Ballantyne of Omaha, Inc. (Amex: BTN): � � � Conference call: �
Today, Thursday, October 30, 2008 at 4:30 p.m. EDT Webcast / Replay
URL: www.earnings.com The replay will be available for 90 days.
Dial-in number: 800/734-4208 (no pass code required) � � �
Ballantyne of Omaha, Inc. (Amex: BTN), a provider of digital and
cinema equipment and services, today reported financial results for
the third quarter (Q3) and nine months ended September 30, 2008.
Net revenues in Q3 2008 were $12.3 million, a 2.4% decrease from
net revenues of $12.6 million in Q3 2007, principally reflecting an
expected decline in film-based products. This decline in sales was
offset by digital cinema equipment sales which rose to $1.6 million
in the period versus $1.1 million in Q3 2007, as well as the
contribution from the Company�s screen business, Strong Screen
Systems (SSS), acquired in mid-October 2007, which contributed
sales of $1.5 million in Q3 2008. Revenues from Strong Technical
Services were consistent with 2007 levels at $0.8 million as the
growth in digital cinema services, which rose to $0.3 million from
$0.1 million in Q3 2007, was offset by lower levels of service
revenues related to traditional film projection systems. Specialty
lighting sales rose to $1.2 million during Q3 2008 compared to $1.1
million in Q3 2007. The gross margin for the period increased to
17.4% versus Q3 2007 gross margin of 16.6%, principally reflecting
the margin contribution from Strong Screen Systems as that unit
benefits from increased demand for its large format screens as well
as specialty silver screens utilized in digital 3-D cinema systems.
Q3 2008 selling, general and administrative (SG&A) expenses
increased 34.5% to $2.8 million compared to $2.1 million in Q3
2007, reflecting a variety of factors including the addition of SSS
overhead, health insurance costs, higher compensation expense, and
increased costs associated with audit and compliance services. For
reasons outlined herein, Ballantyne reported a Q3 2008 net loss of
$0.3 million, or ($0.02) per share, compared to net income of $0.1
million, or $0.01 per share, in Q3 2007. Per share results Q3 2008
and Q3 2007 are based on a weighted average number of diluted
shares outstanding of 13,933,152 and 14,110,477, respectively. John
P. Wilmers, President and CEO, commented, �The exhibition
industry�s transition to digital projection technology continued to
impact our traditional cinema business as expected during Q3, and
sales of digital projection equipment continued to expand. Though
the rollout of digital cinema continues to progress at a modest
pace as the industry awaits the formation of sufficient capital to
fund large scale rollouts, Ballantyne made progress during the
quarter in our cinema screen business, underscoring the strategic
importance of the unit we acquired in October of last year. �In the
first nine months of 2008 our Strong Screen Systems business has
already eclipsed its full year 2007 sales, a performance that
demonstrates the industry-leading products and service they provide
as well as the expanded distribution reach provided by Ballantyne.
�Additionally, we are engaged in productive dialogues with leading
cinema industry customers regarding digital cinema service
opportunities. Our �agnostic� approach to services is enabling us
to pursue service opportunities without regard to brand of
projector being deployed. Of course these opportunities await
larger scale funding prior to their commencement. �On the cost
front, we continue to evaluate strategies to streamline costs
related to our legacy film products business and improve overall
operating performance while still being able to provide our
customers with superior service.� For the nine-month period ended
September 30, 2008, net revenues rose to $40.1 million compared to
$38.2 million a year ago. Gross profit in the first nine months of
2008 amounted to $6.5 million, or 16.2% of net revenues, compared
to $7.3 million, or 19.1% of net revenues in the same period in
2007. SG&A rose to $8.0 million from $7.3 million (including a
$0.6 million goodwill impairment charge) in the year-ago period.
The results reflect the addition of SSS SG&A expense of $0.7
million, higher professional fees pertaining to audit and
compliance services and higher salaries and benefits. The net loss
for the first nine months of 2008 was $0.7 million, or ($0.05) per
diluted share, compared to net income of $0.5 million, or $0.04 per
diluted share, in the comparable 2007 period. Per share results for
the first nine months of 2008 and 2007 are based on a weighted
average number of diluted shares outstanding of 13,894,300 and
14,096,263, respectively. Balance Sheet Update: Ballantyne�s cash
and cash equivalents rose to $6.4 million as of September 30, 2008,
from $4.9 million at June 30, 2008. The increase reflects more
efficient use of working capital in Q3 2008. At September 30, 2008,
Ballantyne also had restricted cash of $1.2 million and $10.9
million in AAA-rated Auction Rate Securities, net of an unrealized
loss of approximately $0.8 million recorded to reflect a temporary
impairment of value of these securities. In addition, Ballantyne
has $13.4 million in availability under its lines of credit. The
Company believes its cash position and credit availability provide
it sufficient liquidity to run its business, pursue digital cinema
opportunities and for possible complementary acquisitions. About
Ballantyne of Omaha Ballantyne is a provider of motion picture
projection, digital cinema projection, cinema screen technology 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 September 30, Nine Months Ended
September 30, 2008 � 2007 2008 � 2007 Net revenues $ 12,309,108 $
12,615,705 $ 40,149,385 $ 38,206,449 Cost of revenues 10,162,988 �
10,526,839 � 33,643,529 � 30,913,586 � Gross profit 2,146,120
2,088,866 6,505,856 7,292,863 � Selling, general &
administrative exp. Selling 835,294 787,270 2,365,814 2,279,622
General and administrative 1,989,584 1,312,779 5,649,852 4,339,829
Goodwill impairment - � - � - � 639,466 � Total SG&A expense
2,824,878 2,100,049 8,015,666 7,258,917 � Gain on transfer of
assets - - - 234,557 Gain (loss) on disposal of fixed assets, net
24,783 - 23,498 (11,004 ) Gain on sale of assets - � - � 258,170 �
- � � Income (loss) from operations (653,975 ) (11,183 ) (1,228,142
) 257,499 Other income (expense) net 74,474 � (39,075 ) 121,148 �
(111,827 ) � Earnings (loss) before interest and taxes (579,501 )
(50,258 ) (1,106,994 ) 145,672 � Interest income 127,855 211,305
403,391 636,548 Interest expense (8,805 ) (11,531 ) (26,503 )
(30,685 ) Net interest income 119,050 199,774 376,888 605,863 �
Equity in loss of Joint Venture (164,329 ) (79,754 ) (462,229 )
(153,134 ) Income (loss) before income taxes (624,780 69,762
(1,192,335 ) 598,401 Income tax (expense) benefit 284,132 � 58,876
� 477,170 � (94,190 ) Net (loss) income (340,648 ) 128,638 �
(715,165 ) 504,211 � � Basic earnings (loss) per share $ (0.02 ) $
0.01 � $ (0.05 ) $ 0.04 � Diluted earnings (loss) per share $ (0.02
) $ 0.01 � $ (0.05 ) $ 0.04 � � Weighted average shares Basic
13,933,152 � 13,836,537 � 13,894,300 � 13,805,506 � Diluted
13,933,152 � 14,110,477 � 13,894,300 � 14,096,263 � � � Selected
Balance Sheet Items: Sept. 30,2008 Dec. 31, 2007 (Unaudited) Cash
and cash equivalents $ 6,440,726 $ 4,220,355 Restricted Cash
1,195,240 1,191,747 Accounts receivable, net 6,975,669 7,841,348
Inventories, net 11,646,888 9,883,555 Investments in securities,
net 10,919,895 13,000,000 Total current liabilities 10,455,761
9,898,601 Total stockholders� equity $ 41,495,536 $ 43,041,698 �
Selected Cash Flow Statement Items: Nine Months Ended September 30,
2008 � 2007 (Unaudited) (Unaudited) Net income (loss) $ (715,165 )
$ 504,211 Depreciation and amortization 1,879,244 1,585,735 Net
cash provided by (used in) operating activities 1,273,724
(3,671,572 ) Capital expenditures (632,772 ) (421,407 ) Net cash
provided by investing activities 775,415 3,979,132 Net cash
provided by financing activities 182,475 224,695 Net increase in
cash & cash equivalents 2,220,371 532,255 Cash & cash
equivalents at beginning of period 4,220,355 2,622,654 Cash &
cash equivalents at end of period $ 6,440,726 � $ 3,154,909 �
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