[TRANSACT COMPANY LOGO]
TRANSACT TECHNOLOGIES REPORTS
FOURTH QUARTER AND FULL YEAR 2005 RESULTS
- Sees Significant Revenue and EPS Improvement in 2006 -
Wallingford, CT, March 7, 2006 - TransAct Technologies Incorporated (Nasdaq:
TACT), a leading producer of transaction-based printers for customers worldwide,
today announced financial results for the fourth quarter and full year ended
December 31, 2005.
Revenues for the full year 2005 were $51.1 million, compared to $59.8 million in
2004. The Company achieved net income in accordance with generally accepted
accounting principles in the United States ("GAAP") for the full year 2005 of
$0.4 million, compared to GAAP net income of $5.5 million in 2004. Earnings per
share for the full year 2005 were $0.04 per diluted share compared to $0.51 per
diluted share in 2004.
Revenues for the fourth quarter of 2005 were $12.5 million, compared to $14.6
million in the same period a year ago. GAAP net loss for the fourth quarter of
2005 was $(0.7) million compared to GAAP net income of $1.0 million in the same
period of 2004. GAAP net loss per share for the fourth quarter of 2005 was
$(0.08) per diluted share compared to GAAP earnings per share of $0.10 per
diluted share in the same period a year ago. During the fourth quarter of 2005,
the Company incurred a charge of approximately $600,000 related primarily to the
write-down of inventory for its M850 thermal ticket casino printer, as its Epic
950(TM) thermal ticket casino printer, which was launched in late 2004, has
gained customer and market acceptance faster than expected. During the fourth
quarter 2005, the Company also incurred approximately $106,000 in severance
charges related to the implementation of its new business unit structure.
Excluding these charges, pro forma net loss for the fourth quarter of 2005 was
$(0.3) million or $(0.03) per diluted share.
Bart C. Shuldman, Chairman, President and Chief Executive Officer of TransAct
Technologies, said "2005 was a difficult year for TransAct, especially in our
gaming and lottery business. However, by staying focused on our strategic growth
initiatives, we believe that we have put TransAct on track for a return to
improved growth and profitability in 2006. In addition to launching seven
promising new products, most of which target new market opportunities for the
Company, we also established three Strategic Business Units (SBU), doubled the
size of our sales force, drove growth internationally across all of our business
units, opened our Las Vegas sales and service facility, and finalized a
comprehensive sales alliance agreement with JCM American Corporation, giving
TransAct a sizeable sales and marketing position in the casino market."
Mr. Shuldman continued, "TransAct ended 2005 with $4.6 million in cash and cash
equivalents and no debt, while continuing with our stock repurchase program
during the fourth quarter. To date, under the Company's stock repurchase program
authorized by our Board of Directors in March 2005, the Company has repurchased
505,000 shares for a total purchase price of $3.9 million, including an
additional 96,100 shares purchased in the fourth quarter for $0.7 million at an
average price of $7.62."
5
LOOKING FORWARD
Mr. Shuldman concluded, "The investments we made in the business last year are
already paying off in the first quarter of 2006. Based on current forecasts, we
believe this business momentum will continue throughout 2006, resulting in
revenue growth. Importantly, we expect even stronger net income growth as we
benefit from the operating leverage we created in the business. We do not expect
significant increases to operating expenses in 2006 and expect our gross margins
to improve.
We are projecting double-digit revenue growth in each SBU in 2006, helped by the
increase in sales people we added last year and our new relationship with JCM
American in the casino market. We also expect that the new products we
introduced in 2005 will give us an advantage in the marketplace and present new
opportunities for growth starting this year. These include our Epic 430 and Epic
630 for the new off-premise global gaming market. We have already secured our
first opportunity and have received positive feedback from other potential
customers. And we are also excited about our Ithaca(R) 8000 high-speed thermal
printer for linerless label printing and our new line of Ithaca(R) branded POS
printers sold exclusively to our POS distribution partners around the world."
FORWARD GUIDANCE
Based on its current outlook, the Company expects revenues for the full year
2006 will be in the range of $63 million to $65 million, with net income in the
range of $0.38 to $0.40 per share. The Company expects revenues for the first
quarter ending March 31, 2006 will be approximately $15 million with net income
of approximately $0.07 per diluted share.
INVESTOR CONFERENCE CALL / WEBCAST DETAILS
TransAct will review detailed full year and fourth quarter 2005 results and
forward looking guidance during a conference call today at 5:00PM EDT. The
conference call-in number is 201-689-8471. A replay of the call will be
available from 8:00PM ET on Tuesday, March 7 through midnight ET on Tuesday,
March 14 by telephone at 201-612-7415. The account number to access the replay
is 3055 and the password is 189388. Investors can also access the conference
call via a live webcast on the Company's website at www.transact-tech.com. A
replay of the call will be archived on that website for one week.
ABOUT TRANSACT TECHNOLOGIES INCORPORATED
TransAct Technologies (Nasdaq: TACT) designs, develops, assembles, markets and
services world-class transaction printers under the Epic and Ithaca(R) brand
names. Known and respected worldwide for innovative designs and real-world
service reliability, TransAct's impact, thermal and inkjet printers generate
top-quality receipts, tickets, coupons, register journals and other documents.
The company focuses on two core markets: point-of-sale (POS) and banking, and
gaming and lottery.
TransAct sells its products to original equipment manufacturers, value-added
resellers and selected distributors, as well as directly to end-users. The
Company's product distribution spans across the Americas, Europe, the Middle
East, Africa, the Caribbean Islands and the South Pacific. In addition, TransAct
has a strong focus on the after-market side of the business, with a growing
commitment to printer service, supplies and spare parts. For further
information, visit TransAct's web site located at www.transact-tech.com.
CONTACTS:
Steven DeMartino, Chief Financial Officer, 203-269-1198 Ext. 6059 or David
Pasquale, 646-536-7006, or Denise Roche, 646-536-7008, both with The Ruth Group
# # #
6
FORWARD-LOOKING STATEMENTS:
Certain statements in this press release include forward-looking statements.
Forward-looking statements generally can be identified by the use of
forward-looking terminology, such as "may", "will", "expect", "intend",
"estimate", "anticipate", "believe", "project" or "continue" or the negative
thereof or other similar words. All forward-looking statements involve risks and
uncertainties, including, but are not limited to, customer acceptance and market
share gains, both domestically and internationally, in the face of substantial
competition from competitors that have broader lines of products and greater
financial resources; introduction of new products into the marketplace by
competitors; successful product development; dependence on significant
customers; dependence on significant vendors; the ability to recruit and retain
quality employees as the Company grows; dependence on third parties for sales
outside the United States, including Australia, New Zealand, Europe and Latin
America; economic and political conditions in the United States, Australia, New
Zealand, Europe and Latin America; marketplace acceptance of new products; risks
associated with foreign operations; availability of third-party components at
reasonable prices; price wars or other significant pricing pressures affecting
the Company's products in the United States or abroad; and the outcome of
lawsuits between TransAct and FutureLogic, Inc. Actual results may differ
materially from those discussed in, or implied by, the forward-looking
statements. The forward-looking statements speak only as of the date of this
release and the Company assumes no duty to update them to reflect new, changing
or unanticipated events or circumstances.
7
TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended Three months ended
(In thousands, except per share amounts) December 31, December 31,
2005 2004
--------------------------------------- ---------------------------------------
GAAP Adjust- Pro Forma GAAP Adjust- Pro Forma
Basis Ments Basis Basis ments Basis
---------- --------- ---------- ---------- --------- ----------
Net sales $ 12,499 $ - $ 12,499 $ 14,596 $ - $ 14,596
Cost of sales 9,416 (600)a 8,786 9,486 - 9,486
(30)b
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 3,083 630 3,713 5,110 - 5,110
---------- ---------- ---------- ---------- ---------- ----------
Operating expenses:
Engineering, design and product
development costs 619 619 910 (350)c 560
Selling and marketing expenses 1,796 (68)b 1,728 1,277 (70)d 1,207
General and administrative expenses 1,743 (8)b 1,735 1,567 - 1,567
Business consolidation and
restructuring expenses - - (225) 225e -
---------- ---------- ---------- ---------- ---------- ----------
4,158 (76) 4,082 3,529 (195) 3,334
---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss) (1,075) 706 (369) 1,581 195 1,776
---------- ---------- ---------- ---------- ---------- ----------
Other income (expense):
Interest, net 14 - 14 12 - 12
Other, net 10 - 10 (21) - (21)
---------- ---------- ---------- ---------- ---------- ----------
24 - 24 (9) - (9)
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes (1,051) 706 (345) 1,572 195 1,767
Income tax provision (benefit) (324) 251f (73) 546 69f 615
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) $ (727) $ 455 $ (272) $ 1,026 $ 126 $ 1,152
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) available to common
shareholders $ (727) $ (272) $ 1,026 $ 1,152
Net income (loss) per share:
Basic $ (0.08) $ (0.03) $ 0.10 $ 0.12
Diluted $ (0.08) $ (0.03) $ 0.10 $ 0.11
Shares used in per share calculation:
Basic 9,603 9,603 9,921 9,921
Diluted 9,603 9,603 10,486 10,486
a Charge related primarily to the write-down of excess inventory and
purchase order cancellation charges for TransAct's M850 casino printer.
b Severance charges related to employee terminations during the fourth
quarter of 2005.
c Engineering costs associated with the integration of TransAct's Epic
950(TM) casino printer by IGT.
d. Charge related to the move of the Company's marketing and services
departments.
e Decrease in restructuring accrual due to a revised estimate of the
remaining lease costs for the Company's Wallingford, CT facility.
f The tax effect on the adjustments was calculated using a tax rate of 35.5%
for the 2005 and 2004 periods presented.
8
TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Year ended Year ended
(In thousands, except per share amounts) December 31, December 31,
2005 2004
---------------------------------------- -----------------------------------------
GAAP Adjust- Pro Forma GAAP Adjust- Pro Forma
Basis Ments Basis Basis ments Basis
---------- --------- ---------- ---------- ----------- ----------
Net sales $ 51,091 $ - $ 51,091 $ 59,847 $ - $ 59,847
Cost of sales 35,501 (600)a 34,871 37,805 - 37,805
(30)b
------------ ------------ ---------- ---------- ----------- ----------
Gross profit 15,590 630 16,220 22,042 - 22,042
------------ ------------ ---------- ---------- ----------- ----------
Operating expenses:
Engineering, design and product
development 2,726 2,726 2,715 (350)c 2,365
Selling and marketing 6,319 (68)b 6,251 5,111 (70)d 5,041
General and administrative 6,321 (8)b 6,313 5,990 - 5,990
Business consolidation and
restructuring - - - (225) 225e -
------------ ------------ ---------- ---------- ----------- ----------
15,366 (76) 15,290 13,591 (195) 13,396
------------ ------------ ---------- ---------- ----------- ----------
Operating income 224 706 930 8,451 195 8,646
------------ ------------ ---------- ---------- ----------- ----------
Other income (expense):
Interest, net 73 - 73 4 - 4
Other, net 32 - 32 (18) - (18)
------------ ------------ ---------- ---------- ----------- ----------
105 - 105 (14) - (14)
------------ ------------ ---------- ---------- ----------- ----------
Income before income taxes 329 706 1,035 8,437 195 8,632
Income tax provision (benefit) (48) 251f 203 2,979 69f 3,048
------------ ------------ ---------- ---------- ----------- ----------
Net income $ 377 $ 455 $ 832 $ 5,458 $ 126 $ 5,584
============ ============ ========== ========== ========== ==========
Net income available to common
shareholders $ 377 $ 832 $ 5,236 $ 5,360
Net income per share:
Basic $ 0.04 $ 0.08 $ 0.55 $ 0.56
Diluted $ 0.04 $ 0.08 $ 0.51 $ 0.52
Shares used in per share calculation:
Basic 9,849 9,849 9,593 9,593
Diluted 10,163 10,163 10,231 10,231
See footnote explanations on the previous page.
SUPPLEMENTAL INFORMATION - SALES BY BUSINESS UNIT:
Three months ended Year ended
December 31, December 31,
------------------ -------------------
2005 2004 2005 2004
------- ------- ------- -------
Point of sale and banking $ 3,757 $ 4,062 $16,410 $17,659
Gaming and lottery 6,303 7,831 23,634 31,937
TransAct Services Group 2,439 2,703 11,047 10,251
------- ------- ------- -------
Total net sales $12,499 $14,596 $51,091 $59,847
======= ======= ======= =======
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TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
DECEMBER 31, December 31,
(In thousands) 2005 2004
-------- --------
ASSETS:
Current assets:
Cash and cash equivalents $ 4,579 $ 8,628
Receivables, net 8,359 8,910
Inventories 6,036 8,074
Refundable income taxes 295 510
Deferred tax assets 2,735 2,370
Other current assets 258 586
-------- --------
Total current assets 22,262 29,078
-------- --------
Fixed assets, net 4,510 3,177
Goodwill, net 1,469 1,469
Deferred tax assets 557 274
Other assets 534 101
-------- --------
7,070 5,021
-------- --------
Total assets $ 29,332 $ 34,099
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable 2,859 3,804
Accrued liabilities 3,162 3,209
Accrued restructuring expenses 420 420
Accrued patent license fees 36 417
Deferred revenue, current portion 410 717
-------- --------
Total current liabilities 6,887 8,567
-------- --------
Long-term portion of accrued restructuring 587 1,034
Accrued product warranty 145 153
Deferred revenue 270 444
Other liabilities 186 186
-------- --------
1,188 1,817
-------- --------
Total liabilities 8,075 10,384
-------- --------
Commitments and contingencies
Shareholders' equity:
Common stock 102 100
Additional paid-in capital 19,334 17,401
Retained earnings 7,489 7,112
Unamortized restricted stock compensation (1,837) (1,067)
Treasury stock, at cost (3,867) --
Accumulated other comprehensive income 36 169
-------- --------
Total shareholders' equity 21,257 23,715
-------- --------
Total liabilities and shareholders' equity $ 29,332 $ 34,099
======== ========