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Pro Dex Inc (PDEX) SEC Filing 10-K Annual report for the fiscal year ending Wednesday, June 30, 2010

Pro Dex Inc

CIK: 788920 Ticker: PDEX

Pro-Dex, Inc. Announces Fiscal Year 2010 Fourth Quarter and Full-Year Results

IRVINE, Calif., Sept. 28 /PRNewswire-FirstCall/ -- PRO-DEX, INC. (Nasdaq: PDEX) today announced financial results for the fiscal fourth quarter and full-year ending June 30, 2010.

Sales for the full fiscal year ended June 30, 2010 increased 10% to $23.2 million compared to $21.1 million in fiscal year 2009, driven by medical products sales to our largest two customers that were up by 30% compared to the previous year.  Sales for the fourth quarter ended June 30, 2010 increased 2% to $5.7 million compared to $5.6 million reported for the fourth quarter of fiscal 2009.  Operating income before recognition of impairments to goodwill and property value reductions was $1.2 million for the full year of fiscal 2010 compared to a loss of $495 thousand for fiscal year ended June 30, 2009. Operating Income before the recognition of impairments to goodwill and real property increased 24% to $296 thousand for the fourth quarter compared to $239 thousand in the same period of the prior year.  Impairments and real property value reductions amounted to $4.3 million in the fourth quarter of fiscal 2010, $4.4 million for the full 2010 fiscal year, $0 in the fourth quarter of fiscal 2009 and $997 thousand for the full fiscal year of 2009.

The net loss for the full fiscal year 2010 was $2,968,000 or $0.92 per share compared to net loss for the full fiscal year 2009 of $2,845,000 or $0.88 per share. The net loss for the fourth quarter of fiscal year 2010 was $3,905,000 or $1.20 per share (based on 3.2 million shares) compared to net income of $202,000 or $0.06 per share for the three months ended June 30, 2009 (based on 3.2 million shares).

Gross profit for the full 2010 fiscal year was $8.4 million, a 36% gross profit margin, compared to gross profit of $6.7 million or 32% gross profit margin, for the year-ago period.  For the full year, margins benefited from higher volumes of our more profitable medical and motion control products.  Gross profit for the quarter ended June 30, 2010 increased to $2.2 million, a 38% gross profit margin, compared to gross profit of $1.9 million or 35% gross profit margin in last year's fourth quarter, as a result of higher sales levels in the motion control business.  

There were $4.4 million of non-cash impairment and real property value reduction charges in fiscal year 2010.  Impairments recognized consisted of $140,000 from the remaining IntraFlow patent (in the second quarter), $1.9 million from the Astromec business goodwill, and $1.1 million from Micro Motors goodwill (both in the fourth quarter). In addition, in the fourth quarter of fiscal 2010 we recognized a $1.3 million reduction in the value of the real property used at our Astromec operation in Carson City, Nevada.   In the third quarter of fiscal year 2009 we recognized $997 thousand of impairment charges associated with the IntraFlow patent.  Following the recognition of these items, our balance sheet has no remaining intangible assets.

Mark Murphy, the Company's President and Chief Executive Officer, commented, "Fiscal 2010 was an encouraging year for Pro-Dex, as we grew the top line and returned to profitable operations on a pre-impairment basis.  I recognize the disappointment of another year of significant write-offs, and know that it detracts from our strong operating performance during fiscal year 2010.  However, focusing on our fundamental operating results excluding these charges, our sales increased by 10% over last year, our gross margins improved by 4 percentage points from 32% to 36%, and our operating expenses remained stable at last year's reduced levels, all resulting in an operating profit of $1.2 million.  In fiscal year 2010, we generated $3.2 million in operating cash, the highest level achieved in the last 10 years, after generating $1.7 million in fiscal year 2009 and $2.0 million in fiscal year 2008.  As a fundamental operating business, Pro-Dex has again produced solid results."

During both the fourth quarter and the entire fiscal year 2010, we continued to strengthen the balance sheet. In Q4, we generated an additional $570,000 of cash from operations and, for all of fiscal year 2010, we generated $3.2 million in cash from operations.  The full-year cash generation includes $549,000 in cash received in the third quarter for collection of a claim for federal income taxes due to enhanced net operating loss carryback rules implemented by the IRS in 2009.  At June 30, 2010, we had cash and cash equivalents of $3,794,000 compared to cash and cash equivalents of $1,124,000 as of June 30, 2009.  The Company had net cash of $899,000 compared to net debt of $2.2 million at June 30, 2009, a $3.1 million total improvement.

Teleconference Information:

Investors and all others are invited to listen to a conference call discussing the fourth fiscal quarter and year end 2010 results, today at 4:30 p.m. Eastern Time. The call is scheduled to be broadcast live over the Internet and may be accessed by visiting the Company's website at http://www.pro-dex.com or directly at http://www.videonewswire.com/event.asp?id=72574. Mark Murphy, Chief Executive Officer and Jeff Ritchey, Chief Financial Officer, plan to host the call. If you would like to join the call, dial (877) 356-8625 U.S. and (706) 634-9779 International, conference I.D. 13203491. You may identify the call as the Pro-Dex Fourth Quarter Earnings Call. An online archive of the broadcast will be available within two hours of the completion of the call and will be accessible on the Company's website for 365 days. Additionally, a telephone replay will be available 2 hours after the call for 48 hours by dialing (800) 642-1687 U.S. or (706) 645-9291 for international callers, conference I.D. number 13203491.

Pro-Dex, Inc., with operations in California, Oregon and Nevada, specializes in bringing speed to market in the development and manufacture of technology-based solutions that incorporate miniature rotary drive systems, embedded motion control and fractional horsepower DC motors, serving the medical, dental, semi-conductor, scientific research and aerospace markets.  Pro-Dex's products are found in hospitals, dental offices, medical engineering labs, commercial and military aircraft, scientific research facilities and high tech manufacturing operations around the world.  For more information, visit the Company's website at www.pro-dex.com.

Statements herein concerning the Company's plans, growth and strategies may include 'forward-looking statements' within the context of the federal securities laws. Statements regarding the Company's future events, developments and future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The Company's actual results may differ materially from those suggested as a result of various factors. Interested parties should refer to the disclosure concerning the operational and business concerns of the Company set forth in the Company's filings with the Securities and Exchange Commission.

(tables follow)


PRO-DEX, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS





30-Jun-10

30-Jun-09

ASSETS



Current assets:



     Cash and cash equivalents

$       3,794,000

$       1,124,000

     Accounts receivable, net of allowance for doubtful accounts of $25,000 in 2010 and $52,000 in 2009

2,682,000

2,515,000

     Other Current Receivables

22,000

16,000

     Inventories

3,228,000

3,365,000

     Prepaid expenses

174,000

117,000

    Prepaid income taxes

-

118,000

     Deferred income taxes

209,000

-

        Total current assets

10,109,000

7,255,000




Property, plant, equipment and leasehold improvements, net

4,092,000

5,981,000

Other assets:



    Goodwill

-

2,997,000

    Intangibles - Patents, net

-

147,000

     Other

78,000

87,000

        Total other assets

78,000

3,231,000




Total assets

$     14,279,000

$     16,467,000







LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:



    Accounts payable

$       1,279,000

$          827,000

    Accrued expenses

1,947,000

1,394,000

    Income taxes payable

79,000

53,000

    Current Portion of T.I. Loan

400,000

400,000

    Current portion of real estate loan

35,000

33,000

       Total current liabilities

3,740,000

2,707,000




Long-term liabilities:



   Notes Payable - T.I. Loan

967,000

1,367,000

   Real estate loan

1,493,000

1,528,000

   Deferred income taxes

209,000

171,000

   Deferred rent

255,000

212,000

       Total long-term liabilities

2,924,000

3,278,000




Total liabilities

6,664,000

5,985,000

Commitments and contingencies



Shareholders' equity:



    Common shares; no par value; 50,000,000 shares authorized; 3,251,850 shares issued and outstanding June 30, 2010 3,222,890 shares issued and outstanding June 30, 2009

16,675,000

16,574,000

    Accumulated deficit

(9,060,000)

(6,092,000)




     Total shareholders’ equity

7,615,000

10,482,000




    Total liabilities and shareholders’ equity

$     14,279,000

$     16,467,000

See notes to consolidated financial statements.



PRO-DEX, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended June 30




2010

2009




Net sales

$      23,211,000

$      21,122,000




Cost of sales

14,847,000

14,374,000

Gross profit

8,364,000

6,748,000




Operating expenses:



    Selling expense

1,382,000

1,295,000

    General and administrative expenses

3,288,000

3,157,000

    Impairment of intangible assets

3,137,000

997,000

    Impairment of property value

1,307,000

-

    Research and development costs

2,480,000

2,791,000

Total operating expenses

11,594,000

8,240,000




(Loss) from operations

(3,230,000)

(1,492,000)




Other:



    Royalty income

44,000

14,000

    Interest income

2,000

2,000

    Interest (expense)

(204,000)

(228,000)

Total

(158,000)

(212,000)




(Loss) Income before provision for income taxes

(3,388,000)

(1,704,000)




Benefit for Income Taxes

1,130,000

1,100,000

Allowance for deferred tax asset

(710,000)

(2,241,000)

Total Benefit (Provision) for Income taxes

420,000

(1,141,000)




Net (Loss)

$      (2,968,000)

$      (2,845,000)




Net (Loss) per share:



    Basic

$               (0.92)

$               (0.88)

    Diluted

$               (0.92)

$               (0.88)




Weighted average shares outstanding - basic

3,232,850

3,236,918

Weighted average shares outstanding - diluted

3,232,850

3,236,918

See notes to consolidated financial statements.



PRO-DEX, INC. and SUBSIDIARIES

RECONCILIATION of NON-GAAP RESULTS to GAAP RESULTS

$ in thousands, except EPS


FY2010

FY2009


Q4 2010

Q4 2009

Operating Income/(Loss) before impairments and property value reductions

$      1,214

$       (495)


$         296

$      239

Impairments

3,137

997


2,997

-

Property Value reduction

1,307

-


1,307

-

Income (Loss) from Operations

$     (3,230)

$     (1,492)


$     (4,008)

$      239

Net interest and Other Income (Loss)

(158)

(212)


(49)

(45)

Income before provision for taxes

(3,388)

(1,704)


(4,057)

194

Benefit/(Provision) for taxes

420

(1,141)


152

8

Net (Loss)/Income

$     (2,968)

$     (2,845)


$     (3,905)

$      202

EPS (Basic & diluted)

$      (0.92)

$      (0.88)


$      (1.20)

$     0.06



PRO-DEX, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended June 30





2010

2009

Cash Flows from Operating Activities:



Net Income

$    (2,968,000)

$    (2,845,000)

    Adjustments to reconcile net income to net cash used in operating activities:



         Depreciation and amortization

726,000

810,000

         Impairment of intangible asset and property value

4,444,000

997,000

         Loss on Disposal

-

25,000

         (Recovery of) Provision for doubtful accounts

(27,000)

(92,000)

         Stock based compensation

101,000

166,000

         Deferred taxes

(91,000)

1,058,000

           Changes in:



                (Increase) Decrease in accounts receivable

(146,000)

609,000

                 Decrease in inventories

137,000

1,737,000

                 (Increase) Decrease in prepaid expenses

(57,000)

97,000

                 Decrease (Increase) in other assets

9,000

(20,000)

                 Increase (Decrease) in accounts payable and accrued expenses

1,086,000

(1,505,000)

                 Increase in income taxes payable

26,000

681,000

Net Cash provided by Operating Activities

3,240,000

1,718,000




Cash Flows From Investing Activities:



    Purchase of equipment and leasehold improvements

(137,000)

(269,000)




Net Cash used in Investing Activities

(137,000)

(269,000)




Cash Flows from Financing Activities:



     Principal payments of patent deferred payable

-

(45,000)

     Net (payments) on Line of Credit

-

(2,000,000)

     Principal (payments) on Term Note

(400,000)

(396,000)

Net Principal borrowing on TI Loan

-

1,767,000

     Principal payments on Real Estate Loan

(33,000)

(31,000)

    Stock Repurchases

-

(137,000)




Net Cash (used in) Financing Activities

(433,000)

(842,000)




Net increase  in Cash and Cash Equivalents

2,670,000

607,000

Cash and Cash Equivalents, beginning of year

1,124,000

517,000




Cash and Cash Equivalents, end of year

$     3,794,000

$     1,124,000




Supplemental Information

Cash paid for interest

$        204,000

$        230,000

Cash paid for income taxes

$        154,000

$                  -








CONTACT:  Mark Murphy, Chief Executive Officer of Pro-Dex, Inc., +1-949-769-3200


The following information was filed by Pro Dex Inc (PDEX) on Tuesday, September 28, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Pro Dex Inc provided additional information to their SEC Filing as exhibits

Ticker: PDEX
CIK: 788920
Form Type: 10-K Annual Report
Accession Number: 0001003297-10-000227
Submitted to the SEC: Tue Sep 28 2010 4:03:23 PM EST
Accepted by the SEC: Tue Sep 28 2010
Period: Wednesday, June 30, 2010
Industry: Surgical And Medical Instruments And Apparatus

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