2008-08-14 08:45:00
NORTHVALE, N.J., Aug. 14 /EMWNews/ -- Photonic Products Group, Inc. (OTC Bulletin Board: PHPG) has reported its consolidated financial results for its second quarter and first six months, which ended June 30, 2008. Revenues for the second quarter were $4,007,000, and revenues for the first six months were $8,172,000, up 9% and up 13%, respectively, from the same periods last year. Order intake for the first six months was $7,024,000, down 16% in comparison to order intake through the first six months of 2007. The backlog at the end of the second quarter was $10,098,000, up 26% from a backlog of $8,032,000 at the same point in 2007. By comparison, product backlog was 4% from $9,672,000 on December 31, 2007. Gross profit for the second quarter was $1,219,000, or 30%, compared with a gross profit of $1,393,000, or 38% in last year's second quarter. Gross profit for the first six months was $2,721,000, or 33%, compared with a gross profit of $2,775,000, or 38% in last year's first half. The Company reported net income of $294,000 for the quarter just ended compared to $396,500 for the same period last year. This quarter's result included a net benefit from income taxes of $78,000, reflecting recognition of a deferred tax asset, while the result in 2007 reflected a provision for income taxes of $25,000. Net income for the first half was $785,000, reflecting a net tax benefit of $130,000. Net income in the first half of 2007 was $831,300, which included a provision for taxes of $40,000. Basic and diluted earnings per common share (EPS) for the second quarter of 2008 were $0.03 and $0.02, respectively. In last year's second quarter, basic and diluted EPS were both $0.02. For the first six months of 2008, basic and diluted EPS were $0.07 and $0.06, which compares with $0.07 and $0.05 in the same period last year. The 2007 EPS results reflect the impact of a stock dividend to preferred shareholders that year of $233,000. Cash flow from operations through the first six months of this year was $558,400, which compares with cash flow from operations of $1,531,000 in the first six months of 2007. The lower cash flow from operations resulted mainly from increases in net working capital over the comparable period last year. Net cash flow from all activities for the six months ended June 30, 2008 was a deficit of $494,700 after the Company accelerated repayment of $2,177,000 of principal and accrued interest on a $1,700,000 senior secured note. For the six months ended June 30, 2007, net cash flow was $946,500, after an accelerated repayment of $500,000 of principal on a subordinated convertible note. Cash balance at the end of the first half was $3,901,000 compared with $4,024,000 at the same point last year. Dan Lehrfeld, President and CEO of PPGI commented, "Revenues were at record levels through the first half, despite significantly lower shipments than expected from our MRC Optics subsidiary. Production problems and delays there persisted through June, and we booked a net loss there for the second quarter and first half. This resulted in the drop we reported in our consolidated income from operations and net income in the first half." "We have initiated a number of changes at MRC in recent months. We've restructured the management team there and reassigned responsibilities to improve execution. We've brought in a new Vice President and General Manager, its founder and former General Manager/President has been reassigned full-time to head engineering and technology. Our corporate Vice Presidents of Operations and Sales/Marketing have additionally been appointed heads of Manufacturing Operations and Sales/Marketing at MRC. Production resources, both people and equipment, have been augmented to expand production capacity and throughput and improve efficiencies, and we have moved to a strong linkage between our New Jersey and Florida operations to ensure all of our manufacturing resources can more flexibly assist one another's businesses. We are dedicated to realizing improved revenues and results at MRC in the second half of this year." Mr. Lehrfeld continued, "While total order intake in the first half was strong, and backlogs are near all time highs, order intake was below average in the second quarter and appears to be softening. One Laser Optics process control and metrology industry OEM customer serving semiconductor manufacturers world-wide has pushed-out release of its next production orders due to a sharp drop in orders for their systems. They have attributed this to global economic uncertainty and a cyclical downturn in semiconductor capital equipment orders. This is the first tangible reflection we have seen that the current economic environment will be more of a challenge for us and our non- defense industry customers than previously anticipated." Mr. Lehrfeld added, "I announced recently that I will be stepping down from leadership of the management team at the end of the year, and we have initiated a process to identify my successor. We are intent on ensuring a seamless transition for all of our stakeholders." Founded in 1973, Photonic Products Group, Inc. develops, manufactures, and markets products and services for use in diverse Photonics industry sectors via its portfolio of distinctly branded businesses. INRAD specializes in crystal-based optical components and devices, laser accessories and instruments. Laser Optics specializes in precision custom optical components, assemblies, and optical coatings. MRC Optics' business specializes in precision diamond turned optics, metal optics, and opto-mechanical and electro-optical assemblies. PPGI's customers include leading corporations in the Defense and Aerospace, Laser Systems, and Process Control and Metrology sectors of the Photonics Industry, as well as the U.S. Government. Its products are also used by researchers at National Laboratories and Universities world-wide. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These statements may be identified by their use of forward-looking terminology such as "believes", "expects", "should", "will", "plan", "anticipate", "targeting" or similar words. Such forward-looking statements, such as our expectation for revenues, new orders, and income, involve risks and uncertainties that could cause actual results to differ materially from those projected. Risks and uncertainties that could cause actual results to differ materially from such forward looking statements are, but are not limited to, uncertainties in market demand for the company's products or the products of its customers, future actions by competitors, inability to deliver product on time, inability to implement its growth strategies or to integrate new operations, inability to realize synergies from its acquisitions, inability to raise capital, inability to retain key employees or hire new employees, and other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. The forward looking statements made in this news release are made as of the date hereof and Photonic Products Group, Inc. does not assume any obligation to update publicly any forward looking statement.
PHOTONIC PRODUCTS GROUP, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 2008 2007 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents $3,901,243 $4,395,945 Accounts receivable (net of allowance for doubtful accounts of $15,000 in 2008 and 2007) 2,347,837 2,181,859 Inventories 3,176,156 2,931,080 Deferred Income Taxes 204,000 - Other current assets 236,686 164,065 Total Current Assets 9,865,922 9,672,949 Plant and equipment, Plant and equipment at cost 14,027,357 13,690,229 Less: Accumulated depreciation and amortization (10,659,314) (10,189,853) Total plant and equipment 3,368,043 3,500,376 Precious Metals 112,851 112,851 Goodwill 1,869,646 1,869,646 Intangible Assets 790,862 830,144 Other Assets 59,930 91,981 Total Assets $16,067,254 $16,077,947 Liabilities and Shareholders' Equity Current Liabilities: Current portion of notes payable -Other $14,429 $14,814 Accounts payable and accrued liabilities 2,240,607 2,741,966 Customer advances 1,074,929 870,550 Current obligations under capital leases 5,930 47,088 Convertible note payable due within one year 2,500,000 1,700,000 Total current liabilities 5,835,895 5,374,418 Secured and Convertible Notes Payable - 2,500,000 Other Long Term Notes 483,674 490,730 Total liabilities 6,319,569 8,365,148 Commitments and Contingencies - - Shareholders' equity: 10% convertible preferred stock, Series A no par value; no shares issued and outstanding - - 10% convertible preferred stock, Series B no par value; no shares issued and outstanding - - Common stock: $.01 par value; 60,000,000 authorized; 11,207,441 shares issued at June 30, 2008 and 10,104,719 issued at December 31, 2007 112,073 101,046 Capital in excess of par value 16,559,413 15,320,771 Accumulated deficit (6,908,851) (7,694,068) 9,762,635 7,727,749 Less - Common stock in treasury, at cost (4,600 shares respectively) (14,950) (14,950) Total Shareholders' Equity 9,747,685 7,712,799 Total Liabilities and Shareholders' Equity $16,067,254 $16,077,947 PHOTONIC PRODUCTS GROUP, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2008 2007 2008 2007 Total Revenue $4,007,412 3,678,796 $8,171,660 $7,219,670 Cost and Expenses: Cost of goods sold 2,788,210 2,285,558 5,450,865 4,444,932 Selling, general and administrative expenses 977,915 901,753 1,964,728 1,758,481 3,766,125 3,187,311 7,415,593 6,203,413 Income from operations 241,287 491,485 756,067 1,016,257 Other expense: Interest expense-net (34,383) (69,997) (109,963) (144,909) Gain on sale of fixed asset 9,113 - 9,113 - (25,270) (69,997) (100,850) (144,909) Net income before income tax provision and preferred stock dividends 216,017 421,488 655,217 871,348 Benefit from (provision for) income taxes 78,000 (25,000) 130,000 (40,000) Net Income 294,017 396,488 785,217 831,348 Preferred stock dividends - (233,240) - (233,240) Net income applicable to common shareholders $294,017 $163,248 $785,217 $598,108 Net income per common share-basic $0.03 $0.02 $0.07 $0.07 Net income per common share-diluted $0.02 $0.02 $0.06 $0.05 Weighted average shares outstanding-basic 11,006,591 8,910,754 10,706,680 8,199,627 Weighted average shares outstanding-diluted 16,014,483 14,044,022 15,766,599 13,340,354 PHOTONIC PRODUCTS GROUP, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2008 2007 Cash flows from operating activities: Net income $785,217 $831,348 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 537,592 568,550 401K common stock contribution 160,181 166,693 Gain on sale of fixed asset (9,113) - Deferred income taxes (204,000) - Stock based compensation 37,146 18,210 Changes in assets and liabilities: Accounts receivable (165,978) 449,612 Inventories (245,076) (192,859) Other current assets (72,621) (5,676) Other assets 32,051 (2,057) Accounts payable and accrued liabilities (501,359) (22,076) Customer advances 204,379 (280,574) Total adjustments (226,798) 699,823 Net cash provided by operating activities 558,419 1,531,171 Capital expenditures (366,864) (93,694) Proceeds from sale of fixed assets 10,000 - Net cash used in investing activities (356,864) (93,694) Cash flows from financing activities: Proceeds from issuance of common stock 244,755 183,053 Principal payment of convertible note payable (1,700,000) (500,000) Exercise of warrants 807,587 - Principal payments of notes payable (7,441) (49,237) Principal payments of capital lease obligations (41,158) (124,759) Net cash used in financing activities (696,257) (490,943) Net increase (decrease) in cash and cash equivalents (494,702) 946,534 Cash and cash equivalents at beginning of period 4,395,945 3,078,052 Cash and cash equivalents at end of period $3,901,243 $4,024,586
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