Ballantyne Reports 13.7% Q4 and 35.3% FY '11 Revenue Increases

Ballantyne Strong's quarterly net earnings increase was led by a 101.3% year-over-year increase in digital service sales, 17.0% growth in digital equipment sales and 46.3% growth in lighting earnings. Cinema screens as well contributed $3.3 million while the period, however fell from $6.0 million in Q4 2010, a record-setting quarter for screen sales.

Consolidated gross profit was $7.3 million, or a 14.2% gross margin on net earnings, compared to gross profit of $8.0 million, or 17.7% of net earnings in the year-ago period. The gross profit margin decline was primarily attributable to an increase in the contribution of digital product sales to the revenue mix as these carry higher price points however lower margins, coupled with lower sales of high margin screens.

Selling expenses declined to $1.0 million, or 2.0% of net earnings, from $1.5 million in Q4 2010, or 3.4% of net earnings. The year-over-year decline was largely related to lower salaries and commissions. General and administrative expenditures remained flat at $2.7 million in Q4 2011, compared to $2.7 million in Q4 2010, nevertheless declined while Q4 2011 to 5.2% of earnings, versus 6.0% of Q4 2010 revenues.

Net earnings rose 35.3% to an all-time record $184.4 million. Digital product sales increased 59.5% and accounted for 75.3% of the full-year total. Gross profit grew 22.1% to $30.2 million, or 16.4% of net earnings. Net revenues rose 22.7% to $10.3 million, or $0.71 per diluted share, which includes a $0.04 impact associated with the Company's corporate refocus, compared to net earnings of $8.4 million, or $0.59 per diluted share in the year-ago twelve-month period.

The Company generated cash flow from operations of $20

The Company generated cash flow from operations of $20.1 million while FY '11 and spent in broad outline $2.9 million on capital expenditures while the year, down from $6.8 million a year-ago. Year-ago cap-ex included $5.8 million for the completed purchase and expansion of the cinema screen manufacturing facility and $0.5 million for the construction and installation of the state-of-the-art Digital Network Operations Center

"For decades, Ballantyne had been known as a worldwide leader in the manufacturing and marketing of analog projectors, however as cinema has been in the process of rapidly transforming into a digital-focused industry in recent years, our Board and senior management agreed that the best course of action was to completely exit the 35 mm projector business and divest our Omaha, NE-based manufacturing facility.

"Consequently, we initiated a strategic refocus on global growth opportunities in digital products and related services, including afterwards-sale maintenance and 24/7 proactive NOC monitoring from our facility, and increased product offerings, which will be following us to a new, smaller corporate headquarters that will as well be based here in Omaha. We are currently scouting potential locations.

"Should the contingency arise to our focus on growing the Company's service business we continue to be a leading reseller of both Barco and NEC projection systems in the Americas, where thousands of analog screens remain to be digitized. We remain excited about the possibility to sell NEC equipment in Asia, especially China, where new theatre construction should continue for years to come given the relatively small number of screens that serve a population of more than 1.3 billion.

"We will continue manufacturing a wide array of cinema screens at our cutting-edge Quebec operation and have recently begun shipping to India, an exciting new market for us. Lastly, we are as well placing a renewed emphasis on Ballantyne's LED lighting business, a segment we believe has an untapped growth possibility for both our own products and distributing partners' brands," concluded Mr. Cavey.

The historical information in this press release

Except for the historical information in this press release, it includes forward-looking statements that involve risks and uncertainties, including nevertheless not limited to, quarterly fluctuations in results; customer demand for the Company's products; the development of new research for alternate means of motion picture presentation; domestic and international economic conditions; the management of growth; and other risks detailed from place to place in the Company's Securities and Exchange Commission filings. Actual results may differ materially from management's expectations.

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