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TASA REPORTS Q1 REVENUES UP 18%, EPS 2 CENTS VS. YEAR-AGO LOSS

  • Growth In Demand For Proprietary Tests Fuels Revenue Increase
  • Strength In Custom Test Products Also Contributes To Record Quarter
  • Arkansas Is Latest State To Adopt TASA’s Test For Limited-English-Proficient Students
  • Continued Growth Seen In All Business Areas
  • Gross Profit Margin Increases To 48% From 44%

BREWSTER, N.Y., March 9, 2004—Touchstone Applied Science Associates, Inc. (OTCBB: TASA), buoyed by its best-ever showing at the beginning of a fiscal year, today reported first-quarter net income of $62,000, or 2 cents per diluted share, compared with a loss from continuing operations of $139,000, or five cents per diluted share, a year earlier. Including discontinued operations, the prior- year loss was $296,000, or 11 cents per diluted share. Net revenue for the quarter ended January 31, 2004, climbed more than 18 percent to $2.1 million from $1.8 million for continuing operations in the fiscal 2003 first quarter.

“Our proprietary test products, especially those designed for students with limited English proficiency, were the primary drivers in delivering our first profitable first quarter in our 27 years of operations,” said Andrew L. Simon, president and chief executive officer. “Historically, the first two quarters of the fiscal year have been our softest because of the buying patterns of school districts and state education authorities. However, provisions of the federal ‘No Child Left Behind’ act have prompted some agencies to place orders earlier in the year. In the first quarter, Missouri and Rhode Island purchased our MACII tests to comply with Title III of the act, which relates to improving language skills for limited English proficient students.”

Proprietary Revenue Up 28%

Simon noted that the proprietary business unit, which provides test services and products for reading assessment in the K-12 market, achieved a more than 28 percent increase in revenues to $1 million from $795,000 in the fiscal 2003 first quarter. In addition to increases in the English proficiency product, Simon said the company received a sizable order for its Degrees of Reading Power® reading assessment program from the city of Los Angeles. The increase in proprietary revenue contributed to an improvement in gross profit margin to 48 percent from 44 percent a year earlier.

BETA, TASA’s custom test services unit, also had a solid quarter, with a nearly 10 percent increase in revenue to $1.1 million from $972,000 in the first quarter of fiscal 2003, Simon said.

“In part because of the previously announced $9.4 million increase and two-and-a-half-year extension of our Michigan contract, which now runs to September 2007, we see continued strength in the custom segment also,” Simon added.

Strong Growth Outlook

“We continue to benefit from the new federal emphasis on education,” Simon said. “As a result of the growing national demand for assessment testing and services, as well as increasing acceptance of our products and services, we see ongoing growth in both our business areas. Most recently, Arkansas became the eighth state to accept our MAC II test, either as the exclusive test or as an approved test, for charting the progress of students who have limited proficiency in English. In addition, with our decision last year to expand our test scanning and scoring services, we expect further opportunities for growth as we begin to pick up third-party scoring business.

”We remain comfortable with our outlook for 20 percent compound annual growth over the next few years.”

Solid Balance Sheet

Simon also noted the early repayment of the company’s debt and the sale-leaseback of its headquarters building, all completed in 2003, have contributed to a strong balance sheet with essentially no long-term debt. At the end of the first quarter, the company reported a cash position of $405,000, a current ratio of 2.6 to 1 and stockholders’ equity of $5.9 million, equivalent to about $2.26 per share.

Conference Call Scheduled Today At 11 A.M. EST

Management will host a conference call this morning to discuss first-quarter results and other matters. The call is scheduled to begin at 11 a.m. Eastern, 10 a.m. Central, 9 a.m. Mountain and 8 a.m. Pacific. Participants may dial 201-689-8359 for the live call. The call will also be webcast live and archived for three months. The webcast can be accessed by clicking the following link: www.viavid.net

A playback of the call will be available shortly after the call concludes through Tuesday, March 23, 2004. The playback number is 201-612-7415, using account number 3055 and conference ID 96735.

TASA, based in Brewster, N.Y., provides the education market with assessment products and services. The base business includes tests and services such as test scoring, primarily for literacy skills in grades K-12 and for limited English proficient students. Products and services typically are sold to state education authorities as well as school districts.

At TASA. contact:
Andrew L. Simon, President & CEO
845-277-8100
asimon@tasa.com

At The Investor Relations Company, contact:
Mike Arneth or Tad Gage
(312) 245-2700

 Statements contained in this release that are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to risks and uncertainties, which are enumerated in the company’s annual report on Form 10KSB for Fiscal Year ended October 31, 2003. These risks and uncertainties could cause actual results to differ materially from those projected or implied in the forward-looking statements.

 

 

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