EX-99.1 2 v013246_ex99-1.htm
Exhibit 99.1
 

SUPERCOM REPORTS FINANCIAL RESULTS
FOR THE FOURTH QUARTER AND FULL YEAR 2004


Q4: 63% YOY Growth in Sales, Net Profit of $451,000; Positioned For Growth in 2005

New York, NY, and Ra’anana, Israel, February 15, 2005 - SuperCom Ltd. (OTCBB: SPCBF.OB; Euronext: SUP), a leading provider of smart card and electronic identification (e-ID) solutions, today announced unaudited financial results for the fourth quarter and fiscal year ended December 31, 2004.

Financial Results 
 
Revenues for the fourth quarter of 2004 were $3,453,000, an increase of 63% compared to $2,118,000 in the fourth quarter of 2003, and the Company’s highest quarterly revenues since the 2nd quarter of 2002. Net profit for the fourth quarter of 2004 was $451,000, or $0.03 per share compared to a net loss of $814,000, or $0.06 per share, for the fourth quarter of 2003 and a loss of $663,000, or $0.04 per share for the third quarter of 2004.

Revenues for the fiscal year ended December 31, 2004 were $7,344,000, an increase of 2% compared to $7,244,000 for fiscal 2003. Net loss for 2004 was $1,872,000, or $0.13 per share, compared to a net loss of $1,995,000, or $0.15 per share for 2003.

Highlights of 2004

Rising sales of government solutions (eID, Homeland Security, electronic passports, National ID Registries):
·  
Awarded 2 finalist positions in GPO tender for integration of technology into US Smart Passport project (Oct. ’04)
 
·  
Portable biometric access control system sold to major Western army (March ’04)
 
·  
$2.5M national ID card deal secured with African governmental agency (Dec. ’04)
 
·  
Automated smart card production system sold to European government (Nov. ’04)
 
·  
Biometric visa system sold to European government
 
Sales of commercial solutions (access control, payment systems, etc.):
·  
Turkish university orders smart campus access control system (Aug. ‘04)
·  
Smart card-based credit control system sold to organization in Hong Kong (March ’04)
·  
25 EduGate systems sold (Feb ’04)
 
 
Comments of Management

“We are pleased to report a breakthrough quarter during which we achieved profitability for the first time in two years and won two finalist positions in the US Government’s GPO e-Passport project,” said Mr. Avi Schechter, CEO of SuperCom. “Our business momentum continues to build, as illustrated by major sales achieved for our biometric e-ID, e-Passport/visa entry and Homeland Security solutions. As long-term deals with significant recurring revenues, these contracts have brought our quarterly revenues to a new level and are giving us visibility for comparable revenues in the year ahead.

“In parallel, we are excited by the upside potential represented by the GPO tender. Although the selection process is not complete, our ‘double’ finalist status is a strong validation that positions us as a major player in the e-ID and Homeland Security marketplace. With rising global demand for better security solutions, a platform of recurring revenues, a strong pipeline of government and commercial deals, and funds from our recent financing for pursuing sales opportunities, we feel well positioned for additional growth in 2005.”

Guidance:
 
Based on recurring revenues and backlog associated with the existing contracts, the Company has visibility for revenues of $7-8 million in 2005, with similar operating margins to those recorded in 2004. Success in closing additional deals represents upside potential that would increase the Company’s revenues and profits.
 
About SuperCom:
 
SuperCom, Ltd. provides innovative solutions in smart-card and e-ID technologies to the commercial and government sectors.  The Company offers a wide range of standard and customized smart-card-based solutions for physical and logical security, education, corrections facilities and air & seaports.  It is also a leader in the manufacturing of secure and durable documents such as national identity cards, passports, visas, drivers’ licenses and vehicle registration to improve homeland security, governmental efficiency and document ease of use. Headquartered in Israel, SuperCom has subsidiaries in the US and Hong Kong.  For more information, visit our website at www.supercomgroup.com.

Safe Harbor
This press release contains forward-looking statements. Such statements are subject to certain risks and uncertainties, such as market acceptance of new products and our ability to execute production on orders, which could cause actual results to differ materially from those in the statements included in this press release. Although SuperCom believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. SuperCom disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events or otherwise. SuperCom undertakes no obligation to update forward-looking statements to reflect subsequently occurring events or circumstances.

This press release and other releases are available on www.supercomgroup.com.

Contact:
Eyal Tuchman, CFO  
SuperCom, Ltd.  
+972 9 775 0800
eyalt@supercomgroup.com



CONSOLIDATED BALANCE SHEETS                     SUPERCOM LTD. AND ITS SUBSIDIARIES
U.S. dollars in thousands


   
December 31,
  
December 31,
  
   
2003
  
2004
  
   
Unaudited
  
ASSETS
          
           
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
1,912
  
$
2,894
 
Short-term deposits
    
1,877
    
1,482
  
Marketable debt securities
   
117
    
-
  
Trade receivables
   
1,808
    
1,463
  
Other accounts receivable and prepaid expenses
    
819
    
1,250
  
Inventories
    
3,236
    
2,165
  
               
Total current assets
    
9,769
    
9,254
  
               
LONG-TERM INVESTMENTS:
              
Long term trade receivables
    
364
    
247
  
Investment in an affiliate and others
   
275
    
275
  
Severance pay fund
   
333
    
428
  
               
Total long-term investments
    
972
    
950
  
               
PROPERTY AND EQUIPMENT, NET
   
1,676
    
3,641
  
               
INTANGIBLE ASSETS
    
156
    
93
  
               
   
$
12,573
  
$
13,938
  



CONSOLIDATED BALANCE SHEETS                        SUPERCOM LTD. AND ITS SUBSIDIARIES
U.S. dollars in thousands


   
December 31,
  
December 31,
  
   
2003
  
2004
  
   
Unaudited
  
           
LIABILITIES AND SHAREHOLDERS' EQUITY
          
           
CURRENT LIABILITIES:
          
Short-term bank credit and current maturities of long-term loan
  
$
2,131
  
$
1,022
 
Trade payables
    
1,085
    
1,135
  
Employees and payroll accruals
    
300
    
357
  
Accrued expenses and other liabilities
   
822
    
1,745
  
               
Total current liabilities
    
4,338
    
4,259
  
               
LONG-TERM LIABILITIES:
              
Long-term loan, net of current maturities
   
187
    
-
  
Accrued severance pay
    
436
    
564
  
               
Total long-term liabilities
    
623
    
564
  
               
SHAREHOLDERS' EQUITY:
             
               
Total shareholders' equity
    
7,612
    
9,115
  
               
   
$
12,573
  
$
13,938
  


 
CONSOLIDATED STATEMENTS OF OPERATIONS                 SUPERCOM LTD. AND ITS SUBSIDIARIES
U.S. dollars in thousands, except per share data


   
Year ended
December 31,
  
Three months ended
December 31,
  
   
2003
  
2004
  
2003
  
2004
  
   
Unaudited
  
                   
Revenues
  
$
7,244
 
$
7,344
  
$
2,118
 
$
3,453
 
Cost of revenues
    
3,102
    
3,730
    
955
    
1,369
  
                           
Gross profit
   
4,142
    
3,614
    
1,163
    
2,084
  
                           
Operating expenses:
                          
Research and development
    
918
    
845
    
209
    
227
  
Selling and marketing, net
    
3,026
    
2,445
    
1,146
    
730
  
General and administrative
    
1,829
    
1,955
    
460
    
572
  
                           
Total operating expenses
    
5,773
    
5,245
    
1,815
    
1,529
  
                           
Operating income (loss)
    
(1,631
)
  
(1,631
)
  
(652
)
  
555
  
Financial expenses, net
    
(233
)
  
(214
)
  
(80
)
  
(97
)
Other expenses, net
    
(83
)
  
(27
)
  
(34
)
  
(7
)
                           
Income (loss) before income taxes
    
(1,947
)
  
(1,872
)
  
(766
)
  
451
  
Equity in losses of affiliates and impairment, net taxes
    
(48
)
  
-
    
(48
)
  
-
  
                           
Net income (loss)
  
$
(1,995
)
$
(1,872
)
$
(814
)
$
451
  
                           
Basic net income (loss) per share
  
$
(0.15
)
$
(0.13
)
$
(0.06
)
$
0.03
  
Diluted net income (loss) per share
  
$
(0.15
)
$
(0.13
)
$
(0.06
)
$
0.02
  
                           
Weighted average number of Ordinary shares used in computing basic net income (loss) per share
    
12,718,426
    
14,590,346
    
12,754,293
    
17,114,044
  
Weighted average number of Ordinary shares used in computing diluted net income (loss) per share
    
12,718,426
    
14,590,346
    
12,754,293
    
20,356,003
  
 

 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS                 SUPERCOM LTD. AND ITS SUBSIDIARIES
U.S. dollars in thousands
   
Year ended
December 31,
  
Three months ended
December 31,
  
   
2003
  
2004
  
2003
  
2004
  
   
Unaudited
  
Cash flows from operating activities:
                  
Net income (loss)
  
$
(1,995
)
$
(1,872
)
$
(814
)
$
451
  
Adjustments to reconcile net income (loss) to net cash used in operating activities:
                          
Depreciation and amortization
    
371
    
338
    
91
    
80
  
Accrued severance pay, net
   
29
    
33
    
15
    
19
  
Amortization of deferred stock compensation
    
26
    
9
    
-
    
2
  
Decline in market value below cost of marketable debt securities
    
52
    
7
    
52
    
-
  
Decrease (increase) in trade receivables
    
30
    
(398
)
  
1,610
    
(221
)
Decrease (increase) in other accounts receivable and prepaid expenses
    
(79
)
  
(431
)
  
1
    
(346
)
Decrease (increase) in inventories
    
(92
)
  
814
    
(178
)
  
538
  
Increase in trade payables
    
394
    
50
    
105
    
321
  
Increase (decrease) in employees and payroll accruals
    
(31
)
  
82
    
(59
)
  
50
  
Increase (decrease) in accrued expenses and other liabilities
   
(912
)
  
747
    
(1,543
)
  
494
  
Loss on sale of property and equipment
    
5
    
1
    
5
    
1
  
Accumulated interest on long-term loan
    
2
    
-
    
-
    
-
  
Write-off of investment in an affiliate
    
48
    
-
    
48
    
-
  
                           
Net cash provided by (used in) operating activities
   
(2,152
)
  
(620
)
  
(667
)
  
1,389
  
                           
Cash flows from investing activities:
                          
Proceeds from sale of property and equipment
    
2
    
1
    
1
    
1
  
Purchase of property and equipment
    
(87
)
  
(1,088
)
  
(39
)
  
(756
)
Proceed (Investment) in short-term deposits, net
    
(1,824
)
  
395
    
1,037
    
(77
)
Proceeds from redemption of marketable debt securities
    
440
    
110
    
-
    
-
  
Investment in intangible assets
    
(70
)
  
(37
)
  
(70
)
  
(9
)
                           
Net cash provided by (used in) investing activities
    
(1,539
)
  
(619
)
  
929
    
(841
)
                           
Cash flows from financing activities:
                          
Short-term bank credit, net
    
1,196
    
(1,122
)
  
115
    
(619
)
Proceed from a private placement, net
    
-
    
3,507
    
-
    
741
  
Issuance of shares
    
-
    
10
    
-
    
2
  
Proceed from long-term loan
    
250
    
400
    
-
    
-
  
Principal payment of long-term loan
    
(410
)
  
(574
)
  
(122
)
  
(152
)
                           
Net cash provided by (used in) financing activities
    
1,036
    
2,221
    
(7
)
  
(28
)
                           
Increase (decrease) in cash and cash equivalents
    
(2,655
)
  
982
    
255
    
520
  
Cash and cash equivalents at beginning of period
    
4,567
    
1,912
    
1,657
    
2,374
  
                           
Cash and cash equivalents at end of period
  
$
1,912
 
$
2,894
  
$
1,912
  
$
2,894
  
Supplemental disclosure of non-cash investing activities:
                  
Transfer of inventory to property and equipment
  
$
-
  
$
1,117
  
$
-
  
$
1,047
  
                           
Transfer of trade receivable inventory
 
$
-
  
$
860
  
$
-
  
$
860
  
                           
Conversion of loan to ordinary shares
  
$
-
  
$
25
  
$
-
  
$
-
  
                           
Other accounts receivable on issuance of shares
 
$
84
  
$
-
  
$
84
  
$
-
  
                           
Accrued expenses related to issuance of shares
  
$
-
  
$
176
  
$
-
  
$
176