International Road Dynamics Inc.

International Road Dynamics Inc.

March 22, 2005 13:51 ET

IRD Announces Improved First Quarter 2005 Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: INTERNATIONAL ROAD DYNAMICS INC.

TSX SYMBOL: IRD

MARCH 22, 2005 - 13:51 ET

IRD Announces Improved First Quarter 2005 Results

SASKATOON, SASKATCHEWAN--(CCNMatthews - March 22, 2005) - International
Road Dynamics Inc. (TSX:IRD) (IRD) announced today results for the three
months ended February 28, 2005.

HIGHLIGHTS:

- Sales rise due to gains in offshore markets

- Improved gross margins and cost controls result in profitable quarter

- Positive outlook for approval of new transportation budget in United
States during 2005

Sales in the first quarter of fiscal 2005 rose 7.8% to $7.2 million from
$6.7 million last year due primarily to solid growth in the Company's
overseas markets and new contracts in Canada.

Gross margin rose to 30.2% of sales from 21.2% in last year's first
quarter. Included in the prior year's results were a number of low
margin OEM sales and low margin contracts acquired with the PAT Traffic
business. These contracts were completed during 2004 and the Company has
returned to a more traditional sales mix favouring higher margin product
and systems sales.

Administrative and marketing expenses were marginally higher in the
first quarter of fiscal 2005 due primarily to increased professional
fees and insurance costs.

As a result of the improved margins and management's cost control
initiatives, the Company generated earnings before interest, taxes,
depreciation and amortization (EBITDA) of $255,546, a considerable
improvement over the loss of $518,958 recorded in the first quarter of
last year. Net income was $88,474 or $0.01 per common share compared to
a net loss of $294,002 or $0.02 per common share in the first quarter of
2004.

IRD's balance sheet remained strong at the end of the first quarter with
working capital of $7.5 million compared to $7.7 million at the end of
fiscal 2004, and a debt to equity ratio of a highly conservative 0.8x:1.
Shareholders equity stood at $12.9 million or $0.94 per common share.

Over the last two years the Company has achieved significant growth in
its overseas markets, including India, South America, China and Korea.
Contributing to this growth were sales of products acquired with the
purchase of the PAT business in 2003, in addition to the development of
new markets for IRD's systems and products, particularly for toll road
systems in India. In order to achieve significantly higher revenues it
is important that spending on new weigh station technology in the U.S.
regain momentum. However, due to ongoing delays by the US federal
government in approving a new six-year transportation budget, State
governments have been unable or reluctant to commit funds to significant
transportation capital projects. The prospect of the passage into law of
the new transportation budget during 2005 looks promising. Although this
passage would not result in an immediate increase in weigh station
spending, it is expected that in 2006 the increase in demand for weigh
station systems in the U.S. will have a positive impact on the Company's
revenues.

"We were pleased to have generated solid profitability in the first
quarter of fiscal 2005, traditionally our weakest period of the year,"
commented Terry Bergan, President and CEO. "We are also cautiously
optimistic that with the anticipated passage of a new transportation
budget in the US this year, we will see a gradual improvement in sales
of our weigh-in-motion and other products into a market where we have a
long-standing and strong reputation for quality and meeting the needs of
our customers."



Financial Highlights (financial statements attached)
------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months
------------------------------------------------------------------------
Period Ended February 28, 2005 2004
------------------------------------------------------------------------
(in $,000 except per share amounts)
Sales 7,167 6,664
EBITDA 256 (519)
Net Earnings 88 (294)
Net Earnings per Common Share (basic) $ 0.01 $ (0.02)
Working Capital 7,484 9,055
Shareholders' Equity per Share $ 0.94 $ 0.98
Common Shares Outstanding 13,766 13,707
------------------------------------------------------------------------
------------------------------------------------------------------------


Certain statements in this discussion may include "forward-looking"
statements which involve known and unknown risks, uncertainties and
other factors which may cause actual results, performance or
achievements of International Road Dynamics Inc. to be materially
different from any future results, performance or achievements expressed
or implied by such forward-looking statements. When used in this
discussion, such statements use such words as "may", "will", "expect",
"anticipate", "project", "believe", "plan", and other similar
terminology. The risks and uncertainties are detailed from time to time
in reports filed by the Corporation with the securities regulatory
authorities in applicable provinces and territories of Canada. New risk
factors may arise from time to time and it is not possible for
management to predict all of those risk factors or the extent to which
any factor or combination of factors may cause actual results,
performance and achievements of the Corporation to be materially
different from those contained in forward-looking statements. Given
these risks and uncertainties, investors should not place undue reliance
on forward-looking statements as a prediction of actual results.

As used herein, "EBITDA" means earnings before interest, income taxes,
depreciation, and amortization. EBITDA is not a recognized measure under
Canadian generally accepted accounting principles ("GAAP"). Management
believes that EBITDA is a useful supplemental measure to net earnings
(loss), as it provides investors with an indication of operating
performance prior to debt service, capital expenditures and income
taxes. Investors should be cautioned, however, that EBITDA should not be
construed as an alternative to net earnings (loss) determined in
accordance with GAAP as an indicator of the Corporation's performance or
to cash flows from operating, investing and financing activities as a
measure of liquidity and cash flows. The Corporation's method of
calculating EBITDA may differ from the methods by which other companies
calculate EBITDA and, accordingly, EBITDA may not be comparable to
measures used by other companies.

IRD is a highway traffic management technology company specializing in
supplying products and systems to the global Intelligent Transportation
Systems (ITS) industry. IRD is a North American company based in
Saskatoon, Saskatchewan with sales and service offices throughout the
United States and overseas. Private corporations, transportation
agencies and highway authorities around the world use IRD's products and
advanced systems to manage and protect their highway infrastructures.

The Company's shares trade on the Toronto Stock Exchange under the
symbol IRD.



INTERNATIONAL ROAD DYNAMICS INC.
Consolidated Balance Sheets
February 28, 2005, with comparative figures for November 30, 2004
"Unaudited"

------------------------------------------------------------------------
------------------------------------------------------------------------
February 28 November 30
2005 2004
------------------------------------------------------------------------
Assets
Current assets:
Cash $ 1,958,042 $ 632,823
Accounts receivable 7,386,971 11,953,467
Inventory 5,742,144 5,191,353
Investment tax credits recoverable 474,000 474,000
Prepaid expenses and deposits 319,500 342,831
----------------------------------------------------------------------
15,880,657 18,594,474

Investment tax credits recoverable 3,030,000 2,900,000
Property, plant and equipment 4,547,568 4,576,853
Intangible assets 85,262 91,082
------------------------------------------------------------------------
$ 23,543,487 $ 26,162,409
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current Liabilities:
Short-term loans $ 3,943,275 $ 6,294,275
Accounts payable and accrued
liabilities 3,009,946 3,185,569
Income taxes payable 140,243 114,862
Deferred revenue 199,000 199,000
Future income taxes 526,000 506,000
Current portion of long-term debt 578,700 578,700
----------------------------------------------------------------------
8,397,164 10,878,406
Long-term debt - net 1,386,124 1,530,185
Deferred revenue 310,009 319,606
Future income taxes 521,000 610,000
------------------------------------------------------------------------
10,614,297 13,338,197
------------------------------------------------------------------------
Shareholders' Equity:
Share capital 11,798,562 11,782,058
Contributed surplus (note 2) 119,843 119,843
Retained earnings 1,010,785 922,311
----------------------------------------------------------------------
12,929,190 12,824,212
------------------------------------------------------------------------
$ 23,543,487 $ 26,162,409
------------------------------------------------------------------------
------------------------------------------------------------------------



INTERNATIONAL ROAD DYNAMICS INC.
Interim Consolidated Statement of Operations and Retained Earnings
"Unaudited"
------------------------------------------------------------------------
Three months ended
February 28 February 29
2005 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
Sales $ 7,166,957 $ 6,663,554

Cost of sales 4,999,851 5,250,925
------------------------------------------------------------------------
2,167,106 1,412,629

Administrative and marketing expenses 1,774,050 1,707,950
------------------------------------------------------------------------
Operating income (loss) 393,056 (295,321)

Research and development 137,510 223,637
------------------------------------------------------------------------
Earnings (loss) before undernoted items 255,546 (518,958)
Other expenses (income)
Foreign exchange (gain) (77,178) (180,484)
Amortization 191,895 211,473
Interest on short-term debt 93,970 66,506
Interest on long-term debt 33,742 22,161
Interest and other income (26,625) (19,745)
----------------------------------------------------------------------
215,804 99,911
------------------------------------------------------------------------
Earnings (loss) before provision
for income taxes 39,742 (618,869)
Provision for (recovery of) income taxes
Current 20,268 30,133
Future (recovery) (69,000) (355,000)
----------------------------------------------------------------------
(48,732) (324,867)
------------------------------------------------------------------------
Net earnings (loss) for the period 88,474 (294,002)
Retained earnings, beginning of period
As previously reported 1,042,154 1,959,238
Less stock based compensation of
prior periods (119,843) (2,843)
----------------------------------------------------------------------
As restated 922,311 1,956,395
------------------------------------------------------------------------
Retained earnings, end of period $ 1,010,785 $ 1,662,393
------------------------------------------------------------------------
------------------------------------------------------------------------
Earnings (loss) per share
- basic and diluted $ 0.01 $ (0.02)
------------------------------------------------------------------------
------------------------------------------------------------------------



INTERNATIONAL ROAD DYNAMICS INC.
Interim Consolidated Statement of Cash Flows
"Unaudited"
------------------------------------------------------------------------
------------------------------------------------------------------------
Three months ended
February 28 February 29
2005 2004
------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings (loss) $ 88,474 $ (294,002)
Items not involving cash:
Amortization 191,895 211,473
Issue of common shares for expenses 16,504 -
Deferred revenue (9,597) (99,392)
Change in non-cash working capital:
Accounts receivable 4,566,496 1,671,189
Investment tax credits recoverable (130,000) (200,000)
Provision for current and future
income taxes (43,619) (318,694)
Inventory (550,791) 185,040
Prepaid expenses and deposits 23,331 (22,651)
Accounts payable and accrued liabilities (175,623) (1,221,731)
----------------------------------------------------------------------
3,977,070 (88,768)
----------------------------------------------------------------------
Financing:
Net short-term loans (2,351,000) (154,066)
Repayment of long-term debt (144,061) (15,294)
Common shares issued - 164,787
----------------------------------------------------------------------
(2,495,061) (4,573)
----------------------------------------------------------------------
Investing:
Additions to property, plant and
equipment (156,790) (178,000)
----------------------------------------------------------------------
Increase (decrease) in cash 1,325,219 (271,341)
Cash, beginning of period 632,823 921,943
------------------------------------------------------------------------
Cash, end of period $ 1,958,042 $ 650,602
------------------------------------------------------------------------
Supplemental cash flow disclosure:
Income taxes paid $ - $ -
Interest paid $ 127,712 $ 88,667
------------------------------------------------------------------------
------------------------------------------------------------------------


INTERNATIONAL ROAD DYNAMICS INC.

Notes to Consolidated Interim Financial Statements

Period ended February 28, 2005

"Unaudited"

1. Significant accounting policies

These interim financial statements are based on the same accounting
policies and methods of their application as, and should be read in
conjunction with the most recent audited annual financial statements as
of November 30, 2004.

The consolidated balance sheet as at February 28, 2005, and the
consolidated statements of operations and cash flow for the three months
then ended have not been audited, however management believes that all
adjustments necessary to present these interim financial statements
fairly have been included.



2. Share capital:

(a) Share transactions:
Number $
of shares amount
------------------------
Balance, November 30, 2004 13,747,614 11,782,058

Shares issued in exchange for expenses 18,862 16,504

------------------------
13,766,476 11,798,562
------------------------
------------------------


(b) Options

Under the terms of a stock option plan approved by the shareholders in
May, 1997 and amended in 1998, the Company is authorized to grant
directors, officers, empoyees and others options to purchase common
shares at prices based on the market price of shares as determined on
the date of grant. At February 28, 2005, 1,198,165 (2004) - 1,617,665)
options remain available to be granted. Stock options become exercisable
at dates determined by the Compensation Committee of the Board of
Directors.

At February 28, 2005 the following stock options to directors, officers,
employees and others were outstanding:



------------------------------------------------------------------------
Options Outstanding Options Exercisable
------------------------------------------------------------------------
Weighted-
Number Average Weighted- Number Weighted-
Outstanding Remaining Average Exercisable Average
Exercise at February Contractual Exercise at February Exercise
Prices 28, 2005 Life (years) Price 28, 2005 Price
------------------------------------------------------------------------
$ 0.95 - 1.16 40,000 0.88 $1.02 36,667 $1.02
$ 1.28 885,000 4.00 $1.28 - $ -
$ 1.30 - 1.60 50,000 0.65 $1.48 46,667 $1.49
------------------------------------------------------------------------
975,000 83,334
------------------------------------------------------------------------
------------------------------------------------------------------------

The Company has granted stock options to directors, officers, employees
and others as follows:

Number of Weighted
Common Shares Average
Issuable Exercise Price
------------------------------------------------------------------------

Outstanding, November 30, 2002 919,500 $ 1.27

Options granted 60,000 1.04
Options exercised (195,000) 0.86
Options expired and cancelled (50,000) 1.29
------------------------------------------------------------------------

Outstanding, November 30, 2003 734,500 $ 1.35

Options granted 937,500 1.28
Options exercised (140,667) 1.17
Options expired and cancelled (556,333) 1.41
------------------------------------------------------------------------

Outstanding, November 30, 2004
and February 28, 2005 975,000 $ 1.28
------------------------------------------------------------------------
Outstanding options expire between June 30, 2005 and February 28, 2009.


Effective December 1, 2002, the Company adopted new CICA Handbook
Section 3870, "Stock-based Compensation and other Stock-based Payments".
This section requires that a fair value based method of accounting be
applied to direct awards of stock options to employees. This standard
allowed the Company to continue its existing policy, the intrinsic value
based method, of recording no compensation cost of the grant of stock
options to employees. For each of the 2003 and 2004 fiscal years pro
forma information was presented which reflects the difference between
compensation costs recorded under the intrinsic based method and costs
that would have been recorded under the fair value based method. The
fair value of stock options issued in the 2004 year was estimated using
the Black-Scholes option pricing model with assumptions of three year
weighted average option life, expected forfeiture rate of 50%, 22%
volatiltiy and risk-free rate of return of 2.31%.

For the year ended November 30, 2004, the effect on compensation cost of
using this approach would be to increase the net loss by $117,000 and
for the 2003 fiscal year to reduce net earnings by $2,843. In the 2005
fiscal year the Company has retroactively adopted the fair value based
method of accounting for awards of employee stock options. Prior periods
have not been restated and an adjustment has been made to the opening
balance of retained earnings of the current period to reflect the
cumulative effect of the change on prior periods.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    International Road Dynamics Inc.
    Terry Bergan
    President & CEO
    (306) 653-6600 or U.S. (303) 355-5998
    or
    International Road Dynamics Inc.
    Francine Senecal-Lepage
    Investor Relations
    (306) 653-6603
    (306) 653-6609 (FAX)
    Email: irdir@irdinc.com
    Website: www.irdinc.com
    or
    Corporate Offices
    Canadian - 702 - 43rd St. E.
    Saskatoon, SK S7K 3T9
    or
    Corporate Offices
    U.S. - 2402 Spring Ridge Drive, Suite E
    Spring Grove, IL 60081