<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-21838
INDUSTRIAL SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1481281
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 Oakdale Road, Oakdale, PA 15071
(Address of principal executive offices) Zip Code
(Registrant's telephone number, including area code): 412-788-4353
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
As of December 14, 1998, there were 3,379,037 shares of Common Stock, par value
$.01 per share of the Registrant's common stock outstanding.
<PAGE>
INDUSTRIAL SCIENTIFIC CORPORATION AND SUBSIDIARIES
INDEX
-----
Page No.
--------
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet -
October 31, 1998 and January 31, 1998. 3
Condensed Consolidated Statement of Income -
Three months and nine months ended
October 31, 1998 and November 1, 1997. 4
Condensed Consolidated Statement of Cash Flows -
Nine months ended October 31, 1998 and
November 1, 1997. 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition. 8
Item 3. Quantitative and Qualitative Disclosure about
Market Risk. 12
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 12
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
INDUSTRIAL SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
<TABLE>
<CAPTION>
October 31, January 31,
1998 1998
----------- -----------
(Unaudited) **
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $3,614 $3,244
Short-term investments 8,512 13,368
----------- -----------
12,126 16,612
Accounts receivable, net 5,458 5,949
Inventories 4,919 3,887
Prepaid expenses and other assets 713 828
Deferred income taxes 515 481
----------- -----------
Total current assets 23,731 27,757
Long-term investments 14,315 7,309
Long-term receivable 84 ---
Property, plant, and equipment, at cost 16,382 14,925
Less accumulated depreciation and amortization 8,700 7,591
----------- -----------
7,682 7,334
Land 390 390
Intangible assets, net 191 233
Other assets 1,279 858
----------- -----------
Total assets $47,672 $43,881
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,045 $1,445
Accrued payroll and related items 1,289 1,977
Accrued warranty expenses 666 662
Income taxes payable 320 ---
Current portion of term debt 375 375
----------- -----------
Total current liabilities 4,695 4,459
Term debt 3,438 3,663
Deferred income taxes 69 167
----------- -----------
Total liabilities 8,202 8,289
Shareholders' equity:
Preferred stock, without par value; authorized
1,000,000 shares; none issued ---- ----
Common stock, $.01 par value; authorized 15,000,000
shares; issued and outstanding 3,379,037 shares and
3,376,307 at 10/31/98 and at 1/31/98 34 34
Additional paid-in capital 5,536 5,492
Retained earnings 36,739 31,793
Dividends paid (912) (405)
Treasury stock, 98,600 shares at 10/31/98 and
72,400 shares at 1/31/98, at cost (1,927) (1,322)
----------- -----------
Total shareholders' equity 39,470 35,592
----------- -----------
Total liabilities and shareholders' equity $47,672 $43,881
=========== ===========
</TABLE>
** - Summarized from audited January 31, 1998 balance sheet.
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE>
INDUSTRIAL SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in thousands except share data)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
October 31, November 1, October 31, November 1,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $10,437 $10,236 $33,103 $30,449
Cost of goods sold 4,218 4,501 13,796 13,523
---------- ---------- ---------- ----------
Gross profit 6,219 5,735 19,307 16,926
Operating expenses:
Selling 2,379 2,216 7,433 6,732
Research, development and
engineering 853 798 2,433 2,287
Administrative 841 800 2,641 2,583
---------- ---------- ---------- ----------
Total operating expenses 4,073 3,814 12,507 11,602
---------- ---------- ---------- ----------
Operating profit 2,146 1,921 6,800 5,324
Interest income 266 280 792 744
Interest expense (36) (41) (116) (126)
Other income 45 --- 15 20
Gain on sale of Monitor Group --- --- --- 580
---------- ---------- ---------- ----------
Income before income taxes 2,421 2,160 7,491 6,542
Provision for income taxes 862 721 2,545 2,255
---------- ---------- ---------- ----------
Net income $1,559 $1,439 $4,946 $4,287
========== ========== ========== ==========
Net income per basic common share:
Basic earnings per share $0.47 $0.43 $1.50 $1.28
Weighted average shares - basic 3,283 3,321 3,295 3,343
Net income per diluted common share:
Diluted earnings per share $0.47 $0.43 $1.49 $1.28
Weighted average shares - diluted 3,297 3,330 3,309 3,349
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE>
INDUSTRIAL SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
For the nine months ended
October 31, November 1,
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $4,946 $4,287
Depreciation, amortization and other non-cash items 1,151 1,107
Gain on sale of Monitor Group --- (580)
Changes in operating assets and liabilities (406) (1,106)
---------- ----------
Net cash provided by operating activities 5,691 3,708
Cash flows from investing activities:
Capital expenditures (1,457) (1,347)
Increase in equity investment (15) (241)
Proceeds from maturities of investments 9,428 9,358
Purchase of investments (11,578) (15,708)
Purchase of officer's life insurance (406) (307)
Proceeds from sale of Monitor Group --- 2,500
---------- ----------
Net cash used in investing activities (4,028) (5,745)
Cash flows from financing activities:
Purchase of treasury stock (605) (906)
Proceeds from exercise of stock options 44 ---
Principal payments on debt (225) (327)
Dividends paid (507) (270)
---------- ----------
Net cash used in financing activities (1,293) (1,503)
Net increase/(decrease) in cash and cash equivalents 370 (3,540)
Cash and cash equivalents at beginning of period 3,244 6,879
---------- ----------
Cash and cash equivalents at end of period $3,614 $3,339
========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE>
INDUSTRIAL SCIENTIFIC CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Management's Discussion and Analysis of results of Operations and
Financial Condition which follows these notes contains additional
information on the results of operations and the financial position
of the Company. These comments should be read in conjunction with
the notes.
(2) In the opinion of management, all adjustments, (consisting only of
normal and recurring adjustments), necessary for a fair presentation
of the results of the operations of these interim periods have been
included.
(3) The Company's investments are in investment grade debt securities
that it has the positive intent and ability to hold to maturity and
are carried at amortized cost. These investments in debt securities
exceeded market value by approximately $83,000 and $79,000 at
October 31, 1998 and November 1, 1997, respectively .
(4) Inventories consisted of:
October 31, January 31,
1998 1998
(in thousands)
---------- ----------
At standard costs, which approximate
first-in, first-out cost:
Raw materials $3,898 $3,314
Work in process 671 423
Finished goods 500 300
-------- ---------
5,069 4,037
Less LIFO reserves 150 150
-------- ---------
Inventories at LIFO value $4,919 $3,887
======== =========
6
<PAGE>
(5) The effective tax rate of 34.0% for the nine month period ended
October 31, 1998 is based upon an estimate of the effective rate for
the year ended January 31, 1999. The principal difference between
the effective tax rate and the federal statutory rate is the effect
of foreign sales corporation benefits, research and experimentation
credits, and non-taxable interest income benefits, offset by the
effect of state and local income taxes.
(6) The Company has initiated a review to ensure that its information
systems can properly handle data which include year 2000 dates. All
of the Company's major software systems have been certified by their
manufacturer to be year 2000 compliant. The Company believes that no
significant modifications or replacement of these systems will be
necessary. Management does not expect the cost of this review or any
resulting replacement or modification of information systems will
have a material adverse effect on the financial position, results of
operations or liquidity of the Company.
7
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion should be read in conjunction with the attached
unaudited condensed consolidated financial statements and notes thereto for the
periods ended October 31, 1998 and November 1,1997 and with the Company's
audited financial statements and notes thereto for the fiscal year ended January
31, 1998. The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains certain forward looking statements
that involve substantial risk and uncertainties. When used in this section, the
words "anticipate," "believe," "estimate," "expect," and similar expressions as
they relate to the Company or its management are intended to identify such
forward looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include those listed in the Company's 10-K for fiscal year
1997.
Results of Operations
Quarter ended October 31, 1998, Compared to Quarter Ended November 1, 1997,
Net sales for the quarter ended October 31, 1998, ("third quarter 1998") totaled
$10.4 million, an increase of 2.0% from net sales of $10.2 million for the
quarter ended November 1, 1997 ("third quarter 1997"). A modest decline in
sales in North America was offset by increased international sales relating to
increased promotional activities and new product introductions.
Gross profit increased $484,000 or 8.4% to $6.2 million for the third quarter
1998 compared to $5.7 million for the third quarter 1997. Gross profit as a
percent of sales increased to 59.6% for the third quarter 1998 compared to 56.0%
for the third quarter 1997. An increased portion of sales for the quarter were
to end users which generally earn a higher gross profit percentage than sales to
distributors. Increased rental services and spare parts sales which earn a
higher than average gross profit percentage also contributed to this increase.
The Company does not expect the change in sales mix to continue and anticipates
gross profit as a percentage of sales to return to a range of 54.0% to 56.0% for
the fourth quarter 1998.
Operating expenses increased $259,000 or 6.8% to $4.1 million for the third
quarter 1998 compared to $3.8 million for the third quarter 1997. Selling
expense increased $163,000 or 7.4% due to increased marketing costs associated
with fixed system products which the
8
<PAGE>
Company acquired in October 1996, and continuing efforts to increase sales
outside North America. Research, development and engineering expense increased
$55,000 or 6.9% to $853,000 for the third quarter 1998 compared to $798,000 for
the third quarter 1997 due to increased new product development. Administrative
expense increased $41,000 or 5.1% to $841,000 for the third quarter 1998
compared to $800,000 for the third quarter 1997.
Interest income totaled $266,000 for the third quarter 1998, a decrease of
$14,000 compared to $280,000 for the third quarter 1997. Slightly lower
interest rates partially offset by higher invested cash balances account for
this decrease. Interest expense declined due to reduced debt balances resulting
from principal payments on outstanding loans. Other income consists of the
Company's portion of results from two joint ventures that the Company
participates in, Industrial Scientific Arabia Ltd. and HEG Industrial
Scientific. Both joint ventures were profitable for the third quarter 1998
totaling other income of $45,000 compared to prior year break even results.
The effective tax rate for the third quarter 1998 increased to 35.6% compared to
33.4% for the third quarter 1997 principally to increase the current year-to-
date tax rate to the anticipated tax liability.
Net income for the third quarter 1998 totaled $1.6 million or $0.47 per share,
an increase of 9.3% compared to $1.4 million or $0.43 per year for the third
quarter 1997.
Results of Operations
Nine Months Ended October 31, 1998,
Compared to Nine Months Ended November 1, 1997,
Net sales for the nine months ended October 31, 1998, totaled $33.1 million, an
increase of $2.7 million or 8.7% compared to net sales of $30.4 million for the
nine months ended November 1, 1997. Sales of the newly introduced ATX series of
portable multi-gas instruments and the T-80 portable single gas instrument,
combined with a large order for TMX412 multi-gas instruments principally account
for this increase.
Gross profit increased $2.4 million or 14.1% to $19.3 million for the nine
months ended October 31, 1998, compared to $16.9 million for the nine months
ended November 1, 1997. Gross profit as a percent of net sales also increased
to 58.3% for the nine months ended October 31, 1998, compared to 55.6% for the
prior period. This increase in gross profit percent is principally due to an
increased portion of sales to end users which generally results in a higher
gross profit percentage. Increased sales of replacement parts and rental
services also contributed to the increased gross profit percentage.
Operating expenses increased $905,000, or 7.8% to $12.5 million for the nine
months ended October 31,1998, compared to $11.6 million for the comparable 1997
period. Selling expense increased $701,000 or 10.4% due to increased commission
and other volume related expenses and increased marketing costs associated with
fixed system products. Research, development and engineering expense increased
$146,000 or 6.4% due to increased new product development efforts in both
portable and fixed systems product lines.
9
<PAGE>
Administrative expense increased 2.2% or $58,000, virtually unchanged for the
comparable nine-month period.
Interest income increased $48,000 or 6.5% for the nine months ended October
31,1998, due to higher investment amounts resulting from positive cash flow.
Interest expense decreased $10,000 to $116,000 due to lower outstanding debt
balances resulting from continuing principal payments. Other income consists of
the Company's portion of results from two joint ventures that the Company
participates in. Industrial Scientific Arabia Ltd., based in Saudi Arabia was
modestly profitable for the nine months ended October 31, 1998 but these results
were partially offset by losses from HEG Industrial Scientific based in Harbin,
China. Losses from HEG Industrial Scientific are primarily due to start up
expenses and slower than anticipated sales growth.
The effective tax rate for the nine months ended October 31,1998, was 34.0 %
down slightly compared to the effective rate of 34.5% for the nine months ended
November 1, 1997.
Net income for the nine months ended October 31,1998, totaled $4.9 million or
$1.50 per share, an increase of 17.2% over net income of $4.3 million or $1.28
per share for the nine months ended November 1, 1997.
Liquidity and Capital Resources
Cash flow from operations totaled $5.7 million for the nine months ended October
31,1998, compared to $3.7 million for the comparable 1997 period. Increased
operating income less cash needed to support increased operating assets and
liabilities principally account for this increase.
Capital expenditures totaled $1.5 million for the nine months ended October
31,1998, compared to $1.3 million for the comparable 1997 period. Capital
expenditures in 1998 primarily consisted of manufacturing equipment, inventory
storage and retrieval systems and computers and related software. In October
1997, the Company invested $241,000 in exchange for a 50% interest HEG
Industrial Scientific, based in Harbin China. In June 1997, the Company
completed the previously announced sale of Monitor Group for $2.5 million in
cash that resulted in a gain of $580,000. During the nine months ended October
31,1998, the Company used $605,000 to repurchase shares of its stock under the
previously announced stock repurchase plan and paid dividends totaling $507,000.
Working capital totaled $19.0 million as of October 31,1998, compared to $23.3
million as of January 27, 1997, a decrease of $4.3 million, primarily resulting
from lengthening maturities of the Company's investments to increase interest
income which increased long-term investments and decreased working capital. The
Company believes that its cash flow and capital structure provide adequate
flexibility to support the growth of operations and funding capital spending
programs.
10
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE
- -----------------------------
The Year 2000 issue exists because many computer systems and applications
use two digit rather than four digit date fields to designate an applicable
year. As a result, the systems and applications may not properly recognize the
year 2000 or process data which include it, potentially causing data
miscalculations or inaccuracies or operational malfunctions or failures.
The Company has developed a plan to evaluate its internal
computer systems and products in light of the Year 2000 problem. The plan
includes inventory, evaluation, and completion of any appropriate remediation.
The Company has substantially completed an inventory and evaluation of all
critical computer systems and corresponding software applications. Based upon
written documentation, certifications from vendors and manufacturers,
information available at vendor websites and the results of Company testing, the
Company believes that its business critical computer systems will not experience
significant Year 2000 problems.
The Company's products with time-of-day ("TOD") clocks in their design have
been tested for successful Year 2000 operation. Products that do not have TOD
clocks have no potential Year 2000 operational issues and therefore have not
been tested. The Company believes that it will have no material exposure to
contingencies related to the Year 2000 issue for the products it has sold.
The Company has contacted its key vendors regarding their Year 2000
compliance efforts. Although the Company has received some information from its
vendors regarding their Year 2000 compliance efforts, there can be no assurance
that the Company will not experience disruptions in its ability to conduct
business because of Year 2000 problems experienced by the Company's vendors. The
Company does not have meaningful information concerning the Year 2000 status of
its customers.
The Company does not expect to incur substantial costs with respect to its
Year 2000 compliance efforts and the Company has not deferred other information
technology projects as a result of the Year 2000 problem. The cost of internal
efforts by Company's personnel are not separately accounted for.
As part of the Company's Year 2000 plan, the Company is evaluating
scenarios that may occur as a result of the century change and is in the process
of developing a contingency plan to address potential Year 2000-related
occurrences.
The above information is based on the Company's current best estimates.
Given the complexity of Year 2000 issues and risks, actual results may vary
materially from those anticipated and discussed above. Specific factors that
might cause such differences include, among others, the availability and cost of
personnel trained in this area, the ability to locate and correct all affected
computer systems, applications and products and the timing and success of
remedial efforts of the Company's third party suppliers, customers and business
partners.
11
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company currently does not invest excess funds in derivative
financial instruments or other market risk sensitive instruments for the
purpose of managing its foreign currency exchange rate risk or for any
other purpose.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nothing to report under this item.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Nothing to report under this item.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Nothing to report under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing to report under this item.
ITEM 5. OTHER INFORMATION
Nothing to report under this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27.0 Financial Data Schedule. Filed herewith.
99.01 Press release announcing fourth quarter dividend
of five cents dated November 11, 1998. Filed herewith.
99.02 Press release announcing Fiscal 1998 Third
Quarter Results dated November 18, 1998. Filed herewith.
(b) Reports on Form 8-K.
None.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Industrial Scientific Corporation
(Registrant)
Date: December 14, 1998
By: /s/ James P. Hart
----------------------------------------------
James P. Hart
Vice-President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer and an authorized signatory)
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential Page Number
Exhibit No. or Reference
- ----------- -------------
<S> <C> <C>
27.0 Financial Statement Data. Filed herewith at page 15.
99.01 Press release announcing fourth quarter dividend
of five cents dated November 11, 1998. Filed herewith at page 16.
99.02 Press release announcing Fiscal 1998 Third
Quarter Results dated November 18, 1998. Filed herewith at page 17.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> AUG-02-1998
<PERIOD-END> OCT-31-1998
<CASH> 3,614,473
<SECURITIES> 0
<RECEIVABLES> 5,554,236
<ALLOWANCES> 95,978
<INVENTORY> 4,918,792
<CURRENT-ASSETS> 23,731,258
<PP&E> 16,382,488
<DEPRECIATION> 8,699,777
<TOTAL-ASSETS> 47,672,219
<CURRENT-LIABILITIES> 4,694,430
<BONDS> 2,500,000
0
0
<COMMON> 33,790
<OTHER-SE> 39,437,235
<TOTAL-LIABILITY-AND-EQUITY> 47,672,219
<SALES> 10,437,351
<TOTAL-REVENUES> 10,437,351
<CGS> 4,218,678
<TOTAL-COSTS> 8,292,167
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,931
<INCOME-PRETAX> 2,420,867
<INCOME-TAX> 862,000
<INCOME-CONTINUING> 1,558,867
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,558,867
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
<PAGE>
INDUSTRIAL SCIENTIFIC NEWS RELEASE
- --------------------------------------------------------------------------------
CORPORATION 1001 Oakdale Road Phone 412-788-4353
Oakdale, PA 15701-1500 1-800-DETECTS (338-3287)
USA Fax 412-788-8353
http://www.indsci.com
Date: November 11, 1998
Release: Immediate
Contact: James P. Hart, Vice President Finance
Chief Financial Officer
412-490-1843
INDUSTRIAL SCIENTIFIC CORPORATION ANNOUNCES
FOURTH QUARTER DIVIDEND OF FIVE CENTS ($.05) PER SHARE
PITTSBURGH, PA -- Industrial Scientific Corporation (NASDAQ/NM symbol: ISCX)
today announced that the Board of Directors declared a dividend of Five Cents a
share ($.05) payable on December 1, 1998, to stockholders on record as of
November 23, 1998.
Headquartered in Oakdale, Pennsylvania, Industrial Scientific Corporation
designs, manufactures and sells gas monitoring instruments, systems and other
technical products for the preservation of life and property.
O U R M I S S I O N
Design-Manufacture-Sell: The highest quality products for the preservation of
life and property
Provide: Best customer service available
<PAGE>
INDUSTRIAL SCIENTIFIC NEWS RELEASE
- -------------------------------------------------------------------------------
CORPORATION 1001 Oakdale Road Phone 412-788-4353
Oakdale, PA 15701-1500 1-800-DETECTS (338-3287)
USA Fax 412-788-8353
http://www.indsci.com
Date: November 18, 1998
Release: Immediately
Contact: James P. Hart, Vice President Finance
Chief Financial Officer 412-490-1843
INDUSTRIAL SCIENTIFIC CORPORATION
ANNOUNCES 1998 THIRD QUARTER RESULTS
PITTSBURGH, PA-- November 18, 1998 -- Industrial Scientific Corporation
(NASDAQ/NMS symbol: ISCX) today reported results for the third quarter ended
October 31, 1998.
Net sales for the third quarter 1998 totaled $10,437,000 an increase of 2.0%
from $10,236,000 for the third quarter 1997. Net income for the third quarter
1998 was $1,559,000 or $0.47 per share, an increase of 8.3% compared to
$1,439,000 or $0.43 per share for the third quarter 1997.
Net sales for the nine-months ended October 31, 1998, increased 8.7% to
$33,103,000 compared to $30,449,000 for the nine-months ended November 1, 1997.
Net income for the nine-months ended October 31, 1998, was $4,946,000 or $1.50
per share, an increase of 15.4% over net income of $4,287,000 or $1.28 per share
for the nine-months ended November 1, 1997. The nine-months ended November 1,
1997, included a non-recurring gain on the sale of Monitor Group which totaled
$377,000. Excluding this gain, year to date net income for 1998 increased 26.5%
compared to the prior year period.
Kent D. McElhattan, President and CEO, stated, "Strong financial results
continued during the third quarter 1998. A year to date sales increase of 8.7%
generated a gross profit increase of 14.1%, an operating profit increase of
27.7% and an increase in net income excluding the non-recurring gain on the sale
of Monitor Group of 26.5%. New product development continues to be the primary
growth strategy resulting in new market opportunities. Customer beta site
testing of our new ammonia optical sensor for the agricultural industry
continues to produce encouraging early results. I believe that new product
development like the optical ammonia sensor will enable us to continue our
excellent financial record."
Headquartered in Oakdale, Pennsylvania, Industrial Scientific Corporation
designs, manufactures and sells gas monitoring instruments, systems and other
technical products for the preservation of life and property.
Certain statements contained in this release may be considered forward-looking.
These statements represent the Company's reasonable judgment and expectations
and are subject to risks and uncertainties, including the risk factors listed in
the Company's 10K for fiscal year 1997, that could cause actual results to
differ materially from these statements.
O U R M I S S I O N
Design-Manufacture-Sell: The highest quality products for the preservation of
life and property
Provide: Best customer service available
<PAGE>
INDUSTRIAL SCIENTIFIC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
10/31/98 11/01/97 10/31/98 11/01/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $10,437 $10,236 $33,103 $30,449
Gross profit 6,219 5,735 19,306 16,926
Operating profit 2,146 1,921 6,800 5,324
Net income 1,559 1,439 4,946 4,287
Net income per basic common share:
Basic earnings per share $0.47 $0.43 $1.50 $1.28
Weighted average shares - basic 3,283 3,321 3,295 3,343
Net income per diluted common share:
Diluted earnings per share $0.47 $0.43 $1.49 $1.28
Weighted average shares - diluted 3,297 3,330 3,309 3,349
</TABLE>
