EXHIBIT 99.1
| Contact: | Karen L. Dexter | |
| Director, Investor Relations | ||
| Ampex Corporation | ||
| (650) 367-4111 |
AMPEX CORPORATION REPORTS
PRELIMINARY UNAUDITED 2004 FINANCIAL RESULTS
Company to Obtain 15-day Extension to File Financial Statements
REDWOOD CITY, Calif., March 31, 2005 – Ampex Corporation (OTCBB:AEXCA) today announced that it intends to file Form 12b-25 with the Securities and Exchange Commission to obtain a 15-day extension to April 15, 2005 to file its annual report on Form 10-K for 2004. As previously reported on Form 8-K, the Company will be restating its financial statements included in its Form 10-K for 2003 as well as financial statements included in its Form 10-Q for March, June and September 2004 to correct the accounting for the pension obligations of a former subsidiary that was sold in 1995. The amended financial statements and Form 10-K for 2004 have not yet been completed due to the substantial amount of additional work associated with the restatements. Accordingly, results and related per share amounts discussed below are preliminary and subject to adjustment pending completion of the 2004 audit and prior period restatement processes. The Company currently expects to file the restated annual and quarterly reports as well as the 2004 Annual Report on or before April 15, 2005.
Ampex also reported preliminary unaudited income from continuing operations of $48.5 million or $12.73 per diluted share for the year ended December 31, 2004. In 2003, the Company reported a loss from continuing operations as preliminarily restated of $1.8 million or ($0.53) per diluted share. The loss in 2003 included a restructuring provision related to previously vacated real estate of $3.1 million or ($0.94) per diluted share.
The Company reported net income applicable to Common Stockholders of $12.35 per diluted share in 2004 compared to net income applicable to Common Stockholders as preliminarily restated of $6.30 per diluted share in 2003, which included a one-time, non- cash gain of $7.26 per share from the redemption of its Preferred Stock.
Net income in 2004 included approximately $9.7 million of interest expense. In 2004, the Company repaid $63.9 million of long-term debt that accounted for $7.6 million of interest expense during 2004.
Revenues from the Company’s continuing operations increased to $101.5 million in 2004 from $43.4 million in 2003 as a result of increased revenues in the patent licensing business segment.
The Company’s patent licensing business segment reported preliminary unaudited operating income of $65.3 million or $17.15 per diluted share in 2004 compared to $8.4 million or $2.55 per diluted share in 2003. Revenues from this segment increased to $72.9 million in 2004 compared with $10.1 million in the prior year as a result of new licensing agreements covering use of the Company’s patents in digital video camcorders, digital still cameras and DVD recorders. Intellectual property costs include litigation expense incurred in connection with suits initiated by Ampex for infringement of its patents and amounted to $4.9 million in 2004
compared to less than $200,000 in 2003. Litigation expense relates to patent infringement suits against Sanyo Electric Company and Sony Corporation which have been settled, and against Eastman Kodak Company (NYSE:EK) which is continuing. A portion of royalties received in 2004 relates to non-refundable, non-forfeitable prepayments by certain licensees of obligations through April 2006. The Company expects to realize significant income from additional new patent licenses during 2005 but is seeking to negotiate recurring royalties rather than prepayments. This may significantly reduce the amount of royalties received when agreements are initially concluded compared with amounts received in 2004.
The Company’s recorders business segment reported preliminary unaudited operating income of $1.5 million or $0.40 per diluted share, a decline from $6.5 million and $1.98 per diluted share respectively in 2003. The segment experienced a decline in revenues to $28.6 million in 2004 from $33.3 million in 2003, reflecting an ongoing transition from an older generation of tape-based image and data acquisition products to a newly introduced range of solid state and hard disk-based products. Unaudited operating income in 2004 was also negatively affected by an increase in research, development and engineering expenditures for the development of these new products and by approximately $2.2 million of writedowns of inventories of older products and other factors. The Company has shipped in 2004 and will continue to ship in 2005 evaluation units of its new products to customers in the intelligence gathering and aerospace markets who have large installed bases of Ampex’s older equipment, and are seeking larger orders for delivery beginning in 2006.
In 2004, unallocated administrative costs decreased unaudited operating results by $7.4 million or $1.95 per diluted share. In 2003, unallocated administrative costs decreased operating results by $5.9 million or $1.80 per diluted share.
Pension costs associated with the former magnetic tape subsidiary amounted to $3.9 million in 2004 or $1.03 per diluted share versus $1.4 million or $0.42 per diluted share in 2003. Amounts in 2004 included a curtailment loss of $2.5 million.
Interest and other financing costs, net, totaled $2.53 per diluted share in 2004 compared to $2.71 per diluted share in 2003. In 2004, the Company’s operations benefited from utilization of net operating loss (NOL) carryforwards that eliminated substantially all federal and state income taxes that would have been payable. The Company has NOL carryforwards totaling $178 million at December 31, 2004 which will be available to reduce future taxable income. In 2003, the non-cash reversal of reserves for foreign, federal, state and deferred income taxes totaled $4.2 million or $1.26 per diluted share.
The Company also noted that it believes that it will satisfy the Nasdaq listing criteria in April 2005, at which time it will submit an application to have its Common Shares listed.
(Amounts for 2003 have been preliminarily restated to correct the accounting for the obligations under a pension plan of the former magnetic tape manufacturing subsidiary (“Media”) which the Company disposed of in 1995, pursuant to SFAS No. 87, “Employers’ Accounting for Pensions.”).
Ampex Corporation, www.ampex.com, headquartered in Redwood City, California, is one of the world’s leading innovators and licensors of technologies for the visual information age.
This news release contains predictions, projections and other statements about the future that are intended to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of l995 (collectively, “forward-looking statements”). Forward-looking statements relate to various aspects of the Company’s operations and strategies, including but not limited to the effects of having experienced significant losses in the past and the risk that the Company may incur losses in the future; the Company’s limited liquidity and significant indebtedness and interest expense; its sales and royalty forecasts for future periods not being attained, and the risk that the Company will not conclude additional royalty-bearing license agreements covering its digital technologies; the Company’s marketing, product development, acquisition, investment, licensing and other strategies not being successful; possible future issuances of debt or equity securities; the possible incurrence of significant patent litigation expenses or adverse legal determinations finding the Company’s patents not be valid or not to have been infringed; new business development and industry trends; the possible need to raise additional capital in order to meet the Company’s obligations; reliance on a former affiliate to make contributions to the Company’s pension plans which are substantially underfunded; and most other statements that are not historical in nature. Important factors that could cause actual results to differ materially from those described in the forward-looking statements are described in cautionary statements included in this news release and/or in the Company’s 2004 Annual Report on Form 10-K and its restated Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2004, June 30, 2004, and September 30, 2004 expected to be filed shortly with the SEC. In assessing forward-looking statements, readers are urged to consider carefully these cautionary statements. Forward-looking statements speak only as of the date of this news release, and the Company disclaims any obligations to update such statements.
any obligations to update such statements.
AMPEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| December 31, 2004 |
December 31, 2003 |
|||||||
| Restated | ||||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 8,840 | $ | 14,023 | ||||
| Short-term investments |
9,134 | — | ||||||
| Accounts receivable (net of allowances of $74 in 2004 and $137 in 2003) |
2,602 | 4,513 | ||||||
| Inventories |
5,187 | 6,343 | ||||||
| Other current assets |
2,071 | 4,366 | ||||||
| Total current assets |
27,834 | 29,245 | ||||||
| Property, plant and equipment |
4,230 | 4,825 | ||||||
| Other assets |
555 | 1,127 | ||||||
| Total assets |
$ | 32,619 | $ | 35,197 | ||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||
| Current liabilities: |
||||||||
| Notes payable |
$ | 131 | $ | 146 | ||||
| Accounts payable |
1,577 | 1,511 | ||||||
| Net liabilities of discontinued operations |
1,042 | 1,076 | ||||||
| Accrued restructuring costs |
645 | 1,300 | ||||||
| Other accrued liabilities |
15,260 | 24,844 | ||||||
| Total current liabilities |
18,655 | 28,877 | ||||||
| Long-term debt |
30,275 | 74,022 | ||||||
| Other liabilities |
77,993 | 74,561 | ||||||
| Accrued restructuring costs |
1,622 | 3,450 | ||||||
| Net liabilities of discontinued operations |
2,803 | 2,071 | ||||||
| Total liabilities |
131,348 | 182,981 | ||||||
| Commitments and contingencies |
||||||||
| Mandatorily redeemable nonconvertible preferred stock, $1,000 liquidation value per share: |
||||||||
| Authorized: 69,970 shares in 2004 and in 2003 |
— | — | ||||||
| Issued and outstanding - none in 2004 and in 2003 |
||||||||
| Mandatorily redeemable preferred stock, $2,000 liquidation value per share: |
||||||||
| Authorized: 21,859 shares in 2004 and in 2003 |
— | — | ||||||
| Issued and outstanding - none in 2004 and in 2003 |
||||||||
| Convertible preferred stock, $2,000 liquidation value per share: |
||||||||
| Authorized: 10,000 shares in 2004 and in 2003 |
— | — | ||||||
| Issued and outstanding - none in 2004 and in 2003 |
||||||||
| Stockholders’ deficit: |
||||||||
| Preferred stock, $1.00 par value: |
||||||||
| Authorized: 898,171 shares in 2004 and in 2003 |
— | — | ||||||
| Issued and outstanding - none in 2004 and in 2003 |
||||||||
| Common stock, $.01 par value: |
||||||||
| Class A: |
||||||||
| Authorized: 175,000,000 shares in 2004 and in 2003 |
37 | 37 | ||||||
| Issued and outstanding - 3,692,517 shares in 2004; 3,728,017 in 2003 |
||||||||
| Class C: |
||||||||
| Authorized: 50,000,000 shares in 2004 and in 2003 |
— | — | ||||||
| Issued and outstanding - none in 2004 and in 2003 |
||||||||
| Other additional capital |
454,525 | 454,394 | ||||||
| Accumulated deficit |
(462,980 | ) | (510,042 | ) | ||||
| Accumulated other comprehensive loss |
(90,311 | ) | (92,173 | ) | ||||
| Total stockholders’ deficit |
(98,729 | ) | (147,784 | ) | ||||
| Total liabilities, redeemable preferred stock and stockholders’ deficit |
$ | 32,619 | $ | 35,197 | ||||
These statements are preliminary and subject to adjustment pending completion of the audits of the 2004 financial statements
and restatement of prior period financial statements.
AMPEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share data)
| Year Ended December 31, |
||||||||||||
| 2004 |
2003 |
2002 |
||||||||||
| Restated | Restated | |||||||||||
| (unaudited) | ||||||||||||
| Licensing revenue |
$ | 72,869 | $ | 10,054 | $ | 3,969 | ||||||
| Product revenue |
19,843 | 23,972 | 24,477 | |||||||||
| Service revenue |
8,739 | 9,333 | 8,543 | |||||||||
| Total revenue |
101,451 | 43,359 | 36,989 | |||||||||
| Intellectual property costs |
7,551 | 1,633 | 958 | |||||||||
| Cost of product revenue |
14,017 | 14,669 | 17,660 | |||||||||
| Cost of service revenue |
2,735 | 2,610 | 2,541 | |||||||||
| Research, development and engineering |
3,934 | 3,179 | 2,614 | |||||||||
| Selling and administrative |
13,780 | 12,236 | 11,217 | |||||||||
| Restructuring charges (credits) |
(1,410 | ) | 3,098 | 2,245 | ||||||||
| Total costs and operating expenses |
40,607 | 37,425 | 37,235 | |||||||||
| Operating income (loss) |
60,844 | 5,934 | (246 | ) | ||||||||
| Media pension costs |
3,936 | 1,383 | 67 | |||||||||
| Interest expense |
9,732 | 9,000 | 8,465 | |||||||||
| Amortization of debt financing costs |
57 | 57 | 460 | |||||||||
| Interest income |
(161 | ) | (103 | ) | (360 | ) | ||||||
| Other (income) expense, net |
(179 | ) | 74 | 236 | ||||||||
| Income (loss) from continuing operations before income taxes and equity in loss (income) of limited partnership, including sale of investment |
47,459 | (4,477 | ) | (9,114 | ) | |||||||
| Provision for (benefit of) income taxes |
1,098 | (3,172 | ) | (6,242 | ) | |||||||
| Equity in loss (income) of limited partnership, including sale of investment |
(2,149 | ) | 459 | — | ||||||||
| Income (loss) from continuing operations |
48,510 | (1,764 | ) | (2,872 | ) | |||||||
| Loss from discontinued operations (net of taxes of nil in 2004) |
(1,448 | ) | — | — | ||||||||
| Net income (loss) |
47,062 | (1,764 | ) | (2,872 | ) | |||||||
| Benefit from extinquishment of mandatorily redeemable preferred stock |
— | 23,951 | 4,192 | |||||||||
| Preferred dividends ascribed, but not declared |
— | (1,416 | ) | (1,320 | ) | |||||||
| Undistributed income applicable to common stockholders |
47,062 | 20,771 | — | |||||||||
| Other comprehensive income (loss), net of tax: |
||||||||||||
| Foreign currency translation adjustments |
18 | 103 | 88 | |||||||||
| Minimum pension adjustment |
1,844 | (8,907 | ) | (33,011 | ) | |||||||
| Comprehensive income (loss) |
$ | 48,924 | $ | 11,967 | $ | (32,923 | ) | |||||
| Basic undistributed income (loss) per share: |
||||||||||||
| Income (loss) per share from continuing operations |
$ | 13.21 | $ | (0.53 | ) | $ | (0.92 | ) | ||||
| Loss per share from discontinued operations |
$ | (0.39 | ) | $ | 0.00 | $ | 0.00 | |||||
| Undistributed income per share applicable to common stockholders |
$ | 12.82 | $ | 6.30 | $ | 0.00 | ||||||
| Weighted average number of basic common shares outstanding |
3,671,803 | 3,297,927 | 3,116,641 | |||||||||
| Diluted undistributed income (loss) per share: |
||||||||||||
| Income (loss) per share from continuing operations |
$ | 12.73 | $ | (0.53 | ) | $ | (0.92 | ) | ||||
| Loss per share from discontinued operations |
$ | (0.38 | ) | $ | 0.00 | $ | 0.00 | |||||
| Undistributed income per share applicable to common stockholders |
$ | 12.35 | $ | 6.30 | $ | 0.00 | ||||||
| Weighted average number of diluted common shares outstanding |
3,809,514 | 3,297,977 | 3,116,641 | |||||||||
These statements are preliminary and subject to adjustment pending completion of the audits of the 2004
financial statements and restatement of prior period financial statements.