American Bank Note Holographics Reports Second Quarter 2006 Financial Results.ROBBINSVILLE, N.J. -- 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. ("ABNH ABNH American Bank Note Holographics, Inc " or the "Company") (OTC Bulletin Board OTC Bulletin Board An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the NASDAQ stock-listing system. : ABHH) a world 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 holograms for security applications, today announced financial results for the second quarter and six months ended June June: see month. 30, 2006. Sales in the second quarter of 2006 totaled $8.4 million, compared with $6.9 million in the second quarter of 2005, an increase of $1.5 million or 22%. Sales in the first six months of 2006 totaled $18.4 million compared to $13.3 million in the comparable period in 2005, a $5.1 million or 38% increase. The Company reported net income of $1.0 million or $0.05 per share in the second quarter of 2006 compared to net income of $0.5 million or $0.02 per share in the second quarter of 2005. For the six months ended June 30, 2006 net income amounted to $2.0 million or $0.10 per share compared to $1.1 million or $0.06 per share in the comparable prior year period. As previously reported, certain shipments of Visa HoloMag(TM) totaling approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.3 million that were completed and invoiced during the quarter ended March 31, 2006 were not recognized as revenue in that quarter as collection of those amounts were not considered probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. at that time as a result of the Visa decision to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: their HoloMag implementation. Approximately $0.9 million of those amounts were collected and recognized as revenue in the second quarter. The increase in net income in the second quarter principally resulted from the increased revenue (including the Visa HoloMag revenue which had no corresponding cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold as those costs were recorded in the first quarter when the product shipped) and the reduction of costs as a result of a negotiated settlement with a vendor partially offset by the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of overhead and other costs as a result of the Visa decision as well as higher research and development costs for the invention INVENTION. A contrivance; a discovery. It is in this sense this word is used in the patent laws of the United States. 17 Pet. 228; S. C. 1 How. U. S. 202. It signifies not something which has been found ready made, but something which, in consequence of art or accident, has been formed; and development of a second generation HoloMag product. Additionally impacting net income and earnings per share was the adoption by the Company of Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement No. 123(R) effective January January: see month. 1, 2006, using the modified-prospective transition method described in the Statement. Under this method, the Company is required to recognize compensation expense for all stock awards granted after the adoption and for the unvested portion of previously granted awards that remain outstanding as of the adoption date. Accordingly, we recorded compensation expense in the three months ended June 30, 2006 of $0.3 million. Kenneth H. Traub, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of ABNH, commented, "We are delighted to report strong financial results for the second quarter along with continued commercial achievements. The results of the second quarter reflected increased sales of Visa Dove and Mini Dove holograms worldwide, as well as continued deployment of HoloMag with other customers. The sales increase also reflected a further penetration in the product 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. market this quarter. We are also starting to see the benefits of the facility consolidation in terms of improved operational efficiency." Mr. Traub continued, "We have devoted a great deal of attention to addressing the phenomenon of electro-static discharge To liberate or free; to terminate or extinguish. A discharge is the act or instrument by which a contract or agreement is ended. A mortgage is discharged if it has been carried out to the full extent originally contemplated or terminated prior to total execution. ("ESD (1) (Electronic Software Distribution) Distributing new software and upgrades via the network rather than individual installations on each machine. See ESL. "), and we have developed innovative solutions to address the very limited instances of ESD that resulted from the use of HoloMag in certain ESD vulnerable payment terminals. The two most noteworthy solutions that ABNH developed include: (1) terminal treatment cards, and (2) a second generation HoloMag product. The terminal treatment cards that ABNH developed incorporate an electro-static dissipative dis·si·pate v. dis·si·pat·ed, dis·si·pat·ing, dis·si·pates v.tr. 1. To drive away; disperse. 2. agent that helps to insulate in·su·late tr.v. in·su·lat·ed, in·su·lat·ing, in·su·lates 1. To cause to be in a detached or isolated position. See Synonyms at isolate. 2. a vulnerable terminal from ESD. Our second generation HoloMag product incorporates ABNH's patent pending invention for significant reduction of ESD. Our testing shows that our second generation HoloMag product generally exhibits no more ESD than a standard black magnetic stripe A small length of magnetic tape adhered to credit cards, badges, permits, passes and tokens. The tape is read by magnetic stripe readers incorporated into ATMs, identification readers and payment terminals. . We are now offering the second generation HoloMag to our customers and expect to begin shipping the product in limited quantities this year." About American Bank Note Holographics, Inc. American Bank Note Holographics is a world leader in the origination, production, and marketing of holograms. The Company's products are used primarily 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 of transaction cards, identity documents, documents of value, pharmaceuticals and other consumer and industrial products. The Company's headquarters is in Robbinsville, NJ. For more information, visit www.abnh.com. ABNH Forward-Looking Statement 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. Certain statements contained in this release, including without limitation, statements containing the words "believes," "intends," "expects," "anticipates," and words of similar import, constitute "forward-looking statements" within the meaning of the private securities litigation reform act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are based on current management expectations. Numerous factors, including those disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). herein, those related to transaction card industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth under the heading "Risk Factors" in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005), may cause results to differ materially from those anticipated in the forward-looking statements. Many of the factors that will determine our future results are beyond our capability to control or predict. These statements are subject to risks and uncertainties and therefore actual results may differ materially. Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of 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" . We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. This release and prior releases are available on the ABNH website at www.abnh.com.
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
BALANCE SHEETS - UNAUDITED
(In thousands, except share data)
June 30, December 31,
2006 2005
----------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,413 $ 9,114
Accounts receivable, net of allowance for
doubtful accounts of $500 and $500 4,732 6,019
Inventories, net 2,258 2,940
Deferred income taxes, net 2,756 2,968
Prepaid expenses and other 110 331
Income tax receivable 329 401
---------- ------------
Total current assets 23,598 21,773
MACHINERY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS--Net of accumulated depreciation
and amortization of $9,240 and $8,852 6,489 7,224
DEFERRED INCOME TAXES, NET -- 411
OTHER ASSETS 66 76
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TOTAL ASSETS $ 30,153 $ 29,484
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,908 $ 3,820
Accrued expenses 3,291 3,834
Customer advances 325 204
Income taxes payable -- 359
---------- ------------
Total current liabilities 6,524 8,217
LONG-TERM LIABILTIES 1,646 1,957
---------- ------------
Total liabilities 8,170 10,174
---------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, authorized 5,000,000
shares; no shares issued or outstanding -- --
Common stock, par value $.01 per share,
authorized 40,000,000 shares; issued and
outstanding 18,905,580 shares and
18,715,469 shares 189 187
Additional paid-in capital 25,303 24,729
Unearned compensation on restricted stock -- (96)
Accumulated deficit (3,509) (5,510)
---------- ------------
Total Stockholders' Equity 21,983 19,310
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,153 $ 29,484
========== ============
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
STATEMENTS OF OPERATIONS - UNAUDITED
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2006 2005 2006 2005
-------- -------- -------- --------
REVENUE:
Sales $ 8,370 $ 6,857 $ 18,358 $ 13,257
Royalty income -- -- -- 10
-------- -------- -------- --------
Total revenue 8,370 6,857 18,358 13,267
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of goods sold, excluding
depreciation and amortization 3,759 3,161 8,595 5,960
Selling and administrative 2,366 2,213 5,131 4,131
Research and development 479 308 936 581
Depreciation and amortization 224 277 451 628
Facility consolidation 74 215 114 322
-------- -------- -------- --------
Total costs and expenses 6,902 6,174 15,227 11,622
-------- -------- -------- --------
Operating income 1,468 683 3,131 1,645
OTHER INCOME:
Interest 117 68 204 122
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR INCOME
TAXES 1,585 751 3,335 1,767
PROVISION FOR INCOME TAXES 634 301 1,334 707
-------- -------- -------- --------
NET INCOME $ 951 $ 450 $ 2,001 $ 1,060
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NET INCOME PER SHARE:
Basic $ 0.05 $ 0.02 $ 0.11 $ 0.06
======== ======== ======== ========
Diluted $ 0.05 $ 0.02 $ 0.10 $ 0.06
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic 18,889 18,550 18,858 18,533
======== ======== ======== ========
Diluted 19,359 19,402 19,636 19,255
======== ======== ======== ========
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