ICTS Icts International N.V (MM)

ICTS International N.V. (NASDAQ: ICTS), a leading provider of advanced security services, reported today that it had received Notice from Nasdaq that the Company had not filed its annual report for the year ended December 31, 2004 in accordance with Marketplace Rule 4310(c)(14). The Company's Annual Report on Form 20-F has been completed, except for the sign off by the Company's prior auditors for the year ended December 31, 2003. The prior auditor is waiting for a consent to reissue their report from an auditor of an affiliated company. The Company expects this technical issue to be resolved shortly and the Form 20-F duly filed. If the Form 20-F is not filed, the Company's securities will be delisted. The Company's trading symbol will be changed from "ICTS" to "ICTSE". In the interim, the Company is requesting a hearing from Nasdaq with respect to this filing, which will delay the delisting. Loss for the year 2004: The Company reported a net loss of $25.9 million ($3.98 per fully diluted share) for the year 2004. This compares to a net loss of $18.9 million in the year 2003 ($2.90 per fully diluted share). Revenues in the year 2004 amounted to $62.8 million as compared with $71.6 million for the year 2003. For the year 2004, revenues were derived primarily from non-aviation security services provided in the United States. Operating loss for the year 2004 amounted to $23.8 million, compared to an operating loss of $9.6 million for the year 2003. A substantial portion of the loss for the year ended 2004 was as a result of write-down of impairment on various assets of the Company ($15.4 million). Shareholders' equity as of December 31, 2004 totals $21.5 million. Cash and cash equivalents amounted to $3.4 million. Mr. Menachem Atzmon, the Chairman of the Supervisory Board of the Company, indicated that "the financial statements for the year ended December 31, 2004 reflect the major restructuring steps developed by management of the Company. The Supervisory Board approved a new strategy for the Company whereby the Company will focus on the Company's security business and dispose of non-core assets and activities." Mr. Atzmon further stated, "The Company had re-entered the aviation business in Europe, as of February of this year. The Company has also entered 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. 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. In view of the recent tragic events in London, management believes that they will be able to contribute significantly to railroad security. The aviation security business in Europe is being operated through a newly created wholly owned subsidiary called I-SEC (International Security)." About ICTS ICTS current principal activity consists of providing manpower based aviation security services in The Netherlands and non-security related manpower based general aviation services in the USA. Its other security activities consist primarily of the development of integrated technological solutions designed to reduce processing time of passengers at airports while maintaining high security level and other products to enhance security services in non-aviation security services. ICTS has interests in a variety of businesses and ventures including the establishment and the operation of motion-based entertainment theatres in the USA. 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 Year ended December 31 ---------------------- 2004 2003 2002 ------------------------------- (U.S. Dollars in thousands except per share data) REVENUES $62,778 $71,571 $279,931 COST OF REVENUES 57,904 57,562 214,054 --------- --------- --------- GROSS PROFIT 4,874 14,009 65,877 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 13,212 9,216 25,636 IMPAIRMENT OF ASSETS AND GOODWILL 15,422 14,352 9,156 --------- --------- --------- OPERATING INCOME (LOSS) (23,760) (9,559) 31,085 INTEREST INCOME 470 2,248 2,072 INTEREST EXPENSE (1,160) (1,222) (1,678) EXCHANGE DIFFERENCES (83) (242) 2,356 OTHER INCOME (EXPENSES), net (2,907) (353) 41,229 --------- --------- --------- INCOME (LOSS) BEFORE TAXES ON INCOME (27,440) (9,128) 75,064 INCOME TAXES BENEFIT (EXPENSE) 3,184 (3,115) (16,442) --------- --------- --------- INCOME (LOSS) FROM OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES (24,256) (12,243) 58,622 SHARE IN LOSSES OF ASSOCIATED COMPANIES - net (1,706) (6,661) 1,807) MINORITY INTERESTS IN PROFITS OF SUBSIDIARIES B net --------- --------- --------- NET INCOME (LOSS) FOR THE YEAR $(25,962) $(18,904) $56,815 --------- --------- --------- OTHER COMPREHENSIVE INCOME (LOSS): Translation adjustments 1,043 3,456 710 Unrealized gains (losses) on marketable securities (616) 794 731 Reclassification adjustment for losses for available for sale securities included in net income -- 237 (771) --------- --------- --------- 427 4,487 670 --------- --------- --------- TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR $(25,535) $(14,417) $57,485 ========= ========= ========= EARNINGS (LOSSES) PER SHARE: Basic $(3.98) $(2.90) $8.85 ========= ========= ========= Diluted $(3.98) $(2.90) $8.80 ========= ========= ========= Weighted average shares of common stock outstanding 6,524,250 6,513,100 6,419,575 Adjusted Diluted weighted average shares of common stock outstanding 6,524,250 6,513,100 6,453,447 ========= ========= ========= *T