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Optelecom-NKF Reports Second Quarter Results
GERMANTOWN, Md., Aug. 10 /PRNewswire-FirstCall/ -- Optelecom-NKF, Inc., , a leading global provider of advanced IP-video network solutions today announced its financial results for the second quarter ended June 30, 2005.
The Company reported record sales for the second quarter of $9,018,154, an increase of 111% from last year's second quarter revenues of $4,264,704. Operating income for the quarter ended June 30, 2005 totaled $1,024,710 compared to $448,752 for the same period last year, an increase of 128%. Net income for the quarter totaled $487,839 or $0.15 per fully diluted share, an increase of 61% compared to net income of $303,431, or $0.09 cents per fully diluted share for the same quarter last year.
"I am pleased with our progress," said Edmund Ludwig, President and CEO of Optelecom-NKF, Inc. "In our first full quarter following the acquisition of NKF Electronics, B.V. (NKF) we posted strong revenue growth and operating results. The secret to our success is straight forward; design, manufacture and sell superior technologies that provide great value to our customers."
"During the quarter we continued growing the business as we executed our plan to integrate NKF. We expanded our global network of integrators and resellers, cross-sold product suites and solutions, and implemented actions to capitalize on efficiencies. The acquisition of NKF has clearly strengthened our hand. Let me be clear, our progress is the direct result of the hard work of Optelecom-NKF's dedicated team. It is their ongoing efforts that resulted in our solid sales and operating performance. We remain solidly focused on our core strategy of profitable growth, completing the integration plan, driving operational enhancements, developing the products our end-users want, pursuing organic growth opportunities and seeking out potential additions to our product lines."
"Revenue and earnings growth for the second quarter were very strong," commented James Armstrong, Optelecom-NKF's CFO. "Operating income came in at a robust $1,024,710 up 128% from a year ago. During the quarter we recorded non- recurring charges of $199,000, related to the closing of our former U.K. sales office.
"Overall, our business is sound. The integration of NKF is going well. We are working our plan to forge Optelecom-NKF into a dynamic leading global provider of IP-Video solutions. We are well positioned to meet the increasingly complex needs of our video surveillance and ITS (Intelligent Transportation Systems) customers. Sales of networked solutions were strong, but we also saw continued demand for high-bandwidth systems as illustrated by our previously announced contract for an advanced uncompressed fiber-optic video network for use in urban warfare training. Recent events in London remind us that the world remains a dangerous place. Optelecom-NKF is meeting our customers' needs today and we remain committed to developing product solutions that will meet their future needs."
OPTELECOM-NKF, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2005 and DECEMBER 31, 2004
(Unaudited)
2005 2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents $3,788,474 $2,918,959
Accounts and contracts receivable, net 6,104,117 3,015,588
Inventories, net 4,808,271 2,867,882
Deferred tax asset - current 945,789 767,841
Prepaid expenses and other current assets 938,660 519,494
Total current assets 16,585,311 10,089,764
Property and equipment, net 2,565,700 1,870,039
Deferred tax asset - non-current 1,033,874 406,606
Goodwill and other intangible assets 20,498,597 -
TOTAL ASSETS $40,683,482 $12,366,409
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $1,555,672 $798,965
Accrued payroll 952,006 394,185
Commissions payable 404,375 297,870
Current portion of notes payable 2,479,449 45,000
Accrued warranty reserve 356,746 130,084
Other current liabilities 1,521,798 523,078
Total current liabilities 7,270,046 2,189,182
Notes payable - senior 11,064,044 45,000
Notes payable - subordinated 8,322,276 -
Deferred tax liability 3,872,806 11,526
Deferred rent liability 205,915 11,526
Other 187,989 186,418
Total liabilities 30,923,076 2,432,126
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.03 par value - shares
authorized, 15,000,000; issued and
outstanding, 3,246,443 and 3,179,109
shares as of June 30, 2005 and
December 31, 2004, respectively 97,393 95,373
Additional paid-in capital 11,781,573 11,318,968
Other comprehensive loss (1,292,316) (15,166)
Treasury stock, 162,672 shares, at cost (1,265,047) (1,265,047)
Retained earnings (deficit) 438,803 (199,845)
Total stockholders' equity 9,760,406 9,934,283
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $40,683,482 $12,366,409
OPTELECOM-NKF, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
(Unaudited)
2005 2004
Revenues $9,018,154 $4,264,704
Cost of goods sold 3,542,917 1,831,514
Gross profit 5,475,237 2,433,190
Operating expenses:
Engineering 901,963 345,664
Selling and marketing 1,969,814 850,448
General and administrative 1,297,586 788,326
Amortization of intangible assets 281,164 0
Total operating expenses 4,450,527 1,984,438
Income from operations 1,024,710 448,752
Other income (expense):
Interest income (expense), net (326,306) 591
Total other income (326,306) 591
Income before income taxes 698,404 449,343
Provision for income taxes 210,565 145,912
Net income $487,839 $303,431
Basic earnings per share $0.15 $0.10
Diluted earnings per share $0.15 $0.09
Weighted average common shares
outstanding - basic 3,236,447 3,160,425
Weighted average common shares
outstanding - diluted 3,347,260 3,287,450
Net income $487,839 $303,431
Foreign currency translation (87,303) 1,032
Comprehensive income $400,536 $304,463
OPTELECOM-NKF, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
2005 2004
Revenues $14,505,068 $8,444,827
Cost of goods sold 6,029,164 3,600,530
Gross profit 8,475,904 4,844,297
Operating expenses:
Engineering 1,466,178 717,163
Selling and marketing 3,002,135 1,538,785
General and administrative 2,391,556 1,698,105
Amortization of intangible assets 281,164 0
Total operating expenses 7,141,033 3,954,053
Income from operations 1,334,871 890,244
Other income (expense):
Interest income (expense), net (417,122) 8,469
Total other income (417,122) 8,469
Income before income taxes 917,749 898,713
Provision for income taxes 279,103 291,857
Net income $638,646 $606,856
Basic earnings per share $0.20 $0.19
Diluted earnings per share $0.19 $0.19
Weighted average common shares
outstanding - basic 3,218,416 3,143,972
Weighted average common shares
outstanding - diluted 3,317,785 3,272,020
Net income $ 638,646 $606,856
Foreign currency translation (124,946) (9,059)
Comprehensive income $513,700 $597,797
Optelecom-NKF, Inc. is a leading global provider of advanced communication platforms that transport data, video, and audio over networks. The Company designs, develops, manufactures, and markets high-bandwidth fiber optic-based communications systems for traffic monitoring, security/surveillance, and business video systems.
The Company offers integrated multimedia products for communicating video, audio, and other data over both copper wire and optical network systems. Taking a client-centric approach to its business through a proactive, flexible, and value-driven philosophy, Optelecom-NKF supplies industry and governments worldwide with best-of-class solutions for highway traffic management, air traffic control, border surveillance, facilities security, and business video systems.
The Company has accumulated extensive expertise in fiber optic and IP/Ethernet network technologies. This expertise has enabled Optelecom-NKF to build a broad range of communications products ranging from fiber optic video modems and multiplexers to complete Video-over-IP network solutions. All its products are designed and tested for Local, Metropolitan, and Wide Area Network (LAN, MAN, and WAN) applications, especially those characterized by harsh environmental conditions and by large distances between the individual transmission locations.
Forward-Looking Statements
The statements contained in this release, which are not historical facts, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include, among others: the ability of Optelecom-NKF to integrate operations with NKF Electronics; the ability of the Company to develop and market products and communication solutions for the video surveillance, transportation, and business video markets; lack of reliable vendors, service providers, and outside products; unforeseen changes in competing technologies and products; worldwide economic variances; poor or delayed research and development results; and disparities between forecast and realized sales results. Other important factors that could cause actual results to differ materially are included but are not limited to those listed in Optelecom-NKF's periodic reports and registration statements filed with the Securities and Exchange Commission. Optelecom-NKF does not assume any obligation to update information concerning its expectations.
Investor inquiries should be directed to Mr. Rick Alpert at 301-948-7872.
Optelecom-NKF, Inc.
CONTACT: Investor inquiries: Mr. Rick Alpert of Optelecom-NKF, Inc.,+1-301-948-7872
Web site: http://www.optelecom.com/
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