A Better Quarter:
FEBRUARY 12, 1999
IPS Automation Rebounds From Two Quarters Of Losses
MARKHAM, ONTARIO--Image Processing Systems Inc. (TSE:IPV)-under
its trade name IPS Automation- announced today its financial
results for the third quarter ended December 31, 1998. After
reporting losses in the first and second quarters, IPS has posted
a profit in its third quarter of this year. The third quarter
results show improved earnings as a direct result of the
restructuring of operations in the first half of the year and
stronger sales for both the Chicago-based TMC and IPS Canadian
operations.
A turnaround in the Asian markets strengthened revenues for IPS
vision systems while engineering and manufacturing efficiencies
have allowed TMC to ship more machines in this quarter.
Consolidated revenues for the third quarter ended December 31,
1998 were $12.2 million, which is an increase of 30 percent over
the same period last year. The third quarter revenues represent
an increase of $8.2 million over the revenues for the second
quarter. Earnings for the third quarter were $44,000 compared to
a loss of $427,000 for the same quarter last year and a loss of
$2.8 million in the second quarter of this year. This third
quarter profit includes a charge of $225,000 due to foreign
currency exchange losses.
TMC represented $6.7 million of the third quarter revenues up from
$2.8 million in the second quarter. A solid order backlog allowed
TMC to manufacture and ship ten more machines than the previous
quarter. IPS vision systems represented $5.5 million of third
quarter revenues up from $1.2 million in the second quarter. A
rebound in Asian sales totalling over $4 million was the primary
reason for the revenue increase at the Canadian operation.
Revenues for the nine months ended December 31, 1998 were $22.1
million, an increase of 25 percent over the same period last year.
The nine-month net loss was $5.3 million compared to $1.4 million
in the previous year. The order backlog now totaling $17.5
million is geographically well diversified over Europe, North
America and Asia.
"The first half of the year was clearly very challenging with the
Asian downturn having a negative impact on IPS vision system sales
and profits" commented Terry Graham, IPS Chairman & President.
"Operating efficiencies along with increased sales in Asia
contributed to this substantial turnaround for IPS. Our
diversification both product-wise and geographically is having an
impact and has positioned us well for the future. We are now
receiving orders for our new Automobile Glass Inspection Systems
and CRT Glass Inspection Systems, with the first of these systems
being installed in North America."
IPS develops production-line inspection systems for manufacturers
that assure the final quality of a variety of products. Its ADI
Systems are used worldwide by electronics manufacturers of
television and computer monitor picture tubes. The Chicago based
TMC division specializes in high-quality, high-speed packaging and
cartoning systems.
IPS Automation, an ISO 9001 registered company, is listed on the
Toronto Stock Exchange under the symbol IPV and has offices in
Canada, China, Japan, Korea, The Netherlands, Taiwan and the
United States. IPS Automation's solutions are used in 23
countries by blue-chip customers including Sony, Philips, Siemens,
LG Electronics, Mitsubishi, Thompson (RCA), Daewoo, 3M, DuPont,
General Foods, Warner-Lambert, Quaker Oats and more. A recipient
of a 1997 Canada Export Award, in 1998 IPS was named the fastest
growing company in Canada by Profit magazine.
Copies of our press releases are available on the IPS website at
www.ipsautomation.com.
Image Processing Systems Inc.
Consolidated Balance Sheet
As at December 31st 1998 1997
---------------------------------------------------------------
(unaudited) (note)
Assets
Current Assets
Cash and investments $ 2,554,633 $ 4,167,049
Accounts receivable 6,569,756 8,831,462
Other receivables 651,979 1,067,544
Inventories 7,973,703 7,839,270
Prepaid expenses 537,161 301,474
---------- ----------
18,287,232 22,206,799
Capital assets 3,790,235 2,317,529
Other assets 3,389,415 2,281,574
Goodwill 4,333,334 12,533,762
---------- ----------
$ 29,800,216 $ 39,339,664
---------- ----------
---------- ----------
---------------------------------------------------------------
Liabilities
Current Liabilities
Bank loan $ 2,497,835 $ 1,899,814
Current portion of long-term debt 85,708 80,030
Accounts payable and accrued
liabilities 10,055,765 6,861,903
Customer deposits 6,504,306 3,087,831
Deferred revenue 457,197 370,522
Other liabilities 393,869 351,034
---------- ----------
19,994,680 12,651,134
Long-term debt 107,155 689,209
Other liabilities 135,784 221,430
---------- ----------
20,237,619 13,561,773
---------- ----------
Shareholders' Equity
Share capital 32,533,359 32,166,267
Cumulative translation adjustment (662,198) (152,759)
Deficit (22,308,564) (6,235,617)
---------- ----------
9,562,597 25,777,891
---------- ----------
$ 29,800,216 $ 39,339,664
---------- ----------
---------- ----------
---------------------------------------------------------------
Note: Figures at December 31, 1997 include Tisma Machinery
Corporation's results from date of acquisition of July 17,
1997. The 1997 financial statements have been restated to
conform with current year presentation.
Image Processing Systems Inc.
Consolidated Statements of
Operations Three Months Ended Nine Months Ended
December 31, December 31,
1998 1997 1998 1997
---------------------------------------------------------------
(unaudited) (note) (note)
Revenue $ 12,221,137 $ 9,406,209 $ 22,072,305 $ 17,630,497
Cost of
revenue 7,739,131 5,358,781 15,309,018 9,544,027
---------- ---------- ---------- ----------
Gross profit 4,482,006 4,047,428 6,763,287 8,086,470
---------- ---------- ---------- ----------
Operating expenses
Selling 1,572,279 2,387,977 4,332,250 3,832,543
Marketing 349,512 452,062 951,771 839,179
Engineering,
research and
development 843,781 420,166 2,664,390 1,602,480
Finance and
admini-
stration 1,378,021 1,393,472 4,213,720 3,119,522
---------- ---------- ---------- ----------
Total operating
expenses 4,143,593 4,653,677 12,162,131 9,393,724
---------- ---------- ---------- ----------
Operating income
(loss) 338,413 (606,249) (5,398,844) (1,307,254)
Non operating income
(expenses) (294,425) 5,033 71,430 (133,476)
---------- ---------- ---------- ----------
Earnings (loss)
before income
taxes 43,988 (601,216) (5,327,414) (1,440,730)
Provision for
income taxes - (173,741) - (1,396)
---------- ---------- ---------- ----------
Earnings (loss) for
the period $ 43,988 $ (427,475)$ (5,327,414)$ (1,439,334)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
---------------------------------------------------------------
Earnings (loss)
per share $ 0.00 $ (0.02) $ (0.27) $ (0.10)
Weighted average
number of
shares 19,935,465 19,549,747 19,844,860 14,836,322
---------------------------------------------------------------
Note: Figures at December 31, 1997 include Tisma Machinery
Corporation's results from date of acquisition of July 17,
1997. The 1997 financial statements have been restated to
conform with current year presentation.
Image Processing Systems Inc.
Statement of Changes in
Financial Position
Periods ended December 31st 1998 1997
---------------------------------------------------------------
(unaudited) (note)
Cash provided by (used in)
Operating activities
Loss for the period $ (5,327,414) $ (1,439,334)
Items not affecting cash -
Amortization 1,070,323 514,463
Shares issued as compensation - 2,100
---------- ----------
(4,257,091) (922,771)
Net change in non-cash components
of working capital 6,364,558 (4,371,943)
---------- ----------
2,107,467 (5,294,714)
---------- ----------
Investing activities
Purchase of capital assets (719,246) (1,519,034)
Investment in other assets (1,064,447) (870,332)
Acquisition of TMC - (9,835,681)
Bank indebtedness assumed on
acquisition of TMC - (3,502,942)
---------- ----------
(1,783,693) (15,727,989)
---------- ----------
Financing activities
Issue of share capital net of
issue costs 141,364 19,270,516
Repayment of long-term debt (49,762) (15,474)
Loans advanced to officers and
directors 23,068 (46,894)
Other liabilities (647) 16,969
Cumulative translation adjustment (567,265) (152,759)
---------- ----------
(453,242) 19,072,358
---------- ----------
Increase (decrease) in cash during
the period (129,468) (1,950,345)
Cash position, beginning of period 186,266 4,217,580
---------- ----------
Cash position, end of period $ 56,798 $ 2,267,235
---------- ----------
---------- ----------
---------------------------------------------------------------
Note: Figures at December 31, 1997 include Tisma Machinery
Corporation's results from date of acquisition of July 17,
1997. The 1997 financial statements have been restated to
conform with current year presentation. |
