Steve Bernstein
Analyst · the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements for revisions or changes after the date of this conference call. It's now my pleasure to introduce your host, Martin Bloch, Executive Chairman of the Board of Frequency Electronics. Sir, the floor is yours
Thank you, Martin, and good afternoon. For the three months ended July 31, 2019, consolidated revenue was $12.6 million, up 14% from $11 million for the prior fiscal year. The components of revenue are as follows: revenue from commercial and U.S. government satellite programs was $3.9 million compared to $5.5 million for the same period of the prior fiscal year and accounted for approximately 31% of consolidated revenue compared to approximately 50% in fiscal 2019. Revenues on satellite payload contracts are recognized primarily under the percentage of completion method and are recorded only in the FEI-New York segment. Revenues from non-space U.S. government and DoD customers, which are recorded in both the FEI-New York and FEI-Zyfer segments rose to $6.7 million compared to $4.8 million in the prior fiscal year. Other commercial and industrial revenues was $1.9 million compared to $700,000 in the prior fiscal year. Intersegment revenues are eliminated in consolidation. For the three months period ended July 31, 2019, the gross margin and gross margin rate both decreased over the same period in fiscal 2019. The decrease is primarily due to higher engineering costs on several current programs which relates to products that are pushing state of the art technology. For the three months ended July 31, 2019 and 2018, selling and administrative costs were approximately 20% and 23% respectively of consolidated revenue. There were no accounts or type of expense that represented a significant portion of the change in expense. R&D expense for the three months ended July 31, 2019 and 2018 increased to $2.3 million from $1.6 million, an increase of $700,000 and were approximately 18% and 15% of consolidated revenue. The company expects to maintain a high-level of internally funded activity relating to R&D through the balance of the current year and beyond to address new large opportunities in secured communication, command and control applications, next generation satellite payload products and additional DoD and commercial applications. For the three months ended July 31, 2019, the company recorded an operating loss of $780,000 compared to an operating profit of $85,000 in the prior-year. The operating loss reflects improvements in revenue offset by both lower gross margin and increased research and development costs compared to the same period of fiscal 2019. Other income consisted primarily of investment income derived from the company's holdings of marketable securities. For the three-month period ending July 31, 2019, investment income included a $125,000 dividend from Morion. Other income included the sale of a fixed asset for gain of $50,000. This yields a pre-tax loss of approximately $570,000 compared to a pre-tax income of approximately $38,000 for the prior year. For the three months ended July 31, 2019, the company recorded a tax provision of $20,000 compared to $7,000 for the same period of fiscal 2019. Consolidated net loss for the three months ended July 31, 2019 was $591,000 or $0.07 per share compared to income of $31,000 or a fraction of a cent per diluted share compared to previous year. For the period just ended, the company generated positive cash flow from operations of $153,000. Our fully funded backlog at the end of July 2019 was $35 million. The company's balance sheet continues to reflect the strong working capital position of approximately $45 million as of July 31, 2019 and a current ratio of over 8.5 to 1. The company believes that its liquidity is adequate to meet its operating and investing needs for the next 12 months and foreseeable future. I will turn the call back to Martin, and we look forward to your questions later.
