Iteris Inc. Reports Fiscal Second Quarter Results
ANAHEIM, Calif.--Nov. 3, 2004--Iteris Inc. (OTCBB:ITRSA), formerly known as Iteris Holdings Inc., a leading provider of traffic optimization and safety technology products and services, today reported financial results for the fiscal second quarter and six-month period ended Sept. 30, 2004.For the second quarter ended Sept. 30, 2004, Iteris Inc. reported net sales and contract revenues of $11.8 million, an increase of 4.5% compared to net sales and contract revenues of $11.3 million in the second quarter of the previous fiscal year. The increase in net sales and contract revenues was primarily driven by sales of Vantage video detection products in addition to product sales, technology access fee revenue and contract engineering revenues related to the company's AutoVue products. Sales of Vantage video detection products increased 21.5% compared to the second quarter of last year due to increased demand and key procurements from various state and local government agencies. Product sales, technology access fee revenue and contract engineering revenues related to AutoVue products increased 71.9% compared to the second quarter of last year as a result of increased sales to European and North American truck manufacturers, and increased passenger car development activities with the company's strategic partner, Valeo Schalter und Sensoren GmbH. These increases were partially offset by contract revenues related to system consulting revenues, which decreased 23.1% to $4.1 million from $5.3 million in the second quarter last year. Management believes the decrease in systems revenues was largely due to the delay in passing the Federal Highway Bill and budgetary issues within certain local government agencies.
The company reported operating income of $474,000, or an increase of 28.8% compared to operating income of $368,000 in the second quarter of the previous fiscal year. Included in operating income in the current quarter was a non-cash charge of $115,000 for in-process research and development, as well as a non-cash charge of $34,000 related to the amortization of intangible assets. Both charges are related to the acquisition and merger of the company's subsidiary, Iteris Inc. The company reported a net loss for the current quarter of $4,000, which included non-cash charges of $121,000 related to the amortization of debt discount and deferred financing costs on the $10.1 million convertible debentures issued in May 20, 200404. Earnings per share was $0.00 for the quarter ended Sept. 30, 2004. This compares to net income of $2.6 million, or $0.14 per share for the second quarter last year. Net income for the quarter ended Sept. 30, 2003, included a $970,000 gain related to the renegotiation of the company's leased facilities in Anaheim, and $2.4 million in income from discontinued operations.
For the six months ended Sept. 30, 2004, net sales and contract revenues were $23.2 million, an increase of 1.8% compared to net sales and contract revenues of $22.8 million in the corresponding period of the prior year. Operating income for the six months ended Sept. 30, 2004, increased 366.1% to $1.0 million compared to $221,000 for the corresponding period in the prior year. The company reported net income of $962,000, or $0.04 per share for the six months ended Sept. 30, 2004, as compared to net income of $630,000, or $0.04 per share, for the corresponding period in the prior year.
The company continued to strengthen its balance sheet, and significantly simplified its capital structure with the recently announced merger of its Iteris Inc. subsidiary into the company in October 2004. As of Sept. 30, 2004, the company had 25.7 million shares of Series A and B common stock outstanding. Subsequent to the merger, the company had 28.2 million shares of Series A common stock outstanding which reflects the issuance of 2.5 million shares of Series A common stock in connection with the merger and the conversion of Class B common stock to Class A common stock immediately following the merger.
Jack Johnson, chief executive officer, commented: "We achieved record Vantage sales by a wide margin for both the quarter and six months, reflecting strong traction in the marketplace with both current and new customers. We also experienced favorable results in the marketing of our AutoVue lane departure warning ("LDW") system, which we believe will translate into sales growth in the coming quarters. At the recent Hanover Truck Show, our LDW system was featured on over a dozen trucks and buses, and as a result of this exposure, two major European truck OEMs have expressed an interest in offering AutoVue on their trucks. In the passenger car market, our OEM partner Valeo has been nominated for the prestigious PACE industry award for their utilization of our LDW system currently available on the Infiniti FX45 throughout the country. We continue to await Congress' passage of the Highway Bill, which we believe will stimulate the market for our consulting services."
Recent Operational Highlights Included:
-- Vantage Video Detection systems achieved record sales and 21.5% sales growth in the quarter compared to the second quarter of the company's last fiscal year.
-- AutoVue LDW systems sales increased 61.1% in the heavy-truck market in the quarter compared to the second quarter of the company's last fiscal year and are up 90.3% for the six months ended Sept. 30, 2004.
-- Successful roll-out of LDW on the Infiniti FX45 platform. LDW has been included in approximately 1,150 of these vehicles to date.
-- Testing of LDW is underway with 20 heavy-truck fleets, representing 45,000 vehicles.
-- More than $5.0 million in new systems consulting contracts were signed during the quarter ended Sept. 30, 2004, and year-to-date signed contracts was $11.1 million. Backlog at the end of the current quarter was $13.2 million.
-- In October 2004, the company completed the merger with its subsidiary, significantly simplifying the company's capital structure.
-- In October 2004, the company converted all of its outstanding Class B common stock into Class A common stock, simplifying its capital structure and resulting in only one class of common stock.
About Iteris Inc.
Iteris Inc. is a leading provider of outdoor machine vision systems and sensors that enhance driver safety and optimize the flow of traffic. The company has combined outdoor image processing, traffic engineering and information technology to offer a broad range of transportation and safety solutions. Iteris Inc. has headquarters in Anaheim. Investors are encouraged to contact the company at 714-774-5000 or at www.iteris.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This news release contains forward-looking statements based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will" and variations of these words are intended to identify forward-looking statements. Such statements speak only as of the date hereof and are subject to change. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. These statements include, but are not limited to, the impact of the Highway Bill and our future performance, and are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.
Important factors that may cause such a difference include, but are not limited to, political agendas and the availability for funding for government contracts, our ability to specify, develop, complete, introduce, market and transition our products and technologies to volume production in a timely manner; the timing and successful completion of customer qualification of our products and the risks of non-qualification; our customers' ability to obtain market acceptance of the products that incorporate our technologies; the potential unforeseen impact of product offerings from competitors and other competitive pressures; the effectiveness of our cost and expense reduction efforts; warranty and support issues; our ability to obtain stockholder approval of the restructuring, and the general economic and political conditions and specific conditions in the markets we address, including the general economic slowdown and volatility in the technology sector, and the possible disruption in government contracting and commercial activities related to terrorist activity or armed conflict in the United States and other locations. Further information on Iteris Inc., including additional risk factors that may affect our forward looking statements, is contained in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and our other SEC filings that are available through the SEC's Web site (www.sec.gov).
ITERIS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, March 31,
2004 2004
ASSETS: (unaudited)
Cash $94 $2,612
Trade accounts receivable and notes receivable 8,932 8,380
Costs and estimated earnings in excess of
billings on uncompleted contracts 2,354 2,653
Inventory 3,802 3,598
Prepaid expenses 575 323
Deferred tax assets 821 821
Total current assets 16,578 18,387
Property, plant and equipment, net 1,512 1,642
Goodwill, net 21,005 9,807
Identifiable intangible assets, net 618 --
Other assets 778 215
Total assets $40,491 $30,051
Total current liabilities $8,808 $9,018
Revolving line of credit 1,294 --
Deferred gain on sale of building 1,342 1,774
Notes payable 4,243 891
Convertible debentures, net 9,118 --
Minority interest 704 17,745
Redeemable common stock 3,414 --
Total stockholders' equity 11,568 623
Total liabilities and stockholders' equity $40,491 $30,051
ITERIS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
September 30, September 30,
2004 2003 2004 2003
Net sales and contract revenues:
Net sales $7,651 $5,905 $14,554 $11,660
Contract revenues 4,109 5,345 8,647 11,120
Total net sales and contract
revenues 11,760 11,250 23,201 22,780
Costs and expenses:
Cost of sales 4,332 3,258 7,878 6,354
Cost of contract revenues 2,733 3,551 5,679 7,438
Gross profit 4,695 4,441 9,644 8,988
Selling, general and
administrative expense 3,201 3,110 6,801 6,760
Research and development
expense 871 963 1,664 2,007
Acquired in-process research
and development 115 -- 115 --
Amortization of intangible
assets 34 -- 34 --
Total operating expenses 4,221 4,073 8,614 8,767
Operating income 474 368 1,030 221
Non-operating income (expense):
Other income, net 57 970 980 970
Interest expense, net (470) (35) (540) (67)
Income before income taxes 61 1,303 1,470 1,124
Income tax expense -- (231) (75) (451)
Income from continuing operations
before minority interest 61 1,072 1,395 673
Minority interest in earnings of
subsidiary (65) (865) (433) (1,725)
Income (loss) from continuing
operations (4) 207 962 (1,052)
Income from discontinued
operations -- 2,377 -- 1,682
Net (loss) income $(4) $2,584 $962 $630
Basic earnings (loss) per share:
Earnings (loss) from
continuing operations $0.00 $0.01 $0.04 $(0.06)
Income from discontinued
operations -- 0.13 -- 0.10
Earnings per share $0.00 $0.14 $0.04 $0.04
Diluted earnings (loss) per
share:
Earnings (loss) from
continuing operations $0.00 $0.01 $0.04 $(0.06)
Income from discontinued
operations -- 0.13 -- 0.10
Earnings per share $0.00 $0.14 $0.04 $0.04
Shares used in calculating
earnings per share:
Basic 25,685 18,056 23,938 16,586
Diluted 27,069 18,056 25,328 16,590