NovAtel Inc. Reports Record Financial Results for Fiscal 2004.CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. -- NovAtel 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 :NGPS), a global positioning systems Global Positioning System: see navigation satellite. Global Positioning System (GPS) Precise satellite-based navigation and location system originally developed for U.S. military use. manufacturer, today announced its financial results for the fourth quarter and the year ended December December: see month. 31, 2004(1). Revenues in the fourth quarter 2004 were CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $14.4 million (US $11.8 million) compared to CDN $11.3 million (US $8.6 million) in the similar period a year ago. The Company is reporting net income for the fourth quarter 2004 of CDN $5.8 million (US $4.7 million) or CDN $0.71 (US $0.58) per share - basic, compared to a net income of CDN $1.0 million (US $0.8 million) or CDN $0.13 (US $0.10) per share - basic, in the similar period a year ago. Revenues in the twelve months ended December 31, 2004 were CDN $53.9 million (US $41.4 million) compared to CDN $38.7 million (US $27.3 million) in fiscal 2003. The Company is reporting net income for the twelve months ended December 31, 2004 of CDN $12.8 million (US $9.8 million) or CDN $1.59 (US $1.22) per share - basic, compared to a net income of CDN $3.5 million (US $2.4 million) or CDN $0.45 (US $0.32) per share - basic, in the similar period a year ago. The net income for the fourth quarter 2004 includes the benefit of recognizing CDN $3.2 million (US $2.6 million) or CDN $0.39 (US $0.32) per share - basic, of future income tax assets, related to the tax benefit of existing tax shields Tax Shield The reduction in income taxes that results from taking an allowable deduction from taxable income. Notes: For example, because interest on debt is a tax-deductible expense, taking on debt can act as a tax shield. that are available to offset earnings in the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. There was no similar benefit related to future income tax assets recorded in the fourth quarter or full year of 2003. (See further discussion in "Recognition of Future Income Tax Asset" section, below.) "This quarter's record results conclude the most successful year in NovAtel's history," said Jon JON Jonah JON Jesus of Nazareth JON Job Order Number JON Johnston Island, US, Outlying Islands (Airport Code) Ladd, 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. . "Our strong revenue growth for the full year 2004 of 39% reflects the continued success of our strategy to build market share with large OEMs and emerging system integrators See systems integrator. ." The growth in revenue and net income in 2004 was driven by such factors as a ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale of business with Leica Geosystems Leica Geosystems (formerly known as Wild Heerbrugg or just Wild) based in eastern Switzerland produces products and systems for surveying and geographical measurement (geomatics). , one of NovAtel's key customers; timing of engineering service revenues and hardware deliveries pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to the US Wide Area Augmentation System The Wide Area Augmentation System (WAAS) is an elevated-accuracy navigation system developed for civil aviation by the Federal Aviation Administration (FAA), a division of the United States Department of Transportation (DOT). (WAAS (Wide Area Augmentation System) A system of earth stations and satellites that improves the tracking accuracy of the GPS navigation system to approximately 10 feet. ) program; a substantial increase in product shipments into China; and the contribution of a full year's revenue in 2004 from an L1 GPS product line acquired in May 2003. NovAtel experienced growth in the fourth quarter in all of its customer categories. Specifically: In the Special Applications category, fourth quarter 2004 revenue grew by 36% year-over-year. The majority of this year-over-year increase was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to shipments to Leica Geosystems and increased product shipments into China. "Demand for our precision positioning components and subsystems continues to be strong, as evidenced by Leica's recently introduced SmartStation. We continue to expect sales into the Special Applications category to be the 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 engine for NovAtel," said Ladd. In the Aerospace and Defence category, fourth quarter 2004 revenue grew by 22% over the similar period a year ago, largely due to increased revenues from Raytheon Raytheon Company (NYSE: RTN) is a major American defense contractor and industrial corporation with core manufacturing concentrations in defense systems and defense and commercial electronics. Company for three contracts related to the next generation WAAS program. These contracts were substantially completed in 2004. "We intend to leverage our leadership in GPS-based ground infrastructure in support of future air traffic control systems into other geographies around the world. NovAtel is focused on identifying and pursuing these opportunities," continued Ladd. "We are therefore very pleased to have announced earlier this week that NovAtel received an order for Satellite Based Augmentation System See GPS augmentation system. (SBAS (Satellite-Based Augmentation System) See GPS augmentation system. ) equipment from Raytheon Company in support of the ground-based elements of the Indian GPS and Geostationary Aligned with the earth. Refers to satellites (GEOs) that travel at the same rotational speed as the earth (they are geosynchronous) and are always the same distance from the earth. See GEO. Earth Orbit orbit, in astronomy, path in space described by a body revolving about a second body where the motion of the orbiting bodies is dominated by their mutual gravitational attraction. (GEO (Geostationary Earth Orbit) A communications satellite in orbit 22,282 miles above the equator. At this orbit, it travels at the same speed as the earth's rotation, thus appearing stationary. ) Augmented Navigation (GAGAN GAGAN GPS and GEO Augmented Navigation GAGAN GPS Aided GEO Augmented Navigation ) program. This cooperative effort between Raytheon and the Indian Space Research Organization is an initial test project, for which NovAtel will supply GPS receiver elements." In the Geomatics Geomatics is the discipline of gathering, storing, processing, and delivering of geographic information, or spatially referenced information. Overview The term "Geomatics" refers to:
"The fourth quarter of 2004 was another strong quarter for NovAtel from a financial performance perspective," commented Werner Werner is a name of Germanic origins that could refer to numerous people or entities.
The oldest known usage of the name was in the Habsburg family.
"In addition, the strong operating results allowed us to continue to strengthen our balance sheet. We generated positive operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the thirteenth consecutive quarter and increased our cash/short-term investments balance to over CDN $23 million as of December 31, 2004, an increase of CDN $10.4 million since the beginning of 2004," concluded Gartner. Recognition of Future Income Tax Asset As noted above, NovAtel recorded a $3.2 million non-cash benefit related to the recognition of future income tax assets in the fourth quarter of 2004. Historically, the Company has recorded a full valuation allowance against the potential value of its extensive tax shields, which previously reduced the accounting value of these tax shields to $ nil on the Company's financial statements. Based on the Company's improved profitability over the past four years, amongst other factors, the Company has determined that the appropriate accounting treatment, under both Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. and US generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , is the recognition of a future income tax asset for a portion of its tax shields. The impact of this tax benefit on net income and earnings per share for the fourth quarter and full year 2004 is detailed below.
Three months ended Dec. 31, 2004
(Canadian $ thousands, except per share data)
-----------------------------------------------
Future Income Excluding Future
As Reported Tax Benefit Income Tax Benefit
-----------------------------------------------
Net Income $5,780 $3,189 $2,591
Net Income per Share
(Basic) $ 0.71 $ 0.39 $ 0.32
Net Income per Share
(Diluted) $ 0.67 $ 0.37 $ 0.30
Twelve months ended Dec. 31, 2004
(Canadian $ thousands, except per share data)
-----------------------------------------------
Future Income Excluding Future
As Reported Tax Benefit Income Tax Benefit
-----------------------------------------------
Net Income $12,815 $3,189 $9,626
Net Income per Share
(Basic) $ 1.59 $ 0.40 $ 1.19
Net Income per Share
(Diluted) $ 1.51 $ 0.38 $ 1.13
Future Guidance Going forward, the Company is changing its policy on providing specific future revenue and earnings guidance, and will no longer provide or update specific revenue or net income guidance. "Over the past year, NovAtel's board of directors has discussed the matter of providing guidance, and has come to the conclusion that our shareholders are best served if the Company's management focus their attention on continuing to build the business for success over the long-run adj. 1. relating to or extending over a relatively long time; as, the long-run significance of the elections s>. Adj. 1. long-run ," stated David E. Vaughn Vaughn may refer to:
adj. 1. Free from prejudice; impartial. 2. Characterized by openness and sincerity of expression; unreservedly straightforward: In private, I gave them my candid opinion. communication with investors by providing information and insight into strategic initiatives, growth drivers, revenue trends and industry trends critical to understanding the Company's business and operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. ." The Company recently provided general guidance on 2005 revenue trends in a press release issued January January: see month. 24, 2005. NovAtel currently continues to expect to grow full year revenue in 2005 over the results of 2004, although the growth rate in 2005 is not expected to be at the exceptional rate of 2004. Looking forward, the Company expects that its rate of revenue growth in 2005 will likely be affected by such factors as the weaker US dollar relative to the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents and lower revenue from the Company's Aerospace and Defence business as a consequence of the substantial completion of certain contracts pertaining to the US WAAS program at the end of 2004. Foreign Exchange Although approximately 95% of the Company's revenues are earned in US dollars, the Company's financial results are reported in Canadian dollars and in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian generally accepted accounting principles. The CDN/US dollar exchange rate has declined from an average rate of approximately CDN $1.30 per US dollar in 2004 to a rate of CDN $1.21 per US dollar as of March 9, 2005. The US dollar financial information presented above is translated from the Canadian dollar financial information at the average rates in effect during the relevant reporting periods, as follows:
Three months ended Year ended
December 31, December 31,
------------------ -------------------
2004 2003 2004 2003
------------------ -------------------
Canadian dollar per US dollar $1.220 $1.322 $1.304 $1.418
---------------------------------------------------------------------
(1) The fourth quarter 2004 included 90 days of operating activities,
compared to 94 days in the fourth quarter of 2003.
During the conference call scheduled for this afternoon, the Company will be providing updates and further information on the following: revenues from the Special Applications, Aerospace & Defence and Geomatics categories; the recent shipments to Raytheon Company; the recent introduction of the Leica SmartStation; the recently announced SBAS contract with Raytheon for the Indian GAGAN system; Point, Inc.; 2005 trends; and recognition of future income tax assets. The Company will have a conference call today at 4:30 p.m. ET. Participants may access the NovAtel Inc. conference call by dialing 877-323-2010 (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. ) or 416-695-9715 (International). This call is also being web cast and can be accessed at NovAtel's web site www.novatel.com or at www.fulldisclosure.com. A replay of the conference call will be available until March 16, 2005 by dialing 1-888-509-0082 (North America) or 416-695-5275 (International), or until April 15, 2005 at the web addresses noted above. The web cast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor centre at www.fulldisclosure.com or by visiting any of the investor sites in CCBN's Individual Investor Network such as America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Online's Personal Finance Channel, Fidelity Investments Fidelity Investments is a group of privately held companies in the financial services industry. It is made up by two independent but closely cooperating companies, Fidelity Management and Research Corporation (FMR Co. (R) (Fidelity Fidelity is a notion that at its most abstract level implies a truthful connection to a source or sources. Its original meaning dealt with loyalty and attentiveness to one's duty to a lord or a king, in a broader sense than the related concept of fealty. .com) and others. Institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com). NovAtel designs, markets and sells high-precision GPS and other positioning components and sub-systems used in a wide variety of commercial applications principally in the aviation, geomatics (surveying and mapping), mining, precision agriculture, marine and defence industries. NovAtel's solutions combine hardware, such as receivers and antennas, with software to enable its customers to fully integrate the Company's high-precision GPS technology into their respective products and systems. The Company is focused on supplying core high-precision positioning technology to OEMs and system integrators who build systems for various end market applications. For more information, visit www.novatel.com. Certain statements in this news release, including those about the Company's future plans and intentions, financial guidance, long-term growth prospects, levels of activity or other future events, 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. . These forward-looking statements are not based on historical facts but rather on management's current expectations regarding NovAtel's future growth, results of operations, performance, future capital and other expenditures, competitive advantages, business prospects and opportunities. Wherever possible, words such as ''anticipate'', ''believe'', ''expect'', ''may'', ''could'', ''will'', ''potential'', ''intend'', ''estimate'', ''should'', ''plan'', ''predict'' or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements, including operating results of Point, establishing and maintaining effective distribution channels, certification and market acceptance of NovAtel's new products, impact and timing of large orders, credit risks of customers and Point, pricing pressures in the market and other competitive factors, maintaining technological leadership, timing of revenue recognition in connection with certain contracts, U.S. dollar to Canadian dollar exchange rate fluctuations, actions by governmental authorities, and other factors described in our Form 20-F and other SEC filings, many of which are beyond the control of NovAtel. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. These forward-looking statements are made as of the date of this news release, and NovAtel assumes no obligation to update or revise them to reflect new 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 .
NOVATEL INC.
CONSOLIDATED BALANCE SHEETS
(in Canadian $ thousands)
(Unaudited)
December 31,
2004 2003
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 8,949 $ 2,445
Short term investments 14,410 10,555
Accounts receivable 9,413 6,383
Related party receivables 1,591 1,081
Related party notes receivable 1,614 1,721
Inventories 5,191 4,782
Prepaid expenses and deposits 268 357
Future income tax asset - current portion 1,286 -
-------- --------
Total current assets 42,722 27,324
Capital assets 3,447 3,342
Intangible assets 2,515 2,349
Deferred development costs 2,359 2,557
Future income tax asset - long term portion 1,903 -
-------- --------
Total assets $ 52,946 $ 35,572
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 9,148 $ 5,868
Related party payables 345 935
Notes payable 1,614 1,721
Deferred revenue 755 312
Provision for future warranty costs 538 410
Capital lease obligations - current portion - 100
-------- --------
Total current liabilities 12,400 9,346
Deferred gain on sale/leaseback of capital assets 453 567
Related party payables - long-term portion - 212
-------- --------
Total liabilities 12,853 10,125
-------- --------
Shareholders' equity:
Capital stock 38,870 37,012
Contributed surplus 442 13
Retained earnings (deficit) 781 (11,578)
-------- --------
Total shareholders' equity 40,093 25,447
-------- --------
Total liabilities and shareholders' equity $ 52,946 $ 35,572
-------- --------
-------- --------
NOVATEL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in Canadian $ thousands, except per share data)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2004 2003 2004 2003
-------- ------- -------- --------
Revenues:
Product sales $ 13,705 $ 9,916 $ 48,802 $ 32,138
NRE fees 666 1,431 5,130 6,546
-------- ------- -------- --------
Total revenues 14,371 11,347 53,932 38,684
-------- ------- -------- --------
Cost of sales:
Cost of product sales 5,708 4,484 19,586 14,805
Cost of NRE fees 493 960 2,917 3,565
-------- ------- -------- --------
Total cost of sales 6,201 5,444 22,503 18,370
-------- ------- -------- --------
Gross profit 8,170 5,903 31,429 20,314
-------- ------- -------- --------
Operating expenses:
Research and development 2,758 1,938 9,588 7,123
Selling and marketing 1,218 1,479 5,751 5,269
General and administration 1,377 1,242 5,312 4,280
Share offering costs 12 - 754 -
-------- ------- -------- --------
Total operating expenses 5,365 4,659 21,405 16,672
-------- ------- -------- --------
Operating income 2,805 1,244 10,024 3,642
Interest income, net 118 28 313 174
Other expense (335) (230) (662) (664)
-------- ------- -------- --------
Income from continuing operations
before income taxes 2,588 1,042 9,675 3,152
Income taxes
Current provision 18 17 70 52
Future income tax (benefit) (3,189) - (3,189) -
-------- ------- -------- --------
Net income from continuing
operations 5,759 1,025 12,794 3,100
Income from discontinued
operations 21 16 21 360
-------- ------- -------- --------
Net income $ 5,780 $ 1,041 $ 12,815 $ 3,460
-------- ------- -------- --------
-------- ------- -------- --------
Net income per share (basic)
Continuing operations $ 0.71 $ 0.13 $ 1.59 $ 0.40
Discontinued operations 0.00 0.00 0.00 0.05
-------- ------- -------- --------
Net income per share (basic) $ 0.71 $ 0.13 $ 1.59 $ 0.45
-------- ------- -------- --------
-------- ------- -------- --------
Weighted average shares
outstanding (basic) 8,156 7,817 8,063 7,723
-------- ------- -------- --------
-------- ------- -------- --------
Net income per share (diluted)
Continuing operations $ 0.67 $ 0.13 $ 1.51 $ 0.39
Discontinued operations 0.00 0.00 0.00 0.04
-------- ------- -------- --------
Net income per share (diluted) $ 0.67 $ 0.13 $ 1.51 $ 0.43
-------- ------- -------- --------
-------- ------- -------- --------
Weighted average shares
outstanding (diluted) 8,639 8,178 8,500 7,983
-------- ------- -------- --------
-------- ------- -------- --------
NOVATEL INC. (Nasdaq:NGPS) |
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