Applied Digital Solutions Reports 2001 Revenue From Continuing Operations of $156 Million, 16% Above 2000.Business Editors/High Tech Writers PALM BEACH, Fla.--(BUSINESS WIRE)--April 1, 2002 Corporate-wide restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and transition to an advanced technology development company is now complete Company expects to be cash flow positive for 2002 Applied Digital Solutions, Inc. (Nasdaq: ADSX ADSX Applied Digital Solutions, Inc. (stock symbol) ), an advanced technology development company, today released financial results for the year ended December December: see month. 31, 2001. Included in the results were one time asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and phase-out Noun 1. phase-out - the act or instance of a planned discontinuation discontinuance, discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) costs of $128 million associated with the recently completed corporate-wide reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. . Revenue from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the in 2001 amounted to $156 million, a 16% increase over the $135 million recorded in 2000. For the three-month period ended December 31, 2001, revenues from continuing operations of $28 million represented a decrease of 24% compared with the $37 million for the same three-month period in 2000. The company reported a net loss from continuing operations of $198 million, or $1.23 per share (including the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges noted above) in 2001, compared with a loss from continuing operations of $29 million, or $0.52 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , in 2000. For the three months ended December 31, 2001, the company reported a net loss from continuing operations of $48 million, or $0.18 cents per share, compared with a loss of $21 million, or $0.27 cents per share, for the same three-month period in 2000. Commenting on the company's results, Scott R. Silverman Silverman is the surname of:
1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have important to put the year's results into the proper context. We've we've Contraction of we have. we've have transformed the company to position us for future growth. The merger between Digital Angel Corporation and Medical Advisory Systems (AMEX AMEX See: American Stock Exchange : DOC See doc file and docs. 1. Doc - Directed Oc 2. doc - /dok/ Common spoken and written shorthand for "documentation". Often used in the plural "docs" and in the construction "doc file" (i.e. documentation available on-line). ) was approved overwhelmingly by MAS shareholders on March 18th. With the closing of the merger, our three-year credit restructuring agreement with IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) Credit Corporation goes into effect. In addition, our corporate-wide restructuring was not completed until February February: see month. of this year. Therefore, the 2001 fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. results reflect restructuring-related write offs and charges. Moving forward, we are very pleased with preliminary results for January January: see month. and February. It's clear that the restructuring is working well. Our core business units are performing ahead of plan, so we expect to be cash flow positive for 2002." Silverman continued: "The restructuring positions us to succeed and to return value to our shareholders in 2002 and beyond. We sold or closed 27 business units, generating proceeds of over $11 million, reducing pro-forma SG&A by over $75 million, and shrinking headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. from a high of over 1600 last year to less than 200 today. Applied is now much leaner lean 1 v. leaned, lean·ing, leans v.intr. 1. To bend or slant away from the vertical. 2. , more agile and clearly focused on executing our strategy as a leading developer of proprietary, life-enhancing technologies. We expect our advanced technologies (Digital Angel(TM), VeriChip A tamper-proof identification device from VeriChip Corporation (Division of Applied Digital Solutions), Delray Beach, FL (www.adsx.com) that is implanted under the skin of a person for medical or security purposes. (TM) and Thermo Life (TM)) to emerge as dynamic engines of profitable growth in the coming years. All of these technologies have received an overwhelmingly positive response worldwide as `first of breed,' life-enhancing technologies. Digital Angel and VeriChip have already started to generate significant revenue streams. Protected by multiple patents and patents pending, these technologies will make Applied Digital the leader in this new breed of advanced personal safeguard technologies. Through our research group in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and China, we will continue to develop and distribute more breakthrough technologies in the years ahead." About Applied Digital Solutions, Inc. Applied Digital Solutions is an advanced technology development company that focuses on a range of early warning alert, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. Through its Advanced Wireless unit, the Company specializes in security-related data collection, value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. For more information, visit the company's website at http://www.adsx.com. Statements about the Company's future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are "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. " within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private 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. Reform Act of 1995. Such forward-looking statements involve risks and uncertainties and are subject to change at any time, and the Company's actual results could differ materially from expected results. The Company undertakes no obligation to update forward-looking statements to reflect subsequently occurring 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 . Financial Information follows.
APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except par value)
Assets
December 31,
-----------------------
2001 2000
-----------------------
Current Assets
Cash and cash equivalents $ 3,696 $ 8,039
Due from buyers of divested
subsidiaries 2,625 --
Accounts receivable and unbilled
receivables (net of allowance
for doubtful accounts of $2,581 in
2001 and $1,681 in 2000) 21,871 43,890
Inventories 6,174 12,311
Notes receivable 2,256 5,711
Other current assets 4,786 16,041
------------------------------------------------------------------
Total Current Assets 41,408 85,992
Net Assets Of Discontinued Operations -- 8,076
Property And Equipment, net 20,185 21,368
Notes Receivable, net 4,004 12,898
Goodwill, net 90,831 166,024
Investment in Affiliate 6,779 --
Other Assets, net 4,282 25,093
---------------------------------------------------------------------
$ 167,489 $ 319,451
=====================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable and current maturities
of long-term debt $ 83,836 $ 70,458
Accounts payable 15,441 16,945
Accrued expenses 18,207 16,361
Due to sellers of acquired subsidiary -- 9,465
Earnout and put accruals 200 18,245
Net liabilities of Discontinued
Operations 9,460 --
---------------------------------------------------------------------
Total Current Liabilities 127,144 131,474
Long-Term Debt And Notes Payable 2,586 3,916
---------------------------------------------------------------------
Total Liabilities 129,730 135,390
---------------------------------------------------------------------
Minority Interest 4,460 4,879
---------------------------------------------------------------------
Redeemable Preferred Stock - Series C -- 13,440
---------------------------------------------------------------------
Redeemable Preferred Stock Options -
Series C 5,180 5,180
---------------------------------------------------------------------
Preferred Stock, Common Stock and Other
Stockholders' Equity Preferred shares:
Authorized 5,000 shares in 2001 and 2000
of $10 par value; special voting, no shares
issued or outstanding in 2001 and 2000,
Class B voting, no shares issued or
outstanding in 2001 and 2000 -- --
Common shares: Authorized 345,000 shares in 2001
and 245,000 shares in 2000 of $.001 par value;
253,384 shares issued and 252,449 shares
outstanding in 2001 and 103,063 shares
issued and 101,847 shares outstanding
in 2000 252 103
Additional paid-in capital 342,189 266,573
Accumulated deficit (304,581) (99,478)
Common stock warrants 3,293 1,406
Treasury stock (carried at cost,
935 shares in 2001 and 1,216
shares in 2000) (1,777) (2,803)
Accumulated other comprehensive loss (747) (729)
Notes received from shares issued (10,510) (4,510)
--------------------------------------------------------------------
Total Preferred Stock, Common Stock,
and Other Stockholders' Equity 28,119 160,562
---------------------------------------------------------------------
$ 167,489 $ 319,451
=====================================================================
APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
For The Years Ended
December 31,
-----------------------------
2001 2000 1999
-----------------------------
Product revenue $ 113,147 $ 104,759 $ 78,243
Service revenue 43,167 30,007 50,821
----------------------------------------------------------------------
Total revenue 156,314 134,766 129,064
Costs of products sold 86,670 68,899 53,341
Cost of services sold 23,169 13,576 20,958
----------------------------------------------------------------------
Gross profit 46,475 52,291 54,765
Selling, general and administrative
expense 97,042 61,996 58,960
Research and development expense 8,610 2,504 --
Interest and non-cash charges:
Asset impairment, restructuring and
unusual charges 71,719 6,383 2,550
Depreciation and amortization 28,899 11,073 6,560
Non-cash compensation expense 5,274 -- --
Loss (gain) on sale of subsidiaries
and business assets 6,058 (486) (20,075)
Interest income (2,076) (1,095) (422)
Interest expense 8,555 5,901 3,478
----------------------------------------------------------------------
(Loss) income from continuing operations
before provision (benefit) for
income taxes and minority interest (177,606) (33,985) 3,714
Provision (benefit) for income taxes 20,870 (5,040) 1,180
----------------------------------------------------------------------
(Loss) income from continuing
operations before minority interest (198,476) (28,945) 2,534
Minority interest (718) 229 (46)
Equity in net loss of affiliate 328 -- --
----------------------------------------------------------------------
(Loss) income from continuing
operations (198,086) (29,174) 2,580
Income (loss) from discontinued
operations, net of income taxes
(benefit) of $0 in 2001, $(13,614)
in 2000 and $1,980 in 1999 213 (75,702) 3,012
Loss on disposal of discontinued
operations, net of tax benefit of
$0 in 2001 and $1,307 in 2000 (16,695) (7,266) --
----------------------------------------------------------------------
(Loss) income before
extraordinary loss (214,568) (112,142) 5,592
Extraordinary gain (loss)
(net of taxes of $89 in 1999) 9,465 -- (160)
----------------------------------------------------------------------
Net (loss) income (205,103) (112,142) 5,432
Preferred stock dividends and other 1,147 191 --
Accretion of beneficial conversion
feature of redeemable preferred
stock - series C 9,392 3,857 --
----------------------------------------------------------------------
Net (loss) income available to
common shareholders $ (215,642) $(116,190) $ 5,432
======================================================================
Earnings per common share - basic
(Loss) income from continuing
operations $ (1.23) $ (.52) $ .06
(Loss) income from discontinued
operations (.10) (1.30) .06
Extraordinary gain (loss) .06 -- --
----------------------------------------------------------------------
Net (loss) income per common
share - basic $ (1.27) $ (1.82) $ .12
======================================================================
Earnings per share - diluted
(Loss) income from continuing
operations $ (1.23) $ (.52) $ .05
(Loss) income from discontinued
operations (.10) (1.30) .06
Extraordinary gain (loss) .06 -- --
----------------------------------------------------------------------
Net (loss) income per common
share - diluted $ (1.27) $ (1.82) $ .11
======================================================================
Weighted average number of common
shares outstanding - basic 170,009 63,825 46,814
Weighted average number of common
shares outstanding - diluted 170,009 63,825 50,086
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