Odetics Inc. Reports Second Quarter Fiscal 2003 Results

Business Wire, Oct 23, 2002

Business Editors

ANAHEIM, Calif.--(BUSINESS WIRE)--Oct. 23, 2002

For its second quarter ended Sept. 30, 2002, Odetics Inc. (Nasdaq:ODETA) (Nasdaq:ODETB) today reported a loss from continuing operations of $2.6 million or $0.18 per share, compared with a loss of $4.3 million or $0.41 per share, reported for the second quarter of the previous fiscal year.

For the second quarter ended Sept. 30, 2002, Odetics net sales and contract revenues were $13.7 million, compared with $16 million reported in the second quarter of the previous fiscal year. Revenues in the second quarter of the previous fiscal year included $3.4 million of sales from the company's former Gyyr CCTV Product line, which was sold during the quarter ended Sept. 30, 2001.

Greg Miner, chief executive officer, stated: "In spite of tough business conditions, overall revenues on our base business increased approximately 9% compared to the second quarter of 2001, and each of the Odetics reporting segments posted continued year over year growth in the current quarter. Gross profit in the current quarter was approximately 39% of net sales, up slightly compared to last year's second quarter and operating expenses, excluding the restructuring charges taken in last year's second quarter, were reduced approximately 20%. Overall operating losses were narrower by nearly 60% in the current year's second quarter compared to last year."

Miner added: "During the second quarter ended September 30, 2002, we shipped new products in both our MAXxess and Zyfer businesses. This revenue includes IMS chemical detectors that our MAXxess subsidiary, in conjunction with our partner Draeger Safety, delivered to DARPA for testing and evaluation by the DoD Immune Building Program.

"Secondly, our Zyfer subsidiary received a significant order from Harris Corporation for production quantities of its newest SAASM GPS-aided product called GSync(TM). We believe that SAASM will be an important building block in secure synchronization of critical network communications. Zyfer's revenues in the quarter ended September 30, 2002 increased 106% compared to the same period of last year and Zyfer now represents approximately 18% of our total revenues."

About Odetics

Odetics products address the security and data management needs of the transportation, defense, facility security, and broadcast industries. Odetics is a market leader for video-based sensors used for surface transportation, a developer of integrated systems for facility security and trace detection of dangerous chemicals and explosives, and is a provider of automation systems to the broadcast industry. Odetics is also a leading provider of equipment built around specific government mandates for secured communications.

Odetics has headquarters in Anaheim. Investors are encouraged to contact the company at 714/774-5000, or at www.odetics.com.

Important Notice

This news release contains statements that may be deemed to be forward-looking. These forward-looking statements may include statements about market acceptance of the company's products and other statements relating to the operating results of Odetics or its subsidiaries. These forward-looking statements speak only as of the date hereof and are based upon the information available to the company at this time. Such information is subject to change, and the company will not necessarily inform you of such changes. Actual results could differ materially from those projected in the forward-looking statements as a result of risk factors such as: incorrect assumptions regarding market demand, the significant uncertainty of market acceptance of new products by both distributors and end-user customers, general economic and political issues, including the continuing significant economic slowdown and volatility in the technology sector issues related to the supply, manufacturing and quality assurance of the company's products; competition (including new and directly competitive products from others), the volume of its sales and pricing pressures, the loss of a key customer, the delay or cancellation of a large customer order in any period; changes in its product or customer mix, and such other factors identified in Odetics' Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Investors are strongly encouraged to review the risk factors set forth in Odetics' most recent SEC filings.

                             Odetics Inc.
                        Summary Financial Data
               (in thousands, except per share amounts)


                               Three Months Ended     Six Months Ended
                                    Sept. 30,             Sept. 30,
Consolidated Statement
 of Operations                    2001      2002        2001     2002

Net sales and contract
 revenues:
  Net sales                    $10,302    $8,026     $21,002  $17,114
  Contract revenues              5,675     5,721      11,359   11,936

     Total net sales and
      contract revenues         15,977    13,747      32,361   29,050

Costs and expenses:
  Cost of sales                  6,253     4,773      13,430    9,356
  Cost of contract revenues      3,575     3,585       7,395    7,684

    Gross profit                 6,149     5,389      11,536   12,010

  Selling, general and
   administrative expense        6,408     5,408      13,418   10,597
  Research and development
   expense                       2,318     1,586       4,455    3,340
  Restructuring charge           1,422         0       1,422        0

     Total operating expenses   10,148     6,994      19,295   13,937

Operating loss                  (3,999)   (1,605)     (7,759)  (1,927)

Non-operating items
  Other income                   1,072       (25)      1,072      580
  Interest expense, net         (1,190)      (41)     (1,785)    (596)

Loss before income taxes        (4,117)   (1,671)     (8,472)  (1,943)
  Income tax benefit                 0         0           0        0

Loss from continuing
 operations before minority
 interest                       (4,117)   (1,671)     (8,472)  (1,943)
  Minority interest in
   earnings of subsidiary          174       946         174    1,974

Loss from continuing
 operations                     (4,291)   (2,617)     (8,646)  (3,917)


Income (loss) from
 discontinued operations
 (including loss on disposal
 of $8,361),
     net of taxes of $0        (10,873)        0     (13,843)       0
Extraordinary loss from
 early extinguishment of
 debt, net of tax of $0              0         0        (450)       0

                              ($15,164)  ($2,617)   ($22,939) ($3,917)

Net loss

Income (loss) per share:
   Basic and diluted
          (Loss) from
           continuing
           operations           ($0.41)   ($0.18)     ($0.82)  ($0.29)
          Income (loss) from
           discontinued
           operations            (1.03)     0.00       (1.31)    0.00
          Extraordinary
           (loss) from the
           early
           extinguishment of
           debt                   0.00      0.00       (0.04)    0.00

          (Loss) per share      ($1.43)   ($0.18)     ($2.17)  ($0.29)


Shares used in calculating
 loss per share:
   Basic and diluted            10,579    14,283      10,566   13,435


                             Odetics Inc.
                        Summary Financial Data
               (in thousands, except per share amounts)


                                Three Months Ended    Six Months Ended
                                     Sept. 30,             Sept. 30,
                                  2001      2002        2001     2002

Revenues by segment:
   Iteris                       $9,637    $9,684     $17,349  $19,943
  Video Products                 5,160     1,628      12,588    4,301
  Telecom Products               1,180     2,435       2,424    4,806

                               $15,977   $13,747     $32,361  $29,050


                                        (audited) (unaudited)
  Balance Sheet Highlights              03/31/02    09/30/02

  Current assets                         $24,721     $25,148
  Property, plant &
   equipment, net                        $17,720      $3,580
  Other assets                            $9,797     $12,959

  Current liabilities                    $34,048     $16,295
  Shareholders' equity                    $5,255      $4,143