COSTA MESA, Calif., July 3 /PRNewswire-FirstCall/ -- TROY Group, Inc. announced today that financial results for the second quarter of fiscal 2008, which ended May 31, 2008, have been posted on the company's web-site at http://www.troygroup.com/. To access the report, click on About TROY Group then click on Financials. TROY's financial results are also posted at http://www.pinksheets.com/. Enter TROY in the symbol field then click on Financial Report.
Revenue for the three months ended May 31, 2008 decreased to $11.3 million compared to revenue for the three months ended May 31, 2007 of $11.8 million largely due to decreased supplies sales. Earnings from continuing operations for the three months ended May 31, 2008 decreased to $0.07 per share compared to $0.11 per share for the three months ended May 31, 2007.
Revenue for the six months ended May 31, 2008 decreased to $21.8 million compared to revenue for the six months ended May 31, 2007 of $24.9 million largely due to the one time purchase of printers by one customer included in the first three months of 2007 and a decline in supplies sales. Earnings from continuing operations for the six months ended May 31, 2008 decreased to $0.14 per share compared to $0.25 per share for the six months ended May 31, 2007.
As of July 2, 2008 a substantial portion of the Company's current assets consisted of $10 million in investments that are auction rate securities. These auction rate securities consist of preferred stock of various closed-end mutual funds which have an AAA credit rating. The auctions for these securities have failed since February 13, 2008 resulting in the investment being illiquid. There has been no default on the underlying securities, and investment income continues to be received in a timely manner while we wait for a return of the market. However, a market for auction rate securities may not return before the Company has a need to sell its investments, which would result in TROY having to borrow on its line of credit or other lending sources. In addition, a prolonged decline in marketability could result in a reduced value of the securities. There can be no assurance when or if the market for these securities will return.
On June 23, 2008, the Orange County Water District filed a lawsuit against 17 companies including TROY and 400 unnamed companies in the Superior Court of the State of California, Orange County. The complaint asserts claims for these alleged hazardous releases under the Orange County Water District Act and the California Superfund Act. The complaint further asserts common law claims for negligence, trespass and nuisance. The complaint seeks various forms of legal and equitable relief, including without limitation unspecified compensatory damages, attorneys' fees and costs, and declaratory relief.
The consolidated balance sheet and consolidated statement of income are attached to this press release. Please refer to the quarterly report including financial statements for more detailed information.
TROY GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS Assets May 31, November 30, 2008 2007 (unaudited) Current assets: Cash and cash equivalents $3,170,000 $782,000 Investment in available-for-sale securities 11,475,000 11,400,000 Accounts receivable, net of allowances 2008 $307,000; 2007 $293,000 5,211,000 6,302,000 Inventories 3,502,000 3,050,000 Prepaid expenses and other 945,000 840,000 Deferred tax assets 421,000 734,000 Current assets of discontinued operations held for sale - 311,000 Total current assets 24,724,000 23,419,000 Equipment and leasehold improvements, net 1,611,000 1,725,000 Goodwill 281,000 281,000 Other assets, including receivables from stockholders; $1,899,000 in 2008 and $1,903,000 in 2007 3,595,000 3,535,000 Total assets $30,211,000 $28,960,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $2,969,000 $2,645,000 Accrued expenses 2,282,000 2,085,000 Deferred revenue 1,289,000 1,286,000 Current liabilities of discontinued operations held for sale - 1,976,000 Total current liabilities 6,540,000 7,992,000 Non-current liabilities 1,275,000 881,000 Total liabilities 7,815,000 8,873,000 Commitments and contingencies Stockholders' equity: Preferred stock, no par value, authorized 100,000 shares; issued none - - Common stock, par value $0.01 per share; authorized 13,000,000 shares; issued 9,763,235 shares in 2008 and 10,563,701 shares in 2007; outstanding 9,713,235 in 2008 and 9,948,235 in 2007 98,000 106,000 Additional paid-in capital 18,082,000 21,587,000 Retained earnings 4,416,000 1,441,000 Less cost of treasury stock; 2008 50,000 shares, 2007 615,466 shares (200,000) (3,047,000) Total stockholders' equity 22,396,000 20,087,000 Total liabilities and stockholders' equity $30,211,000 $28,960,000 TROY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Six Months Ended May 31, May 31, May 31, May 31, 2008 2007 2008 2007 Net sales $11,267,000 $11,773,000 $21,820,000 $24,860,000 Cost of goods sold 6,622,000 7,025,000 12,965,000 14,683,000 Gross profit 4,645,000 4,748,000 8,855,000 10,177,000 Operating expenses: Selling, general and administrative 2,871,000 2,347,000 5,580,000 5,069,000 Research and development 756,000 632,000 1,378,000 1,213,000 Total operating expenses 3,627,000 2,979,000 6,958,000 6,282,000 Operating income 1,018,000 1,769,000 1,897,000 3,895,000 Interest income 149,000 142,000 327,000 288,000 Income from continuing operations before income taxes 1,167,000 1,911,000 2,224,000 4,183,000 Provision for income taxes 432,000 740,000 823,000 1,558,000 Income from continuing operations 735,000 1,171,000 1,401,000 2,625,000 Loss from discontinued operations, net of tax - (307,000) (73,000) (602,000) Gains on disposal of discontinued operations, net of tax - - 1,647,000 - Discontinued operations, net of tax - (307,000) 1,574,000 (602,000) Net income $735,000 $864,000 $2,975,000 $2,023,000 Net income per share: Basic income from continuing operations $0.07 $0.11 $0.14 $0.25 Basic income (loss) from discontinued operations - (0.03) 0.16 (0.06) Basic income $0.07 $0.08 $0.30 $0.19 Diluted income from continuing operations $0.07 $0.11 $0.14 $0.25 Diluted income (loss) from discontinued operations - (0.03) 0.16 (0.06) Diluted income $0.07 $0.08 $0.30 $0.19 Weighted average shares outstanding: Basic 9,806,000 10,564,000 9,828,000 10,564,000 Diluted 9,904,000 10,589,000 9,974,000 10,576,000 About TROY Group
TROY Group, Inc. ("TROY") is a worldwide leader of secure on-demand printing solutions. TROY solutions manage, secure and simplify end-to-end enterprise printing environments. TROY offers application software, security printing hardware and specialized consumables for securely printing checks, money orders, transcripts, prescriptions and other important documents. TROY solutions are used by small and medium size businesses as well as large enterprises and governmental organizations to manage fraud, operational risk and comply with government regulations related to protecting information privacy. As a Gold Solutions Partner to Hewlett Packard, TROY is the only company in the world authorized by HP to enhance HP printers and consumables for use in secure printing workflows. Only TROY MICR and Security printers and HP compatible MICR Toner cartridges are certified by Hewlett Packard for quality and reliability. We sell and service our products to major corporations, banks, key government accounts and distributors worldwide. Visit TROY at http://www.troygroup.com/
Forward-looking statements of TROY (statements that are not historical fact) in this news release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as believe, expect, may, will, could and should, and the negative of these terms or other similar expressions. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but, are not limited to, the ability to sell investments when needed, the ability to develop new products, the ability to hire and retain qualified management, technology and other personnel, the impact of competition from existing and new technologies and companies and the other factors set forth in our periodic reports and other documents that we distribute from time to time which are available in our financial statements under certain important factors on our website TROYgroup.com or pinksheets.com. Statements included in this news release are based upon information known to TROY as of the date of this release, and TROY assumes no obligation to update information contained in this news release.
For More Information Contact: TROY Group, Inc. 3535 Hyland Ave., Suite 200 Costa Mesa, CA 92626 (714) 241-4760 (714) 241-4762 Facsimile http://www.troygroup.com/ Contact: Myra Erickson, Investor Relations
