Hauppauge Digital Reports Fiscal 2005 Year End Financial Results; Fiscal Year Sales Increase 20%, to a New Annual High, Led By Increase in OEM Sales of WinTV-PVR Products.HAUPPAUGE Hauppauge can refer to:
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 : HAUP HAUP High-Accuracy Universal Polarimeter ), a leading developer of digital video TV and data broadcast receiver products for personal computers, today reported financial results for the fiscal fourth quarter and fiscal year ended September September: see month. 30, 2005. FOURTH QUARTER RESULTS 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 were $15.4 million for the fourth quarter compared to $16.5 million for the previous year's fourth quarter, a decrease of approximately 7%. Despite the growth of sales of our new WinTV-HVR series of hybrid video recorders See DVR, DVD-R and DVD drives. , overall European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. retail sales of our older analog TV product line experienced a sharp drop off. Gross profit percentage was 21.71% for the fourth quarter compared with a gross profit of 25.58% for the previous year's fourth quarter. Higher sales of lower margin OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and products coupled with the drop in European retail sales were the primary items driving the gross profit percent decrease. Selling, General and Administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. increased by $165,413. Increased promotional expenses Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade related to marketing programs were the main forces driving the increase. The Company recorded a net loss for the fourth fiscal quarter of $864,371, compared to a net income of $119,261 for the fourth fiscal quarter ended September 30, 2004. Net loss per share was $0.09 on a basic and 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. basis compared to net income per share of $0.01 on a basic and diluted basis for the prior year's fourth quarter. FISCAL YEAR RESULTS Net sales were $78.5 million for the year ended September 30, 2005, a new record, compared to $65.3 million for the previous fiscal year, an increase of approximately 20%. Increases in sales of our retail WinTV-PVR personal video recorder See DVR. products, WinTV-PVR MCE See Media Center Edition. personal video recorder products for Windows XP The previous client version of Windows. XP was a major upgrade to the client version of Windows 2000 with numerous changes to the user interface. XP improved support for gaming, digital photography, instant messaging, wireless networking and sharing connections to the Internet. Media Center sold to the OEM market, digital TV receiver products and the introduction of dual digital and analog TV receiver products were the primary reasons for the sales increase. These include products introduced in 2005. Gross profit percentage was 22.76% for the 2005 fiscal year compared to a gross profit percentage of 26.47% for the previous year. The continued growth of OEM product sales, while desirable, will yield a lower gross profit margin 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. than our retail products. These do not require the sales, promotion and customer support required of our retail sales, but do result in reduction of gross profit margin. Selling, General and Administrative expenses, increased by $1,229,562 for the fiscal year ended September 30, 2005 over the prior fiscal year. Selling expenses increased due to increased compensation and commission expenses related to sales volume, investments in retail promotional programs and the strengthening of the value of the Euro to the U.S. dollar, which increased sales expenses in our European operation. There was a decrease in General and Administrative expenses due to lower legal fees due to the completion during fiscal 2004 of certain arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the and 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. suits and lower compensation expenses mainly due to the resignation of the Company's former President, offset by higher consulting fees related to Sarbanes-Oxley Section 404 compliance work and the costs of updating our transfer price study. Spending for research and development increased $472,886, mainly due to the addition of research and development personnel, the opening during fiscal 2004 of a research and development facility in Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan and increased volume of product development programs. Net income for the fiscal year ended September 30, 2005 was $1,386,753 compared to net income of $1,825,148 for the prior year. Basic net income per share was $0.15 and diluted net income per share was $0.14, compared to basic net income per share of $0.20 and diluted net income of $0.19 for the prior year. DISCUSSION OF RESULTS Ken Plotkin, Hauppauge's Chief Executive Officer stated "Sales growth in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and in international OEM sales was responsible for our strong year over year sales increase. The strong sales growth was limited by weak sales of older products in our European retail sales channel. But based on the forecasted growth of the Media Center market in 2006, a key driver in the OEM and U.S. retail markets, we expect continued sales growth in 2006. In fiscal 2005, we successfully transitioned to a lower cost series of digital TV products for the European market, which we believe will allow the company to replace our older, declining analog product line with a more competitive series of digital TV receivers. We re-launched our entire line of European digital TV products, lead by the new WinTV-HVR series of hybrid digital/analog TV receivers for PCs." ABOUT HAUPPAUGE DIGITAL Hauppauge Digital, Inc. is a leading developer of analog and digital TV receiver products for the personal computer market. Through its Hauppauge Computer Works, Inc. and Hauppauge Digital Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). subsidiaries, the Company designs and develops analog and digital TV
receivers that allow PC users to watch television on their PC screen in
a resizable window and enable the recording of TV shows to a hard disk,
digital video editing See nonlinear video editing and video editor. , video conferencing See videoconferencing. (communications) video conferencing - A discussion between two or more groups of people who are in different places but can see and hear each other using electronic communications. , receiving of digital TV transmissions, and the display of digital media stored on a computer to a TV set via a home network. The Company is headquartered in Hauppauge, New York Hauppauge (pronounced /hɔpɔg/) is a hamlet in the Town of Islip and the Town of Smithtown in Suffolk County, New York, United States. , with administrative offices in Luxembourg Luxembourg, province, Belgium Luxembourg, Du. Luxemburg, province (1991 pop. 232,813), 1,706 sq mi (4,419 sq km), SE Belgium, in the Ardennes, bordering on the Grand Duchy of Luxembourg in the east and on France in the south. , Ireland and Singapore and sales offices in Germany, London, Paris, The Netherlands, Sweden, Italy, Spain, Singapore, Taiwan and 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). . The Company's Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the web site can be found at http://www.hauppauge.com. Statements in this Release constitute "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 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. All statements, other than statements of historical facts, may be forward looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in 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 . These statements involve risks or uncertainties that could cause actual results to differ materially from those included in forward-looking statements due to a variety of factors. More information about these factors can be found in Hauppauge's latest Annual Report filed with the Securities and Exchange Commission under 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. . Hauppauge undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended
September 30,
2005 2004
------ -------
Net Sales $15,362,266 $16,510,710
Cost of Sales 12,026,964 12,287,239
----------- ------------
Gross Profit 3,335,302 4,223,471
Selling, General and Administrative expenses 3,566,819 3,401,406
Research & Development expenses 649,155 653,554
----------- ------------
Income (loss) from operations (880,672) 168,511
Other income (expense):
Interest income 5,657 1,681
Foreign currency 41,844 (19,657)
----------- ------------
Total other income (expense) 47,501 (17,976)
----------- ------------
Income (loss) before income tax expense (833,171) 150,535
Income tax expense 31,200 31,274
----------- ------------
Net income (loss ) $ (864,371)$ 119,261
=========== ============
Net income (loss) per share
Basic $ (0.09) $ 0.01
Diluted $ (0.09) $ 0.01
============ ===========
Weighted average shares-basic 9,499,556 9,166,581
Weighted average shares-diluted 9,499,556 9,746,553
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended
September 30,
2005 2004
------- -------
Net Sales $78,457,785 $65,339,583
Cost of Sales 60,599,066 48,045,365
----------- ------------
Gross Profit 17,858,719 17,294,218
Selling, General and Administrative expenses 13,903,417 12,319,805
Research & Development expenses 2,493,710 2,020,824
Litigation expenses related to litigation and
arbitration proceedings - 354,050
Arbitration proceeding - 206,250
Litigation proceeding - 427,000
----------- ------------
Income from operations 1,461,592 1,966,289
Other income:
Interest income 13,684 6,054
Foreign currency 60,833 2,302
----------- ------------
Total other income 74,517 8,356
----------- ------------
Income before income tax expense 1,536,109 1,974,645
Income tax expense 149,356 149,497
----------- ------------
Net income $ 1,386,753 $ 1,825,148
=========== ============
Net income per share:
Basic $ 0.15 $ 0.20
Diluted $ 0.14 $ 0.19
=========== ============
Weighted average shares-basic 9,431,695 8,999,266
Weighted average shares-diluted 9,988,646 9,668,223
HAUPPAUGE DIGITAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, September 30,
2005 2004
----------------------------
Assets:
Current Assets:
Cash and cash equivalents $ 7,567,393 $ 8,661,589
Accounts receivables, net of various
allowances 13,048,076 13,593,907
Inventories 9,806,785 8,477,254
Prepaid expenses and other current
assets 1,087,453 770,745
------------- --------------
Total current assets 31,509,707 31,503,495
Property, plant and equipment, net 525,108 489,370
Security deposits and other non
current assets 81,529 77,934
------------- --------------
$32,116,344 $32,070,799
------------- --------------
Liabilities and Stockholders' Equity :
Current Liabilities:
Accounts payable $10,750,560 $13,243,966
Accrued expenses 5,248,348 4,256,970
Income taxes payable 175,944 242,438
------------- --------------
Total current liabilities 16,174,852 17,743,374
Stockholders' Equity
Common stock $.01 par value;
25,000,000 shares authorized
10,107,936 and 9,759,465 issued,
respectively 101,080 97,595
Additional paid-in capital 13,603,705 12,913,497
Retained earnings 3,311,888 1,925,135
Accumulated other comprehensive income 682,770 975,511
Treasury Stock, at cost, 607,547, and
567,067 shares, respectively (1,757,951) (1,584,313)
-------------- -------------
Total stockholders' equity 15,941,492 14,327,425
-------------- -------------
$32,116,344 $32,070,799
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