Video Display Corporation (Nasdaq:VIDE), a recognized leader in the
manufacture and distribution of simulation, broadcast, defense and
industrial display solutions, today is issuing the CEO's "Annual
Letter to Shareholders" containing excerpts from the 11/27/2013
CEO's Address to Shareholders at the Company's Annual Meeting in
Stone Mountain GA and updating the Shareholders on earnings
guidance and other events of significance.
The Company will file a Report on SEC Form 8K detailing the
revisions in guidance for this fiscal year ending Feb. 28, 2014 and
attach a full copy of this Letter thereto.
The Company had issued previous guidance for the fiscal 2014
year end; however, due to the sale of VDC's Aydin Displays
subsidiary, the anticipated December 2013 sale of its Z-AXIS Inc
subsidiary and the potential sale of its Lexel Imaging subsidiary,
the previously issued guidance of the consolidated operations no
longer remains valid and requires revision. Revised guidance,
issued today, recognizes the completion of the August 30th Aydin
Displays Inc. sale and assumes a December sale of Z-AXIS Inc. Per
share earnings guidance is now revised to reflect such anticipated
transactions and is projected to be in the range of $0.14 - $0.16
per share for fiscal 2014, excluding the potential gain on the
Z-AXIS transaction, based upon achieving revenue for fiscal 2014 in
the range of $40 - $42 million.
The Company further provides guidance for its 2015 fiscal year,
assuming no additional sales of subsidiaries or divisions, for per
share earnings in the range of $0.44 to $0.48 on achievement of
fiscal 2015 revenues in the range of $38 - $40 million.
Our Company's Balance Sheet is currently in the strongest
condition of its 38 year history due to the reduction of long term
and short term debt from nearly $28 million to its current level of
$1.5 million with an offsetting cash balance of approximately $2
million. Upon the anticipated closing of the sale of Z-AXIS
transaction, the Company's cash position would increase to be in
excess of $10 million after elimination of all current short term
debt.
Subsequent to the sale of the two divisions, the Company will
maintain ownership and operation of the remaining assets and
businesses until such time that the Board of Directors, while
continuing to develop all available alternatives, determines that
the best value can be achieved for the shareholders. The following
schedule illustrates the potential values of the primary remaining
assets and divisions of the Company, assuming the completion of the
Z-AXIS Inc transaction, at this time:
|
(A) |
(B) |
|
|
|
Cash & Restricted Cash |
$10,700,000 |
$11,200,000 |
|
|
|
Remaining (4) Subsidiaries |
$15,500,000 |
$31,000,000 |
|
|
|
Company Owned RE Invest. |
$1,600,000 |
$2,100,000 |
|
|
|
CRT Class Action Law Suit |
$500,000 |
$1,500,000 |
|
|
|
Working Capital & WC Adjust. |
$1,350,000 |
$4,450,000 |
|
|
|
Earn-Out Aydin |
$2,000,000 |
$6,600,000 |
|
|
|
Current Term Debt |
$(1,350,000) |
$(1,350,000) |
|
|
|
Total |
$32,300,000 |
$55,500,000 |
(A) Reflect the low range
estimate of value of each of the assets if sold within 12
months |
(B) Reflect the high range
estimate of value of each of the assets if sold within 12
months. |
(There can be no assurance that any of the above listed holdings
of VDC can be sold and the values shown cannot be relied upon to be
indicative of the ultimate saleable value. This table is for
general illustrative purposes only and has not been validated by
any professional evaluation firm to verify the information provided
therein.)
The following excerpts are from the CEO Address at the
2013 Annual Meeting:
"GOOD MORNING & WELCOME"
"TODAY'S MEETING REPRESENTS THE 29TH ANNUAL MEETING OF VIDEO'S
LIFE AS A PUBLIC COMPANY SINCE THE COMPANY IPO IN JANUARY OF
1985. IT IS VIDEO'S 38th YEAR OF EXISTENCE AS A SPECIALTY
DISPLAY COMPANY.
I EXTEND MY PERSONAL WELCOME TO EACH OF THE NEW ATTENDEES
AND A PERSONAL WELCOME BACK TO OUR REGULAR ATTENDEES.
ALL OF OUR SHAREHOLDER MEETINGS ARE DESIGNED TO BE INFORMAL, BUT
THERE ARE CERTAIN FORMALITIES THAT MUST BE ADHERED TO, AND THUS WE
WILL DISPOSE OF THAT AGENDA FIRST IN ORDER TO MOVE ON TO THE
INFORMAL SEGMENT OF THIS SHAREHOLDER'S MEETING.
OUR ANNUAL MEETINGS ALSO ARE DESIGNED TO GIVE YOU AND OTHER
MEMBERS OF VDC, OUR EMPLOYEES, AND SUPPORTING PROFESSIONALS, A ONCE
A YEAR OPPORTUNITY TO INTRODUCE YOURSELVES OR
RENEW ACQUAINTANCES WITH EACH OTHER OVER A CUP OF COFFEE
RATHER THAN BY PHONE OR BY EMAILS. SO, PLEASE FEEL AT
HOME. THIS IS YOUR MEETING.
THIS YEAR THERE IS ONE IMPORTANT ITEM ON THE AGENDA TO BE VOTED
ON OTHER THAN THE NORMAL ELECTION OF THE PROPOSED DELEGATES TO
SERVE ON THE COMPANY'S BOARD OF DIRECTORS FOR THE UP-COMING
YEAR.
MY APOLOGIES TO THOSE WHO HAD TO TRAVEL DURING THE THANKSGIVING
HOLIDAY WEEKEND TO ATTEND. WE WANTED TO GET THE MEETING I
SCHEDULED AS EARLY AS WE COULD, BUT SEC REGS ON TIMING
RULED. WE ALSO WANTED IT TO BE AS LATE AS POSSIBLE TO BE ABLE
TO REPORT ON THE PENDING SALES OF THE DIFFERENT SUBSIDIARIES THAT
WE WERE NEGOTIATING.
AS TO MY PRESENTATION: AFTER 28 ANNUAL APPEARANCES IN FRONT
OF THIS GROUP, YOU HAVE LIKELY HEARD IT ALL. AT LAST YEAR'S
MEETING I ANNOUNCED THAT I WOULD BE ASKING FOR THE APPROVAL OF THE
BOARD OF DIRECTORS TO SEARCH OUT AND TO SECURE BIDS FOR THE SALE OF
EITHER VDC AS A WHOLE OR ITS INDIVIDUAL PARTS IN AN EFFORT TO
ENHANCE SHAREHOLDER VALUE. AND, WITH THAT INTENT IN MIND,
INDICATED THAT THE 27TH PUBLIC ANNUAL MEETING OF THE SHAREHOLDERS
WOULD BE MY LAST TO HOST. OBVIOUSLY, I WAS TOO OPTIMISTIC IN
MY ESTIMATION OF THE TIME THAT IT WOULD TAKE TO ACCOMPLISH SUCH A
TASK.
WE HAVE, HOWEVER ACCOMPLISHED GIANT STEPS IN THAT DIRECTION:
1: WE HAVE CLOSED ON THE SALE OF AYDIN DISPLAYS INC TO
SPARTON CORP (NYSE:SPA).
2: WE HAVE PAID DOWN NEARLY 100% OF THE COMPANY'S DEBT AND
ELIMINATED PNC BANK AS OUR LENDER.
3: WE HAVE SIGNED AN AGREEMENT TO SELL THE Z-AXIS, INC
SUBSIDIARY WITH A PROPOSED CLOSING WITHIN THE NEXT 30 DAYS.
4: WE HAVE SIGNED AN AGREEMENT TO SELL LEXEL IMAGING INC.
FOR A COMBINATION OF CASH AND NOTES. THE CLOSING ON THAT SALE
IS STILL PENDING AND MAY NOT HAPPEN DUE TO THE DELAYS IN ARRANGING
FINANCING BY THE POTENTIAL BUYER.
EVERYTHING IS SUBSTANTIALLY IN FLUX AT THIS POINT, BUT WITH WHAT
I HAVE SEEN THUS FAR, IT SEEMS PRUDENT TO AMEND ISSUED GUIDANCE FOR
THE BALANCE OF THE CURRENT YEAR AND TO ISSUE NEW GUIDANCE FOR
FISCAL 2015.
THE COMPANY HAS ISSUED A PRESS RELEASE AS WELL AS AN 8K FILING
AS REQUIRED BY THE SEC EARLIER IN ORDER TO DISCUSS SUCH NEW
GUIDANCE HERE AT THIS MEETING.
PER SHARE EARNINGS GUIDANCE HAS BEEN REVISED TO REFLECT THE SALE
OF AYDIN DISPLAYS, INC AND THE ANTICIPATED DECEMBER 2013 SALE OF
Z-AXIS INC AND IS NOW PROJECTED TO BE IN THE RANGE OF $0.14 - $0.16
PER SHARE FOR FISCAL 2014, EXCLUDING THE POTENTIAL GAIN ON THE SALE
OF Z-AXIS AND BASED UPON ACHIEVING REVENUE FOR FISCAL 2014 IN THE
RANGE OF $40 - $42 MILLION.
THE COMPANY FURTHER PROVIDES NEW GUIDANCE FOR ITS FISCAL 2015
FISCAL YEAR, ASSUMING NO FURTHER SALES OF OPERATIONS, FOR PER SHARE
EARNINGS IN THE RANGE OF $0.44 TO $0.48 ON ACHIEVEMENT OF REVENUES
IN THE RANGE OF $38 - $40 MILLION.
FINANCIALLY, WE ARE IN REASONABLY STRONG CONDITION WHEN COMPARED
TO MANY YEARS IN THE PAST. WE HAVE ABSORBED THE LOSSES OF AVS,
ACS AND VDC DISPLAY SYSTEMS THROUGH THEIR START UPS AND NEW
BUSINESS DEVELOPMENT PERIODS. WHILE THE DEVELOPMENT HAS BEEN
AT TIMES PAINFUL, YOU CAN INTERPOLATE THROUGH THE GUIDANCE GIVEN,
THAT THE INVESTMENT SEEMS TO HAVE BEEN WORTHWHILE. WE SEE A
VERY STRONG 2015 FOR BOTH AVS AND DISPLAY SYSTEMS. THE JURY IS
STILL OUT ON AYON CYBERSECURITY, BUT IT SEEMS TO BE TURNING THE
CORNER. OUR DISPLAYS ARE THE "DISPLAY OF CHOICE" IN NUMEROUS
PROGRAMS JUST BEING ENACTED OR RAMPED UP BY MANY OF THE COUNTRY'S
LEADING DEFENSE CONTRACTORS AND THE US ARMED FORCES AS WELL.
HOPEFULLY, YOU CAN VISUALIZE THAT THE GROUNDWORK HAS BEEN
LAID. IT IS NOW UP TO US TO DELIVER THE RESULTS THAT I BELIEVE
THE COMPANY AND ITS PEOPLE ARE CAPABLE OF DOING. THE FLOOR IS
NOW OPEN FOR QUESTIONS.
I AM A STRONG BELIEVER IN BOTH THE SHORT TERM AND THE LONG TERM
FUTURE OF VDC AND THE POTENTIAL OF ITS LEADERS TO GET THE JOB
DONE MY INTENT IS TO REMAIN IN MY CURRENT POSITION FOR
THE TIME BEING UNTIL I AM CONFIDENT THAT BOTH THE SPIN-OFFS AND THE
BASE BUILDING ARE SATISFACTORILY COMPLETED. AT THAT TIME, AND
HOPEFULLY SOON, THAT TASK WILL BE SUBSTANTIALLY COMPLETED AND WE
CAN MAKE THE CHANGES TO BEGIN THE TRANSITIONING OF LEADERSHIP TO A
NEW GENERATION OF CAPABLE INDIVIDUALS.
I WANT TO THANK YOU FOR ATTENDING TODAY AND THANK YOU FOR
SUPPORTING VDC FOR THE LAST 28 YEARS. WE APPRECIATE
YOU. INTRODUCE YOURSELVES TO OTHERS AROUND YOU, HAVE A SECOND
OR THIRD CUP OF COFFEE AND LET'S LOOK FORWARD TO A STRONG
PERFORMANCE FOR THE BALANCE OF FISCAL 2014.
CONTACT: Ronald D. Ordway, Chairman and CEO
770-938-2080
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