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Pro-Dex, Inc. Announces Fiscal 2011 Fourth Quarter and Full-Year Results
Date:9/14/2011

IRVINE, Calif., Sept. 14, 2011 /PRNewswire/ -- PRO-DEX, INC. (NasdaqCM: PDEX) today announced financial results for its fiscal fourth quarter and full-year ended June 30, 2011.

Sales for the quarter ended June 30, 2011 were $7.5 million, 31% higher than sales of $5.7 million for the corresponding quarter in 2010, due primarily to increases in sales of the Company's medical device products to its three largest customers.  For the year ended June 30, 2011, sales were $27.1 million, 17% higher than sales of $23.2 million for fiscal year 2010, resulting primarily from increases in sales of medical device products to the Company's largest customer and from growth in sales of its motion control products.  

Operating income was $1.1 million for the quarter, a 283% increase from operating income of $296,000 before impairment charges in the corresponding 2010 period.  For the year ended June 30, 2011, operating income increased 167% to $3.2 million from operating income of $1.2 million before impairment charges in fiscal year 2010.  

Net income for the 2011 fourth quarter was $1.0 million, or $0.31 per diluted share, which represents a 498% improvement from net income of $172,000, or $0.05 per diluted share, before impairment charges in the corresponding 2010 quarter.  For the year ended June 30, 2011, net income was $2.6 million, or $0.80 per diluted share, a 111% improvement from net income of $1.2 million, or $0.38 per diluted share, before impairment charges in fiscal year 2010.  

Gross profit for the quarter ended June 30, 2011 increased to $3.1 million, a 41% gross profit margin, compared to gross profit of $2.2 million, a 38% gross profit margin, for the same year-ago period.  For the fiscal year ended June 30, 2011, gross profit was $10.5 million, a 39% gross profit margin, compared to gross profit and margin of $8.4 million and 36%, respectively, for fiscal year ended June 30, 2010.  The increase in gross profit as a percentage of sales during both periods was due to a change in mix toward sales of medical device and motion control products at relatively higher margins, and to cost reductions. Mark Murphy, the Company's President and Chief Executive Officer, commented, "Fiscal 2011 was a notable year.  Sales and profitability were significantly higher than the prior year, indicating the strength of our operating engine at a record high sales level.  In addition, we generated $2.9 million of operating cash, allowing us to further strengthen the balance sheet with $900,000 of increased cash and $1.7 million of reduced debt. We ended the year with $4.7 million in cash.  Looking forward, we anticipate a reduction in shipments to our largest customer, and our focus remains on managing our cost structure while we diversify our customer base. I am pleased to report that we have broadened and deepened our relationships with major medical device companies, and have experienced increased proposal activity.  Our task now is to convert those opportunities into backlog.  In the meantime, we will protect our balance sheet as we work toward our goal of systemically recreating this year's notable results on a new customer base."

Teleconference Information:Investors and analysts are invited to listen to a broadcast review of the Company's fiscal 2011 fourth quarter and full-year financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) that may be accessed by visiting the Company's website at www.pro-dex.com.  The conference call may also be accessed at www.InvestorCalendar.com. Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-8033, or at (201) 689-8033 if calling from outside the U.S.

For those who cannot access the live broadcast, a replay will be available approximately two hours after the completion of the call until midnight (Eastern Time) on September 28, 2011 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S., and then entering account number 286 and conference I.D. number 378851.  An online archive of the broadcast will be available on the Company's website www.pro-dex.com for a period of 365 days.

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 powered surgical device 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 SUBSIDIARIESCONSOLIDATED BALANCE SHEETSJune 30, 2011

June 30, 2010ASSETSCurrent assets:Cash and cash equivalents

$
4,689,000

$
3,794,000Accounts receivable, net of allowance for doubtful accountsof $7,000 in 2011 and $25,000 in 2010

3,128,000

2,682,000Other current receivables

12,000

22,000Inventories

3,703,000

3,228,000Prepaid expenses

145,000

174,000Deferred income taxes

163,000

209,000Total current assets

11,840,000

10,109,000Property, plant, equipment and leasehold improvements, net

3,661,000

4,092,000Other assets

60,000

78,000Total assets

$   15,561,000

$   14,279,000LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable

$
,207,000

$
,279,000Accrued expenses

2,379,000

1,947,000Income taxes payable

78,000

79,000Current Portion of bank term loan

357,000

400,000Current portion of real estate loan

-

35,000Total current liabilities

4,021,000

3,740,000Non-current liabilities:Bank term loan

774,000

967,000Real estate loan

-

1,493,000Deferred income taxes

163,000

209,000Deferred rent

279,000

255,000Total non-current liabilities

1,216,000

2,924,000Total liabilities

5,237,000

6,664,000Commitments and contingencies Shareholders' equity:Common shares; no par value; 50,000,000 shares authorized;3,272,350 shares issued and outstanding June 30, 20113,251,850 shares issued and outstanding June 30, 2010

16,744,000

16,675,000Accumulated deficit

(6,420,000)

(9,060,000)Total shareholders’ equity

10,324,000

7,615,000Total liabilities and shareholders’ equity

$   15,561,000

$   14,279,000PRO-DEX, INC. and SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFor The Years Ended June 30,20112010Net sales

$   27,109,000

$   23,211,000Cost of sales

16,573,000

14,847,000Gross profit

10,536,000

8,364,000Operating expenses: Selling expenses

1,600,000

1,382,000General and administrative expenses

3,276,000

3,288,000Impairment of goodwill

-

2,997,000Impairment of patent

-

140,000Impairment of property value

-

1,307,000Research and development costs

2,416,000

2,480,000Total operating expenses

7,292,000

11,594,000Income (loss) from operations

3,244,000

(3,230,000)Other income (expense): Royalty income

-

44,000Interest expense, net

(148,000)

(202,000)Total other income (expense)

(148,000)

(158,000)Income (loss) before provision for income taxes

3,096,000

(3,388,000)Provision (benefit) for income taxes

456,000

(420,000)Net income (loss)

$
2,640,000

$
(2,968,000)Net income (loss) per share:Basic

$
.81

$
(0.92)Diluted

$
.80

$
(0.92)Weighted average shares outstanding - basic

3,264,936

3,232,850Weighted average shares outstanding - diluted

3,287,415

3,232,850PRO-DEX, INC. and SUBSIDIARIESRECONCILIATION of NON-GAAP RESULTS to GAAP RESULTSFor the Year Ended
June 30, 2010

For the Three
Months Ended
June 30, 2010Income (Loss) From Operations Income from operations before impairment charges

$
,214,000

$
296,000Impairment charges to:Goodwill

2,997,000

2,997,000Patent

140,000

-Property

1,307,000

1,307,000(Loss) from operations

$
(3,230,000)

$  (4,008,000)Net Income (Loss)Income from operations before impairment charges

$
,214,000

$
296,000Other (expense), net

(158,000)

(49,000)Income before provision (benefit) for income taxes

1,056,000

247,000Provision (benefit) for income taxes

(193,000)

75,000Net income before impairment charges

$
,249,000

$
72,000Impairment charges to:Goodwill

2,997,000

2,997,000Patent

140,000

-Property

1,307,000

1,307,000Total impairment charges

4,444,000

4,304,000Effect of impairment charges on provision for income taxes

(227,000)

(227,000)Net (loss)

$
(2,968,000)

$   (3,905,000)Net Income (Loss) Per Diluted Share InformationNet income per diluted share before impairment charges

$
.38

$
.05Net loss per diluted share

$
(0.92)

$
(1.20)Weighted average diluted shares outstandingUsed for net income per diluted share before impairment charges

3,252,959

3,272,805Dilutive equivalent shares excluded from net loss per diluted share calculation

10,109

21,567Used for net loss per diluted share

3,242,850

3,251,238PRO-DEX, INC. and SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor The Years Ended June 30,20112010Cash flows from operating activities: Net income (loss)

$   2,640,000

$   (2,968,000)Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization

697,000

726,000Impairment expense

-

4,444,000(Decrease) in allowance for doubtful accounts

(18,000)

(27,000)Stock based compensation

43,000

101,000Deferred taxes

-

(91,000)Changes in:Accounts receivable

(418,000)

(146,000)Inventories

(475,000)

137,000Prepaid expenses

29,000

(57,000)Other assets

18,000

9,000Accounts payable and accrued expenses

383,000

1,086,000Income taxes payable

(1,000)

26,000Net cash provided by operating activities

2,898,000

3,240,000Cash flows from investing activities: Purchase of equipment and leasehold improvements

(265,000)

(137,000)Net cash used in investing activities

(265,000)

(137,000)Cash flows from financing activities:Principal payments on bank loan

(236,000)

(400,000)Principal payments on real estate loan

(1,528,000)

(33,000)Proceeds from exercise of stock options

26,000

-Net cash used in financing activities

(1,738,000)

(433,000)Net increase in cash and cash equivalents

895,000

2,670,000Cash and cash equivalents, beginning of year

3,794,000

1,124,000Cash and cash equivalents, end of year

$   4,689,000

$
3,794,000Supplemental InformationCash paid for interest

$
48,000

$
204,000Cash paid for income taxes

$
456,000

$
54,000
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SOURCE Pro-Dex, Inc.
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