SUPVA Super Vision International (MM)

Super Vision International, Inc. (NASDAQ:SUPVA), a world leader in solid-state LED and fiber optic lighting systems and controls used in commercial, architectural, signage, swimming pool and retail lighting applications today announced financial results for the full year ended December 31, 2005 and the restatement of the quarterly results for the first three quarters of 2005 and the full year ended December 31, 2004. 2005 Financial Results Total revenue for the year increased to $12.0 million as compared to $11.9 million in 2004, driven by a 21% increase in LED revenue in 2005 offset by a 15% decrease in sales of fiber optic lighting products. 2005 was a milestone year for the company as revenue from LED lighting systems surpassed revenue from fiber optic lighting systems for the first time in the company's history. LED revenues accounted for 49% of the company's sales compared to 41% in 2004. Fiber optic revenue represented only 47% of total revenue compared to 55% of total revenue in 2004 and 66% in 2003. Gross margins for the year improved to 41% in 2005 compared to 36% in 2004 as restated (39% compared to 36% as restated excluding a one-time settlement recovery of $240,000 received in 2005 for damaged and faulty parts charged to cost of sales in prior years) as a result of cost reduction initiatives and improvements in operational efficiencies. The net loss for the year was approximately $488,500 or ($0.19) per basic and diluted share as compared to a restated net loss of approximately $401,400, or ($0.16) per basic and diluted share for 2004. The increase in net loss was driven primarily by increased research and development expenses, legal fees, wages, benefits and a one-time severance expense. New President and Chief Executive Officer Mike Bauer said, "Repositioning Super Vision International to capitalize on the emerging market for solid-state LED lighting systems and controls, expanding our product platform through strategic investments and reconfiguring our facility for improved operational efficiencies and higher gross margins were our primary goals in 2005 and we achieved them. The investments in new product development and our new training and development center were long overdue and as the market for fiber optic lighting has matured we felt it was critical to make these key moves to break out of the past, accelerate our revenue growth and drive the company to profitability. It is an exciting time for our company. The overall market for high brightness, solid-state lighting systems is estimated to grow at over 20% in the next several years. Our goal is to capitalize on this opportunity and become a leader in the market." "Sales to date of our new SaVi(TM) brand of architectural LED lighting products that we began shipping last April have exceeded $1 million and we have introduced three new state-of-the-art high density array LED SaVi(TM) products that we expect to start shipping in the 2nd quarter of 2006. In addition, during 2005, we filed six new patent applications and were issued another patent in December, bringing our total number of issued patents to nineteen." Earlier this month the company, along with its independent registered public accounting firm, Cross, Fernandez & Riley, LLP, determined to restate its previously filed financial statements for the year ended December 31, 2004 and the quarters ended March 31, June 30 and September 30, 2005 to reflect the capitalization of overhead and freight-in costs on inventory items not previously capitalized and the correction of an error in our overhead rate. The restatement resulted from a reassessment of the company's current methodology for capitalizing labor and overhead due to the change in product mix from fiber optics to LED based products over the last three years. As a result of the restatement, the company's accumulated deficit decreased by $434,967 as of December 31, 2004 and the company's net loss for 2004 increased by $69,231 from $332,201 to $401,432, or an increased loss of $0.03 per basic and diluted share. The impact of the restatement on the quarterly unaudited financial statements for the three previously reported quarters in 2005 is disclosed in our 10-KSB for the year ended December 31, 2005 filed with the Securities and Exchange Commission on March 29, 2006 and in the company's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 22, 2006. "2005 was a milestone year for Super Vision as we diversified our product platform, transitioned to new senior leadership, began executing a new strategic vision for the company and invested in our future," stated Dan Regalado, Executive Vice President and Chief Financial Officer. "Gross margins increased year over year by 200 basis points excluding the one-time benefit of a settlement that reduced our cost of sales, and in February 2006, we established a $1.2 million revolving line of credit to finance additional investments or working capital needs that might arise." Operating expenses for the year increased 16% compared to 2004 primarily driven by higher legal expenses, higher research and development expenses, increased wages and benefits, and a one-time severance expense. Total operating expenses for 2005 were $5.2 million as compared to $4.5 million in 2004 as restated. EBITDA, which is Earnings Before Interest, Taxes, Depreciation and Amortization, is a non-GAAP financial measure which management uses as part of its performance appraisal in reviewing the Company's ongoing operational business trends related to its financial condition and results of operations. For the year ended December 31, 2005, EBITDA was approximately $467,500 compared to $644,300 in 2004. The Company had cash and investments of approximately $1.3 million at December 31, 2005 with a current ratio of 3.2 to 1. 2005 Highlights -- Successful President/CEO transition announced and executed. -- LED revenues increased 21%. -- Gross Margins improved 8.0% to 39% on a normalized basis. -- New SaVi(TM) brand of architectural LED products was introduced. -- New LED and Fiber Optic Training and Development Center opened in November. -- Six patent applications were filed; one new patent was issued bringing the total for issued company patents to nineteen. About Super Vision International, Inc. Super Vision International's vision is to incorporate Light, Color and Imagination with advanced technology to become one of the world's leading suppliers of lighting and lighting control products that add visual excitement, accent, impact and identity to commercial and residential lighting projects around the world. For more information, please visit the Super Vision web site at http://www.svision.com. Certain of the above statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Reference is made to Super Vision's filings under the Securities Exchange Act for factors that could cause actual results to differ materially. Super Vision undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements. -0- *T SUPER VISION INTERNATIONAL, INC. STATEMENTS OF OPERATIONS Year Ended December 31, 2005 2004 (as restated) ------------ ------------- Revenues $11,983,223 $11,894,666 Cost of sales 7,110,595 7,605,656 ------------ ------------- Gross margin 4,872,628 4,289,010 Operating expenses: Selling, general and administrative 4,691,905 4,087,412 Research and development 552,209 418,177 (Gain) Loss on disposal of property and equipment (6,000) 18,937 ------------ ------------- Total operating expenses 5,238,114 4,524,526 ------------ ------------- Operating loss (365,486) (235,516) Non-operating income (expense): Interest income 55,540 32,392 Other income 189,480 192,691 Interest expense (367,992) (390,999) ------------ ------------- Total non-operating expense, net (122,972) (165,916) ------------ ------------- Net loss $ (488,458) $ (401,432) ============ ============= Basic and diluted loss per common share $ (0.19) $ (0.16) ============ ============= Basic and diluted weighted average shares outstanding 2,542,579 2,541,601 ============ ============= *T -0- *T Selected Balance Sheet Data As of December 31, 2005 2004 (as restated) ------------- ------------- Cash and investments $ 1,274,150 $ 1,926,042 Current assets $ 6,311,190 $ 6,679,561 Total assets $ 9,323,808 $ 9,829,528 Current liabilities $ 1,995,530 $ 1,794,366 Total liabilities $ 4,288,386 $ 4,313,034 Total stockholders' equity $ 5,035,422 $ 5,516,494 *T -0- *T Reconciliation of Non-GAAP Financial Measure The following table reconciles GAAP to non-GAAP financial measure: Earnings Before Interest Taxes Depreciation and Amortization Year Ended December 31, ------------------------------------- 2005 2004 Change % (as restated) ------------------------------------- Net Loss (488,458) (401,432) (87,026) (22%) Plus: Interest expense 367,992 390,999 (23,007) (6%) Depreciation 549,311 580,165 (30,854) (5%) Amortization and impairment 38,654 74,556 (35,902) (48%) Taxes -- -- -- -- ------------------------------------- EBITDA 467,499 644,288 (176,789) (27%) ===================================== % of Revenues 4% 5% *T