SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf of the undersigned hereunto
duly authorized.
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SYS
(Registrant)
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Date:
February 11, 2008
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By:
/s/ Michael W. Fink
Michael W. Fink,
Secretary
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EXHIBIT 99.1
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SYS
Contact:
Edward M. Lake
Chief
Financial Officer
858-715-5500
Email:
elake@systechnologies.com
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SYS
TECHNOLOGIES REPORTS FISCAL 2008 SECOND QUARTER AND SIX MONTHS
RESULTS
--Second Quarter Revenues of $18.1
Million in Line with Guidance --
SAN DIEGO, CA – February 11,
2008
– SYS Technologies (SYS), (AMEX:
SYS
), a leading
provider of information connectivity solutions that enable real-time, complex
decision-making, today reported results for the second quarter and six months
ended December 28, 2007.
Cliff
Cooke, chief executive officer of SYS Technologies, said, “Our revenues of $18.1
million for the second quarter tracked to our guidance range of $17.0 million to
$19.0 million. As reported previously, we anticipated that in the near-term the
combined services, software license and product revenue would be less than the
first quarter; nevertheless, we expected to and have maintained
profitability.
Second
quarter 2008 revenues were $18.1 million, down $1.1 million from the prior year
second quarter. The decrease in revenues was attributable to an increase of $0.2
million from acquisition revenues offset by net decreases of $1.3 million, of
which, $0.9 million was from services and $0.4 million was from
products. The decrease in services was attributable to decreases in
IT support programs. Growth in learning and performance training solutions and
public safety solutions partially offset the other reductions.
Gross
margin was 25.4 percent in the quarter as compared to 23.7 percent in the prior
year, as a result of higher overall margins on our services business
due to growth in our time and material contracts. Operating expenses
were $4.5 million, or 24.8 percent of revenues, in the current year quarter, as
compared to $4.8 million, or 24.9 percent of revenues, in the prior year.
Importantly, on a sequential quarter basis, operating expenses for the first and
second quarters of this fiscal year have each been reduced by $1.1 million or 19
percent compared to the fourth quarter of 2007.
Cooke
stated that, “Our core DoD service based revenues were down in the second
quarter as a result of uncertainties concerning the DoD budget while we operated
under a continuing resolution which resulted in delayed funding for certain
contracts, This combined with the fact that we typically generate less revenue
in the second fiscal quarter in our services business due to vacations and
holidays that reduce billable hours impacted our revenues for the quarter.
However, since we have been implementing sustainable overall cost reductions we
were able to maintain profitability.”
Management
has included information about non-GAAP net income because management believes
it provides a more meaningful measure of quarter-over-quarter and year-over-year
financial performance. A reconciliation of generally accepted
accounting principles (GAAP) results to non-GAAP net income results follows in
this press release. Non-GAAP net income and non-GAAP net income per share are
non-GAAP measures and exclude amortization of intangibles from acquisitions,
non-cash share-based compensation charges and asset impairment charges, if any,
all net of their related tax effect. For further information, please refer to
the section of the press release titled, “Note Regarding Use of Non-GAAP
Financial Measures.”
Second
quarter 2008 net income was $45,000, or $0.00 per diluted share, compared to a
net loss of $342,000, or $0.02 per share, in the prior year’s second
quarter. For the second quarter of 2008, the company reported
non-GAAP net income of $236,000 or $0.01 per diluted share, compared to net
income of $29,000 or $0.00 per share in the prior year’s second
quarter.
At
December 28, 2007, the company had a cash balance of $2.2 million, working
capital of $10.7 million and an available credit facility balance of $2.4
million.
Cooke
added, “We anticipate that for the third quarter, our top line revenues will
increase to a range of $19.0 million to $20.0 million with increases in all our
business areas. Recent contract awards which began generating revenue in January
will help drive our services revenues and we also anticipate that our mix of
products based revenues, particularly in our network management solutions
products business to grow from the second quarter. This revenue growth, together
with cost reductions already implemented put us in a strong position for the
third quarter.”
For the
six months ended December 28, 2007, revenues were $38.6 million, up $3.2 million
from the prior year six-month period, reflecting contributions from an
acquisition, engineering and program management services and products which were
slightly offset by a decrease in certain of the company’s net-centric
engineering services programs. The six-month to date GAAP net income
was $572,000, or $0.03 per share, compared to GAAP net loss of $457,000, or
$0.03 per diluted share, in the prior year’s six-month period. For the six month
period, the company reported non-GAAP net income of $949,000, or $0.05 per
diluted share, compared to non-GAAP net income of $25,000 or $0.00 per diluted
share, in the prior year’s six-month period.
Outlook
for Fiscal Year 2008
The
business continues to be dependent upon awards from large government agencies
and corporations, and as such, the revenue stream may be unpredictable. For the
fiscal 2008 third quarter, management expects revenue to be in the range of
$19.0 million to $20.0 million and the company to be profitable. For
fiscal year 2008, management expects revenue to be in the range of $78.0 million
to $80.0 million. The company expects to be profitable throughout the year;
however, management anticipates the level of profitability will fluctuate based
on the timing and composition of revenues.
Fiscal
2008 Second Quarter Conference Call
SYS
management will host a conference call on Monday, February 11, 2008 at 11:00
a.m. ET (8:00 a.m. PT) to discuss its financial results for the recent quarter
and to answer questions. Participating in the call will be Cliff Cooke, chief
executive officer, and Ed Lake, chief financial officer.
To
participate in the live call, please dial (888) 396-2384 from the US or, for
international callers, please dial (617) 847-8711 passcode #22569740
approximately 15 minutes before the start time. A telephone replay
will be available for one week by dialing (888) 286-8010 from the US, or (617)
801-6888 for international callers, and entering passcode
#90766477. To listen to the conference call live via the Internet,
visit the SYS web site at
www.systechnologies.com
.
Please go to the web site 15 minutes prior to its start to register, download,
and install the necessary audio software.
About
SYS Technologies
SYS
(AMEX: SYS), is a leading provider of information connectivity solutions that
capture, analyze and present real-time information to our customers in the
Department of Defense, Department of Homeland Security, other government
agencies and to commercial companies. Using interoperable communications
software, sensors, digital video broadcast and surveillance technologies,
wireless networks, network management, decision-support tools and Net-centric
technologies, our technical experts enhance complex decision-making. We also
provide solution lifecycle support with program, financial, test and logistical
services and training. Founded in 1966, SYS is headquartered in San Diego and
has principal offices in California and Virginia. For additional information,
visit
www.systechnologies.com
.
Notice
Regarding Use of Non-GAAP Financial Measures
Certain
of the information set forth herein, including non-GAAP net income (loss) and
non-GAAP net income (loss) per share, are non-GAAP financial measures. SYS
believes this information is useful to investors because it provides a basis for
measuring SYS’s available capital resources, the operating performance of SYS’
business and SYS’ cash flow, excluding the effects of non-cash charges for
amortization of intangibles from acquisitions, non-cash share-based compensation
charges and asset impairment charges, if any, all net of their related tax
effects, that would normally be included in the most directly comparable
measures calculated and presented in accordance with GAAP. SYS’ management uses
these non-GAAP financial measures along with the most directly comparable GAAP
financial measures in evaluating SYS’ operating performance, capital resources
and cash flow. Non-GAAP financial measures should not be considered in isolation
from, or as a substitute for, financial information presented in accordance with
GAAP. Non-financial measures as reported by SYS may not be comparable to
similarly titled amounts reported by other companies. A reconciliation of GAAP
results to non-GAAP results has been provided in the financial statement tables
that accompany this press release
Notice
Regarding Forward-Looking Statements
This
press release includes “forward-looking statements” within the meaning of
section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this press release regarding the
Company’s strategies, plans, objectives, expectations, and future operating
results are forward-looking statements. Although SYS believes that the
expectations reflected in such forward-looking statements are reasonable at this
time, it can give no assurance that such expectations will prove to have been
correct. Actual results could differ materially based upon a number of factors
including, but not limited to, the state of economy, competition, unanticipated
business opportunities, availability of financing, market acceptance, government
regulation, dependence on key personnel, limited public markets and liquidity,
shares eligible for future sale, continuation and renewal of contracts and other
risks that may apply to the Company, including risks that are disclosed in the
Company’s Securities and Exchange Commission filings.
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