Exhibit 1 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2004 U.S. DOLLARS IN THOUSANDS UNAUDITED INDEX Page ---------------- REVIEW REPORT OF UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS F-2 CONSOLIDATED BALANCE SHEETS F-3 - F-4 CONSOLIDATED STATEMENTS OF INCOME F-5 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY F-6 CONSOLIDATED STATEMENTS OF CASH FLOWS F-7 - F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-9 - F-11 - - - - - - - - - - [ERNST & YOUNG LOGO] o KOST FORER GABBAY & KASIERER o Phone: 972-3-6232525 3 Aminadav St. Fax: 972-3-5622555 Tel-Aviv 67067, Israel The Board of Directors Lipman Electronic Engineering Ltd. Re: Review report of unaudited interim consolidated financial statements for the six-month and three-month periods ended June 30, 2004 ------------------------------------------------------------- We have reviewed the accompanying interim consolidated balance sheet of Lipman Electronic Engineering Ltd. (the "Company") and its subsidiaries as of June 30, 2004 and the related interim consolidated statements of income for the three-month and six-month periods ended June 30, 2004 and 2003, and the statements of changes in shareholders' equity for the six-month period ended June 30, 2004 and consolidated statements of cash flows for the six-month period ended June 30, 2004 and 2003. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements referred to above for them to be conformity with U.S. generally accepted accounting principles. We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Lipman Electronic Engineering Ltd. and subsidiaries as of December 31, 2003, and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended, and in our report dated February 22, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Tel-Aviv, Israel KOST FORER GABBAY & KASIERER August 8, 2004 A Member of Ernst & Young Global F-2 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- IN THOUSANDS DECEMBER 31, JUNE 30, 2003 2004 ----------------- --------------- Unaudited --------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 57,465 $ 162,766 Trade receivables (net of allowance for doubtful accounts of $470 and $713 as of December 31, 2003 and June 30 2004, respectively) 23,473 20,220 Other receivables and prepaid expenses 5,114 6,573 Inventories 28,889 30,545 ----------------- --------------- Total current assets 114,941 220,104 ----------------- --------------- LONG-TERM ASSETS: Long-term marketable securities 1,600 1,600 Property, plant and equipment, net 6,966 7,643 Severance pay fund 2,196 2,364 Other long-term assets 123 794 Intangible assets, net 7,196 7,093 Goodwill 1,150 1,150 ----------------- --------------- 19,231 20,644 ----------------- --------------- Total assets $ 134,172 $ 240,748 ================= =============== The accompanying notes are an integral part of the consolidated financial statements. F-3 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- IN THOUSANDS (EXCEPT PER SHARE DATA) DECEMBER 31, JUNE 30, 2003 2004 ------------------ ---------------- Unaudited ---------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term bank loans $ 145 $ 326 Trade payables 11,917 8,362 Employees and payroll accruals 2,384 1,728 Accrued expenses and other liabilities 9,133 11,689 ------------------ ---------------- Total current liabilities 23,579 22,105 ------------------ ---------------- LONG-TERM LIABILITIES: Long-term bank loans, net of current maturities 1,119 -- Accrued severance pay 3,083 3,441 ------------------ ---------------- 4,202 3,441 ------------------ ---------------- Total liabilities 27,781 25,546 ------------------ ---------------- SHAREHOLDERS' EQUITY: Share capital- Ordinary shares of NIS 1.00 par value: Authorized: 35,000,000 shares as of December 31, 2003 and June 30, 2004; Issued: 22,929,296 and 27,838,296 shares as of December 31, 2003 and June 30, 2004, respectively; Outstanding: 21,003,636 and 25,913,626 shares as of December 31, 2003 and June 30, 2004, respectively 6,846 7,938 Additional paid-in capital 35,242 131,428 Accumulated other comprehensive income 829 879 Retained earnings 70,092 81,575 Treasury stock: 1,925,660 shares as of December 31, 2003 and June 30, 2004 (6,618) (6,618) ------------------ ---------------- Total shareholders' equity 106,391 215,202 ------------------ ---------------- Total liabilities and shareholders' equity $134,172 $240,748 ================== ================ The accompanying notes are an integral part of the consolidated financial statements. F-4 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - -------------------------------------------------------------------------------- IN THOUSANDS (EXCEPT PER SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------ ------------------------------- 2003 2004 2003 2004 ------- ------- ------- ------- UNAUDITED ---------------------------------------------------------------- Revenues $27,379 $38,283 $49,636 $70,386 Cost of revenues 15,009 20,247 24,558 36,612 ------- ------- ------- ------- Gross profit 12,370 18,036 25,078 33,774 ------- ------- ------- ------- Operating expenses: Research and development 1,182 1,606 2,318 3,094 Selling and marketing 3,811 4,288 7,523 8,412 General and administrative 1,348 2,850 2,927 5,365 Stock-based compensation 689 1,205 807 3,045 Amortization and other intangible assets 52 52 103 103 ------- ------- ------- ------- Total operating expenses 7,082 10,001 13,678 20,019 ------- ------- ------- ------- Operating income 5,288 8,035 11,400 13,755 Financial income, net 2,050 415 2,239 681 Other income, net 71 -- 109 -- ------- ------- ------- ------- Income before taxes on income 7,409 8,450 13,748 14,436 Taxes on income 338 1,807 871 2,953 ------- ------- ------- ------- Net income $ 7,071 $ 6,643 $12,877 $11,483 ======= ======= ======= ======= Basic net earnings per share $ 0.35 $ 0.26 $ 0.64 $ 0.46 ======= ======= ======= ======= Diluted net earnings per share $ 0.33 $ 0.25 $ 0.61 $ 0.44 ======= ======= ======= ======= The accompanying notes are an integral part of the consolidated financial statements. F-5 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------- IN THOUSANDS ACCUMULATED ADDITIONAL OTHER TOTAL TOTAL SHARE PAID-IN COMPREHENSIVE RETAINED COMPREHENSIVE TREASURY SHAREHOLDERS' CAPITAL CAPITAL INCOME EARNINGS INCOME STOCK EQUITY --------- --------- ------------- --------- -------------- -------- ------------- Balance as of January 1, 2003 $ 6,664 $ 28,224 $ -- $ 45,388 $ (6,618) $ 73,658 Exercise of options granted to employees 24 415 -- -- -- 439 Tax benefit related to exercise of options -- 21 -- -- -- 21 Stock-based compensation related to options issued to employees and others -- 807 -- -- -- 807 Dividend paid -- -- -- (4,661) -- (4,661) Comprehensive income: Net income -- -- -- 12,877 12,877 -- 12,877 --------- --------- --------- --------- --------- --------- --------- Total comprehensive income $ 12,877 ========= Balance as of June 30, 2003 (Unaudited) 6,688 29,467 -- 53,604 (6,618) 83,141 ========= ========= ========== ========= ========= ========= Balance as of January 1, 2004 6,846 35,242 829 70,092 (6,618) 106,391 Exercise of options granted to employees 34 1,167 -- -- -- 1,201 Tax benefit related to exercise of options -- 258 -- -- -- 258 Stock-based compensation related to options issued to employees and others -- 3,045 -- -- -- 3,045 Issuance of share capital, net 1,058 90,289 -- -- -- 91,347 Tax benefit related to issuance costs -- 1,427 -- -- -- 1,427 Comprehensive income: Unrealized loss on hedge transaction -- -- (12) -- $ (12) -- (12) Foreign currency translation adjustments -- -- 62 -- 62 -- 62 Net income -- -- -- 11,483 11,483 -- 11,483 --------- --------- --------- --------- --------- --------- --------- Total comprehensive income $ 11,533 ========= Balance as of June 30, 2004 (Unaudited) $ 7,938 $ 131,428 $ 879 $ 81,575 $ (6,618) $ 215,202 ========= ========= ========= ========= ========= ========= The accompanying notes are an integral part of the consolidated financial statements. F-6 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- IN THOUSANDS SIX MONTHS ENDED JUNE 30, -------------------- 2003 2004 -------- -------- UNAUDITED -------------------- Cash flows from operating activities: Net income $ 12,877 $ 11,483 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 476 607 Stock-based compensation related to options issued to employees and others 807 3,045 Accrued severance pay, net (381) 190 Amortization of goodwill and other intangible assets 103 103 Gain on available-for-sale marketable securities (364) -- Gain on sale of property, plant and equipment -- (7) Currency fluctuations of long-term bank loans (15) (29) Decrease (increase) in trade receivables (5,235) 3,315 Decrease (increase) in other receivables, prepaid expenses and other long-term assets (618) 112 Decrease (increase) in inventories 2,160 (1,656) Increase (decrease) in trade payables 3,122 (3,555) Increase in employee and payroll accruals, accrued expenses and other liabilities 690 1,900 Deferred income taxes, net 127 (815) Tax benefit related to exercise of options 21 258 -------- -------- Net cash provided by operating activities 13,770 14,951 -------- -------- The accompanying notes are an integral part of the consolidated financial statements. F-7 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- IN THOUSANDS SIX MONTHS ENDED JUNE 30, ---------------------- 2003 2004 --------- --------- UNAUDITED ---------------------- Cash flows from investing activities: Purchase of property, plant and equipment (360) (1,342) Proceeds from sale of property, plant and equipment -- 65 Investment in short-term available-for-sale marketable securities and short-term deposit (234) -- Proceeds from sales of available-for-sale marketable securities and short-term deposit 550 -- --------- --------- Net cash used in investing activities (44) (1,277) --------- --------- Cash flows from financing activities: Exercise of options granted to employees 439 1,201 Proceeds from issuance of share capital -- 91,347 Principal payments of long-term bank loans (64) (921) Dividend paid (4,661) -- --------- --------- Net cash provided by (used in) financing activities (4,286) 91,627 --------- --------- Increase in cash and cash equivalents 9,440 105,301 Cash and cash equivalents at the beginning of the period 35,522 57,465 --------- --------- Cash and cash equivalents at the end of the period $ 44,962 $ 162,766 ========= ========= Supplemental disclosure of cash flows activities: Cash paid during the period for: Income taxes $ 356 $ 968 ========= ========= Interest $ 11 $ 10 ========= ========= The accompanying notes are an integral part of the consolidated financial statements. F-8 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- IN THOUSANDS NOTE 1:- GENERAL Lipman Electronic Engineering Ltd. (collectively with its subsidiaries, the "Company") is a worldwide provider of electronic payment systems. The Company's products include landline and wireless point-of-sale terminals, personal identification number pads, electronic cash registers, self-service systems that include automatic teller machines and related applications. The Company was established in 1974, and its shares have been quoted on the Tel-Aviv Stock exchange since May 1993, and in NASDAQ National Market since January 2004. In June 2004, the Company effected a 1:2 share dividend. All share and per share data have been retroactively adjusted to reflect this share dividend. The Company operates in one industry segment. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES a. These interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States for interim information. b. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2003, are applied consistently in these interim consolidated financial statements. NOTE 3:- UNAUDITED INTERIM FINANCIAL STATEMENTS The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months and three months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004. NOTE 4:- INVENTORIES Inventories are stated at the lower of cost or market value. Inventory write-offs are provided to cover risks arising from obsolete or slow-moving items, excess inventories and for declines in market prices below cost. To date, inventory write-offs were immaterial. JUNE 30, ----------------------------- 2003 2004 ------------ ------------- UNAUDITED ----------------------------- Raw materials $ 7,879 $ 11,115 Work in progress 901 1,881 Finished goods 9,323 17,549 ------------ ------------- $ 18,103 $ 30,545 ============ ============= F-9 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- IN THOUSANDS (EXCEPT PER SHARE DATA) NOTE 5:- EARNINGS PER SHARE The following table sets forth the computation of historical basic and diluted net earnings per share: THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------- ------------------- 2003 2004 2003 2004 --------- --------- --------- ------- UNAUDITED ------------------------------------------- Net income $ 7,701 $ 6,643 $ 12,877 $11,483 ========= ========= ========= ======= Weighted average number of Ordinary shares outstanding 20,295 25,897 20,275 25,105 ========= ========= ========= ======= Dilutive effect: Employee stock options 1,041 1,094 908 1,043 ========= ========= ========= ======= Diluted weighted average number of Ordinary shares outstanding 21,336 26,991 21,183 26,148 ========= ========= ========= ======= Basic net earnings per share $ 0.35 $ 0.26 $ 0.64 $ 0.46 ========= ========= ========= ======= Diluted net earnings per share $ 0.33 $ 0.25 $ 0.61 $ 0.44 ========= ========= ========= ======= In January 2004, the Company effected an initial public offering in the United States in the NASDAQ and issued 4,752,800 shares including shares issued in connection with the exercise of the underwrites over allotment option, at a public offering price of $ 20.8 per share. NOTE 6:- INCOME TAXES The effective tax rate used in computing the provision for income taxes is based on projected fiscal year income before taxes, including estimated income by tax jurisdiction. The difference between the effective tax rate and the statutory rate is mainly derived from tax-exempt income in Israel. NOTE 7:- SIGNIFICANT CUSTOMERS Sales to major customers, representing more than 10% of total revenues, are as follows: SIX MONTHS ENDED JUNE 30, ------------------------------ 2003 2004 ------------- -------------- UNAUDITED ------------------------------ Customer A 20 6 Customer B -- 12 F-10 LIPMAN ELECTRONIC ENGINEERING LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- IN THOUSANDS (EXCEPT PER SHARE DATA) NOTE 8:- CONTINGENCIES The Company is involved in certain claims arising in the normal course of business. However, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position, results of operations or cash flows. NOTE 9:- SUBSEQUENT EVENTS In August 2004, the board of directors announced a dividend payment in the amount of approximately $ 5,100 or $ 0.196 per share. The dividend will be paid in September 2004. - - - - - - - - - - - - - - - - - - - - - - - F-11
- LPMA Dashboard
- Filings
-
6-K Filing
Lipman Electronic Engineering (LPMA) Inactive 6-KCurrent report (foreign)
Filed: 18 Aug 04, 12:00am