Ballantyne of Omaha: Conference call: � Today, Thursday, May 8,
2008 at 4:30 p.m. EDT Webcast / Replay URL:
www.ballantyne-omaha.com/IREvents.aspx or www.earnings.com. The
replay will be available on the Internet for 90 days. Dial-in
number: 800/734-4208 (no pass code required) 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 first quarter (Q1) ended March 31, 2008.
Q1 2008 net revenues increased 9.8% to $14.2 million compared to Q1
2007 net revenues of $12.9 million. The increase was principally
due to recording as revenue in Q1 2008 the sale of digital
projection equipment in 2007 on deferred payment terms. That
equipment was installed in the latter part of 2007 and during Q1
2008. As a result, digital projection equipment revenue increased
over five-fold to $4.4 million in Q1 2008 from $0.7 million in Q1
2007 and more than offset an anticipated decline in sales of
traditional analog film projection systems. The first quarter
performance also reflected $1.2 million in sales from the Company�s
screen subsidiary, Marcel Desrochers, Inc. (MDI), acquired in
mid-October 2007. Accordingly, there was no contribution from MDI
in the three-month period ending March 31, 2007. Gross profit in Q1
2008 declined to $2.3 million, or 16.3% of net revenues, from $2.7
million, or 21.0% of net revenues in Q1 2007. The reduction in
gross profit largely reflects the expected decrease in
manufacturing and overhead efficiency related to lower production
volumes of traditional cinema equipment. In addition, the gross
profit 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. Selling expenses in Q1 2008 were in line with those of the
prior year�s period, while general and administrative expense rose
to $2.0 million versus $1.4 million in Q1 2007, primarily
reflecting the addition of MDI�s expenses, higher salaries and
benefits, and increased audit and Sarbanes-Oxley expenses. General
and administrative expenses are expected to decline in future
quarters as compared to Q1 2008, principally due to lower audit and
Sarbanes-Oxley expenses. Net interest income in Q1 2008 was $0.1
million compared to $0.2 million in Q1 2007, as a result of lower
average investment balances. Reflecting the above factors,
Ballantyne reported a Q1 2008 net loss of $254,000, or $0.02 per
diluted share, compared to net income of $573,000, or $0.04 per
diluted share, in Q1 2007. Per share results for the first quarter
of 2008 and 2007 are based on a weighted average number of diluted
shares outstanding of 13,858,440 and 14,065,208, respectively. John
P. Wilmers, President and Chief Executive Officer of Ballantyne,
commented, �Though the industry�s transition to digital cinema
projection technologies is still in its early stages, we were able
to record a substantial increase in digital projection equipment
sales in Q1 2008, based largely on orders we had secured last year
and installed late last year and during Q1 2008. We also benefited
from the first full quarter�s contribution from our MDI cinema
screen unit and are very pleased with the progress of our
integration of that business into our overall product and service
offering. These improvements helped to offset the anticipated
decline in sales of traditional cinema products as well as lower
revenues from our Strong Technical Services subsidiary as that
division experiences some attrition in its analog business while we
await the expected ramp up in digital service opportunities. �We
continue to actively manage our business through the challenges of
the early stages of the technology transition. We anticipate a
substantial ramp up in activity later in the year as funding is
made available for large-scale deployments of digital projection
technology and believe we are ideally positioned to participate in
that opportunity.� Balance Sheet Update: At March 31, 2008,
Ballantyne had $4.5 million in cash and cash equivalents and
approximately $12.0 million in AAA-rated auction rate securities
(ARS) compared to $4.2 million in cash and cash equivalents and
$13.0 million in ARS at December 31, 2007. Historically,
Ballantyne�s ARS have been highly liquid, however, as a result of
liquidity issues in the global credit and capital markets, ARS
auctions began failing during Q1 2008 when sell orders exceeded buy
orders. While Ballantyne has no reason to believe at this time that
any of the five issuers of its ARS securities are presently at
risk, this lack of market liquidity required the Company to
estimate and recognize a temporary decline in the fair value of its
ARS of approximately $1.0 million at March 31, 2008. A temporary
change in fair value of available-for-sale investments resulted in
an unrealized holding loss which is excluded from earnings and
recorded in the �other comprehensive income (loss)� component of
shareholders� equity. Due to the uncertainty regarding whether the
auction rate securities market will regain liquidity within a
one-year period, Ballantyne has reclassified these investments at
fair value to �non-current investments� for the current reporting
period. Ballantyne continues to earn and receive in cash the
maximum interest rate of the underlying investments during the
unsuccessful auction periods. As a result of the liquidity issues
in the ARS marketplace, during Q1 2008, Ballantyne secured an
additional $10.4 million credit line from its existing bank.
Ballantyne believes it maintains sufficient liquidity to run its
business via its cash position held in a commercial bank, combined
with its ability to draw on its two lines of credit which total
$14.4 million in availability. 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 March 31, 2008 � 2007 � Net revenues $
14,197,172 $ 12,930,750 Cost of revenues 11,887,291 10,208,966
Gross profit 2,309,881 2,721,784 � Selling, general &
administrative expenses: Selling 787,802 782,616 General and
administrative 2,025,296 1,433,047 Total selling, general &
administrative expenses 2,813,098 2,215,663 � Gain on transfer of
assets - 233,327 Loss on disposal of assets, net (1,285) (11,004)
Income (loss) from operations (504,502) 728,444 � Other income
(expense), net 26,792 (48,021) Earnings (loss) before interest and
taxes (477,710) 680,423 � Interest income 146,186 218,313 Interest
expense 8,535 10,257 Net interest income 137,651 208,056 � Equity
in loss of joint venture (112,991) - � Earnings (loss) before
income taxes (453,050) 888,479 Income tax benefit (expense) 198,614
(315,741) Net income (loss) $ (254,436) $ 572,738 � � Earnings
(loss) per share Basic $ (0.02) $ 0.04 Diluted $ (0.02) $ 0.04 �
Weighted average shares outstanding: Basic 13,858,440 13,765,897
Diluted 13,858,440 14,065,208 � Selected Balance Sheet Items: � �
March 31,2008 December 31,2007 (unaudited) Cash and cash
equivalents $ 4,514,328 $ 4,220,355 Restricted Cash 1,191,747
1,191,747 Accounts receivable, net 8,196,942 7,841,348 Inventories,
net 11,074,144 9,883,555 Investments 11,957,280 13,000,000 Total
current liabilities 10,732,305 9,898,601 Total stockholders� equity
$ 41,596,244 $ 43,041,698 � Selected Cash Flow Statement Items
(unaudited): � � Three Months Ended March 31, 2008 � 2007 � Net
income (loss) $ (254,236) $ 572,739 Depreciation and amortization
629,775 545,045 Net cash provided by operating activities 668,949
661,428 Capital expenditures (299,180) (109,565) Net cash provided
by (used in) investing activities (358,245) 2,202,588 Net cash
provided by financing activities - 102,350 Net increase in cash
& cash equivalents 293,973 2,966,366 Cash & cash
equivalents at beginning of period 4,220,355 2,622,654 Cash &
cash equivalents at end of period $ 4,514,328 $ 5,589,020 �
Non-cash investing activities: Non-cash investment in Digital Link
II, LLC $ - $ 2,358,251
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