[Lipman TransAction Solutions(TM) LOGO] Exhibit 1 FOR FURTHER INFORMATION CONTACT ISRAEL: UNITED STATES: Liat Angel Jeff Corbin/Lee Roth Investor Relations & Public Relations KCSA Worldwide coordinator 800 Second Ave. Lipman Electronic Engineering Ltd. New York, NY 10017 11 Haamal Street, Park Afek (212) 896-1214/(212) 896-1209 Rosh Haayin 48092, Israel jcorbin@kcsa.com/lroth@kcsa.com 972-3-902-9730 972-3-902-9731 liata@lipman.co.il LIPMAN ELECTRONIC ENGINEERING LTD. REPORTS SECOND QUARTER 2006 FINANCIAL RESULTS ROSH HAAYIN, ISRAEL, AUGUST 8, 2006 - Lipman Electronic Engineering Ltd. (Nasdaq, TASE: LPMA), a leading provider of electronic transaction systems and solutions, today announced financial results for the second quarter ended June 30, 2006. For the second quarter of 2006, revenues were $62.8 million, an increase of 7.7% over revenues of $58.3 million for the second quarter of 2005. Net income for the quarter was $7.5 million, or $0.28 per diluted share, compared to net income of $7.4 million, or $0.27 per diluted share, in the second quarter of 2005. Non-GAAP net income for the three months ended June 30, 2006, which excludes $1,771,000 of non-cash stock-based compensation expenses, was $9.2 million, or $0.34 per diluted share, compared to $8.7 million, or $0.31 per diluted share, for the comparable period of 2005. Non-cash stock-based compensation expenses for the three months ended June 30, 2005 totaled $1.2 million. Gross profit for the quarter was $27.0 million, or 43.0% of revenues, compared to $25.2 million, or 43.3% of revenues, for the second quarter of 2005. During the second quarter of 2006, the Company incurred $195,000 of other expenses (equal to approximately $0.01 per share) related to integration and planning costs in connection with the proposed acquisition of the Company by Verifone, As of June 30, 2006, the Company had cash and cash equivalents of $115.5 million compared to $124.4 million as of December 31, 2005. For the six months ended June 30, 2006, revenues increased 7.0% to $120.4 million, from $112.5 million in the same period last year. Effective January 1, 2006, the Company was required to take into account an estimate of outstanding options that would be forfeited prior to vesting in determining the amount of stock-based compensation. Accounting rules required the Company to recognize the cumulative effect of the change in these accounting principles to reverse LIPMAN ELECTRONIC ENGINEERING LTD. - -------------------------------------------------------------------------------- 11 Haamal Street, Park Afek, Rosh Haayin 48092, Israel Tel: +972-3-9029730 Fax: +972-3-9029731 e-mail :mail@lipman.co.il www.lipman.biz [Lipman TransAction Solutions(TM) LOGO] compensation cost recognized in the financial statements in periods prior to January 1, 2006 for those options that were not expected to vest. As a result, $1.3 million was added to net income in the first quarter of 2006 to reflect the cumulative effect of this accounting change, net of taxes. Net income for the first six months of 2006 before cumulative effect of an accounting change was $14.1 million, or $0.52 per diluted share, compared to net income of $12.6 million, or $0.46 per diluted share, in the same period in 2005. Net income for the first six months of 2006 after cumulative effect of an accounting change was $15.5 million, or $0.57 per diluted share. There were 27,286,973 diluted shares outstanding in the six months ended June 30, 2006 compared to 27,498,156 diluted shares outstanding in the first six months of 2005. For the six months ended June 30, 2006, gross profit was $51.5 million, or 42.8% of revenues, compared to $48.1 million, or 42.8% of revenues, for the same period in 2005. Commenting on the results, Isaac Angel, President and CEO of Lipman, said, "Our results for the second quarter were in line with our expectations, driven primarily by growth in markets such as Spain and China. Strategically, the proposed acquisition of Lipman by Verifone is proceeding according to plan and we remain on track toward the estimated closing during Verifone's fiscal fourth quarter, which ends on October 31st." 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, Germany, 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. LIPMAN ELECTRONIC ENGINEERING LTD. - -------------------------------------------------------------------------------- 11 Haamal Street, Park Afek, Rosh Haayin 48092, Israel Tel: +972-3-9029730 Fax: +972-3-9029731 e-mail :mail@lipman.co.il www.lipman.biz [Lipman TransAction Solutions(TM) LOGO] LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED BALANCE SHEETS U.S. DOLLARS IN THOUSANDS DECEMBER 31, JUNE 30, 2005 2006 ------------ ----------- (Audited) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents 124,413 115,520 Trade receivables, net 46,921 49,325 Other receivables and prepaid expenses 13,667 17,704 Inventories 53,906 63,831 ------- ------- Total current assets 238,907 246,380 Property, plant and equipment, net 14,969 17,379 Severance pay fund 3,120 3,630 Long term recievable and other 2,192 1,634 Intangible assets, net 26,247 25,534 Goodwill 39,607 42,275 TOTAL ASSETS 325,042 336,832 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables 20,864 19,783 Other payables and accrued expenses 28,221 27,399 ------- ------- Total current liabilities 49,085 47,182 Other long term liabilities 11,514 10,582 Accrued severance pay 4,394 4,961 Total shareholders' equity 260,049 274,107 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 325,042 336,832 LIPMAN ELECTRONIC ENGINEERING LTD. - -------------------------------------------------------------------------------- 11 Haamal Street, Park Afek, Rosh Haayin 48092, Israel Tel: +972-3-9029730 Fax: +972-3-9029731 e-mail :mail@lipman.co.il www.lipman.biz [Lipman TransAction Solutions(TM) LOGO] LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA) THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, ------------------------- ------------------------- 2005 2006 2005 2006 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues 58,295 62,767 112,503 120,399 Cost of revenues 33,053 35,763 64,365 68,895 ---------- ---------- ---------- ---------- Gross profit 25,242 27,004 48,138 51,504 Operating expenses: Research and development 4,122 3,521 7,547 6,904 Selling and marketing 7,376 9,475 14,644 18,138 General and administrative 2,110 2,083 4,375 4,329 Special legal expenses 478 -- 899 -- Stock-based compensation 1,281 1,771 2,618 2,572 Amortization of intangible assets 746 1,054 1,619 1,924 ---------- ---------- ---------- ---------- Total operating expenses 16,113 17,904 31,702 33,867 Operating income 9,129 9,100 16,436 17,637 Financial income, net 787 873 1,037 1,675 Other income (expenses), net -18 -195 -49 -176 ---------- ---------- ---------- ---------- Income before taxes on income 9,898 9,778 17,424 19,136 Taxes on income 2,529 2,256 4,781 4,988 ---------- ---------- ---------- ---------- Net income 7,369 7,522 12,643 14,148 ---------- ---------- ---------- ---------- Cumulative effect of an accounting change, net of taxes -- -- -- 1,338 Net income after cumulative effect of an accounting change 7,369 7,522 12,643 15,486 ========== ========== ========== ========== Diluted earnings per share(*) 0.27 0.28 0.46 0.57 Number of shares for diluted earnings per share(*) 27,536,901 27,249,335 27,489,156 27,286,973 LIPMAN ELECTRONIC ENGINEERING LTD. - -------------------------------------------------------------------------------- 11 Haamal Street, Park Afek, Rosh Haayin 48092, Israel Tel: +972-3-9029730 Fax: +972-3-9029731 e-mail :mail@lipman.co.il www.lipman.biz [Lipman TransAction Solutions(TM) LOGO] LIPMAN ELECTRONIC ENGINEERING LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. DOLLARS IN THOUSANDS THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------- ------------------------- 2005 2006 2005 2006 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) CASH FLOW FROM OPERATING ACTIVITIES: Net income for the period 7,369 7,522 12,643 15,486 Adjustments require to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,294 1,865 2,637 3,504 Stock-based compensation related to options issued to employees and others 1,281 1,771 2,618 2,572 Increase in trade receivables and other receivables (1,667) (5,557) (6,797) (2,712) Increase in inventories (1359) (5,545) (1,604) (9,292) Increase in trade payables & other liabilities (3,908) (2,834) (5,102) (5,783) Gain on available-for-sale marketable securities (522) -- (522) -- Deferred income taxes, net (474) (627) (130) (1,417) Cumulative effect of an accounting change, net of taxes -- -- -- (1,338) Other 73 52 (1) 96 ------- ------ ------ ------ Net cash provided by (used in) operating activities 2,087 (3,353) 3,742 1,116 CASH FLOW FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (1,379) (1,851) (2,507) (3,813) Proceed from sales of available-for-sale marketable securities 431 -- 431 428 Other (28) 26 6 109 ------- ------ ------ ------ Net cash used in investing activities (976) (1,825) (2,070) (3,276) CASH FLOW FROM FINANCING ACTIVITIES: Exercise of options granted to employees and other 1,539 771 1,749 2,137 Purchase of treasury stock at cost -- -- -- (8,680) Tax benefit related to exercise of options *1,119 104 *1,415 184 Loan received from minority shareholders in a subsidiary -- -- 150 -- ------- ------ ------ ------ Net cash provided by (used in) financing activities 2,658 875 3,314 (6,359) LIPMAN ELECTRONIC ENGINEERING LTD. - -------------------------------------------------------------------------------- 11 Haamal Street, Park Afek, Rosh Haayin 48092, Israel Tel: +972-3-9029730 Fax: +972-3-9029731 e-mail :mail@lipman.co.il www.lipman.biz [Lipman TransAction Solutions(TM) LOGO] Effect of exchange rate differences on cash and cash equivalents (566) (216) (892) (374) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,203 (4,519) 4,094 (8,893) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 118,287 120,039 117,396 124,413 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 121,490 115,520 121,490 115,520 ------- ------- ------- ------- *Reclassified LIPMAN ELECTRONIC ENGINEERING LTD. - -------------------------------------------------------------------------------- 11 Haamal Street, Park Afek, Rosh Haayin 48092, Israel Tel: +972-3-9029730 Fax: +972-3-9029731 e-mail :mail@lipman.co.il www.lipman.biz
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6-K Filing
Lipman Electronic Engineering (LPMA) Inactive 6-KCurrent report (foreign)
Filed: 10 Aug 06, 12:00am