CSP Inc. Reports Fourth-Quarter and Year-End Fiscal 2012 Financial Results

CSP Inc. Reports Fourth-Quarter and Year-End Fiscal 2012 Financial Results

BILLERICA, Mass., Dec. 13, 2012 (GLOBE NEWSWIRE) -- CSP Inc. (Nasdaq:CSPI), a
provider of IT solutions, systems integration services and dense cluster
computing systems, today reported financial results for the fourth quarter and
fiscal year 2012 ended September 30, 2012.

Fourth-Quarter and Fiscal 2012 Financial Highlights

  *Revenue increases 35% to $22.3 million for Q4 and grows 15% to $84.8
    million for fiscal 2012
  *Gross margin increases to 25% for Q4 2012 from 24% for Q4 2011; Climbs to
    24% for fiscal 2012 from 22% in fiscal 2011
  *Tax benefit of $2.6 million for Q4 due primarily to thereversal of $3.0
    million of valuation allowance for the deferred tax asset
  *Net income at $4.9 million for Q4 2012 compared with net loss of $92
    thousand a year ago; Full year net income increases 1690% to $6.6 million
    from $369 thousand in fiscal 2011
  *Cash increases by $4.6 million from year-end 2011 to $20.5 million
  *Company declares special annual dividend of $0.20 per share

Management Comments

"We concluded an excellent fiscal year with strong results in the fourth
quarter," said CSP President & Chief Executive Officer Victor Dellovo. "We
increased revenue at both of our segments, and generated strong gross margins
and significantly improved earnings per share."

"At our Systems segment, we benefited from royalty revenues related to two
E-2D Hawkeye aircraft," said Dellovo. "We expect to record revenue for the
final plane on the E-2D purchase order in the first quarter of fiscal 2013. At
our Service and Systems Integration segment, the strong sales growth was
driven by continued demand from hosting customers as well as new customer
relationships in the banking and hospital markets. All three of our
subsidiaries in this segment reported year-over-year sales growth in the
quarter."

"We are executing on a new strategy to capitalize on many opportunities that
we see in our markets," said Dellovo. "This strategy includes cross selling
our Systems segment multicomputers with our Services and Systems Integration
software and services to become more of an end-to-end supplier; becoming a
global partner to our customers by cross selling between our three Modcomp
geographic locations; focusing on winning higher-margin consulting as well as
managed services business; leveraging an increasing number of partnerships
across both segments; and maintaining a vigilant focus on cost control. To
implement this strategy and position CSP for its next stage of growth, we are
making the necessary investments in sales and engineering talent."

"Looking ahead, we expect that the recording of royalties for nine E-2D planes
in 2012 versus only five that we had expected for fiscal 2012 will create a
difficult year-over-year comparison in fiscal 2013," said Dellovo."While we
anticipate continued growth from our Service and Systems Integration segment,
the timing of programs will most likely result in a loss at our Systems
segment.Fiscal 2013 will mark an important transition year for us as we
execute on our new strategy that we expect will reduce the year-to-year
volatility in our sales, and position the company for sustained, long-term
growth and profitability."

Financial Results

For the fourth quarter of fiscal 2012, total sales increased 35% to $22.3
million from $16.6 million for the fourth quarter of fiscal 2011. For the full
year, sales grew 15% to $84.8 million from $73.6 million in the prior year.

Gross margin for the fourth quarter of fiscal 2012 increased to 25% compared
with 24% in the fourth quarter a year ago. The increase in margin during the
quarter was the result of higher sales volume as well as royalty revenue that
did not occur in the prior-year period. For the full year, gross margin
increased to 24% from 22% in fiscal 2011.

Net income for the fourth quarter of fiscal 2012 increased to $4.9 million, or
$1.43 per diluted share, compared with a net loss of $92 thousand, or $0.03
per share, in the fourth quarter of fiscal 2011. For the full year, net
income grew to $6.6 million, or $1.91 per diluted share, from $369 thousand,
or $0.10 per diluted share, in fiscal 2011.

For the year ended September 30, 2012, the company realized a tax benefit of
$1.7 million related to a reversal of its previously disclosed valuation
allowance on deferred tax assets. This reversal reflected the company's belief
that it will have sufficient future taxable income to utilize its existing
deferred tax assets, based on its assessment of positive evidence in its U.S
operations, as well as the likelihood of continued royalty income and
expectation that its Service and Systems Integration segment will continue to
be profitable in future years.

Cash and short-term investments increased to $20.5 million compared with $15.9
million at year end fiscal 2011.The increase was primarily due to strong cash
from operations during the year. CSP's cash position may vary significantly
from quarter to quarter due to the high working capital requirements needed to
fund large projects at both its Systems and its Services and Systems
Integration segments.

Special Annual Dividend

On December 10, 2012, the Board of Directors approved a special dividend of
$0.20 per share, payable on December 28, 2012 to shareholders of record as of
December 20, 2012. The board carefully evaluated the company's current cash
position, considered alternatives for deploying cash, and determined that
paying another dividend was a prudent way to generate shareholder value.The
Board intends to review CSP's financial performance, balance sheet and working
capital requirements to determine any future dividends.

Conference Call Details

CSP Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W.
Levine will host a conference call at 10:00 a.m. (ET) today to review CSP's
financial results and provide a business update.To listen to a live webcast
of the call, please visit the "Investor Relations" section of the Company's
website at www.cspi.com.Individuals may also listen to the call via
telephone, by dialing (877) 407-5790 or (201) 689-8328.For interested parties
unable to participate in the live call, an archived version of the webcast
will be available for approximately one year on CSP's website.

About CSP Inc.

Based in Billerica, Massachusetts and founded in 1968, CSP Inc. and its
subsidiaries develop and market IT integration solutions and high-performance
computer systems to meet the diverse requirements of our industrial,
commercial, and defense customers worldwide.

CSP's Systems segment includes the MultiComputer Division, which designs and
manufactures commercial high-performance computer signal processing systems
for a variety of complex real time applications in defense and commercial
markets. The Company's MODCOMP Inc. subsidiary, also part of its Service and
Systems Integration segment was founded in 1970, and has offices in the U.S.,
U.K. and Germany. Modcomp provides solutions and services for complex IT
environments including storage and servers, unified communications solutions,
IT security solutions and consulting services. More information about CSP is
available on the company's website at www.cspi.com.

To learn more about MODCOMP, Inc., consult www.modcomp.com.

The CSP, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=14484

Safe Harbor 

The Company wishes to take advantage of the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995 with respect to statements
that may be deemed to be forward-looking under the Act.Such forward-looking
statements may include, but are not limited to, royalty revenues related to
E-2D Hawkeye aircraft, strong sales growth was driven by continued demand from
hosting customers and reversal of $3.0 million of valuation allowance for the
deferred tax asset. The Company cautions that numerous factors could cause
actual results to differ materially from forward-looking statements made by
the Company.Such risks include general economic conditions, market factors,
competitive factors and pricing pressures, and others described in the
Company's filings with the SEC.Please refer to the section on forward-looking
statements included in the Company's filings with the Securities and Exchange
Commission.

PRESS RELEASE
                                                          
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
                                                          
                                                          
                                             September 30, September 30,
                                              2012          2011
                                                          
Assets                                                     
                                                          
Current assets:                                            
Cash and short-term investments              $20,493     $15,874
Accounts receivable, net                     12,145        13,148
Officer life insurance settlement receivable 2,172         --
Inventories                                  6,276         6,777
Other current assets                         3,620         2,079
                                                          
Total current assets                         44,706        37,878
Property, equipment and improvements, net     991           833
Other assets                                  5,369         4,397
                                                          
Total assets                                  $51,066     $43,108
                                                          
                                                          
Liabilities and Shareholders' Equity                       
                                                          
Current liabilities                           $18,168     $15,870
Pension and retirement plans                  9,431         9,056
Non-current liabilities                       426           286
                                                          
Shareholders' equity                          23,041        17,896
                                                          
Total liabilities and shareholders' equity    $51,066     $43,108



PRESS RELEASE
                                                              
CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data )
                                                              
                                                              
                          /---------Three Months    /---------Twelve Months
                           Ended------/              Ended----/
                          September 30 September 30 September 30 September 30
                           2012         2011         2012         2011
Sales:                                                         
Product                   $15,976      $11,950      $59,583      $54,734
Service                  6,355        4,650        25,224       18,911
                                                              
Total sales               22,331       16,600       84,807       73,645
                                                              
Cost of sales:                                                 
Product                   12,952       9,179        50,226       44,810
Service                  3,725        3,450        14,160       12,466
                                                              
Total cost of sales       16,677       12,629       64,386       57,276
                                                              
Gross Profit              5,654        3,971        20,421       16,369
                                                              
Operating expenses:                                            
Engineering and           419          325          1,720        1,785
development
Selling, general &        5,019        3,640        15,847       13,775
administrative
                                                              
Total operating expenses  5,438        3,965        17,567       15,560
Proceeds from officer life 2,115        --          2,115        --
insurance settlement
                                                              
Operating income           2,331        6            4,969        809
                                                              
                                                              
Other income (expense),    2            (39)         (100)        (94)
net
                                                              
Income (loss)before       2,333        (33)         4,869        715
income taxes
                                                              
Income taxes expense      (2,600)      59           (1,740)      346
(benefit)
                                                              
Net income (loss)         $4,933       ($92)        $6,609       $369
                                                              
                                                              
Net income (loss) per      $1.44        ($0.03)      $1.93        $0.11
share - basic
                                                              
Weighted average shares    3,363        3,407        3,362        3,439
outstanding - basic
                                                              
Net income (loss) per      $1.43        ($0.03)      $1.91        $0.10
share - diluted
                                                              
Weighted average shares    3,405        3,407        3,405        3,482
outstanding - diluted

CONTACT: Gary Levine
         Chief Financial Officer
         CSP Inc.
         Tel:  978.663.7598 ext. 1200
         Fax: 978.663.0150

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