Exhibit 1 FOR FURTHER INFORMATION CONTACT ISRAEL: UNITED STATES: Maya Lustig Jeff Corbin/Lee Roth Investor Relations & Public Relations Manager KCSA Worldwide Lipman Electronic Engineering Ltd. 800 Second Ave. 11 Haamal Street, Park Afek New York, NY 10017 Rosh Haayin 48092, Israel (212) 896-1214/(212) 896-1209 972-3-902-8603 jcorbin@kcsa.com/lroth@kcsa.com maya_l@lipman.co.il LIPMAN ELECTRONIC ENGINEERING LTD. REPORTS FIRST QUARTER 2005 RESULTS Revenues of $54.2 Million; Net Income of $5.3 Million, or $0.19 Per Diluted Share; Excluding Stock-Based Compensation, Pro Forma Net Income of $6.6 Million, or $0.24 Per Diluted Share; ROSH HAAYIN, ISRAEL, APRIL 20, 2005 - Lipman Electronic Engineering Ltd. (Nasdaq, TASE: LPMA), a leading provider of electronic payment systems, today announced financial results for the first quarter ended March 31, 2005. For the first quarter of 2005, revenues were $54.2 million, an increase of 69% over revenues of $32.1 million for the first quarter of 2004. Our revenues increased due to the consolidation of Dione's operations, which were acquired in October 2004, as well as increased sales in Turkey, India, Latin America and the United States. Net income for the quarter was $5.3 million, or $0.19 per diluted share, compared to $4.8 million, or $0.19 per diluted share, for the comparable period in 2004. There were 27,459,411 diluted shares outstanding in the first quarter of 2005 compared to 25,305,702 diluted shares outstanding in the first quarter of 2004. All share and per share data have been adjusted to reflect a two-for-one stock split effected on June 22, 2004. Gross profit for the quarter was $22.9 million, or 42.2% of revenues, compared to $15.7 million, or 49.0% of revenues, for the first quarter of 2004. The lower gross margin is due mainly to the consolidation of Dione's results as the gross margin on products sold by Dione are lower then the Company's gross margin prior to the acquisition. During the first quarter of 2005, the Company had amortization of intangible assets expenses of $873,000, compared to $52,000 of such expenses in the first quarter of 2004. In addition, operating expenses for the first quarter included $421,000 (equal to approximately $.02 per share) in legal expenses in connection with patent infringement claims brought against the company, and most of the other major point of sale vendors serving the US market, by Verve, LLC and filed with the US International Trade Commission. In February 2005, Verve filed a motion to withdraw the complaint and terminate the ITC action without prejudice. Operating expenses for the three months ended March 31, 2005 also included $1.3 million of non-cash stock-based compensation expenses compared to $1.8 million of similar expenses in the comparable period in 2004. Excluding the effect of stock-based compensation, pro forma net income for the quarter was $6.6 million, or $0.24 per diluted share, compared to pro forma net income of $6.7 million, or $0.26 per diluted share, for the same period last year. As of March 31, 2005, the Company had cash and cash equivalents of $118.3 million compared to $117.4 million as of December 31, 2004. Commenting on the results, Isaac Angel, President and CEO of Lipman said, "During the quarter we exhibited strength across a number of our primary markets - -- especially in India and Turkey, where we exceeded our expectations. Countries in Asia Pacific, particularly China and India, represent significant growth opportunities for Lipman in terms of population density and because they are in the early stages of credit and debit card use and penetration. As part of our plan to further establish our Asia Pacific presence, during the second quarter of 2005 we intend to open our new subsidiary, Lipman India, to service and support our customers in this important region." "Additionally, our performance in the United States showed an improvement, as changes implemented by the new Lipman USA management team began to take hold. We started to realize the benefit of certain certifications we received in 2004, resulting in increased sales. We expect to see continued growth in the U.S. throughout 2005 as the expanded focus and new initiatives of Lipman USA continue to gain traction." Mr. Angel continued, "In Europe, the quarter was highlighted by initial orders from customers in the Italian market and continued progress toward the integration of Dione. In Italy, we began shipping our NURIT 8320 terminals to EasyNolo, a member of Gruppo Banca Sella. We expect to see continued growth from the Italian market going forward, as we work to sign new customers and increase penetration of our existing customer base. Our business in the U.K. remained strong, driven by the continued success of the Dione products. During the first quarter, we began a pilot program to manufacture Dione's products at our facilities in Israel and our sales team received training, enabling them to sell Dione products through the Lipman channels. We believe these steps will further strengthen our position in the point-of-sale market by leveraging both Lipman's and Dione's products and sales capabilities over an expanded customer base, while taking advantage of our manufacturing expertise to produce products more efficiently." Mr. Angel concluded, "We continue working to position Lipman for long-term growth and to further establish the Company as a leader in the point-of-sale market. We believe we are well prepared to expand within the markets we currently serve and to seek strategic acquisition opportunities that will not only enhance Lipman's overall position in our existing markets, but will also provide the Company with a means to enhance our recurring revenue opportunities." ABOUT LIPMAN Lipman is a leading worldwide provider of electronic payment systems. Lipman develops, manufactures and markets a variety of handheld, wireless and landline POS terminals, electronic cash registers, retail ATM units, PIN pads and smart card readers, as well as integrated PIN and smart card ("Chip & PIN") solutions. In addition, Lipman develops technologically advanced software platforms that offer comprehensive and customized transaction processing solutions for its customers, as well as managed professional services such as on-site and call-center support with remote terminal management. Lipman's corporate headquarters and R&D facilities are located in Israel. Lipman also maintains offices in the US, United Kingdom, Turkey, China, Spain, Finland, Russia, Italy, Canada and Latin America. For more information visit www.lipman.biz Statements concerning Lipman's business outlook or future economic performance; product introductions and plans and objectives related thereto; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are "forward-looking statements" as that term is defined under U.S. Federal securities laws. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks, uncertainties and factors include, but are not limited to: our dependence on distributors and customers; the competitive market for our products; market acceptance of new products and continuing products; timely product and technology development/upgrades and the ability to manage changing market conditions; manufacturing in Israel; compliance with industry and government standards and regulations; dependence on key personnel; possible business disruption from acquisitions; and other factors detailed in Lipman's filings with the U.S. Securities and Exchange Commission. Lipman assumes no obligation to update the information in this release. (Tables to follow) LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED BALANCE SHEETS U.S. DOLLARS IN THOUSANDS MARCH 31, DECEMBER 31, 2005 2004 ASSETS (Unaudited) (Unaudited) CURRENT ASSETS: Cash and cash equivalents 118,287 117,396 Marketable securities 1,400 1,176 Trade receivables, net 45,330 42,349 Other receivables and prepaid expenses 9,056 7,835 Inventories 31,962 31,941 ------ ------ Total current assets 206,035 200,697 Property, plant and equipment, net 12,534 11,971 Severance pay fund 2,820 2,674 Long term receivable and other 2,081 2,054 Intangible assets, net 29,227 30,646 Goodwill 54,156 56,081 TOTAL ASSETS 306,853 304,123 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables 22,418 20,028 Other payables and accrued expenses 20,089 25,435 ------ ------ Total current liabilities 42,507 45,463 Other long term liabilities 15,150 15,257 Accrued severance pay 3,893 3,810 Total shareholders' equity 245,303 239,593 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 306,853 304,123 LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA) THREE MONTHS ENDED MARCH 31, 2005 2004 (Unaudited) (Unaudited) Revenues 54,208 32,103 Cost of revenues 31,312 16,365 ------ ------ Gross profit 22,896 15,738 Operating expenses: Research and development 3,425 1,488 Selling and marketing 7,268 4,124 General and administrative 2,265 2,514 Special legal expenses 421 - Stock-based compensation 1,337 1,840 Amortization of intangible assets 873 52 --- -- Total operating expenses 15,589 10,018 Operating income 7,307 5,720 Financial income, net 250 266 Other expenses, net (31) - ---- - Income before taxes on income 7,526 5,986 Taxes on income 2,252 1,146 ----- ----- Net income 5,274 4,840 ===== ----- Diluted earnings per share(*) 0.19 0.19 Number of shares for diluted earnings per share(*) 27,459,411 25,305,702 (*) All share and per share data have been retroactively adjusted for a two-for-one stock split effected on June 22, 2004. LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. DOLLARS IN THOUSANDS THREE MONTHS ENDED MARCH 31, 2005 2004 (Unaudited) (Unaudited) CASH FLOW FROM OPERATING ACTIVITIES: Net income for the period 5,274 4,840 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,343 319 Stock-based compensation related to options issued to 1,337 1,840 employees and others Decrease (increase) in trade receivables and other (5,130) 940 receivables Increase in inventories (245) (2,385) Decrease in trade payables & other liabilities (1,260) (3,522) Increase in deferred Income 66 - Tax benefit related to exercise of options 296 216 Deferred income taxes, net 344 (583) Other (80) 161 ---- --- Net cash provided by operating activities 1,945 1,826 CASH FLOW FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (1,128) (563) Other 34 23 -- -- Net cash used in investing activities (1,094) (540) CASH FLOW FROM FINANCING ACTIVITIES: Exercise of options granted to employees 210 921 Issuance of shares, net - 91,427 Principal payments of long-term bank - (35) Loan received from minority shareholders in a subsidiary 156 - --- - Net cash provided financing activities 366 92,313 Effect of exchange rate differences on cash and cash equivalents (326) - ---- - INCREASE IN CASH AND CASH EQUIVALENTS 891 93,599 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 117,396 57,465 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 118,287 151,064 ------- -------
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6-K Filing
Lipman Electronic Engineering (LPMA) Inactive 6-KCurrent report (foreign)
Filed: 21 Apr 05, 12:00am