TKH SECURITY SOLUTIONS USA INC 
By GERMANTOWN, Md., Aug. 4 /PRNewswire-FirstCall/ -- Optelecom-NKF, Inc. (Nasdaq: OPTC), manufacturer of market leading Siqura(®) advanced video surveillance solutions, today reported its results for the second quarter of 2010.
Second Quarter 2010 Financial Results
Revenue for the second quarter totaled $7.7 million U.S. dollars, compared to $10.0 million for the same quarter one year earlier. Revenue increased sequentially from $7.2 million, reported in the first quarter of this year.
Optelecom-NKF reported a net loss of $698 thousand, or $(0.19) per share, for the quarter ending on June 30, 2010, compared to the net loss of $127 thousand, or $(0.03) per share, one year earlier. Second quarter results improved sequentially from this year's first quarter loss of $1.6 million, or $(0.45) per share.
During the quarter, Optelecom-NKF completed the sale of its Electro Optics coil manufacturing business. Optelecom-NKF received $1,150 thousand at the close of the transaction, with a balance of $250 thousand held in escrow, subject to the completion of a specified technology transfer. The impact of the Electro Optics sale is included in this quarter's financial results. The related gain was offset by $868 thousand in restructuring charges recorded during the quarter.
Restructuring Initiatives
During the quarter Optelecom-NKF completed several major restructuring initiatives intended to strengthen Optelecom-NKF's financial and operational framework, including the following:
-- Replaced the geographical sales model and realigned the U.S. Sales
Department to focus on three distinct markets, Transportation,
Government, and Critical Infrastructure, in an effort to improve
customer orientation.
-- Consolidated the U.S. manufacturing operations into Optelecom-NKF's
existing Dutch manufacturing facility and a U.S. based contract
manufacturer.
-- Streamlined Optelecom-NKF's international headquarters in the U.S. to
leverage existing international operations and perform critical
functions domestically.
These actions are expected to generate annualized savings of approximately $2.0 million in 2011, with partial savings expected during the balance of this year.
"We have taken the steps required to put Optelecom-NKF back on track toward regaining profitability. Our new structure lowers fixed costs, which should enable Optelecom-NKF to generate earnings at reduced revenue levels," said Dave Patterson, Optelecom-NKF's President and CEO. "We are now concentrating our efforts to drive improved U.S. sales performance. We have recruited strong leadership and realigned our U.S. sales teams in a way that addresses the unique needs of the key industry sectors we serve. I'm pleased that we were able to improve revenues sequentially even as we significantly reduced our workforce. As experts in Video over IP and Fiber, we are positioned to facilitate technology migration strategies for mission-critical applications. This has worked well for us in the European, Middle Eastern, and Asia Pacific regions."
Second Quarter Conference Call
Optelecom-NKF will host a conference call to discuss its second quarter results on Thursday, August 5, 2010, at 10:00 a.m. EDT. To participate live, go to http://www.videonewswire.com/event.asp?id=70942
Participant Dial-In (U.S. Toll Free): 1-800-860-2442
Participant International Dial-In: +1-412-858-4600
Parties should ask for: Optelecom-NKF Conference Call
Playback Dial-In (U.S. Toll Free): 1-877-344-7529
Playback International Dial-In: +1-412-317-0088
Playback code: 442794
If you are unable to participate during the live webcast, the event will be archived at http://www.videonewswire.com/event.asp?id=70942
Safe Harbor Statement
This press release contains "forward-looking statements," a term used here as defined in the amended Securities Exchange Act of 1934, and it includes statements relating to the impact of the restructuring initiatives discussed herein. Forward-looking statements typically include words such as "expect," "anticipate," "believe," "estimate," "intend," "may," "will," and similar expressions as they relate to Optelecom-NKF or its management. Forward-looking statements are based on our current expectations and assumptions. These are subject to risks and uncertainties, including potential negative effects on our operations and financial results that might arise from the restructuring initiatives discussed herein. These risks and uncertainties are discussed in detail in Optelecom-NKF's recently filed Annual Report on Form 10-K and other subsequent filings with the Securities and Exchange Commission. These forward-looking statements are written from the perspective of the circumstances under and date upon which they were composed. Optelecom-NKF disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
About Optelecom-NKF
Optelecom-NKF, Inc. (Nasdaq: OPTC), manufacturer of Siqura(®) advanced video surveillance solutions, provides a full range of network products based on an open technology platform that simplifies integration and installation. Our Siqura(®) solutions offer a perfect blend of ease of use and processing power, enabling end users to optimize the effectiveness of their surveillance systems while reducing the total cost of ownership. All products and solutions are developed and tested for professional and mission-critical applications, such as at highway departments, airports, seaports, casinos, public transport authorities, hospitals, city centers, shopping centers, military bases, and corporate and government campuses. Founded in 1972, Optelecom-NKF is committed to providing its customers with expert technical advice and support.
Investor inquiries should be directed to Mr. Rick Alpert at 301-948-7872.
Press inquiries should be directed to Kate Huber, khuber@optelecom-nkf.com tel. 301-444-2294 (for North and Latin America) or tel. +31 182 592 215 (for Europe, Middle East, Africa, and Asia). For more information please visit our website: www.optelecom-nkf.com
OPTELECOM-NKF, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2010 AND DECEMBER 31, 2009
(Dollars in Thousands, Except Share and Per Share Amounts)
June 30, December 31,
2010 2009
--- ---
(unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents $1,794 $2,344
Restricted cash 255 1,900
Accounts receivable, net of
allowance for doubtful
accounts of $506 and $386 6,834 8,209
Inventories, net 4,281 4,343
Deferred tax asset 123 240
Prepaid expenses and other current
assets 785 893
--- ---
Total current assets 14,072 17,929
Property & equipment, less
accumulated depreciation of $5,223
and $5,681 1,040 1,593
Intangible assets, net of
accumulated amortization of $3,368
and $3,609 5,335 6,609
Goodwill 12,647 14,848
Other assets 187 209
--- ---
TOTAL ASSETS 33,281 41,188
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes and
interest payable 11,057 1,907
Accounts payable 2,290 2,012
Accrued payroll 1,228 1,280
Accrued warranty reserve 383 422
Other current liabilities 2,029 1,233
----- -----
Total current liabilities 16,987 6,854
Long term notes and interest payable - 12,818
Deferred tax liabilities 674 1,513
Other liabilities 170 188
--- ---
Total liabilities 17,831 21,373
STOCKHOLDERS' EQUITY
Common stock, $.03 par value-shares
authorized, 15,000,000; issued and
outstanding, 3,697,432 and
3,653,644 shares as of June, 2010,
and December 31, 2009, respectively 111 110
Additional paid-in capital 17,282 17,036
Accumulated other comprehensive
income 503 2,769
Treasury stock, 162,672 shares at
cost (1,265) (1,265)
(Accumulated deficit) retained
earnings (1,181) 1,165
------ -----
Total stockholders' equity 15,450 19,815
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $33,281 $41,188
======= =======
OPTELECOM-NKF, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
FOR THE THREE MONTHS ENDED JUNE 30,
(Unaudited)
(Dollars in Thousands, Except Share and Per Share Amounts)
2010 2009
--- ---
Revenue $7,703 $10,010
Cost of goods sold 3,984 3,962
----- -----
Gross profit 3,719 6,048
Operating expenses:
Sales and marketing 2,745 2,877
Engineering 1,170 1,089
General and administrative 1,377 1,660
Amortization of intangibles 154 164
Gain on sale of Electro Optics (1,150) -
------ ---
Total operating expenses 4,296 5,790
Net (loss) income from operation (577) 258
Other expense, net 316 142
--- ---
Net (loss) income before income taxes (893) 116
(Benefit) provision for income taxes (195) 243
---- ---
Net loss $(698) $(127)
===== =====
Basic loss per share $(0.19) $(0.03)
====== ======
Diluted loss per share $(0.19) $(0.03)
====== ======
Weighted average common shares
outstanding -basic 3,685,144 3,645,037
========= =========
Weighted average common shares
outstanding -diluted 3,685,144 3,645,037
========= =========
Net loss $(698) $(127)
Foreign currency translation (1,313) 1,008
------ -----
Comprehensive (loss) income $(2,011) $881
======= ====
OPTELECOM-NKF, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
(Dollars in Thousands, Except Share and Per Share Amounts)
2010 2009
--- ---
Revenue $14,856 $18,596
Cost of goods sold 7,203 7,832
----- -----
Gross profit 7,653 10,764
Operating expenses:
Sales and marketing 5,618 5,492
Engineering 2,255 2,437
General and administrative 2,836 3,204
Amortization of intangibles 321 322
Gain on sale of Electro Optics (1,150) -
------ ---
Total operating expenses 9,880 11,455
Loss from operations (2,227) (691)
Other expense, net 619 433
--- ---
Loss before income taxes (2,846) (1,124)
Benefit for income taxes (500) (232)
---- ----
Net loss $(2,346) $(892)
======= =====
Basic loss per share $(0.64) $(0.24)
====== ======
Diluted loss per share $(0.64) $(0.24)
====== ======
Weighted average common shares outstanding
-basic 3,680,067 3,643,333
========= =========
Weighted average common shares outstanding
-diluted 3,680,067 3,643,333
========= =========
Net loss $(2,346) $(892)
Foreign currency translation (2,266) (48)
------ ---
Comprehensive loss $(4,612) $(940)
======= =====
Non-GAAP Earnings Addendum
We define Adjusted EBITDA as net income or net loss plus interest expense, income taxes, foreign exchange gains and losses, depreciation, and amortization. Adjusted EBITDA is not a measure of cash flow or liquidity as determined under U.S. Generally Accepted Accounting Principles (GAAP). We have included this Adjusted EBITDA as a supplemental disclosure because we believe that it is widely used by investors, industry analysts, and others as a useful supplemental measure. Optelecom-NKF calculates and uses Adjusted EBITDA as an indicator of its ability to generate cash from reported operating results.
Adjusted EBITDA does not represent funds available for our discretionary use and is not intended to represent or to be used as a substitute for net income or cash flows from operations data as measured under GAAP. The items excluded from Adjusted EBITDA but included in the calculation of Optelecom-NKF's reported net income are significant components of the accompanying unaudited consolidated statements of operations and must be considered in performing a comprehensive assessment of overall financial performance. Other companies may calculate Adjusted EBITDA differently than we do, which may limit its usefulness as a comparative measure.
The table below presents a reconciliation of net income to Adjusted EBITDA:
Three Months Six Months
Ended Ended
June 30, June 30,
-------- --------
(Unaudited) 2010 2009 2010 2009
--- --- --- ---
Net Loss $(698) $(127) $(2,346) $(892)
Add:
Interest expense, net 310 160 659 320
(Benefit) Provision for
income taxes (195) 243 (500) (232)
Foreign exchange gain
(loss) 6 (18) (40) 113
Depreciation 188 240 392 480
Amortization 154 164 321 322
--- --- --- ---
Adjusted EBITDA $(235) $662 $(1,514) $111
----- ---- ------- ----
SOURCE Optelecom-NKF, Inc.
