Global Election Systems Inc. announces second quarter results
VANCOUVER, Feb. 17 /CNW/ - GLOBAL ELECTION SYSTEMS INC.
Trading Symbol: GSM (TSE)
Web Site: www.gesn.com
Global Election Systems Inc. is pleased to report a very successful
season of primary and general elections conducted during the second quarter of
fiscal year 1999, which ended December 31, 1998. Global's election equipment
was used in approximately 600 voting jurisdictions in 25 states across the
United States during the November 3, 1998 general election. The November 3,
1998 general election represented the largest number of Accu-Vote and
Accu-Touch voting systems used in an election in the history of the company.
The success of this maximum effort proved once again that Global continues to
achieve the company's goal of providing the finest products and services in
the election industry.
The November general election required total dedication of the entire
Global personnel staff, plus a cadre of company trained part time support
personnel. The monumental task of supporting a general election is very
expensive at a time that the company can not ship, install and invoice voting
systems; consequently, expenses exceeded income during the general election
season.
All amounts quoted below are expressed in US dollars.
Sales and other income decreased 46.2%, or $2,104,000, to $2,450,000 in
the second quarter ended December 31, 1998 from $4,554,000 in the second
quarter ended December 31, 1997. Year to date sales and other income for the
six months ended December 31, 1998 decreased 18.3%, or $1,505,000, to
$6,731,000 from $8,236,000 for the six months ended December 31, 1997.
Cost of sales and operating expenses decreased 39.5%, or $895,000, to
$1,369,000 in the second quarter of fiscal 1999 from $2,264,000 in the second
quarter of fiscal 1998. Year to date cost of sales and operating expenses in
fiscal 1999 amount to $3,205,000, a decrease of 19.9% or $797,000 from
$4,002,000 for fiscal 1998. In fiscal 1999, year to date cost of sales and
operating expense as a percentage of gross revenues decreased to 47.6% from
48.6% in fiscal 1998.
In the second quarter ended December 31, 1998, selling, administrative
and general expenses increased 24%, or $294,000 to $1,515,000 from $1,221,000.
Year to date selling, administrative and general expenses for fiscal 1999
increased by 35.1%, or $788,000, to $3,037,000 from $2,249,000. The increase
is due largely to election preparation and support provided during the
November 1998 elections and increased manpower. In addition, expenses
relating to the I-Mark acquisition have been incurred for the whole 1999
fiscal period, whereas in the 1998 period expenses were incurred for only five
months.
Research and development expenses increased 108.5%, or $122,000, to
$234,000 in the second quarter of fiscal 1999 from $112,000 in fiscal 1998.
Year to date research and development expenses for fiscal 1999 increased by
177.8%, or $390,000, to $609,000 from $219,000. The increase is due to
providing enhancements to software for the Accu-Vote and Accu-Touch systems.
This additional cost was expected to continue in the second quarter. The
company continues to fund research and development in order to offer leading
edge products to the market place.
The trade-in inventory write off amounted to $131,000 for second quarter
ended December 31, 1998. The trade-in inventory write down will continue for
the next six consecutive quarters. As the trade-in inventory is sold, it will
be recaptured as sales revenue.
The company's loss for the second quarter ended December 31, 1998 was
$954,000 or $(0.05) per share. Year to date loss for fiscal 1999 loss was
$698,000 or $(0.04) per share. The decrease in earnings per share for fiscal
1999 as compared to fiscal 1998 was attributable to increases in selling,
administrative and general expenses, research and development, amortization
and interest expense along with the write down of the trade-in inventory.
Management believes that financial resources, including internally
generated funds and available bank line of credit and borrowings, will be
sufficient to finance the company's current operations and capital
expenditures, excluding acquisitions, for the next 12 months.
Global announced in a news release on January 7, 1999 that the company
''has entered into a letter of intent with BRELSH Holdings Ltd. pursuant to
which they have agreed to negotiate the terms of a formal agreement providing
for the merger of the two companies.'' ''Under the merger, which would be
undertaken by way of a plan of arrangement, BRELSH would acquire all the
outstanding common shares of Global by paying its shareholders $50,000,000.00
,...and by BRELSH issuing a right to Global's shareholders enabling them to
acquire, for no further consideration, .05 of a share of BRELSH for each
outstanding common share of Global.''
In anticipation of finalizing this transaction, the due diligence
activity is in process. At this time, the merger appears to be well on
course.
Now that a successful election season is over, the company is positioned
to enter the selling season which should show growth in sales and revenue. The
company anticipates a successful fiscal third quarter ending March 31, 1999
and a successful fiscal fourth quarter ending June 30, 1999.
Global is one of the fastest growing election and vote tabulation
companies in the election industry. It continues to provide leading edge
technology to the election marketplace with technically advanced products such
as the Accu-Vote and Accu-Touch voting systems and the C.M.I.S. voter
registration system. Global is dedicated to providing technical solutions to
election jurisdictions.
Global is listed for trading on the Toronto Stock Exchange.
GLOBAL ELECTION SYSTEMS INC.
Signed: ''HOWARD T. VAN PELT''
-------------------------------
Howard T. Van Pelt, President
and Chief Executive Officer
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For further information: Clinton Rickards (604) 261-6313, facsimile
(604) 261-9226 |
