ICTS Icts International N.V (MM)

ICTS International N.V. (NASDAQ: ICTS), a leading provider of advanced security services, reported on Friday, September 15 2006 it's results for the year ended December 31, 2005 are as follows: Revenues from continuing operations in the year 2005 amounted to $57.7 million as compared with $58 million for the year 2004. For the year 2005, revenues were derived primarily from non-aviation security services provided in the United States. Operating loss for the year 2005 amounted to $7.7 million, compared to an operating loss of $7.0 million for the year 2004. Loss from continuing operations for the year 2005 amounted to $11.3 million ($1.74 per fully diluted share). This compares to a net loss of $10.5 million in the year 2004 ($1.61 per fully diluted share). Loss from discontinued operations for the year 2005 amounted to $13.5 million. This compares to a net loss of $15.5 million in the year 2004. The loss this year is a result of one time provision of 14 years future rent and capital loss from sale of equipments. Loss for the year 2005 amounted to $24.9 million ($3.81 per fully diluted share). This compares to a net loss of $26 million in the year 2004 ($3.98 per fully diluted share). Shareholders' equity (deficiency) as of December 31, 2005 totals $5.1 million. Auditor's Report. In connection with the audit for the year end December 31, 2005 the Company's independent auditors have raised the going concern of the Company in their report. Nasdaq letter. The Company on September 19, 206 received a notice from The Nasdaq Stock Market that the Staff determined that the Company's stockholder's equity was ($5,148,000). Accordingly, the Company does not comply with the minimum $10,000,000 stockholders' equity requirement for continued listing on The Nasdaq Global Market set forth in Marketplace Rule 4450(a)(3) and this matter serves as an additional basis for delisting the Company's securities from The Nasdaq Stock Market. Mr. Menachem Atzmon, the Chairman of the Supervisory Board of the Company, indicated that "the financial statements for the year ended December 31, 2005 reflected the major restructuring steps developed by management of the Company. These steps which amounted to $13.5 million, primarily dealt with the close down of the Company's entertainment business located in Atlantic City and Baltimore, Maryland. In addition, due to GAAP requirements of presentation, the financial statements do not reflect the real impact of ICTS's investment in two affiliates: 1) 31.83% ownership interest in Inksure Technologies Inc. is presented on the Equity method as $1.8 million asset and $1.1 million loss, while our share in it's market value as of December 31, 2005 was $14 million (August 2006 independent evaluation of Inksure indicates our share value of $19 million. 2) 50% share in NAS with total revenue of more than $40 million, is not consolidated. The investment is presented on the Equity method showing an asset of $1.2 million and profit of $700K. Mr. Atzmon further stated "The Company re-entered the aviation business in Europe, as well as entering the mass transportation security business with the focus on railroad security business. The Company is currently aggressively marketing its capabilities in the railroad security business, having obtained a contract for rail security development in Rotterdam, Amsterdam. The Company is continuing to develop and to market its technological products as a stand alone product as well as supporting tools for the aviation security services, the emergency preparedness services and for the new activities the company entered into". About ICTS International N.V. ICTS specializes in the development and implementation of innovative security concepts and solutions designed to meet the needs of a variety of industries, mainly including transportation (aviation, railroad and other means of public transportation), border control and sensitive facilities. ICTS International benefits from over two decades of expertise and international operational experience in transportation security, with a particular emphasis on high-risk environments, passenger processing transactions and the integration of security services to provide a comprehensive security solution. It also offers a wide variety of customized training programs, tailored procedures and a wide range of security consulting services. The company has developed and implemented unique technological solutions, based on its comprehensive approach to security, designed to enhance the level of security while accelerating the security check process. www.icts-int.com This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the Company's business strategy and future plans of operations. Forward-looking statements involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this press release. These and other important factors, including those mentioned in various Securities and Exchange Commission filings made periodically by the Company, may cause the Company's actual results and performance to differ materially from the future results and performance expressed in or implied by such forward-looking statements. The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Company's expectations or future events. -0- *T December 31, ---------------- 2005 2004 ------- ------- A s s e t s CURRENT ASSETS: Cash and cash equivalents $ 5,927 $ 3,224 Restricted cash and short term investments 3,724 4,773 Accounts receivable (net of allowance for doubtful accounts of $1,237 and $2,708 as of December 31, 2005 and 2004, respectively) 13,639 11,958 Prepaid expenses 1,335 1,051 Other current assets 337 2,523 Current assets from discontinued operations 482 1,139 ------- ------- T o t a l current assets 25,444 24,668 ------- ------- INVESTMENTS: Investments in associated companies 2,989 3,774 Other investments 495 7,118 Deferred income taxes 0 3 -------- ------- 3,484 10,895 ------- ------- PROPERTY AND EQUIPMENT: Cost 4,232 3,549 Less - accumulated depreciation and amortization 2,979 2,534 ------- ------- 1,253 1,015 ------- ------- GOODWILL 314 314 ------- ------- OTHER ASSETS, net of Accumulated amortization 1,663 1,754 Non current assets from discontinued operations 55 16,316 ------- ------- T o t a l other assets 1,718 18,070 ------- ------- T o t a l assets $32,213 $54,962 ======= ======= The accompanying notes are an integral part of the consolidated financial statements. *T -0- *T The following table summarizes certain statement of operations data for ICTS for the years ended December 31, 2005, 2004, 2003, 2002 and 2001: (U.S. Dollars in thousand except per share data) Year ended December 31, ------------------------------------------------------- 2005 2004 2003 2002 2001 ---------- ---------- ---------- ---------- ---------- REVENUES $57,713 $ 57,993 $ 67,933 $ 278,561 $ 212,137 COST OF REVENUES 53,721 52,825 52,557 212,439 189,925 ---------- ---------- ---------- ---------- ---------- GROSS PROFIT 3,992 5,168 15,376 66,122 22,212 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 11,690 12,201 8,547 25,635 18,641 IMPAIRMENT OF ASSETS AND GOODWILL 797 9,156 820 ----------- ---------- ---------- ---------- ---------- OPERATING INCOME (LOSS) (7,698) (7,033) 6,032 31,331 2,751 FINANCIAL INCOME (EXPENSES) - net (908) (452) 4,118 3,046 1,977 OTHER INCOME (EXPENSES) - net 147 (2,907) (353) 41,229 29,520 INCOME (LOSS) BEFORE TAXES (8,459) (10,392) 9,797 75,606 34,248 INCOME TAXES BENEFIT (EXPENSE) (2,387) 1,529 (3,910) (16,442) (4,919) SHARE IN LOSSES OF ASSOCIATED COMPANIES - net (486) (1,625) (6,661) (1,807) (395) MINORITY INTERESTS IN PROFIT OF SUBSIDIARIES (2,735) ----------- ---------- ---------- ---------- ---------- PROFIT (LOSS) FROM CONTINUING OPERATIONS (11,332) (10,488) (744) 57,357 26,198 DISCONTINUED OPERATIONS: Loss from discontinued operations, net of tax Benefit of $2,525, $1,655 and $795 in 2005, 2004 and 2003, respectively Includes loss of $4,7774 on sale of assets to a related party on 2005, and after share in loss of associated company of $36 and $81 in 2005 and 2004, respectively (13,548) (15,474) (18,130) (542) INCOME (LOSS) FOR THE YEAR (24,880) (25,962) (18,904)$ 56,815 $ 26,198 ---------- ---------- ---------- ---------- ---------- OTHER COMPREHENSIVE INCOME: Translation adjustments (1,560) 1,043 3,456 710 (1,811) Unrealized gains (losses) on marketable securities (214) (616) 794 731 (345) Reclass- ification adjustment for losses for available for sale securities included in net income 237 (771) 368 (1,774) 427 4,487 670 (1,788) ---------- ---------- ---------- ---------- ---------- TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR $ (26,654)$ (25,535)$ (14,417)$ 57,485 $ 24,410 ========== ========== ========== ========== ========== LOSSES PER SHARE: Profit (Loss) from continued operations: Profit (Loss) per common share - basic $ (1.74)$ (1.61)$ ( 0.12)$ 8.93 $ 4.18 ========== ========== ========== ========== ========== Profit (Loss) per common share - diluted $ (1.74)$ (1.61)$ ( 0.12)$ 8.88 $ 4.09 ========== ========== ========== ========== ========== (Loss) from discontinued operations: (Loss) per common share - basic $ (2.07)$ (2.37)$ (2.78)$ (0.08) ========== ========== ========== ========== (Loss) per common share - diluted $ (2.07)$ (2.37)$ (2.78)$ (0.08) ========== ========== ========== ========== NET INCOME (LOSS): Profit (Loss) per common share - basic $ (3.81)$ (3.98)$ ( 2.90)$ 8 .85 $ 4.18 ========== ========== ========== ========== ========== Profit (Loss) per common share - diluted $ (3.81)$ (3.98)$ ( 2.90)$ 8.80 $ 4.09 ========== ========== ========== ========== ========== Weighted average shares of common stock outstanding 6,528,100 6,524,250 6,513,100 6,419,575 6,263,909 Adjusted diluted weighted average shares of Common stock outstanding 6,528,100 6,524,250 6,513,100 6,453,447 6,412,535 ========== ========== ========== ========== ========== *T