8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) 
Of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 14, 2009

OPTELECOM-NKF, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

0-8828	52-1010850
(Commission	(IRS
File Number)	Employer Identification No.)

12920 Cloverleaf Center Drive
Germantown, Maryland 20874
(Address of principal executive offices)  (ZIP Code)

(301) 444-2200
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

The information in this Form 8-K and the Exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

On May 12, 2009, Optelecom-NKF, Inc. (the “Company”) issued a press release announcing financial results for the quarter ended March 31, 2009. The press release is attached hereto as Exhibit 99.1 and incorporated by reference herein. Also, on May 13, 2009, the Company held a conference call to discuss financial results for the quarter ended March 31, 2009. The transcript of the conference call is attached hereto as Exhibit 99.2 and incorporated by reference herein.

Item 9.01	Financial Statements and Exhibits.
Exhibit 99.1	Press Release of Optelecom-NKF, Inc., dated May 12, 2009.
Exhibit 99.2	Transcript of conference call of Optelecom-NKF, Inc., held on May 13, 2009.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 14, 2009

OPTELECOM-NKF, INC.
By:	/s/ Edmund Ludwig
	Edmund Ludwig
	Chief Executive Officer

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

OPTELECOM-NKF, INC.
EXHIBIT INDEX TO FORM 8-K

Exhibit No.	Item
Exhibit 99.1	Press Release of Optelecom-NKF, Inc., dated May 12, 2009.
Exhibit 99.2	Transcript of conference call of Optelecom-NKF, Inc., held on May, 13 2009.

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Optelecom-NKF Reports First Quarter 2009 Results

GERMANTOWN, MD/May 12, 2009/PRNewswire-FirstCall — Optelecom-NKF, Inc. (NASDAQ: OPTC), a leading global provider of Siqura® advanced IP-video network solutions, today announced first quarter 2009 results.

Revenues for the first quarter totaled $8.6 million, compared to $10.5 million for the same quarter of 2008. Video over IP-related revenue climbed 10% in the first quarter to $2.9 million, compared to last year’s $2.6 million.

The Company reported a net loss of $765 thousand, or $(0.21) per share, in the quarter ending March 31, 2009. This compares to net income of $148 thousand, or $0.04 per share, one year earlier.

Adjusted EBITDA for the quarter (as defined in the addendum to this release) was a loss of $551 thousand compared to profit of $976 thousand for the same quarter last year.

“The sharp contraction in the global economy was the dominant force affecting our first quarter performance along with a reduction in reported revenue from foreign exchange translation rates,” said Ed Ludwig, Optelecom-NKF’s Chairman and CEO. “Orders slowed this winter as customers delayed projects in the face of budgetary concerns.  As we look for signs of a bottom in the economic contraction and we actively contain costs, I view our long-term business prospects with measured optimism based on feedback from current customers and visits we’ve had with prospective customers.”

First Quarter Conference Call

Optelecom-NKF CEO Edmund Ludwig will lead a conference call to discuss first quarter results at 10:00 a.m. Eastern Time, Wednesday, May 13, 2009. Interested parties are welcome to call 866-730-5771 (International Dial In: 857-350-1595) and request the “Optelecom-NKF conference call” shortly before the designated start time or provide the participant pass code 54941156. The telephone conference call will feature a question and answer segment with management.

For those parties unable to participate in the live conference call, a replay will be available from 1:00 p.m. following the teleconference until May 20, 2009. Those wishing to listen to the replay should call 888-286-8010 (International Dial In: 617-801-6888) and enter pass code number 87823732 when prompted.

The call is being web cast by Thomson Reuters and can be accessed at www.earnings.com or at Optelecom-NKF’s website www.optelecom-nkf.com.

About Optelecom-NKF

Optelecom-NKF, Inc. (NASDAQ: OPTC - News), manufacturer of Siqura® advanced video surveillance solutions, provides a full range of cameras, video servers/codecs, network video recorders, fiber transmission equipment, video content analysis applications, and video management software 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.

We deliver complete solutions for the Traffic Monitoring, Public Transport, Industrial and Commercial Security, and Government markets. Our systems are deployed by professionals at highway departments, airports, seaports, casinos, public transport authorities, hospitals, city centers, shopping centers, and corporate, military, and government campuses.

Founded in 1972, Optelecom-NKF is committed to providing its customers with expert technical advice and support.  Corporate headquarters are in Germantown, Maryland, USA. The Company’s European corporate offices are located in Gouda, The Netherlands. Optelecom-NKF has sales offices or support covering Latin America, France, Spain, the UK, Germany, Italy, Dubai, and Singapore.

Investor inquiries should be directed to Mr. Rick Alpert at +1 301-948-7872.

Press inquiries for North, Latin, and South America, and Japan should be directed to Betsy Lanning, blanning@optelecom-nkf.com, tel. +1 301-444-2276.

Press inquiries for Europe, Middle East, Africa, and Asia should be directed to Jolanda Medendorp, jmedendorp@optelecom-nkf.com, tel. +31 182 592 470.

For more information please visit our website: www.optelecom-nkf.com.

OPTELECOM-NKF, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (LOSS) INCOME

FOR THE THREE MONTHS ENDED MARCH 31,

(Unaudited)

(Dollars in Thousands, Except Share Amounts)

	2009			2008
Revenue	$	8,586		$	10,535
Cost of goods sold	3,871			4,076
Gross profit	4,715			6,459
Operating expenses:
Sales and marketing	2,615			2,661
Engineering	1,349			1,416
General and administrative	1,543			1,662
Amortization of intangibles	157			208
Total operating expenses	5,664			5,947
(Loss) income from operations	(949		)	512
Other expense, net	(290		)	(352		)
(Loss) income before income taxes	(1,239		)	160
(Benefit) provision for income taxes	(474		)	12
Net (loss) income	$	(765	)	$	148
Basic (loss) income per share	$	(0.21	)	$	0.04
Diluted (loss) income per share	$	(0.21	)	$	0.04
Weighted average common shares outstanding -basic	3,641,692			3,632,564
Weighted average common shares outstanding -diluted	3,641,692			3,632,635
Net (loss) income	$	(765	)	$	148
Foreign currency translation	(1,056		)	1,920
Comprehensive (loss) income	$	(1,821	)	$	2,068

OPTELECOM-NKF, INC.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2009 AND DECEMBER 31, 2008

(March 31, 2009 Unaudited)

(Dollars in Thousands, Except Share and Per Share Amounts)

	March 31,			December 31,
	2009			2008
	(unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents	$	3,374		$	5,671
Accounts receivable, net of allowance for doubtful accounts of $317 and $245	9,181			10,290
Inventories, net of allowance for obsolescence of $832 and $679	5,834			5,782
Deferred tax asset	308			205
Prepaid expenses and other current assets	1,202			1,152
Total current assets	19,899			23,100
Property & equipment, less accumulated depreciation of $7,388 and $7,820	2,115			2,063
Intangible assets, net of accumulated amortization of $2,848 and $2,870	6,568			7,180
Goodwill	13,683			14,603
Other assets	189			202
TOTAL ASSETS	42,454			47,148
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	3,388			3,634
Accrued payroll	1,630			1,841
Commissions payable	193			198
Bank line of credit	150			—
Current portion of notes and interest payable	14,329			3,432
Accrued warranty reserve	422			410
Taxes payable	18			931
Other current liabilities	1,282			1,724
Total current liabilities	21,412			12,170
Notes payable and interest payable	—			12,093
Deferred tax liabilities	1,163			1,427
Other liabilities	254			267
Total liabilities	22,829			25,957
STOCKHOLDERS' EQUITY
Common stock, $.03 par value-shares authorized, 15,000,000; issued and outstanding, 3,641,804 and 3,645,084 shares as of March 31, 2009, and December 31, 2008, respectively	109			109
Additional paid-in capital	16,507			16,252
Accumulated other comprehensive income	1,478			2,534
Treasury stock, 162,672 shares at cost	(1,265		)	(1,265		)
Retained earnings	2,796			3,561
Total stockholders' equity	19,625			21,191
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	42,454		$	47,148

Non-GAAP Earnings Addendum

We define Adjusted EBITDA as net income or net loss plus interest expense, income taxes, foreign exchange losses, depreciation and amortization. Adjusted EBITDA is not a measure of cash flow or liquidity as determined by generally accepted accounting principles (GAAP). We have included 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 U.S. generally accepted accounting principles (“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 Ended
(Unaudited)	March 31,
(Dollars in Thousands)	2009			2008
Net Income	$	(765	)	$	148
Add:
Interest expense, net	159			250
(Benefit) Provision for income taxes	(474		)	12
Foreign currency loss	131			102
Depreciation	241			256
Amortization	157			208
Adjusted EBITDA	$	(551	)	$	976

EX-99.2

Exhibit 99.2

FINAL TRANSCRIPT

Conference Call Transcript

OPTC - - Q1 2009 Optelecom-NKF Earnings Conference Call

Event Date/Time: May. 13. 2009 / 10:00AM ET

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May. 13. 2009 / 10:00AM ET, OPTC - Q1 2009 Optelecom-NKF Earnings Conference Call

CORPORATE PARTICIPANTS

Ed Ludwig

Optelecom-NKF - Chairman & CEO

Steve Tamburo

Optelecom-NKF - CFO

Dave Patterson

Optelecom-NKF - President

PRESENTATION

Operator

Good day, ladies and gentlemen, and welcome to the first quarter 2009 Optelecom-NKF earnings conference call. My name is Eric, I will be your audio coordinator for today. At this time all participants are in a listen-only mode. We will facilitate the question-and-answer session at the end of the presentation. (Operator Instructions).

I would like to turn the presentation over to your host Mr. Ed Ludwig, Chairman and CEO. Please proceed.

Ed Ludwig  — Optelecom-NKF - Chairman & CEO

Thanks, Eric. Good morning, and welcome to our Optelecom-NKF first quarter 2009 earnings conference call. I’m Ed Ludwig, Chairman and CEO. With me today are Steve Tamburo, our CFO, and Dave Patterson, our President. Steve, please recite our Safe Harbor disclosure.

Steve Tamburo  — Optelecom-NKF - CFO

Any forward-looking statements made during today’s call are subject to risks and uncertainties. You should not place undue reliance on forward-looking statements and these statements speak only as of the date they are made. Factors that could materially change the Company’s current forward-looking assumptions are detailed in our form 10-K, and subsequent reports on file with the SEC. We also refer to a non-GAAP financial measure in our press release. Reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure can be found within our recent earnings press release.

Ed Ludwig  — Optelecom-NKF - Chairman & CEO

Thanks, Steve. Once again, welcome to our 2009 first quarter conference call. We will discuss today the primary performance metrics we saw in our first quarter and tell you what we’re seeing in our major markets. We will also spend some time looking at long-term drivers of demand, which we covered to some extent during the 2008 year-end conference call, and we still believe are applicable today.

During the quarter, our new President, Dave Patterson, joined our team, and immediately began a virtual total immersion program to become familiar with our organization, our business practices, and our customer base. He and I traveled to the Netherlands to meet Tom Overwign, our COO and his staff, and to become familiar with our operations at our facility in Europe. I feel he is off to a strong start. Dave will share some of his thoughts and impressions with you in a few minutes.

We’ve seen difficult quarters before, and our experience tells us business will get better in time, as a shareholder myself, I know it can test your patience. But I’m confident we’re on the right track, based on feedback from discussions with current customers, and visits we’ve had with prospective customers. Throughout the quarter, and indeed on a continuous basis, we evaluated our operating environment and continued to gather a wide array of both internal and external data to support our operating investment decisions. I can say that as a result of that evaluation, that we continue to see opportunities for companies like Optelecom-NKF, companies that can differentiate themselves to superior product and service offerings, on time delivery and strong customer relationships. Again, Dave will have some comments about this process in a few minutes.

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In these times, cost controls are extremely important. We continue to manage our business to reduce expenses where we can, while optimizing our ability to deliver the products and services our customers want. We are aggressively driving further initiatives that will expand our market reach, while containing our overall cost structure. When comparing this quarter with the first quarter of 2008, we find a very different economic environment. While there are hints of recession early last year, sub prime was not even a household word, and the global economy was holding its own. This year, we face considerable head winds in our first quarter, as reflected in our operating results. While the economy led to a longer-than-anticipated sales cycle, we don’t believe this is permanent. We see many project opportunities as being delayed, not canceled. We expect these projects will be supported because the market areas we address are exactly where a significant portion of the federal government’s stimulus funding is aimed.

As always, we will continue to focus on the broader goal of improving sales. Clearly, we still have more work to do in these areas to improve our operating results.

Steve, let’s review those results.

Steve Tamburo  — Optelecom-NKF - CFO

Thanks, Ed. As Ed indicated, we’re disappointed in the first quarter results, but before Dave Patterson talks about the actions we’re taking, let me take a minute to explain the current numbers. Revenue in the first quarter was $8.6 million. This is a drop from the first quarter of 2008, as we faced resistance in the overall economy, combined with revenue reductions from foreign currency translation, and we saw a slowing of our legacy fiberoptic product sales. International revenue this quarter was based on a US dollar which averaged $1.31 versus the Euro, in the first quarter ‘08, the average was a much higher $1.50, leaving us with a large negative impact on sales of about $900,000 this period. Stated simply, this is almost half the revenue decline in the recent quarter, and we expect that foreign currency translation will continue to impact our reported revenue.

Also impacting our sales is an ongoing and expected decline in the market for legacy fiberoptic-based products and this is in favor of our new video over IP products. Sales of fiberoptic products declined 29% during the first quarter. Fortunately, the Company has planned for this change, and we made significant investments developing a full line of IP products. We also had an impact from seasonality as we have generally lower levels of revenue in the first half of the year, compared to the second half of the year. The second half revenue has been higher in each of the last five years. Nevertheless, the decline in revenue for the current quarter led us to a net loss of $765,000, or minus $0.21 per share.

On a positive note, we experienced continued demand for our video over IP products, as sales were up 10%, even with the significant decline in the foreign currency translation. Our IP sales, when we exclude the FX, would have increased about 20%.

While IP revenues are led by sales of our encoders and decoders, the largest percent increase this quarter was from very strong sales of our network video recorders. NVR sales were driven by our involvement in a major highway project in France. Our INVR compact and elite series provided reliable video storage solutions as an essential part of video surveillance systems.

Also, the Company controlled the costs in this difficult economic environment with a decrease in overall operating expense of about 5%. We were helped by FX rates in the first quarter of ‘09, but the first quarter of ‘09 expenses are lower than any quarter during 2008. This decline was led by a 7% reduction in our general and admin expenses.

We’re also proactively pursuing refinancing of our debt facilities, but we have cash on hand, so we’re focused on our subordinated debt which comes due in early 2010. And as a reminder, we completed a reduction in force at year end where we eliminated costs in mature fiberoptic product areas. This allowed the Company to maintain its investment in the video over IP market as we continue development of new products and sales channels.

And with that, I will turn the call back to Ed.

Ed Ludwig  — Optelecom-NKF - Chairman & CEO

Thanks, Steve. On the first day Dave Patterson came on board in early March, he has been extremely busy examining the inner working of Optelecom-NKF. He has been a man in perpetual motion, meeting with members of our team at home and overseas and reaching out to meet with customers and with many of the folks we would like to be doing business with. I have asked Dave to share with you today some of his thoughts and experiences as he has been hard at work charting the Company’s future course. Dave?

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Dave Patterson  — Optelecom-NKF - President

Thanks, Ed. And good morning, everyone. I’m excited to participate in this call. While our company has experienced impacts from the current state of the global economy, I share Ed’s measured optimism regarding our long term business prospects. In the next few minutes, I would like to outline my initial perspectives on our company. In the annual shareholder meeting in April, I had an opportunity to speak with a group assembled, and I covered the following points. First, why I am here at Optelecom-NKF. Secondly, what I have observed thus far. Third, where we want to go as a company. And then finally, how we will get there.

In our corporate presentations and trade shows, we provide an answer to the question why Optelecom-NKF. Several reasons are provided for customers to consider as they evaluate us as their supplier of video surveillance solutions. These are also important things for our shareholders to know as well. First, we have a clear vision, which I have found shared among our employees. Secondly, our solutions are based upon an open technology architecture, which enables them to interface with other systems. Also, Optelecom-NKF is very customer-focused, which was acknowledged in an independent survey conducted in 2008. And finally, we also have extreme depth of expertise associated with video technology and networking, which can be very valuable in the design proposal and post-sales support phases of projects. Many of these attributes attracted me to Optelecom-NKF. Also, my experience in the industrial and government markets reinforced the potential for our industry to address the challenges faced by those responsible for the safety and security of both people and property around the world. A unique characteristic of Optelecom-NKF is that these attributes have been retained and enhanced throughout the history of the company. I view this as a testament to the resolve of the leadership and employees to remain true to what makes this company a special place. I appreciate this fact and I will make every effort to retain these positive attributes as we grow.

In my first nine weeks with the company, I have had the opportunity to meet most employees based in the US and Europe, including most of our regional sales managers. Additionally, I participated in the ISD west trade show, and I’ve spoken with many in my professional network to introduce them to Optelecom-NKF. I cannot imagine a better slate of activities to become oriented to the Company and its capabilities. Our leadership team has provided support to me to ensure that I had the chance to come up to speed as quickly as possible.

Our Company has a strong foundation of integrity, the right products, and we enjoy significant customer loyalty. However, our primary challenge is a lack of market exposure and customer awareness particularly in the Americas. Our leadership team met recently to develop the framework for an updated strategic plan focused on revenue growth and profitability. I was very encouraged about the insight, flexibility, and vision displayed by our leadership team as we challenged ourselves to objectively evaluate every aspect of our company and the markets we serve. We have great people in this Company, loyal customers and a differentiated portfolio of knowledge covering video over both fiber and IP. I am confident that we will work smarter to leverage our strengths and charting a course for sustainable growth in revenues, while generating the profitability expected by our shareholders.

Given that the strong foundation exists across all functional areas of the company, I will continue to dedicate a significant amount of my time and energy toward a revenue growth throughout 2009. While taking on broader responsibilities upon Ed Ludwig’s retirement from daily activities later this year. So my specific areas of focus throughout the balance of 2009 will include the introduction of Optelecom-NKF to my professional network. This involves many companies within the industrial or critical infrastructure and government markets. I’m using a multi-level relationship development approach, which encompasses the C-level at the customer down through further management and ultimately to the technology centers. My primary objective is to convert these contacts to contracts and ultimately to purchase orders. We will also focus on the leveraging our current product portfolio. For example, we will seek to drive new sales by concentrating on winning a role in providing our video surveillance and networking expertise on active contract vehicles held by prime contractors to the US federal government. These may include single award programs that include physical security scope, as well as indefinite delivery, and indefinite quantity or IDIQ, contracts and other types. Meanwhile though, we will continue to strengthen our market channels through system integrators, distributors and resellers. Our traffic server offering is a differentiated solution that offers customers the ability to utilize video analytics to effectively monitor and manage high volume continuous flow environments and I am very excited about this solution.

In closing, I would like to reference a comment, a quote. Edwin Land, Founder of Polaroid and Inventor of the instant camera is credited with saying, “if you are able to state the problem, then the problem can be solved.” From my perspective, we have only one significant business issue at Optelecom-NKF, and that is our ability to increase sales. There are several factors that have contributed to our performance to date, but one singular objective going forward. So with a clear focus on achieving this goal, while maintaining our strengths in the other areas, I’m confident that we will find the ways to accomplish a successful transformation in our sales performance going forward.

So I will look forward to addressing your questions this morning, and in speaking with you, on future conference calls, as we reflect our progress. Ed?

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Ed Ludwig  — Optelecom-NKF - Chairman & CEO

Thanks, Dave. I’m delighted we have someone of Dave’s caliber leading the management team. You now have a sense of why we recruited him to succeed me and why there are good reasons to look to the future with continued optimism. In spite of the recent upheaval in the world’s business environment, we feel there remains a strong demand for the products, services and solutions that Optelecom-NKF offers. We fully intend to aggressively pursue these opportunities and develop additional relationships with new customers under Dave’s leadership.

Okay, Eric, can we open the line for questions now please?

QUESTION AND ANSWER

Operator

Thank you. (Operator Instructions). It appears we have no audio questions at this time.

Ed Ludwig  — Optelecom-NKF - Chairman & CEO

Okay. Eric. Well, thanks, everyone for listening to our conference call. We will look forward to talking to you again in about three months and we can talk about the second quarter at that time. So have a great day.

Operator

Thank you for your participation in today’s conference. This concludes our presentation. You may now disconnect. Have a good day.

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