Sales for the third quarter this year were $9,586,000 compared to $12,500,000 for the same quarter last year reflecting, principally, lower sales to a major medical distributor and the elimination of revenues from discontinued businesses, as announced previously.

Due to lower costs resulting from previously announced restructuring programs, the discontinuation of certain development programs and the benefits of on-going cost reduction initiatives, the operating profit for this quarter improved to $524,000 from an operating loss of ($3,124,000) for the same period last fiscal year, despite lower revenues.

On July 1, 1999, subsequent to the end of the third quarter, the Company sold its Scientific Detector Products Business and certain assets related to a previously discontinued business. The proceeds from those transactions, totaling approximately $8,500,000, were applied to the Company’s indebtedness under its revolving credit agreement with its principal lender, reducing its indebtedness to approximately $1,100,000 as of July 1, 1999. The Company will recognize the gain from these transactions in its fourth quarter.

Gerhard R. Andlinger, Chairman of the Board and President of Galileo Corporation, said, “The continued profitability of the Company during its third quarter, the strengthening of its balance sheet and its improved liquidity reinforce the Company’s commitment to re-establishing credibility through tangible accomplishments. The Company’s improved financial strength should enable it to continue to concentrate its research and development efforts in the rapidly growing area of Dense Wavelength Division Multiplex (DWDM) filters for the telecommunications industry.”

This press release contains forward-looking statements which are subject to the inherent uncertainties in predicting future results and conditions, such as comments regarding future financial performance and growth opportunities. Certain factors that could cause actual results to differ materially from those projected include the Company’s ability to remain in compliance with its loan covenants, achieve the objectives it has established for its development programs and meet the loan facility repayment criteria. Other factors affecting the Company’s businesses are discussed in its Annual Report on Form 10-K for the fiscal year ended September 30, 1998. -0-

GALILEO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

June 30 September 30,

1999 1998

ASSETS

Current assets:

Cash and cash equivalents $ 1,281 $ 710

Accounts receivable, net 6,609 7,952

Inventories, net 7,665 8,828

Other current assets 841 1,092

Assets held for sale 9,020 —

Total current assets 25,416 18,582

Property, plant and equipment, net 8,230 16,128

Excess of cost over the fair value

of assets acquired, net 18,865 19,396

Other assets, net 1,141 1,548

Total assets $ 53,652 $ 55,654

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Notes payable $ 9,763 $ 11,846

Current portion of other notes payable 44 1,458

Accounts payable 2,917 4,283

Accrued liabilities 5,267 4,400

Total current liabilities 17,991 21,987

Other liabilities 920 1,008

Commitments and contingencies — —

Shareholders’ equity

Common stock 101 81

Additional paid-in capital 58,057 52,176

Accumulated deficit (23,161) (19,545)

Accumulated other comprehensive loss (256) (53)

Total shareholders’ equity 34,741 32,659

Total liabilities and shareholders’ equity $ 53,652 $ 55,654

GALILEO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands except per share data)

For the Three Months For the Nine Months

Ended June 30, Ended June 30,

1999 1998 1999(a) 1998

Net sales $ 9,586 $ 12,500 $ 31,189 $ 32,540

Cost of sales 5,308 8,586 18,503 21,859

Gross profit 4,278 3,914 12,686 10,681

Engineering expenses 314 1,320 1,218 3,954

Selling and administrative

expenses 3,440 5,718 12,460 11,815

Reduction in carrying value of

certain long-lived assets — — 1,841 —

3,754 7,038 15,519 15,769

Operating profit (loss) 524 (3,124) (2,833) (5,088)

Interest expense, net (243) (208) (791) (278)

Other income, net 89 29 177 37

Profit (loss) before income

taxes 370 (3,303) (3,447) (5,329)

Provision (benefit)

for income taxes 25 (44) 169 (64)

Net income (loss) $ 345 $ (3,259) $ (3,616) $ (5,265)

Net income (loss) per share –

basic and assuming dilution $ .03 $ (0.41) $ (0.39) $ (0.70)

Weighted shares outstanding

(000’s) 10,109 8,042 9,232 7,509

(a) Certain reclassifications have been made to amounts reported

in previous quarters to conform with current quarter presentation.

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