TKH SECURITY SOLUTIONS USA INC 
By GERMANTOWN, Md., Nov. 15, 2010 /PRNewswire-FirstCall/ -- Optelecom-NKF, Inc. (Nasdaq: OPTC), a leading global provider of Siqura® advanced IP-video network solutions, today announced third quarter 2010 results.
Revenues for the third quarter totaled $7.6 million compared to $8.3 million for the same quarter one year earlier. Revenues declined sequentially from $7.7 million reported in the second quarter this year. Backlog at the end of the third quarter climbed to $3.4 million, a multi-year high.
During the quarter the Company consolidated manufacturing operations into its existing Dutch manufacturing facility and outsourced U.S. production to a Maryland-based contract manufacturer. This transition impacted the shipment of some orders. The delayed recognition of revenue from work in progress (WIP) totaled approximately $700 thousand. This delay was a component of the significant climb in backlog.
The Company reported a net loss of $929 thousand or $(0.25) per share, for the quarter ending September 2010, compared to net loss of $1.3 million, or $(0.35) per share, one year earlier. The Company's operating loss declined to $53 thousand compared to a loss of $958 thousand one year earlier.
Adjusted EBITDA for the quarter was $244 thousand compared to a loss of $553 thousand for the same quarter last year.
On November 11, 2010, the Company and TKH Group N.V. (NYSE Euronext Amsterdam, AMS: TWEKA, "TKH") announced a definitive merger agreement for a subsidiary of TKH to acquire all of the outstanding shares of the Company in an all cash merger transaction for $2.45 per share. The transaction, which is expected to close in the first quarter of 2011, is subject to the approval of the Company's stockholders and other customary closing conditions. There is no financing condition to consummate the transaction.
Additional Information
In connection with the proposed transaction, the Company will file a proxy statement with the Securities and Exchange Commission ("SEC"). When completed, a definitive proxy statement and a form of proxy will be mailed to the stockholders of the Company. INVESTORS AND SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AGREEMENT, THE PROPOSED MERGER AND THE PARTIES THERETO.
Investors and shareholders will be able to obtain copies of the proxy statement and other documents filed with the SEC by the Company without charge and when available, at the SEC's Website at www.sec.gov. The proxy statement and such other documents may also be obtained without charge and when available, from the Company by directing such request to Cathy Mizell, Chief Financial Officer, Optelecom-NKF, Inc., 12920 Cloverleaf Center Drive, Germantown, MD 20874; telephone: (301) 444-2200.
The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company's stockholders in connection with the proposed transaction. Information about the Company's directors and executive officers and their ownership of the Company's common stock is set forth in the Company's proxy statement relating to the 2010 annual shareholder meeting, which was filed with the SEC on March 30, 2010, and its Current Report on Form 8-K filed with the SEC on August 27, 2010. Stockholders may obtain additional information regarding the interests of the Company's directors and executive officers in the merger, which may be different than those of the Company's stockholders generally, by reading the proxy statement and other relevant documents regarding the transaction, when filed with the SEC.
Conference Call
In light of the proposed transaction, Optelecom-NKF has cancelled the previously announced conference call that was scheduled for Tuesday, November 16, 2010 at 10:00 am Eastern Standard Time.
Safe Harbor Statement
This communication contains forward-looking statements that involve numerous risks and uncertainties. The statements contained in this communication that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. All forward-looking statements included in this communication are based on information available to the Company on the date hereof. In some cases, you can identify forward-looking statements by terminology such as "may," "can," "will," "should," "could," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," "goals," "projects," "outlook," "continue," or variations of such words, similar expressions, or the negative of these terms or, other comparable terminology. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the Company's results of operations or financial condition. Accordingly, actual results may differ materially and adversely from those expressed in any forward-looking statements. None of the Company nor any other person can assume responsibility for the accuracy and completeness of forward-looking statements and there are various important factors that could cause actual results to differ materially from those in any such forward-looking statements, many of which are beyond the Company's control. These factors include: failure to obtain stockholder approval of the proposed merger; failure to obtain, delays in obtaining or adverse conditions contained in any required approvals; failure to consummate or a delay in consummating the transaction for other reasons, changes in laws or regulations; and changes in general economic conditions. The Company undertakes no obligation (and expressly disclaim any such obligation) to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. For additional information please refer to the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.
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 SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
(Dollars in Thousands, Except Share and Per Share Amounts)
September 30, December 31,
2010 2009
--- ---
(unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents $1,172 $2,344
Restricted cash 255 1,900
Accounts receivable, net of allowance
for doubtful accounts of $505 and $386 7,271 8,209
Inventories, net 4,301 4,343
Deferred tax assets 120 240
Prepaid expenses and other current
assets 803 893
--- ---
Total current assets 13,922 17,929
Property & equipment, less accumulated
depreciation of $5,368 and $5,681 907 1,593
Intangible assets, net of accumulated
amortization of $3,919 and $3,609 5,785 6,609
Goodwill 14,102 14,848
Other assets 207 209
--- ---
TOTAL ASSETS 34,923 41,188
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes and interest
payable 12,329 1,907
Accounts payable 2,535 2,012
Accrued payroll 907 1,280
Accrued warranty reserve 445 422
Other current liabilities 1,194 1,233
----- -----
Total current liabilities 17,410 6,854
Long term notes and interest payable - 12,818
Deferred tax liabilities 1,260 1,513
Other liabilities 159 188
--- ---
Total liabilities 18,829 21,373
STOCKHOLDERS' EQUITY
Common stock, $.03 par value-shares
authorized, 15,000,000; issued 111 110
and outstanding, 3,702,409 and
3,653,644 shares as of September 30,
2010, and December 31, 2009,
respectively
Additional paid-in capital 17,294 17,036
Accumulated other comprehensive income 2,064 2,769
Treasury stock, 162,672 shares at cost (1,265) (1,265)
(Accumulated deficit) retained earnings (2,110) 1,165
------ -----
Total stockholders' equity 16,094 19,815
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $34,923 $41,188
======= =======
OPTELECOM-NKF, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
(Dollars in Thousands, Except Share and Per Share Amounts)
2010 2009
--- ---
Revenue $7,585 $8,307
Cost of goods sold 3,492 3,714
----- -----
Gross profit 4,093 4,593
Operating expenses:
Sales and marketing 1,871 2,723
Engineering 895 1,195
General and administrative 1,225 1,461
Amortization of intangibles 155 172
Total operating expenses 4,146 5,551
Loss from operations (53) (958)
Other expense, net 394 158
--- ---
Loss before income taxes (447) (1,116)
Provision for income taxes 482 153
--- ---
Net loss $(929) $(1,269)
===== =======
Basic loss per share $(0.25) $(0.35)
====== ======
Diluted loss per share $(0.25) $(0.35)
====== ======
Weighted average common shares
outstanding -basic 3,702,155 3,648,490
========= =========
Weighted average common shares
outstanding -diluted 3,702,155 3,648,490
========= =========
Net loss $(929) $(1,269)
Foreign currency translation 1,562 570
----- ---
Comprehensive income (loss) $633 $(699)
==== =====
OPTELECOM-NKF, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(Unaudited)
(Dollars in Thousands, Except Share and Per Share Amounts)
2010 2009
--- ---
Revenue $22,441 $26,904
Cost of goods sold 10,695 11,547
------ ------
Gross profit 11,746 15,357
Operating expenses:
Sales and marketing 7,488 8,215
Engineering 3,151 3,632
General and administrative 4,060 4,665
Amortization of intangibles 476 494
Gain on sale of Electro
Optics (1,150) -
Total operating expenses 14,025 17,006
Loss from operations (2,279) (1,649)
Other expense, net 1,013 591
----- ---
Loss before income taxes (3,292) (2,240)
Benefit for income taxes 17 78
--- ---
Net loss $(3,275) $(2,162)
======= =======
Basic loss per share $(0.89) $(0.59)
====== ======
Diluted loss per share $(0.89) $(0.59)
====== ======
Weighted average common shares
outstanding -basic 3,687,511 3,645,360
========= =========
Weighted average common shares
outstanding -diluted 3,687,511 3,645,360
========= =========
Net loss $(3,275) $(2,162)
Foreign currency translation 705 522
--- ---
Comprehensive loss $(2,570) $(1,640)
======= =======
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 Nine Months
Ended Ended
September 30, September 30,
(Unaudited) 2010 2009 2010 2009
Net Loss $(929) $(1,269) $(3,275) $(2,162)
Add:
Interest expense, net 263 169 921 489
(Benefit) Provision for
income taxes 482 153 (17) (78)
Other expenses, net 131 (11) 92 102
Depreciation 142 233 534 714
Amortization 155 172 476 494
--- --- --- ---
Adjusted EBITDA $244 $(553) $(1,269) $(441)
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SOURCE Optelecom-NKF, Inc.
