Fargo Electronics, Inc. Reports Second Quarter 2005 Results.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- Fargo Fargo, city (1990 pop. 74,111), seat of Cass co., E N.Dak., at the head of navigation on the Red River, opposite Moorhead, Minn.; inc. 1875. A railroad hub and regional financial and medical center, Fargo is also the trade and distribution center of a spring-wheat Electronics, Inc. (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 :FRGO) today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the second quarter ended June June: see month. 30, 2005, of $18,886,000 compared with net sales of $17,545,000 in the second quarter of 2004. Net income for the second quarter was $2,366,000, or $0.18 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $1,747,000, or $0.14 per diluted share in the same period last year. For the six months ended June 30, 2005, the company reported net sales of $37,543,000, an increase of 13% over the $33,099,000 reported in the same period last year. Net income for the period was $4,515,000, or $0.35 per diluted share, an increase of 42% over the $3,174,000, or $0.25 per diluted share reported in the previous year. "Fargo has performed well in the first half of 2005," said Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. R. Holland, Fargo's president and chief executive officer. "Demand for our printer/encoders continues to be strong, resulting in printer revenue growth of 10% over the comparable quarter last year and 16% for the first half year. Operating profitability and cash flow remain high. With our new security-focused product line, we believe Fargo is positioned well to meet the needs of organizations worldwide that are concerned about the security of their personnel, facilities and information. "We are also pleased at the settlement reached during the quarter with Toppan Printing Co. Ltd. and Viisage Technology, Inc. of the lawsuit lawsuit: see procedure; tort. we filed last year," continued Holland. "As a result of the settlement we now have another technology partner in Toppan, and the opportunity to increase our distribution by working with Viisage." Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the quarter were 44% and benefited from lower manufacturing costs and reduced warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. expense due to improved product quality. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $5,342,000 compared to $4,257,000 last year. The increase is primarily due to higher sales and marketing expenses, increased 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. and increased professional fees. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter was $2,978,000, or 16% of revenues, compared to $2,555,000, or 15% of revenues last year. Other income for the quarter was $588,000 and included $400,000 received from Toppan Printing Co. Ltd. as part of the 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. settlement. Other accomplishments included the addition of Fargo to the Russell 3000 Index The Russell 3000 Index is a stock market index of US stocks. The ticker is "RUA" or similar. See Russell Indexes page for main discussion. See also the iShares Russell 3000. and the receipt of notice of allowances from the United States Patent and Trademark Office The United States Patent and Trademark Office (PTO or USPTO) is an agency in the United States Department of Commerce that provides patent protection to inventors and businesses for their inventions, and trademark registration for product and intellectual property on six patent applications. A notice of allowance is the final step before issuance of the patent. These applications relate to printer consumables, feeding of cards into the printer, and lamination lamination a laminar structure or arrangement. technologies. Outlook Fargo presently anticipates that earnings per diluted share for the third quarter of fiscal 2005 will be in the range of $0.18 to $0.21. 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. Statements made in this release concerning the Company's expectations about future results or events, are "forward-looking statements". When used in this release and the documents referenced, words such as "anticipate," "believe," "estimate," "expect," and "forecast" as they relate to the Company or its management are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. Such statements are subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created by 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, and are necessarily subject to risks and uncertainties. Actual results may differ materially from those reflected in these forward-looking statements. These statements are based on current expectations, forecasts and assumptions, and are subject to the risks and uncertainties inherent in general industry and market conditions, general domestic and international economic conditions, and other factors. These risks and uncertainties include, but are not limited to: product acceptance and customer demand for Fargo's card personalization Custom tailoring information to the individual. On the Web, personalization means returning a page that has been customized for the user, taking into consideration that person's habits and preferences. systems and proprietary supplies; actions taken and alternative products marketed by Fargo's competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; supplier relationships, including reliance on sole and single-source suppliers; manufacturing or design defects that we may discover after shipment; lack of inventories of component parts or finished goods; our focus on the identification card personalization market; continuing technological changes in our industry; our dependence on a distribution network and the reaction of this network to changes in distribution programs; domestic and international regulations and standards; our dependence on international sales and foreign suppliers; material changes in orders placed by large end users; challenges in effectively managing growth; our dependence on technologies we do not own; complex design that could result in manufacturing delays; protecting and enforcing our intellectual property rights; inadequate protection against infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. claims; adverse economic and business conditions, including conditions resulting from the terrorist attack on the U.S. on September September: see month. 11, 2001 and the resulting hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. and the war with Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. . For more detail of the risks, uncertainties and other factors that could affect the Company's future operations and results, see the Company's filings with the Securities and Exchange Commission, particularly the 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, 2004. The Company assumes no obligation to update the forward-looking statements or any other information contained in this release. About Fargo Founded in 1974, Fargo Electronics is a global leader in the development of secure technologies for identity card issuance systems, including secure card printer/encoders, materials and software. The company has sold more than 100,000 systems in the U.S. and over 80 other countries worldwide. Fargo card issuance systems reduce vulnerabilities and potential for loss of time, money and lives by continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. improving the security of identity credentials CREDENTIALS, international law. The instruments which authorize and establish a public minister in his character with the state or prince to whom they are addressed. If the state or prince receive the minister, he can be received only in the quality attributed to him in his credentials. . Fargo provides physical, information, and transaction security for a wide variety of applications and industries, including government, corporate, national IDs, drivers' licenses, universities, schools and membership. Based in Minneapolis, Minn., Fargo markets its products through a global distribution network of professional security integrators. For more information about Fargo, visit www.fargo.com.
FARGO ELECTRONICS, INC.
CONDENSED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
June 30, December 31,
ASSETS 2005 2004
------------ ------------
Current assets:
Cash and cash equivalents $29,858 $23,435
Accounts receivable, net 9,229 9,702
Inventories, net 4,990 6,219
Prepaid expenses 555 271
Deferred income taxes 3,259 3,259
------------ ------------
Total current assets 47,891 42,886
Equipment and leasehold improvements, net 3,081 2,026
Deferred income taxes 15,514 16,966
Other 23 27
------------ ------------
Total assets $66,509 $61,905
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,430 $6,018
Accrued liabilities 2,507 2,806
------------ ------------
Total current liabilities 7,937 8,824
------------ ------------
Commitments and contingencies - -
Stockholders' equity:
Common stock, $.01 par value; 50,000
shares authorized, 12,737 and 12,603
shares issued and outstanding at June 30,
2005 and December 31, 2004, respectively 127 126
Additional paid-in capital 151,278 150,303
Accumulated deficit (92,833) (97,348)
------------ ------------
Total stockholders' equity 58,572 53,081
------------ ------------
Total liabilities and stockholders'
equity $66,509 $61,905
------------ ------------
FARGO ELECTRONICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
--------- -------- -------- ---------
Net sales $18,886 $17,545 $37,543 $33,099
Cost of sales 10,566 10,733 21,280 19,766
--------- -------- -------- ---------
Gross profit 8,320 6,812 16,263 13,333
--------- -------- -------- ---------
Operating expenses:
Research and development 1,544 1,218 2,797 2,504
Selling, general and
administrative 3,798 3,039 7,468 6,133
--------- -------- -------- ---------
Total operating expenses 5,342 4,257 10,265 8,637
--------- -------- -------- ---------
Operating income 2,978 2,555 5,998 4,696
--------- -------- -------- ---------
Other income:
Interest, net 188 32 310 54
Other, net 400 - 393 -
--------- -------- -------- ---------
Total other income 588 32 703 54
--------- -------- -------- ---------
Income before provision for
income taxes 3,566 2,587 6,701 4,750
Provision for income taxes 1,200 840 2,186 1,576
--------- -------- -------- ---------
Net income $2,366 $1,747 $4,515 $3,174
--------- -------- -------- ---------
Net income per common share:
Basic earnings per share $0.19 $0.14 $0.36 $0.25
Diluted earnings per share $0.18 $0.14 $0.35 $0.25
Weighted average common shares
outstanding:
Basic 12,676 12,491 12,646 12,482
Diluted 13,094 12,788 13,051 12,821
FARGO ELECTRONICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
2005 2004
------------ ------------
Cash flows from operating activities:
Net income $4,515 $3,174
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 521 489
Provision for excess and obsolete
inventory 168 58
Loss on disposal of equipment 8 -
Deferred income taxes 1,452 1,310
Tax benefit recognized for stock
options - 16
Changes in operating assets and
liabilities
Accounts receivable 473 (2,896)
Inventories 1,061 (16)
Prepaid expenses and other assets (284) (199)
Accounts payable (816) 2,330
Accrued liabilities (299) (25)
------------ ------------
Net cash provided by operating
activities 6,799 4,241
------------ ------------
Cash flows from investing activities:
Purchases of equipment and leasehold
improvements (1,352) (472)
------------ ------------
Net cash used in investing activities (1,352) (472)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 976 302
------------ ------------
Net cash provided by financing
activities 976 302
------------ ------------
Net increase in cash and cash equivalents 6,423 4,071
Cash and cash equivalents, beginning of
period 23,435 13,445
------------ ------------
Cash and cash equivalents, end of period $29,858 17,516
------------ ------------
Significant noncash activities:
Purchases of equipment included in
accounts payable $228 $53
FARGO ELECTRONICS, INC.
SUPPLEMENTAL SALES INFORMATION
(In thousands)
(Unaudited)
Sales by Product Category
Three Months Ended June 30, Six Months Ended June 30,
2005 2004 2005 2004
------------- ------------- ------------- -------------
Equipment $7,670 $6,954 $14,341 $12,386
Supplies 11,216 10,591 23,202 20,713
------------- ------------- ------------- -------------
Total sales $18,886 $17,545 $37,543 $33,099
============= ============= ============= =============
Sales by Geographic Region
Three Months Ended June 30, Six Months Ended June 30,
2005 2004 2005 2004
------------- ------------- ------------- -------------
U.S. $9,636 $10,344 $20,563 $18,521
International 9,250 7,201 16,980 14,578
------------- ------------- ------------- -------------
Total sales $18,886 $17,545 $37,543 $33,099
============= ============= ============= =============
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion