[May 16, 2005] Optelecom-NKF Reports First Quarter Results Tweet GERMANTOWN, Md., May 16 /PRNewswire-FirstCall/ Optelecom-NKF, Inc., , today announced its financial results for the first quarter ended March 31, 2005. The Company reported record sales for the first quarter of $5,486,914, an increase of 31% from last year's first quarter revenues of $4,180,123. Operating income for the quarter ended March 31, 2005 totaled $310,161 even as the Company recognized more than $200,000 of non-recurring charges related to the acquisition of NKF Electronics. Net income for the quarter totaled $150,808, or $0.05 per fully diluted share. "I am pleased with the Company's first quarter financial performance," said Edmund Ludwig, president and CEO of Optelecom-NKF, Inc. "We posted strong revenue growth and operating results, marking our 15th consecutive profitable quarter, despite anticipated non-recurring expenses related to the March 8th acquisition of NKF Electronics." "During the quarter we aggressively executed our business plan, announcing and completing the acquisition of NKF. We continued to expand our global network of integrators and resellers for greater penetration in new geographic and key vertical markets. The acquisition of NKF has expanded our market coverage and broadened customer access to our solutions. We are already seeing the benefits of cross-selling training as we have started moving NKF solutions into our state-side distribution channels, and as NKF's sales organization has begun incorporating Optelecom technologies into bids for new business. Going forward through 2005, we intend to remain solidly focused on our core strategy of profitable growth, on the successful integration of NKF, and on driving operational enhancements and unparalleled innovation to create value for our customers and shareholders." "Revenue growth for the first quarter was strong and earnings were on plan, even as we incurred non-recurring charges related to the acquisition, paid almost $91,000 of interest expense, and reported results as a fully-taxed business," added James Armstrong, Optelecom-NKF's CFO. "The integration of NKF is well underway and right on track. We recently downsized and realigned our United Kingdom sales office as part of that plan, handing off marketing responsibility to NKF and setting the stage for significant cost savings going forward. We anticipate taking a charge of approximately $100,000 in the second quarter related to the realignment and reduction in force. Looking ahead, we intend to pursue operating efficiencies where they make good sense." "I'm pleased to report that The Dutch Ministry of Transport has entrusted Optelecom-NKF with the roll-out of a wide area IP network," Mr. Armstrong continued. "This Gigabit Ethernet network connects 16 remote sites in the 900 km2 Rotterdam area to a new Traffic Management Centre. Optelecom-NKF is responsible for the design, installation and maintenance of the entire network which will begin operations shortly. This award is illustrative of the in- depth knowledge in the areas of video, video compression, IP networking, fiber optics and network management we now bring to the marketplace. I think this project award exemplifies the many reasons we are so confident in Tom Overwijn, Managing Director of NKF, and his entire team." OPTELECOM, Inc. CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2005 AND DECEMBER 31, 2004 31-Mar 31-Dec 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $2,738,281 $2,918,959 Accounts and contracts receivable, net 6,853,266 3,015,588 Inventories, net 5,569,461 2,867,882 Deferred tax asset - current 833,796 767,841 Prepaid expenses and other current assets 943,758 519,494 Total current assets 16,938,562 10,089,764 Property and equipment, net 2,777,672 1,870,039 Deferred tax asset - non-current 500,189 406,606 Goodwill and other intangible assets 19,509,003 - TOTAL ASSETS $39,725,425 $12,366,409 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,847,426 $798,965 Accrued payroll 579,460 394,185 Commissions payable 474,674 297,870 Current portion of notes payable 2,479,449 45,000 Accrued warranty reserve 405,807 130,084 Other current liabilities 2,111,760 523,078 Total current liabilities 7,898,576 2,189,182 LONG-TERM LIABILITIES: Notes payable - Senior 12,065,085 45,000 Notes payable - Subordinated 9,180,630 - Security deposit payable 11,526 11,526 Deferred rent liability 196,752 186,418 Total liabilities 29,352,569 2,432,126 STOCKHOLDERS' EQUITY: Common Stock, $.03 par value - shares authorized, 15,000,000; issued and outstanding, 3,225,978 and 3,179,109 shares as of March 31, 2005 and December 31, 2004, respectively 96,779 95,373 Additional paid-in capital 11,642,970 11,318,968 Foreign currency translation adjustment (52,809) (15,166) Treasury stock, 162,672 shares, at cost (1,265,047) (1,265,047) Accumulated deficit (49,036) (199,845) Total stockholders' equity 10,372,856 9,934,283 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $39,725,425 $12,366,409 OPTELECOM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 2004 Revenues $5,486,914 $4,180,123 Cost of goods sold 2,486,247 1,769,016 Gross profit 3,000,667 2,411,107 Operating expenses: Engineering 564,215 371,499 Selling and marketing 1,032,321 688,337 General and administrative 1,093,970 909,779 Total operating expenses 2,690,506 1,969,615 Operating income (loss) 310,161 441,492 Other income (expense): Other income - 5,391 Interest income (expense) (90,815) 2,487 Total other income (expense) (90,815) 7,878 Income (loss) before income taxes 219,346 449,370 Provision (benefit) for income taxes 68,538 145,945 Net income $150,808 $303,425 Basic earnings per share $0.05 $0.10 Diluted earnings per share $0.05 $0.09 Weighted average shares outstanding - basic 3,193,575 3,127,520 Weighted average shares outstanding - diluted 3,282,336 3,256,489 See notes to consolidated financial statements. About Optelecom-NKF, Inc. 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: Rick Alpert of Optelecom-NKF, Inc., +1-301-948-7872 Web site: http://www.optelecom.com/ [ Back To TMCnet.com's Homepage ]