American Bank Note Holographics Announces Completion of the Audits of its Financial Statements for 1996, 1997 and 1998.ELMSFORD, N.Y.--(BUSINESS WIRE)--Nov. 15, 1999-- Financial Statements Reflect Adjustments to 1996 and 1997 and Each of the Quarters of 1998 Previously Reported by Prior Management American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Bank Note Holographics, Inc. announced today that the Company's independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. , Deloitte & Touche LLP LLP - Lower Layer Protocol , have completed the audits of the Company's balance sheets at December December: see month. 31, 1997 and 1998 and the related statements of income, stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. and cash flows for each of the three years in the period ended December 31, 1998. These financial statements reflect restatements of the years ended December 31, 1996 and 1997 as well as adjustments to the unaudited results of the first three quarters of 1998 previously reported by prior management. The Company announced audited financial results for the years ended December 31, 1996 (restated), 1997 (restated) and 1998, as follows: - 1996 sales were $27.5 million. Net income was $4.3 million, or $0.32 per share. - 1997 sales were $23.1 million. Net income was $2.8 million, or $0.21 per share. - 1998 sales were $28.7 million. Net income was $1.1 million, or $0.08 per share. The Company's stockholders' equity as of December 31, 1998 was $14.5 million. Kenneth Traub, President of the Company, said, "The restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. and audit of the Company's historical financial statements was a substantial and time consuming undertaking. Now that the restatement has been completed, we look forward to bringing all of the Company's SEC filings current over the next several weeks and moving on to other important priorities for the future." Mr. Traub continued, "1999 was a transition year for American Bank Note Holographics during which we addressed many of the most pressing issues facing the Company, restored stability to the business, and began to focus on long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth initiatives. We are proud of the progress we have made this year in a challenging environment, and we look forward to continuing this progress and enhancing our leadership position in the industry." During 1999, the Company confronted a variety of challenges and achieved some important milestones and accomplishments. The challenges included the following: - In January, the Company disclosed that its previously issued financial statements for 1996, 1997 and the first three quarters of 1998 all required restatement. This gave rise either directly or indirectly to several other issues that were significant to the Company. - The Company was notified by its commercial bankers, led by the Chase Manhattan Bank The Chase Manhattan Bank, now part of JPMorgan Chase, was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. The bank is headquartered in New York City. , that it was in default on its bank debt. At the time of the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. , the Company was born with $5.2 million of secured bank debt and nominal cash. - The Chairman and Chief Executive Officer, the President and Chief Operating Officer, the VP Finance, the Controller, and the VP Operations all resigned from their positions with the Company. - Class Action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax were filed against the Company on behalf of shareholders. - The Securities and Exchange Commission and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Attorney's CERTIFICATE, ATTORNEY'S, Practice, English law. By statute 37 Geo. III., c. 90, s. 26, 28, attorneys are required to deliver to the commissioners of stamp duties, a paper or note in writing, containing the name and usual place of residence of such person, and thereupon, on paying certain office commenced investigations. - The New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. suspended trading Suspended trading Temporary halt in trading in a particular security, in advance of a major news announcement or to correct an imbalance of orders to buy and sell. suspended trading The temporary suspension of trading in a security. and indicated its intention to seek the delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. of the Company's stock due to the failure to file the required financial documents with the SEC. While the Company does not expect its securities to resume trading on the NYSE NYSE See: New York Stock Exchange , the Company expects to seek to have its securities traded on another stock exchange or NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on when it becomes current with all of its SEC filings. - As a result of the above issues, the Company was under a great deal of scrutiny by concerned customers, suppliers, employees, lenders, shareholders, lawyers, regulators and others. In light of these issues, the Company took a series of actions and achieved some important accomplishments: - The Audit Committee of the Company's Board of Directors conducted an extensive investigation into the Company's prior management and accounting practices. - The Company recruited and built a strong new management team. Kenneth Traub, President; Salvatore D'Amato, Chairman; Russell LaCoste, Executive Vice President of Business Development and Marketing; Alan Goldstein Gold·stein , Joseph Leonard Born 1940. American biochemist. He shared a 1985 Nobel Prize for discoveries related to cholesterol metabolism. , Chief Financial Officer; George Condos, Controller; and Peter Sorbo, Director of Research and Development and Engineering, all joined or rejoined "Rejoined" is an episode of , the sixth episode of the fourth season. Quick Overview: Jadzia Dax is reunited with the mate of a former host and the two struggle with their feelings for one another. the Company in 1999. - We negotiated an Amendment to the Loan Agreement with Chase which waived the existing defaults, and then closed a refinancing Refinancing An extension and/or increase in amount of existing debt. with Foothill Capital Corporation, which enabled the Company to repay the Chase facility and improve its capital structure. - We generated positive cash flow enabling us to reduce debt. We accomplished this during a challenging period in which we had a substantial amount of non-recurring expenditures relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the issues described above. Early in the year, we implemented improved cost control and balance sheet management initiatives which helped us achieve this cash flow and debt reduction. - We restructured operations to improve accountability and reduce expenses, including headcount reductions of approximately 50 employees. We believe we have been successful in retaining all of our most important employees, and we have created a stronger, more efficient workforce. - We have implemented improved information and accounting systems. - We have been cooperating with the SEC and the U.S. Attorney in connection with their investigations. - We have made a lot of progress in restoring our reputation among our customers and within our industry. - We have succeeded in retaining the great majority of our customer relationships and we have developed some important new customers. - We have started to pursue new applications and markets for our products. For instance, we believe there is an increasing demand for holograms on bank notes (currency), and we have started to develop improved solutions that better meet the needs and requirements of this market. - We have studied our patent rights and certain commercial agreements. We succeeded in persuading a competitor to pay past due royalties in excess of $800,000 that were owed from the fourth quarter of 1997 through the second quarter of 1999, and to resume future royalty payments pursuant to a patent license agreement that the Company had previously entered into. We believe our patent portfolio is very valuable and we intend to continue to leverage the value of our intellectual property and patent rights. Mr. Traub continued, "This year, our priorities were to address the problems we inherited inherited received by inheritance. inherited achondroplastic dwarfism see achondroplastic dwarfism. inherited combined immunodeficiency see combined immune deficiency syndrome (disease). and stabilize stabilize See peg. the business. While it was difficult, I believe we accomplished much of what we needed to do this year, and we are now a stronger company going into the year 2000. Our current priorities are to focus on enhancing our reputation in the marketplace, continuing to improve product quality and customer service, and seizing new product and market opportunities to strengthen our leadership position in our industry." Salvatore D'Amato, Chairman of the Board of the Company, added, "While it was unfortunate to see the company that I started 18 years ago go through such a difficult experience, I am delighted to be working closely with Ken to help address the issues we inherited this year and position the company for the future. We have a strong management team now that is committed to not only moving the Company forward, but developing more of the innovative products and programs on which American Bank Note Holographics has built its reputation. We have accomplished a lot this year and I am excited about the opportunities for the future." American Bank Note Holographics is a leader in the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real , production, and marketing of mass-produced secure holograms. The Company's products are used for security applications, such as counterfeiting counterfeiting, manufacturing spurious coins, paper money, or evidences of governmental obligation (e.g., bonds) in the semblance of the true. There must be sufficient resemblance to the genuine article to deceive a person using ordinary caution. protection for credit and other transaction cards, identification cards and documents of value, as well as for tamper resistance Tamper resistance is resistance to by either the normal users of a product, package, or system or others with physical access to it. There are many reasons for employing tamper-resistance. and authentication (1) Verifying the integrity of a transmitted message. See message integrity, e-mail authentication and MAC. (2) Verifying the identity of a user logging into a network. of high-value consumer and industrial products. This news release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. Although the Company believes such statements are reasonable, it can make no assurances that such statements will prove to be correct. Such statements are subject to certain factors which may cause actual results to differ materially from the forward-looking statements, including but not limited to, risks associated with our ability to resolve problems resulting from the need to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state prior period financial statements; pending shareholder litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; competition in themarket for holograms; retaining and attracting key employees; and changes in business conditions which might impact customers and suppliers. The Company undertakes no obligation to publicly release results of any of these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unexpected results.
Statements Of Income
Years Ended December 31, 1998, 1997
(As Restated) and 1996 (As Restated)
(In Thousands, Except Share Data)
----------------------------------------------------------------------
1998 1997 1996
---- ---- ----
SALES $ 28,669 $ 23,085 $ 27,516
COSTS AND EXPENSES:
Cost of sales 19,064 12,153 14,710
Selling, general, administrative
and depreciation and amortization 7,371 6,949 5,852
-------- -------- --------
Total costs and expenses 26,435 19,102 20,562
-------- -------- --------
OPERATING INCOME 2,234 3,983 6,954
OTHER-Net:
Royalty income 554 785 128
Interest and other income (expense) (400) 182 373
-------- -------- --------
INCOME BEFORE INCOME TAXES 2,388 4,950 7,455
INCOME TAXES 1,269 2,130 3,117
-------- -------- --------
NET INCOME $ 1,119 $ 2,820 $ 4,338
======== ======== ========
NET INCOME PER SHARE:
Basic and diluted $ 0.08 $ 0.21 $ 0.32
======== ======== ========
Balance Sheets
December 31, 1998 and 1997 (As Restated)
(In Thousands)
----------------------------------------------------------------------
ASSETS 1998 1997
---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 4,319 $ 253
Accounts receivable, net 4,023 5,897
Inventory, net 5,827 6,031
Deferred income taxes 1,777 708
Prepaid expenses and other 427 95
-------- --------
Total current assets 16,373 12,984
MACHINERY, EQUIPMENT AND
LEASEHOLD IMPROVEMENTS - Net 5,325 5,695
OTHER ASSETS 680 43
EXCESS OF COST OVER NET ASSETS ACQUIRED - Net 8,442 8,793
-------- --------
TOTAL ASSETS $ 30,820 $ 27,515
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank debt $ 5,591 $ 674
Current portion of notes payable 304 --
Accounts payable 4,376 2,244
Accrued expenses 2,619 1,382
Customer advances 1,460 --
-------- --------
Total current liabilities 14,350 4,300
OTHER LONG-TERM LIABILITIES, INCLUDING NOTES PAYABLE 477 460
DEFERRED INCOME TAXES 1,463 1,590
-------- --------
Total liabilities 16,290 6,350
-------- --------
STOCKHOLDERS' EQUITY:
Common stock 136 136
Additional paid-in capital 11,627 11,627
Retained earnings 2,767 35,536
Due from former parent and affiliates -- (26,134)
-------- --------
Total stockholders' equity 14,530 21,165
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,820 $ 27,515
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