Exhibit 1 [LIPMAN TRANSACTION SOLUTIONS LOGO OMITTED] 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 SECOND QUARTER 2005 RESULTS Revenues of $58.3 Million; Net Income of $7.4 Million, or $0.27 Per Diluted Share; Excluding Stock-Based Compensation, Non-GAAP Net Income of $8.7 Million, or $0.31 Per Diluted Share; ROSH HAAYIN, ISRAEL, JULY 26, 2005 - Lipman Electronic Engineering Ltd. (Nasdaq, TASE: LPMA), a leading provider of electronic payment systems, today announced financial results for the second quarter ended June 30, 2005. For the second quarter of 2005, revenues were $58.3 million, an increase of 52.2% over revenues of $38.3 million for the second quarter of 2004. Revenues increased due to the consolidation of Dione's results of operations, as well as increased sales in the United States and Latin America. Net income for the quarter was $7.4 million, or $0.27 per diluted share, compared to $6.6 million, or $0.25 per diluted share, for the comparable period in 2004. There were 27,536,901 diluted shares outstanding in the second quarter of 2005 compared to 26,991,269 diluted shares outstanding in the second 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 $25.2 million, or 43.3% of revenues, compared to $18.0 million, or 47.1% of revenues, for the second 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 is lower than the Company's gross margin prior to Dione's acquisition. During the second quarter of 2005, the Company had amortization of intangible assets expenses of $746,000, compared to $52,000 of such expenses in the second quarter of 2004. In addition, operating expenses for the second quarter of 2005 included $478,000 (equal to approximately $.02 per share) in special legal expenses in connection with patent infringement claims brought against the company, and most of the other major POS terminal 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. The ITC Administrative Law Judge has terminated the ITC investigation ending the case against the Company. Financial income for the second quarter of 2005 was $787,000, compared to $415,000 for the second quarter of 2004. Financial income in the second quarter of 2005 included $522,000, or approximately $0.02 per share related to a one-time gain from the sale of the Company's shares in Wizcom Technologies Ltd. Operating expenses for the three months ended June 30, 2005 also included $1.3 million of non-cash stock-based compensation expenses compared to $1.2 million of similar expenses in the comparable period in 2004. Excluding the effect of stock-based compensation, non-GAAP net income for the quarter was $8.7 million, or $0.31 per diluted share, compared to non-GAAP net income of $7.8 million, or $0.29 per diluted share, for the same period last year. As of June 30, 2005, the Company had cash and cash equivalents of $121.5 million compared to $117.4 million as of December 31, 2004. For the six months ended June 30, 2005, revenues increased 59.8% to $112.5 million, from $70.4 million in the same period last year. Revenues increased due to the consolidation of Dione's results of operations, as well as increased sales in the United States, Latin America and Turkey. Net income for the six months was $12.6 million, or $0.46 per diluted share, compared to $11.5 million, or $0.44 per diluted share, in the same period in 2004. There were 27,498,156 diluted shares outstanding in the six months ended June 30, 2005 compared to 26,148,486 diluted shares outstanding in the first six months of 2004. For the six months ended June 30, 2005, gross profit was $48.1 million, or 42.8% of revenues, compared to $33.8 million, or 48.0% of revenues, for the same period in 2004. The lower gross margin is due mainly to the consolidation of Dione's results as the gross margin on products sold by Dione is lower then the Company's gross margin prior to Dione's acquisition. During the first half of 2005, the Company had amortization of intangible assets expenses of $1.6 million, compared to $103,000 of such expenses in the comparable period in 2004 and incurred $899,000 in special legal expenses related to the patent infringement claims by Verve. Operating expenses for the six months ended June 30, 2005 included $2.6 million of non-cash stock-based compensation expenses, compared to $3.0 million of non-cash stock-based compensation expenses in the six-month period in 2004. Excluding the effect of stock-based compensation, non-GAAP net income for the period was $15.3 million, or $0.55 per diluted share, compared to non-GAAP net income of $14.5 million, or $0.56 per diluted share, for the six months ended June 30, 2004. Cash flow from operating activities for the six months ended June 30, 2005 was $5.2 million. In May, 2005, a public offering of 2,269,000 Lipman ordinary shares was completed by certain shareholders. Proceeds from the offering went to the selling shareholders. Lipman did receive approximately $1.2 million upon the exercise of options for shares sold in the offering by two of the selling shareholders. Commenting on the results, Isaac Angel, President and CEO of Lipman said, "Our revenues for the second quarter were driven in part by strength in our international markets, notably Turkey, Spain and Latin America where our performance remained strong as we received major orders from a number of key customers. We believe our success in these markets is indicative of the strong relationships that we have been able to develop, and of the appreciation institutions have for the technological benefits of our solutions. We are also encouraged by the momentum and solid performance Lipman achieved in the United States, which we attribute to the success of our new U.S. management team and the receipt of key certifications in 2004." "During the quarter, we achieved Sistema 4B certification in Spain. This certification positions Lipman to take better advantage of this market as it allows us to begin selling our NURIT 8010 wireless terminals to all banks that process payment transactions through Sistema 4B, one of the leading network authorization centers for electronic payments in Spain. This certification should help Lipman to effectively implement its growth strategy just as the Company has done in other regions around the world." Mr. Angel concluded, "We will continue to build on Lipman's strong performance, and we remain focused on driving growth through innovation and the successful execution of our long-term business strategy. We remain positive about the trends in our business, and we believe the combination of our solid financial position, strong customer relationships, and our commitment to leadership and quality, will enable us to continue expanding our business in the point of sale market for the rest of the year and beyond." 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 SHEET <TABLE> U.S. DOLLARS IN THOUSANDS JUNE 30 DECEMBER 31 2005 2004 ASSETS (Unaudited) (Audited) CURRENT ASSETS: Cash and cash equivalents 121,490 117,396 Marketable securities - 1,176 Trade receivables, net 44,639 42,349 Other receivables and prepaid expenses 9,869 7,835 Inventories 32,591 31,941 ------ ------ Total current assets 208,589 200,697 Property, plant and equipment, net 13,502 11,971 Severance pay fund 2,801 2,674 Other long-term assets 2,810 2,054 Intangible assets, net 29,285 30,646 Goodwill 52,065 56,081 TOTAL ASSETS 309,052 304,123 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables 17,282 20,028 Other payables and accrued expenses 20,031 25,435 ------ ------ Total current liabilities 37,313 45,463 Other long-term liabilities 14,027 15,257 Accrued severance pay 3,950 3,810 Total shareholders' equity 253,762 239,593 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 309,052 304,123 </TABLE> LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA) <TABLE> THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues 58,295 38,283 112,503 70,386 Cost of revenues 33,053 20,247 64,365 36,612 ------ ------ ------ ------ Gross profit 25,242 18,036 48,138 33,774 Operating expenses: Research and development 4,122 1,606 7,547 3,094 Selling and marketing 7,376 4,288 14,644 8,412 General and administrative 2,110 2,850 4,375 5,365 Special legal expenses 478 - 899 - Stock-based compensation 1,281 1,205 2,618 3,045 Amortization of intangible assets 746 52 1,619 103 --- -- ----- --- Total operating expenses 16,113 10,001 31,702 20,019 Operating income 9,129 8,035 16,436 13,755 Financial income, net 787 415 1,037 681 Other expenses, net -18 - -49 - --- - --- - Income before taxes on income 9,898 8,450 17,424 14,436 Taxes on income 2,529 1,807 4,781 2,953 ----- ----- ----- ----- Net income 7,369 6,643 12,643 11,483 ----- ----- ------ ------ Diluted earnings per share(*) 0.27 0.25 0.46 0.44 Number of shares for diluted earnings per share(*) 27,536,901 26,991,269 27,498,156 26,148,486 </TABLE> (*) 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 <TABLE> THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2005 2004 2005 2004 (Unaudited) (Unaudited) (Unaudited) (Unaudited) CASH FLOW FROM OPERATING ACTIVITIES: 7,369 6,643 12,643 11,483 Net income for the period Adjustments require to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,294 391 2,637 710 Stock-based compensation related to options issued to 1,281 1,205 2,618 3,045 employees and others Decrease (increase) in trade receivables and other (1,667) 2,487 (6,797) 3,427 receivables Decrease (increase) in inventories (1,359) 729 (1,604) (1,656) Increase (decrease) in trade payables & (3,908) 1,867 (5,102) (1,655) other liabilities Tax benefit related to exercise of options 1,119 42 1,415 258 Gain on available-for-sale marketable securities (522) - (522) - Deferred income taxes, net (474) (232) (130) (815) Other 73 (7) (1) 154 --- --- --- --- Net cash provided by operating activities 3,206 13,125 5,157 14,951 CASH FLOW FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (1,379) (779) (2,507) (1,342) Proceed from sales of available-for-sale marketable 431 - 431 - securities Other (28) 42 6 65 ---- --- --- --- Net cash used in investing activities (976) (737) (2,070) (1,277) CASH FLOW FROM FINANCING ACTIVITIES: Exercise of options granted to employees and other 1,539 280 1,749 1,201 Issuance of shares, net - (80) - 91,347 Principal payments of long-term bank loans - (886) - (921) Loan received from minority shareholders in a subsidiary - - 150 - --- --- --- Net cash provided by (used in) financing activities 1,539 (686) 1,899 91,627 Effect of exchange rate differences on cash and cash (566) - (892) - equivalents INCREASE IN CASH AND CASH EQUIVALENTS 3,203 11,702 4,094 105,301 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 118,287 151,064 117,396 57,465 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 121,490 162,766 121,490 162,766 ------- ------- ------- ------- </TABLE>
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6-K Filing
Lipman Electronic Engineering (LPMA) Inactive 6-KCurrent report (foreign)
Filed: 27 Jul 05, 12:00am