OSI Reports Second Quarter Financial Results; Highlighted by Strong Earnings of $.03 for First Six Months.VANCOUVER, British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography -- Offshore Systems International Ltd. (OSI (1) (Open System Interconnection) An ISO standard for worldwide communications that defines a framework for implementing protocols in seven layers. Control is passed from one layer to the next, starting at the application layer in one station, proceeding to the ) (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :OSI) (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :OFSYF) today announced its financial results for the second quarter and six months ended May 31, 2004. "OSI has developed exceptionally well in the first half of the year," said John Jacobson, 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 Offshore Systems International. "Revenues for the first six months improved and our earnings more than doubled over the comparable period in 2003. Our total backlog(i) grew to $22.6 million based on some key contract signings, and our current contract mix has a significant proportion of software deliveries, increasing our 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. to 64% from 58%. We are building for the future with a new $3.76 million investment from Technology Partnerships Canada and an internally funded commitment of over half a million dollars so far in business and product development expenses to fuel our new OSI Applications business unit. We see tremendous opportunity in electronic geography, and we are moving aggressively to win our share." Financial Highlights For the second quarter of fiscal 2004, revenues decreased 6% to $2.8 million compared with $3.0 million in the same quarter last year. For the first half of fiscal 2004, revenues increased 4% to $6.8 million compared with $6.5 million in the first half last year. Earnings for the second quarter were $298,670, or $0.01 per diluted share, compared to earnings of $152,162, or $0.00 per diluted share, in the same quarter last year. Earnings for the six months ended May 31, 2004 were $850,461, or $0.03 per diluted share, compared to earnings of $400,410, or $0.01 a diluted share, in the same period last year. During the first half of the fiscal year, the Company received and claimed $851,542 as part of a strategic investment of $3.76 million from Technology Partnerships Canada, with the remainder of the investment to be earned by the Company before March 2007. At May 31, 2004, the Company had current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. of $11.5 million versus current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. of $2.6 million, which resulted in working capital increasing $0.9 million to $9.0 million from $8.1 million at November 30, 2003. Cash and cash equivalents were $1.0 million at May 31, 2004 versus $3.8 million at November 30, 2003. The Company's total order backlog(i) at the end of the second quarter was approximately $22.6 million including option backlog(i) of $13.9 million versus $5.4 million at May 31, 2003 including option backlog of $2.9 million. Operational Highlights - March 2004: The Company announced that its teaming partner, Nautronix Ltd., signed the final prime contract to supply the Royal Australian Navy This article is about the Royal Australian Navy. For other Royal Navies, see Royal Navy (disambiguation). The Royal Australian Navy (RAN) is the naval branch of the Australian Defence Force. with a fleet installation of OSI's ECPINS-M electronic chart navigation system A GPS-based electronic system in a car or truck that provides a real time map of the vehicle's current location as well as step-by-step directions to a programmed destination. See GPS and vehicle tracking. . The total contract value including options to OSI Navigation Systems is approximately $8 million, $4.5 million of which will be realized over 12 to 18 months beginning in September 2004. - March 2004: The Naval and Ground Systems Division of Terma A/S, a leading systems integrator in military command and control applications, has integrated OSI's COP-IDS software into their next generation of naval command and control systems. This system has been delivered to the Royal Danish Navy This article is about the Royal Navy of Denmark. For other Royal Navies, see Royal Navy (disambiguation). The Royal Danish Navy (or Kongelige Danske Marine in Danish) is the sea-based branch of The Danish Defence force. , successfully concluded sea trials and has been ordered by the Royal Danish Navy. - May 2004: The Company announced that Technology Partnerships Canada, an agency of Industry Canada Industry Canada is the department of the Government of Canada with responsibility for regional economic development, investment, and innovation/research and development. The department employs 6104 FTEs across Canada. , will be making a strategic investment of $3.76 million in a research and development initiative dedicated to improving geographical display capabilities in defense and navigation systems. - May 2004: The Company announced that the Canadian Department of National Defence has invited OSI to demonstrate its newest product, COP-IDS(R), as part of the Joint Warrior Interoperability Demonstration event hosted by the U.S. Chairman of the Joint Chiefs of Staff The Chairman of the Joint Chiefs of Staff is by law the highest ranking overall military officer of the United States military, and the principal military adviser to the President of the United States. . - June 2004: OSI Geomatics Geomatics is the discipline of gathering, storing, processing, and delivering of geographic information, or spatially referenced information. Overview The term "Geomatics" refers to:
About Offshore Systems International Ltd. Offshore Systems International Ltd (OSI) is a leader in electronic geography. The Company's core strengths lie in the ability to produce, manage and display many forms of geographic data. The Company provides display systems and data for several defense, government and commercial customers. OSI conducts its operations through three business units: OSI Geomatics (data production and distribution), OSI Navigation Systems, and OSI Applications (products and services for command and control systems). OSI's common shares are listed for trading on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TSX:OSI) and the 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. (OTCBB: OFSYF). For more information please visit www.osil.com. (i)Non-GAAP Definitions Total backlog, firm backlog and option backlog are non-GAAP measures that do not have a standardized meaning and are likely not comparable to similar measures presented by other issuers. These measures, also do not have a comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure. Total backlog is the total of the firm and option backlogs. Firm backlog consists of firm, fixed, signed orders issued to the Company and executable by the Company subsequent to the balance sheet date. Option backlog consists of unexercised contract options at the balance sheet date and indefinite-quantity contracts executable by the Company subsequent to the balance sheet date. There is no guarantee or certainty that the Company's customers will elect to exercise their contract option backlog. Should our customers elect to exercise contract options or place orders against indefinite-quantity contracts, the option backlog converts to firm backlog. Forward-Looking Statements This news release contains discussion of items that may constitute forward-looking statements within the meaning of securities laws including Section 27a of the Securities Act of 1933, as amended, and Section 21e of the Securities Exchange Act of 1934, as amended, with respect to achieving corporate objectives, developing additional project interests, OSI's analysis of opportunities in the acquisition and development of various project interests and other matters. These statements are made under the 'safe harbour' provisions 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 and, as such, involve known and unknown risks and uncertainties and other factors that may cause the actual results to be materially different from the results implied herein. Although Offshore Systems International believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurances that its expectations will be achieved. Factors that could cause actual results to differ from expectations include the effects of general economic conditions, changing foreign exchange rates, actions by government authorities, uncertainties associated with contract negotiations, and industry supply. Offshore Systems International Ltd. 107 - telephone: (604) 904-4600, fax: (604) 987-2555. ECPINS ECPINS Electronic Chart Precise Integrated Navigation System (Offshore Systems) and COP-IDS are trademarks of Offshore Systems Limited. All other trade names mentioned are trademarks and/or registered trademarks of their respective owners.
Offshore Systems International Ltd.
Selected Consolidated Financial Information (Unaudited)
(Canadian dollars - Canadian GAAP)
Statement of Earnings Three months ended Six months ended
Information May 31, 2004 May 31, 2004
(unaudited) (unaudited)
----------------------- ------------------------
2004 2003 2004 2003
Revenue $ 2,773,835 $ 2,958,027 $ 6,803,595 $ 6,521,202
Earnings (loss)
for the period 298,670 152,162 850,461 400,410
Basic earnings per
share 0.01 0.00 0.03 0.01
Fully diluted
earnings per share 0.01 0.00 0.03 0.01
Balance Sheet May 31 November 30
Information 2004 2003
------------------------
(unaudited) (unaudited)
Cash and cash
equivalents $ 1,017,005 $ 3,837,555
Working capital 8,977,443 8,071,926
Current assets 11,532,250 10,377,836
Total assets 12,965,217 11,728,257
Current
liabilities 2,554,807 2,305,910
Long term debt 93,694 187,384
Total liabilities 2,648,501 2,493,294
Shareholders'
equity 10,316,716 9,234,963
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