GERMANTOWN, Md., Aug. 14 /PRNewswire-FirstCall/ -- Optelecom-NKF, Inc., , a leading global provider of advanced Internet Protocol (IP)- video network solutions, today announced its financial results for the second quarter ended June 30, 2006.
Revenues for the quarter totaled $9.0 million, equal to revenues for the same quarter a year ago. The Company reported a net loss of $176,000, or $(0.05) per diluted share, on a GAAP basis, compared with net income of $488,000, or $0.15 per diluted share, for the same period last year.
Stock-based compensation expenses impacted GAAP earnings for the second quarter of 2006 by $270,000, or $(0.08) per diluted share. Expenses related to compliance with federal regulations contained in the Sarbanes-Oxley Act reduced GAAP earnings for the quarter by $70,000, or $(0.02) per diluted share. Expenses related to these two items are new for 2006 and were not factors in the 2005 results.
Edmund Ludwig, Optelecom-NKF's president and CEO, commented, "After 19 consecutive profitable, and in many cases record-setting quarters, this quarter turned out to be a transition period, as we ramped-up Siqura(TM), our cornerstone technology platform for building integrated IP networked surveillance systems. Sales fell short of our goals. At the same time we incurred additional engineering costs to accelerate the development of IP products and higher one-time, unplanned costs related to meeting new international standards for lead-free manufacturing.
"We continued the revamp of the North American operation to better align that unit for what we know to be an expanding market for integrated video solutions. This included implementing changes to our sales processes, upgrading our sales channels and finalizing plans to add direct sales personnel.
"Siqura(TM) shows significant potential for the future, as we move past our launch phase. Looking ahead, for the balance of the year, we expect to see increased leverage and solid contributions from our efforts in North America. We believe we will be able to grow revenue at our historic year-over-year growth rate of 13-15%. We also believe that our gross margins will return to levels we have more characteristically reported since 2001."
About Optelecom-NKF, Inc.
Optelecom-NKF, Inc., is a global supplier of network video equipment, including video servers, Ethernet switches, fiber optic systems and video management software. It delivers complete solutions for traffic management and security in airports, seaports, public transport, public space, industry parks and buildings. Founded in 1972, the Company's R&D centers have accumulated extensive knowledge of fiber optic and IP/Ethernet network technologies. Optelecom-NKF supplies top-quality equipment and is committed to providing its customers with expert technical advice and support. All products are developed and tested for LAN and WAN applications.
Optelecom-NKF has offices in the US, the Netherlands, France, Spain, the UK, and Singapore, and expertise centers in the US and Europe.
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
Consolidated Statements of Income
Three Months Ended
30-Jun 30-Jun
2006 2005
(unaudited) (unaudited)
Revenues $8,986,809 $9,018,154
Cost of goods sold 4,159,245 3,542,917
Gross profit 4,827,564 5,475,237
Gross Margin 54% 61%
Operating expenses:
Engineering 1,198,132 946,667
Selling and marketing 2,084,526 1,969,814
General and administrative 1,355,592 1,252,882
Amortization of intangible assets 175,294 281,164
Total operating expenses 4,813,544 4,450,527
Operating income 14,020 1,024,710
Other expense, net (290,980) (326,306)
(Loss) Income before income taxes (276,960) 698,404
(Benefit) provision for income taxes (100,955) 210,565
Net (loss) income $(176,005) $487,839
Basic earnings per share $(0.05) $0.15
Diluted earnings per share $(0.05) $0.15
Weighted avg shares outstanding -
basic 3,446,140 3,236,447
Weighted avg shares outstanding -
diluted 3,446,140 3,347,260
Net (loss) income $(176,005) $487,839
Foreign currency translation 930,341 (1,239,507)
Comprehensive (loss) income $754,336 $(751,668)
OPTELECOM-NKF, INC
Consolidated Statements of Income
Six Months Ended
30-Jun 30-Jun
2006 2005
(unaudited) (unaudited) *
Revenues $18,502,255 $14,505,068
Cost of goods sold 8,023,647 6,029,164
Gross profit 10,478,608 8,475,904
Gross Margin 57% 58%
Operating expenses:
Engineering 2,352,165 1,551,791
Selling and marketing 3,996,346 3,002,135
General and administrative 2,675,538 2,305,943
Amortization of intangible assets 271,779 281,164
Total operating expenses 9,295,828 7,141,033
Operating income 1,182,780 1,334,871
Other expense, net (596,438) (417,122)
Income before income taxes 586,342 917,749
Provision for income taxes 198,158 279,103
Net income $388,184 $638,646
Basic earnings per share $0.11 $0.20
Diluted earnings per share $0.11 $0.19
Weighted avg shares outstanding -
basic 3,396,428 3,218,416
Weighted avg shares outstanding -
diluted 3,594,101 3,317,785
Net income $388,184 $638,646
Foreign currency translation 1,235,668 (1,277,150)
Comprehensive income (loss) $1,623,852 $(638,504)
* Results of operations herein reflect NKF activity from the acquisition
date of March 8, 2005.
OPTELECOM-NKF, Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2006 AND DECEMBER 31, 2005
30-Jun 31-Dec
2006 2005
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,520,610 $3,046,353
Accounts and contracts receivable,
net 7,482,923 6,731,373
Inventories, net 4,362,133 4,212,652
Deferred tax asset - current 550,168 820,830
Prepaid expenses and other current
assets 721,829 640,050
Total current assets 15,637,663 15,451,258
Property and equipment, net 2,578,447 2,677,865
Deferred tax asset - non-current 1,275,600 589,010
Intangible assets, net 8,073,382 7,719,737
Goodwill 13,002,382 12,430,037
Other Assets 139,701
TOTAL ASSETS $40,707,175 $38,867,907
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,627,509 $2,235,665
Accrued payroll 1,172,279 1,616,988
Current portion of capitalized leases 72,021 72,021
Commissions payable 209,760 539,352
Current portion of notes payable 1,570,478 1,592,978
Accrued warranty reserve 358,855 308,570
Taxes payable 531,835 568,147
Other current liabilities 792,791 1,393,945
Total current liabilities 7,335,528 8,327,666
LONG-TERM LIABILITIES:
Notes payable 15,159,530 15,794,050
Deferred tax liability 2,430,978 2,353,500
Capitalized lease obligations 77,099 115,880
Other liabilities 742,665 523,118
Total liabilities 25,745,800 27,114,214
STOCKHOLDERS' EQUITY :
Common Stock, $.03 par value - shares
authorized, 15,000,000; issued and
outstanding, 3,484,047 and
3,301,414 shares as of June 30, 2006
and December 31, 2005, respectively 104,521 99,042
Additional paid-in capital 13,834,330 12,255,978
Other comprehensive loss (582,682) (1,818,350)
Treasury stock, 162,672 shares, at
cost (1,265,047) (1,265,047)
Retained earnings (deficit) 2,870,253 2,482,070
Total stockholders' equity 14,961,375 11,753,693
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $40,707,175 $38,867,907
