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 FOURTH QUARTER AND FULL YEAR 2005 FINANCIAL RESULTS Record Revenues of $235.4 Million for full year 2005; Full year Non-GAAP Net Income of $35.9 Million, or $1.31 Per Diluted Share; Fourth Quarter Non-GAAP Net Income of $11.5 Million, or $0.42 Per Diluted Share ROSH HAAYIN, ISRAEL, FEBRUARY 7, 2006 - Lipman Electronic Engineering Ltd. (Nasdaq, TASE: LPMA), a leading provider of electronic transaction systems and solutions, today announced financial results for the fourth quarter and full year ended December 31, 2005. For the fourth quarter of 2005, revenues were $68.8 million, an increase of 4.7% over revenues of $65.7 million for the fourth quarter of 2004, and an increase of 27.0% over revenues of $54.1 million for the third quarter 2005. Net loss for the quarter was $(360,000), or $(0.01) per diluted share, which includes a non-cash goodwill impairment charge of $10.5 million related to the Company's Dione subsidiary. Lipman determined the impairment charge in accordance with SFAS 142 based on current projections of future cash flows. Net income for the comparable period in 2004 was $9.7 million, or $0.35 per diluted share. Non-GAAP net income for the three months ended December 31, 2005, which excludes the non-cash impairment charge of $10.5 million and $1.4 million of non-cash stock-based compensation expenses, was $11.5 million, or 0.42 per diluted share, compared to $10.3 million, or 0.38 per diluted share, for the comparable period of 2004. Non-cash stock-based compensation expenses for the three months ended December 31, 2004 totaled $636,000. Gross profit for the quarter was $27.9 million, or 40.6% of revenues, compared to $26.6 million, or 40.6% of revenues, for the fourth quarter of 2004. Cash flow from operating activities for the three months ended December 31, 2005 was $9.4 million compared to $15.5 million for the comparable period in 2004. As of December 31, 2005, the Company had cash and cash equivalents of $124.4 million compared to $117.4 million as of December 31, 2004 and $118.1 million as of September 30, 2005. During the fourth quarter of 2005, the Company purchased its ordinary shares for an aggregate amount of $1.5 million in accordance with its previously announced share buyback program. For the twelve months ended December 31, 2005, revenues increased 30.4% to $235.4 million, from $180.6 million during 2004. Net income for the year was $20.0 million, or $0.73 per diluted share, compared to $30.7 million, or $1.15 per diluted share in 2004. Operating expenses for 2005 include the non cash impairment charge of $10.5 million, as well as non-cash stock-based compensation expenses totaling $5.3 million, compared to $4.8 million of non-cash stock-based compensation expenses in 2004. Excluding the effect of non-cash stock-based compensation and the non-cash impairment charge, non-GAAP net income for 2005 was $35.9 million, or $1.31 per diluted share, compared to $35.5 million, or $1.33 per diluted share, for 2004. Gross profit for the year was $100.5 million, or 42.7% of revenues, compared to $81.5 million, or 45.2% of revenues, for 2004. Key highlights for the quarter included: o Follow-on orders totaling $6 million from leading banks in India for the NURIT 8320 landline POS terminal. o Initial order valued at $2.2 million for Lipman's Dione Secura(TM) PIN Entry Device from one of Mexico's largest banks. o Initial order valued at $3 million for Lipman's Dione Secura PIN Pads and Xpress card readers from retailers in Germany. o Participation in the launch of the EMV initiative of ICBC, one of China's leading banks, and the subsequent $7 million contract with ICBC to supply our new WiFi-capable terminals for a large-scale POS deployment in petrol stations around China. o The launch of Lipman's NURIT 8210, our newest secure, multi-application integrated POS terminal, developed jointly with Yapi Kredi Bank in Turkey, which placed an order for 35,000 terminals. Commenting on the results, Isaac Angel, President and CEO of Lipman, said, "Our results for the fourth quarter and full-year reflect the positive momentum in our core business. We continued to execute well on our strategy to advance our leadership position in the point-of-sale market in 2005 and we are enthusiastic about new growth opportunities that we see in 2006." "During the year, we saw strength in a number of key regions, including the United States, China, India and South America. Our U.S. subsidiary showed a substantial increase in performance compared to 2004, underscoring the talent of our sales and management team, the value of our products and the overall strength of our business. In China, India and South America, our growth was driven by significant orders from leading organizations in each region. We view our growth and accomplishments in these markets as evidence of the continuing development of the infrastructure in emerging countries and the greater emphasis these nations are placing on card-based transactions." He continued, "During the quarter we continued to address the issues in our Dione subsidiary. We rationalized Dione's cost structure in order to bring it in line with Dione's goals for the coming year. We secured contracts for the sale of Dione products to customers in Mexico and Germany, countries in which Lipman did not have a presence." "We also realized a number of technological achievements in 2005. Throughout the year, our products received certifications from leading regional and international organizations. These certifications further broaden the reach of Lipman's products, enabling us to sell to new customers in new markets. In addition to enhancing our existing product family, we launched the NURIT 8210, our newest integrated terminal, at the CARTES 2005 Exhibition. This continued innovation underscores Lipman's commitment to providing its customers with the most advanced, most robust solutions available." Mr. Angel concluded, "As we have previously indicated, it is Lipman's plan to grow by expanding into new markets, enhancing our suite of offerings through the introduction of new products and accessing new vertical markets. Lipman has a solid groundwork from which to build continued success. We have forged strong customer relationships and further developed our technology, all of which we expect will positively impact our business as we continue to execute on our strategic growth plan. Lipman is on target to expand its position in the point-of-sale market and we remain excited about the Company's future." ABOUT LIPMAN Lipman is a leading worldwide provider of electronic transaction systems and solutions. 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, Brazil, Argentina, Mexico, Australia and India. 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 U.S. DOLLARS IN THOUSANDS DECEMBER 31, DECEMBER 31, 2004 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents 117,396 124,413 Trade receivables 42,349 46,921 Other receivables and prepaid expenses 9,011 13,667 Inventories 31,941 53,906 Total current assets 200,697 238,907 Property, plant and equipment, net 11,971 14,969 Severance pay fund 2,674 3,120 Other long-term assets 2,054 2,192 Intangible assets, net 30,646 26,247 Goodwill 56,081 39,607 TOTAL ASSETS 304,123 325,042 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables 20,028 20,864 Other payables and accrued expenses 25,435 28,221 Total current liabilities 45,463 49,085 Other long term liabilities 15,257 11,514 Accrued severance pay 3,810 4,394 Total shareholders' equity 239,593 260,049 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 304,123 325,042 LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED STATEMENT OF OPERATIONS U.S. DOLLARS IN THOUSANDS THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2005 2004 2005 2004 Revenues 68,753 65,668 235,400 180,553 Cost of revenues 40,820 39,030 134,929 99,012 ------------------------------------------------------------------- Gross profit 27,933 26,638 100,471 81,541 Operating expenses: Research and development 3,627 3,095 14,728 7,829 Selling and marketing 8,844 7,202 30,824 20,665 General and administrative 2,073 2,647 8,521 9,946 Special legal expenses - 510 899 610 Stock-based compensation 1,400 636 5,283 4,783 Impairment 10,493 - 10,493 - Amortization of intangible assets 752 804 3,208 959 ------------------------------------------------------------------- Total operating expenses 27,189 14,894 73,956 44,792 ------------------------------------------------------------------- Operating income 744 11,744 26,515 36,749 Financial Income, net 921 1,741 2,909 3,099 Other income (expenses), net 84 55 44 62 ------------------------------------------------------------------- Income before taxes on income 1,749 13,540 29,468 39,910 Taxes on income 2,109 3,831 9,384 9,167 ------------------------------------------------------------------- Net income (loss) (360) 9,709 20,084 30,743 =================================================================== Diluted earnings per share-US GAAP (0.01) 0.35 0.73 1.15 ------------------------------------------------------------------- Diluted earnings per share-NON GAAP 0.42 0.38 1.31 1.33 ------------------------------------------------------------------- Number of shares for diluted earnings per share 27,253 27,382 27,460 26,680 LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. DOLLARS IN THOUSANDS THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2005 2004 2005 2004 CASH FLOW FROM OPERATING ACTIVITIES : Net income for the period (360) 9,709 20,084 30,743 Adjustments require to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,722 1,271 15,729 2,376 Stock-based compensation related to options issued 3 to employees and others 1,400 636 5,283 4,78 Decrease (increase) in trade receivables and other receivables 2,864 (3,166) (11,613) (4,694) Increase in Inventory (3,964) 5,828 (21,489) 634 Increase (decrease) in trade payables and other liabilities 274 (2,006) 6,589 2,299 Deferred income (1,696) 2,859 (2,411) 2,859 Tax benefit related to exercise of options 10 1,587 1,752 1,865 Gain on available-for-sale marketable securities - - (522) - Deferred income taxes, net (1,020) (1,139) (1,856) (1,779) Other 134 (60) 178 199 ---------------------------------------------------------------------- Net cash provided by (used in) operating activities 9,364 15,519 11,724 39,285 ---------------------------------------------------------------------- CASH FLOW FROM INVESTING ACTIVITIES : Acquisition of Dione (64,896) - (64,896) Purchase of property, plant and equipment (1,569) (2,286) (5,222) (4,306) Proceed from sales of available-for-sale marketable securities - - 431 120 Other (290) 55 (396) - - - ---------------------------------------------------------------------- Net cash used in investing activities (1,859) (67,127) (5,187) (69,082) ---------------------------------------------------------------------- CASH FLOW FROM FINANCING ACTIVITIES : Exercise of options granted to employees 127 2,451 2,826 4,487 Issuance of shares, net - - - 91,347 Principal payments of long-term bank loans - - - (1,235) Loan received from minority shareholders in a subsidiary 28 - 222 - Dividend paid - - - (5,091) Buyback of shares (1,537) - (1,537) - Net cash Provided by (used in) financing activities (1,382) 2,451 1,511 89,508 ---------------------------------------------------------------------- Effect of exchange rate differences on cash and cash equivalents 188 - (1,031) 220 ---------------------------------------------------------------------- Increase in cash and cash equivalents 6,311 (49,157) 7,017 59,931 Cash and cash equivalents at the beginning of the period 118,102 166,553 117,396 57,465 ---------------------------------------------------------------------- Cash and cash equivalents at the end of the period 124,413 117,396 124,413 117,396 ======================================================================
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6-K Filing
Lipman Electronic Engineering (LPMA) Inactive 6-KLipman Electronic Engineering LTD.
Filed: 8 Feb 06, 12:00am