Ballantyne of Omaha, Inc. (Amex: BTN), a provider of motion picture
projection, digital cinema and cinema screen equipment and
services, today reported financial results for the fourth quarter
(Q4) and year ended December 31, 2007, a period of technology
transition in the theatre exhibition industry. Q4 2007 net revenues
rose to $13.3 million compared to $12.4 million in the year-ago
fourth quarter, principally due to the contribution of
approximately $0.9 million from Marcel Desrochers, Inc. (MDI) which
Ballantyne purchased in mid October 2007, coupled with higher sales
of digital projection equipment which amounted to $1.7 million
during Q4 2007 compared to less than $0.1 million a year-ago. Gross
profit in Q4 2007 declined to $2.2 million, or 16.3% of net
revenues, compared to Q4 2006�s gross profit of $2.6 million, or
20.8% of net revenues. The decline in gross profit margin
principally reflects the impact of the industry�s transition from
analog to digital cinema projection technology on Ballantyne�s
traditional cinema sales and profitability. Additionally, the Q4
2007 gross profit margin was affected by lower margin distribution
revenues and lower levels of operating efficiency within the
Company�s cinema services business related to it being in the early
stages of its anticipated growth. SG&A (excluding goodwill
impairment charges) increased to $2.7 million in Q4 2007, compared
to $2.3 million in Q4 2006, principally reflecting the addition of
MDI overhead, increased costs for compliance with Sarbanes Oxley,
the write-off of approximately $140,000 of acquisition related
expense, coupled with fees related to the purchase of MDI.
Ballantyne incurred a loss of approximately $142,000 from the sale
of its Design & Manufacturing (Design) subsidiary. The sale was
part of the Company�s strategy to reduce fixed overhead and
monetize assets within its legacy film projection equipment
business to better position Ballantyne for the transition to
digital cinema in 2008. Reflecting the factors above, Ballantyne
reported a Q4 2007 net loss of $0.3 million, or ($0.02) per diluted
share, compared to a Q4 2006 net loss of approximately $0.4
million, or ($0.03) per diluted share. Per share results for the
fourth quarters of 2007 and 2006 are based on a weighted average
number of diluted shares outstanding of 13,854,291 and 13,721,312
respectively. For the full year 2007, net revenues rose to $51.5
million compared to $49.7 million in 2006, reflecting an increase
in digital projection equipment sales to $4.2 million, compared to
$0.8 million in 2006, as well as the contribution of $0.9 million
of revenues from MDI. Theater service revenues also contributed to
the increase reflecting a full year�s contribution from the Strong
Technical Services subsidiary in 2007 compared to a partial year�s
contribution in 2006, as well as an increase in digital services
revenue from that unit. Additionally, lighting revenues rose to
$4.3 million in 2007 compared to $3.0 million in 2006, principally
reflecting increased sales of follow spotlights and replacement
parts. Gross profit in 2007 declined to $9.5 million, or 18.4% of
net revenues, from $10.8 million, or 21.8% of net revenues, in
2006. The decline in gross profit principally reflects the impact
of the ongoing analog to digital transition in the exhibition
industry and the consequent decrease in traditional cinema
manufacturing throughput, the impact of lower margins from
distribution revenues, lower levels of operating efficiency within
the Company�s cinema services business related to it being in the
early stages of its anticipated growth and expenses pertaining to
digital projection equipment being used for testing and customer
demonstrations. Results for 2007 and 2006 also reflect non-cash
goodwill impairment charges of $0.6 million and $1.3 million,
respectively, which related to the Design subsidiary which was
divested in late 2007. Net income in 2007 was $0.2 million, or
$0.02 per diluted share, compared to net income of approximately
$1.6 million, or $0.11 per diluted share, in 2006. Per share
results for 2007 and 2006 are based on a weighted average number of
diluted shares outstanding of 14,094,927 and 14,018,682
respectively. John P. Wilmers, President and Chief Executive
Officer of Ballantyne, commented, �The past year was a period of
progress and challenge for Ballantyne as we worked to position our
Company to be a leading participant in the rollout of digital
cinema technology at the same time we took steps to reduce costs
and to diminish our exposure to traditional film-based cinema
products. The acquisition of MDI in the fourth quarter was a
significant milestone, as this market leader in cinema screen
technology expands our ability to participate in future digital and
3-D digital cinema installations. �We continue to anticipate the
large scale rollout of digital cinema technology later this year,
once industry funding to support these deployments has been put in
place. We believe we are well positioned for this opportunity
given: our long-standing industry relationships and reputation in
the traditional cinema industry, our distribution partnership with
NEC Corporation of America for their Starus� line of digital cinema
projectors, our Strong Technical Services subsidiary aimed at the
digital cinema service opportunity, and now our Strong cinema
screen offerings. We believe there is no firm as well suited or
committed to meet the needs of exhibitors in harnessing the
benefits of digital cinema technology, and we eagerly await the
coming ramp in installations later this year.� Ballantyne also
announced today that it has requested an automatic 15-day extension
for the filing of its Form 10-K. Balance Sheet Update: The Company
ended fiscal 2007 with total cash and cash equivalents and
investments of $17.2 million, including $13 million of investments
in AAA-rated auction rate securities (�ARS�) issued by five
different closed end funds. Ballantyne has no reason to believe
that any of the issuers of its ARS securities are presently at risk
or that the AAA-Rated credit quality of the assets backing the ARS
securities are impacted by the current reduced market liquidity of
these securities. Ballantyne believes it maintains sufficient
liquidity to run its business via its cash position that is held in
a commercial bank and its ability to draw on its line of credit.
Effective with the fourth quarter and full year 2007, Ballantyne
has reclassified the ARS securities from �cash and cash
equivalents� to � investments� in accordance with current
accounting guidance. The Company has also reclassified prior year
amounts for the periods ended December 31, 2006 and 2005 to reflect
this treatment. The Company�s Selected Balance Sheet and Cash Flow
items reflect this treatment in the tables that follow. About
Ballantyne of Omaha Ballantyne is a provider of motion picture
projection, digital cinema projection and specialty lighting
equipment and services. The Company supplies major theater chains,
top arenas, television and motion picture production studios, theme
parks and architectural sites around the world. For more
information visit www.ballantyne-omaha.com. Except for the
historical information in this press release, it includes
forward-looking statements that involve risks and uncertainties,
including but not limited to, quarterly fluctuations in results;
customer demand for the Company�s products; the development of new
technology for alternate means of motion picture presentation;
domestic and international economic conditions; the management of
growth; and other risks detailed from time to time in the Company�s
Securities and Exchange Commission filings. Actual results may
differ materially from management�s expectations. Ballantyne of
Omaha, Inc. and Subsidiaries Consolidated Statements of Operations
(unaudited) � � Three Months Ended December 31, Year EndedDecember
31, 2007 � 2006 2007 � 2006 � Net revenues $ 13,279,415 $
12,374,592 $ 51,485,864 $ 49,732,371 Cost of revenues 11,116,684
9,806,531 42,030,270 38,906,691 Gross profit 2,162,731 2,568,061
9,455,594 10,825,680 � Selling, general & administrative
expenses: Selling 890,745 824,976 3,170,367 2,982,893 General &
administrative 1,807,175 1,439,955 6,147,004 5,120,740 Goodwill
impairment - 1,250,534 639,466 1,250,534 Total selling, general
& administrative expenses 2,697,920 3,515,465 9,956,837
9,354,167 � Gain on transfer of assets -- -- 234,557 -- Gain (loss)
on disposal of assets, net (13,098) -- (24,102) 37,546 Gain (loss)
on sale of assets (142,284) -- (142,284) -- Income (loss) from
operations (690,571) (947,404) (433,072) 1,509,059 � Other income
(expense), net 20,907 68,533 (90,920) 40,101 Earnings (loss) before
interest and taxes (669,664) (878,871) (523,992) 1,549,160 �
Interest income 160,525 223,710 797,073 796,016 Interest expense
6,252 5,534 36,937 45,652 Net interest income 154,273 218,176
760,136 750,364 � Equity in loss of joint venture (92,569) --
(245,703) -- � Earnings (loss) before income taxes (607,960)
(660,695) (9,559) 2,299,524 Income tax benefit (expense) 331,880
211,991 237,690 (731,332) Net (loss) income $ (276,080) $ (448,704)
$ 228,131 $ 1,568,192 � Earnings (loss) per share Basic $ (0.02) $
(0.03) $ 0.02 $ 0.12 Diluted $ (0.02) $ (0.03) $ 0.02 $ 0.11 �
Weighted average shares outstanding: Basic 13,854,291 13,721,312
13,817,802 13,586,252 Diluted 13,854,291 13,721,312 14,094,927
14,018,682 Selected Balance Sheet Items: � � (unaudited) Year Ended
December 31, 2007 � 2006 Cash and cash equivalents $ 4,220,355 $
2,622,654 Investments 13,000,000 20,000,000 Restricted Cash
1,191,747 611,391 Accounts receivable, net 7,841,348 7,468,533
Inventories, net 9,883,555 8,848,396 Current portion of long-term
debt - 14,608 Total current liabilities 9,898,601 7,087,346 Total
stockholders� equity $ 43,041,698 $ 42,388,947 Selected Cash Flow
Statement Items: � � (unaudited) Year Ended December 31, 2007 �
2006 Net income $ 228,131 $ 1,568,192 Depreciation and amortization
2,150,677 1,565,088 Goodwill impairment 639,466 1,250,534 Net cash
provided by (used in) operating activities (1,859,688) 4,798,664
Capital expenditures (610,317) (514,927) Acquisitions, Net of Cash
Acquired (2,910,819) (1,508,258) Purchases of investments -
(7,000,000) Proceeds from sales of investments 7,000,000 - Net cash
provided by (used in) investing activities 3,092,477 (9,369,175)
Net cash provided by financing activities 341,895 564,817 Effect of
exchange rate on cash & cash equivalents 23,017 - Net increase
(decrease) in cash & cash equivalents 1,597,701 (4,005,694)
Cash & cash equivalents at beginning of year 2,622,654
6,628,348 Cash & cash equivalents at end of year $ 4,220,355 $
2,622,654 # # #
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