IRVINE, Calif., Nov. 8, 1999 (PRIMEZONE) -- Litronic Inc. (Nasdaq:LTNX), a leader in professional Internet data security services and secure electronic commerce applications, today announced results for the quarter ended Sept. 30, 1999.
Litronic noted that groundwork laid during the third quarter has resulted in a number of contract wins in recent weeks. Contract wins include the U.S. Department of Defense Financial Management Service and the Entertainment Industry Development Corporation.
Kris Shah, Litronic's chairman and chief executive officer, said, "We continue to make great progress in executing our fundamental growth strategy and achieving the goals we set for ourselves at the time of our IPO. During the quarter, we increased our marketing opportunities through strategic alliances with Cybertrust (a GTE (GTE) company), Microsoft (MSFT), and Verisign (VRSN). For the remainder of 1999, sales and marketing efforts will be an important factor while we continue to develop relationships with leading commercial and government sectors to drive top-line performance."
Results
For the third quarter ended Sept. 30, 1999, the company reported increased revenues of $16.1 million versus $1.8 million for the same quarter last year. A major contribution to the increased revenues is attributed to our June 1999 acquisition. Net loss for the quarter was $1.4 million, or $0.14 per basic and diluted share, versus a net loss of $467,000, or $0.12 per basic and diluted share, for the same quarter last year.
For the nine months ended Sept. 30, 1999, the company reported a 310 percent increase in revenues to $20.3 million versus $5.0 million for the same period a year ago. Net loss was $3.9 million or $0.63 per basic and diluted share, versus a net loss of $868,000, $0.22 per basic and diluted share, for the same period a year ago.
Tom Seykora, Litronic's chief financial officer, said, "We are pleased with our performance this quarter and continue to invest in our infrastructure to support the future growth of Litronic. Additionally, beginning in the third quarter ended Sept. 30, 1999, the company will not recognize deferred tax benefits related to operating losses until they become more likely than not realizable."
At Sept. 30, 1999, Litronic maintained a positive cash position, with cash and cash equivalents of $5.8 million as compared to $898,000 of cash and cash equivalents at December 31, 1998. Stockholders' equity was $51.1 million at Sept. 30, 1999.
Third Quarter Performance
During the third quarter we launched several new products that will contribute to the continued growth of the company:
-- Netsignia(TM) is a family of smart card readers/writers designed to address all levels of smart card deployment. The product line includes the 210 serial reader and the 410 PCMCIA laptop solution.
-- In August 1999 Litronic introduced a smart card migration path to Windows 2000 for NetSign. NetSign is a public key infrastructure (PKI) smart card solution that enables leading Web browser applications and enhances security. Designed for smart card deployment in businesses conducting Internet commerce, NetSign allows easy deployment in Windows operating systems and offers a migration path to Windows 2000.
-- Litronic completed the strategic development of ProFile Manager 3.0 and launched the new version in October 1999. ProFile Manager is a comprehensive PKI Web and network security deployment and management system that supports issuance and maintenance of Windows Powered Smart Cards. It provides a central point of data management, controlling the deployment, applications and content for every user.
Additionally during the third quarter, Litronic began testing its 32-bit Forte smart card, the industry's fastest and most powerful smart card security solution. The Forte smart card has been developed in conjunction with Atmel and the National Security Agency with shipments commencing in the first quarter 2000.
Microsoft Conference
At Microsoft's Smart Card '99 Business Development Conference in Oct. 1999, Litronic announced a new version of ProFile Manager 3.0, its management tool for deployment of smart card and PKI security solutions. The application is now able to manage the infrastructure for the many PKI applications anticipated with the release of Windows Powered Smart Cards. Windows Powered Smart Cards will allow smart cards to reach mass deployment far quicker than through the current proprietary solutions.
"Litronic's participation at the Microsoft conference contributes to the rapid recognition and validation of our smart card technology and leading edge position in the PKI commercial market. Products like our ProFile Manager 3.0 allow enterprises to enable and maintain the security infrastructure, and support the multiplicity of smart card uses on the Internet," said Bill Holmes, Litronic's vice president sales and marketing.
Recent Contract Wins
During the third quarter, Litronic's strengthened its sales and marketing focus and built up a momentum that resulted in launching the fourth quarter 1999 with several significant contract wins:
-- Litronic announced a half million dollar order from the U.S. Department of Defense Financial Management Service (DFAS) for a smart card-based digital signature system. Litronic will install its government-validated security solution into the DFAS Defense Joint Accounting System (DJAS) for more than 1,400 new users, enabling secure government procurement and electronic commerce. Once the integration is complete, the new system will create a ripple effect among government suppliers that digital signatures are needed to transact commerce with the government.
-- Litronic provided technology to Entertainment Industry Development Corp. (EIDC) that authenticates a paperless permit process. Litronic integrated its ProFile Manager with EIDC's online location permitting system (LPS), streamlining, securing and adding value for television and movie production companies requesting permits to film in Southern California. EIDC will initially have 20 employees with access to the system, with plans to add up to 300 internal and external users within the next two years. EIDC is scheduled to complete their internal online system by the end of this year and external rollout is scheduled to start January 2000.
Establishing International Presence
As part of Litronic's strategic growth plan, the company announced the appointment of a vice president of international sales, to support the company's commitment to the worldwide business-to-business e-commerce market. The primary responsibilities of this new appointment are to develop key distributor relationships throughout Europe and Asia. "With 250 percent growth expected in worldwide business-to-business e-commerce in the year 2000, the need for robust Internet security is rapidly expanding," said Kris Shah, president and CEO of Litronic.
Y2K Issues
Shah said, "From an internal standpoint, we have addressed all year 2000 issues and our products are compliant and will accommodate the date change. We anticipate that our current and potential customers may be required to devote material portions of their information technology budgets to evaluations, repairs and replacements of their internal systems as the year 2000 approaches. However, after the New Year, we expect that budget dollars allocated to year 2000 issues will be realigned to focus on addressing data security issues and provide a substantial opportunity for Litronic."
Outlook
Shah said, "Our focus remains on delivering on our growth strategy which includes significantly penetrating the information security market, expanding our presence in the PKI market niche and leveraging our technology in the fast growing e-commerce arena. Crucial to our success is increasing our sales and marketing opportunities in both the government and the commercial sectors, maintaining our technological leadership and optimizing our existing strategic alliances while pursuing additional strategic relationships to effectively develop in-roads to capture a greater share of our target markets."
About Litronic
Litronic provides professional Internet data security services and develops and markets software and microprocessor-based products needed to secure electronic commerce business transactions and communications over the Internet and other communications networks based on Internet protocols. Litronic's primary data security products use an advanced form of computer security technology referred to as PKI. Litronic's Internet security products can be used with world-wide-web browsers, including Netscape Communicator and Microsoft Internet Explorer. Further, Litronic provides the PKI hardware and software components that enable software applications developers to incorporate robust data security into applications such as data base management, e-mail, e-commerce, financial, medical, legal and other sensitive data systems.
Litronic will demonstrate PKI technology with Microsoft Windows Powered Smart cards in corporate IT scenarios during Comdex 99 at booth L5142 #238.
Investors will have the opportunity to listen to Litronic's quarterly conference call today at 2:00 p.m. Eastern over the Internet through Investor Broadcast Networks' Vcall Web site, located at http://www.vcall.com. To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available through Vcall shortly after the conference call.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
With the exception of historical information, the matters discussed in this news release relating to the projected growth of e-commence and of the Internet security market; and to Litronic's ability to penetrate the Internet security market, to integrate our June 1999 acquisition and to transition to commercial markets are forward-looking statements that involve a number of risks and uncertainties, including competition from companies with greater financial and technical resources than Litronic, the difficulty in continuing technical innovation (particularly in light of the competitive market for technical personnel), the effect of differing corporate cultures on the integration of our June 1999 acquisition and the acceptance of Litronic's products in the commercial marketplace. Other risks inherent in Litronic's business are described in its Securities and Exchange Commission filings, including the Company prospectus. Litronic undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
LITRONIC INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
ASSETS Sept. 30, Dec. 31,
1999 1998
Current assets:
Cash and cash equivalents $ 5,810 $ 898
Accounts receivable, net 10,814 740
Inventories 721 533
Other current assets 1,867 385
Total current assets 19,212 2,556
Property and equipment, net 666 235
Goodwill and other intangibles, net 35,614 -
Other assets 625 -
$ 56,117 $ 2,791
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt $ 334 $ 580
Accounts payable 3,081 456
Accrued liabilities 1,586 762
Total current liabilities 5,001 1,798
Long-term debt - 5,200
Total liabilities 5,001 6,998
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $.01 par value;
Authorized 5,000,000 shares; no shares
issued or outstanding - -
Common stock, $.01 par value; 25,000,000
shares authorized; 9,741,986 and 3,870,693
shares issued and outstanding at
Sept. 30, 1999 and Dec. 31,1998,
Respectively 98 39
Additional paid-in capital 52,771 -
Accumulated deficit (1,753) (4,246)
Total stockholders' equity (deficit) 51,116 (4,207)
$ 56,117 $ 2,791
LITRONIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
3 Months Ended 9 Months Ended
9/30/99 9/30/98 9/30/99 9/30/98
Revenues:
Product $15,574 $ 1,526 $18,784 $ 3,886
License and service 451 98 703 925
Research and development 103 140 798 140
Total revenues $ 16,128 1,764 20,285 4,951
Costs and expenses:
Cost of sales-products 13,245 686 15,807 1,740
Cost of sales-license
and service 364 390 639 909
Selling, general and
Administrative 2,249 778 4,531 1,990
Research and development 973 285 2,476 919
Amortization of goodwill
and other intangibles 709 - 827 -
Operating loss (1,412) (375) (3,995) (607)
Interest expense (86) (107) (324) (338)
Interest income 119 12 163 16
Loss before income taxes (1,379) (470) (4,156) (929)
Benefit from income taxes - (3) (285) (61)
Net loss $ (1,379) $ (467) $(3,871) $ (868)
Net loss per share-basic
and diluted $ (0.14) $ (0.12) $ (0.63) $ (0.22)
Shares used in per share
computations-basic
and diluted 9,742 3,871 6,154 3,871
CONTACT: Thomas W. Seykora
Chief Financial Officer
Litronic Inc.
949-851-1085
Geri Weinfeld
Financial Communications
Hill and Knowlton
323-966-5768