International Road Dynamics Inc.
TSX : IRD

International Road Dynamics Inc.

September 22, 2005 19:23 ET

IRD Announces Solid Third Quarter 2005 Results

SASKATOON, SASKATCHEWAN--(CCNMatthews - Sept. 22, 2005) - International Road Dynamics Inc. (TSX:IRD) (IRD) announced today its results for the three and nine months ended August 31, 2005.

Highlights:

- Third quarter sales rise 15.3% as North American market fundamentals strengthen

- Quarterly revenues pass $10 million for the first time

- Gross margins improve due to increased systems sales

- Nine months net earnings of $0.07 per share compared to loss of $0.04 per share in 2004

- Awarding of $7.9 million in new contracts

- Passing of U.S. Transportation Bill bodes well for continued growth

Sales in the third quarter of fiscal 2005 rose 15.3% to $10.1 million from $8.8 million last year due primarily to higher Commercial Vehicle Operations (CVO) systems sales in Canada and the United States. For the nine months ended August 31, 2005, sales were $25.89 million, up 12.8% from fiscal 2004.

As a result of the increase in higher margin systems and product sales, gross margin improved in both the third quarter and nine month periods compared to last year. Administrative and marketing expenses were lower for the three and nine months ended August 31, 2005 compared to the prior year due to ongoing cost control initiatives.

The increase in sales, combined with the improved gross margin and lower overhead expenses, resulted in third quarter earnings before interest, taxes, depreciation and amortization (EBITDA) rising to $1.0 million from $154,242 last year. EBITDA for the nine months ended August 31, 2005 rose to $2.3 million from a loss of $308,554 in fiscal 2004. Net earnings in the third quarter of fiscal 2005 increased to $406,810 or $0.03 per common share from a loss of $187,998 or $0.01 per share last year. Net earnings for the first nine months of fiscal 2005 were $935,598 or $0.07 per share compared to a loss of 543,135 or $0.04 per share last year.

The Company's balance sheet continued to strengthen in the quarter with working capital rising to $8.5 million from $7.7 million at the end of fiscal 2004 and $7.1 million at the end of last year's third quarter. Long-term debt continued to reduce, while shareholders' equity increased to $13.8 million or $1.00 per common share compared to $12.8 million or $0.93 as at November 30, 2004. The Company generated cash from operations of $1.8 million for the nine months ended August 31, 2005 compared to a use of cash of $1.2 million last year.

"Our results continued to improve in the third quarter, and we look for further growth in both sales and earnings going forward," commented Terry Bergan, President and Chief Executive Officer. "In addition, with the recent passing of the long-awaited transportation bill in the United States, we are confident we will capitalize on the increased demand for our innovative ITS solutions and build on our industry leading presence in the U.S. market."

On August 10, the United States government passed its surface transportation reauthorization bill with approved total guaranteed funding of $286.5 billion for fiscal years 2004 through 2009 for improvements and maintenance for the highway and transit systems, including significant funding for the installation, service, and maintenance of Intelligent Transportation Systems (ITS). IRD is a global leader in the provision of ITS systems and solutions, with an established market presence and a significant installed base of its Weigh-In-Motion (WIM) and other ITS technologies in the U.S.

"With the passage of this bill, we are confident many of the projects that have been delayed over the last three years will now proceed on the fast track," Mr. Bergan concluded.

IRD is the worldwide leader in WIM systems with an installed base of more than 2,500 systems throughout North, South and Central America, Europe, Asia and Australia. During the third quarter the Company renewed an $850,000 one-year service and maintenance contract with the Oklahoma Department of Transportation, as well as maintenance contracts in Oregon, Illinois, Indiana, North Carolina, Washington, Nebraska, and Kentucky worth a total of $1.25 million. The Company's overseas business was also strengthened with the awarding of a $1.86 million iToll and WIM contract in India, as well as its first WIM contract in Bangladesh worth $600,000. IRD's Brazilian subsidiary was also awarded a $2.0 million contract for the refurbishment of 13 WIM stations.



Financial Highlights (full statements follow)

------------------------------------------------------------------------
------------------------------------------------------------------------
Three Months Nine Months
------------------------------------------------------------------------
Period Ended August 31, 2005 2004 2005 2004
------------------------------------------------------------------------
(in $,000 except per share amounts)
Sales:
Canada 1,900 657 4,722 1,314
United States 6,377 5,357 14,581 14,444
International 1,805 2,731 6,594 7,204
---------------------------------
10,082 8,745 25,897 22,962
EBITDA 1,036 154 2,253 (309)
Net Earnings (Loss) 407 (188) 936 (543)
Net Earnings (Loss) per Common Share $0.03 $(0.01) $ 0.07 $ (0.04)
Working Capital 8,499 7,102
Shareholders' Equity per Share $ 1.00 $ 0.96
------------------------------------------------------------------------
------------------------------------------------------------------------


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.



INTERNATIONAL ROAD DYNAMICS INC.
Consolidated Balance Sheets
August 31, 2005, with comparative figures for November 30, 2004
"Unaudited"


------------------------------------------------------------------------
------------------------------------------------------------------------
August 31 November 30
2005 2004
(as restated)
------------------------------------------------------------------------

Assets

Current assets:
Cash $ 702,676 $ 632,823
Accounts receivable 10,623,388 11,953,467
Inventory 5,653,646 5,191,353
Investment tax credits recoverable 475,000 474,000
Prepaid expenses and deposits 449,053 342,831
------------------------------------------------------------------------

17,903,763 18,594,474

Investment tax credit recoverable 3,199,000 2,900,000
Property, plant and equipment 4,466,071 4,576,853
Intangible assets 78,510 91,082

------------------------------------------------------------------------
$ 25,647,344 $ 26,162,409
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current Liabilities:
Short-term loans $ 5,562,655 $ 6,294,275
Accounts payable and accrued liabilities 2,474,730 3,185,569
Current income taxes 131,500 114,862
Deferred revenue 160,000 199,000
Future income taxes 500,000 506,000
Current portion of long-term debt 576,000 578,700
------------------------------------------------------------------------

9,404,885 10,878,406

Long-term debt 1,099,764 1,530,185
Deferred revenue 455,688 319,606
Future income taxes 881,500 610,000
------------------------------------------------------------------------
11,841,837 13,338,197
------------------------------------------------------------------------

Shareholders' Equity:
Share capital (note 2) 11,827,755 11,782,058
Contributed surplus (note 2) 119,843 119,843
Retained earnings 1,857,909 922,311

------------------------------------------------------------------------
13,805,507 12,824,212
------------------------------------------------------------------------

$ 25,647,344 $ 26,162,409
------------------------------------------------------------------------
------------------------------------------------------------------------


INTERNATIONAL ROAD DYNAMICS INC.
Consolidated Statement of Operations and Retained Earnings
"Unaudited"

------------------------------------------------------------------------
------------------------------------------------------------------------
Three months ended Nine months ended
August 31 August 31
2005 2004 2005 2004
------------------------------------------------------------------------

Sales $ 10,081,600 $ 8,745,473 $ 25,896,900 $ 22,962,422

Cost of sales 7,077,611 6,147,334 17,888,992 16,799,366
------------------------------------------------------------------------
3,003,989 2,598,139 8,007,908 6,163,056

Administrative and
marketing expenses 1,829,876 2,069,630 5,267,406 5,599,668
------------------------------------------------------------------------
1,174,113 528,509 2,740,502 563,388

Research and
development 137,672 374,267 487,424 871,942
------------------------------------------------------------------------
Earnings (loss) before
undernoted items 1,036,441 154,242 2,253,078 (308,554)
------------------------------------------------------------------------

Other expenses
(income)
Foreign exchange
loss (gain) 65,542 148,163 7,189 (159,511)
Amortization 226,661 212,268 643,960 641,330
Interest on
short-term debt 80,953 59,142 238,043 174,173
Interest on
long-term debt 29,064 19,579 94,817 63,344
Interest and other
income (12,360) (3,582) (55,682) (38,724)
------------------------------------------------------------------------
389,860 435,570 928,327 680,612
------------------------------------------------------------------------
Earnings (loss) before
income taxes 646,581 (281,328) 1,324,751 (989,166)

Provision for
income taxes
Current 56,271 142,670 123,653 214,969
Future (recovery) 183,500 (236,000) 265,500 (661,000)
------------------------------------------------------------------------
239,771 (93,330) 389,153 (446,031)

Net earnings
(loss) for the
period 406,810 (187,998) 935,598 (543,135)

Retained earnings,
beginning of
period
As previously
reported 1,451,099 1,604,101 1,042,154 1,959,238
Less stock based
compensation of
prior periods - (2,843) (119,843) (2,843)
------------------------------------------------------------------------
As restated 1,451,099 1,601,258 922,311 1,956,395
------------------------------------------------------------------------
Retained earnings,
end of period $ 1,857,909 $ 1,413,260 $ 1,857,909 $ 1,413,260
------------------------------------------------------------------------
------------------------------------------------------------------------
Earnings (loss)
per share
- basic $ 0.03 $ (0.01) $ 0.07 $ (0.04)
- diluted $ 0.03 $ (0.01) $ 0.07 $ (0.04)
------------------------------------------------------------------------
------------------------------------------------------------------------


INTERNATIONAL ROAD DYNAMICS INC.
Consolidated Statement of Cash Flows
"Unaudited"

------------------------------------------------------------------------
------------------------------------------------------------------------
Three months ended Nine months ended
August 31 August 31
2005 2004 2005 2004
------------------------------------------------------------------------
Cash provided by
(used in):

Operations:
Net earnings (loss) $ 406,810 $ (187,998) $ 935,598 $ (543,135)
Items not
involving cash:
Amortization 226,661 212,268 643,960 641,330
Issue of common
shares for
expenses 14,734 - 45,697 21,489
Provision for
future income
taxes 183,500 (236,000) 265,500 (661,000)
Investment tax
credits
recoverable (82,000) (140,000) (300,000) (610,000)
Deferred revenue 13,167 (36,053) 97,082 (232,756)
------------------------------------------------------------------------
762,872 (387,783) 1,687,837 (1,384,072)

Change in non-cash
working capital:
Accounts
receivable (2,902,706) (480,518) 1,330,079 1,191,665
Inventory 483,282 270,857 (462,293) (530,225)
Prepaid expenses
and deposits 1,961 (29,122) (106,222) (224,524)
Accounts payable
and accrued
liabilities 148,585 (885,965) (710,839) (413,958)
Income taxes
payable 51,362 119,167 16,638 122,792

------------------------------------------------------------------------
(1,454,644) (1,393,364) 1,755,200 (1,238,322)
------------------------------------------------------------------------

Financing:
Net short-term
loans 1,908,580 1,604,301 (731,620) 1,410,758
Repayment of
long-term debt (144,825) (22,433) (433,121) (56,198)
Issuance share
capital - - - 164,787
------------------------------------------------------------------------
1,763,755 1,581,868 (1,164,741) 1,519,347
------------------------------------------------------------------------

Investing:
Additions to
property, plant
and equipment (89,732) (125,772) (515,799) (622,939)
Intangible assets (4,807) - (4,807) -
Equity investment - - - (61,772)
------------------------------------------------------------------------
(94,539) (125,772) (520,606) (684,711)
------------------------------------------------------------------------

Increase (decrease)
in cash 214,572 62,732 69,853 (403,686)

Cash, beginning of
period 488,104 455,525 632,823 921,943

------------------------------------------------------------------------
Cash, end of
period $ 702,676 $ 518,257 $ 702,676 $ 518,257
------------------------------------------------------------------------
------------------------------------------------------------------------
Supplemental cash
flow disclosure:
Income taxes paid $ 4,909 $ 23,503 $ 107,015 $ 92,177
Interest paid $ 110,017 $ 78,721 $ 332,860 $ 237,517
------------------------------------------------------------------------
------------------------------------------------------------------------


INTERNATIONAL ROAD DYNAMICS INC.
Notes to Consolidated Financial Statements
Period ended August 31, 2005
"Unaudited"


1. Significant accounting policies

These consolidated financial statements have been prepared in accordance with Canadaian Generally Accepted Accounting Principals and follow the same accounting policies and methods of 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 August 31, 2005, and the consolidated statements of operations and cash flow for the three and nine months ended August 31, 2005 and 2004 have not been audited or reviewed, however management believes that all adjustments necessary to present fairly these financial statements 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 52,929 45,697

---------------------------
13,800,543 11,827,755
---------------------------
---------------------------


(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 August 31, 2005, 1,253,165 (2004) - 988,165) options remain available to be granted. Stock options become exercisable at dates determined by the Compensation Committee of the Board of Directors.

At August 31, 2005 the following stock options to officers, employees and others were outstanding:



------------------------------------------------------------------------
Options Outstanding Options Exercisable
------------------------------------------------------------------------
Weighted-
Number Average Weighted- Number Weighted-
Outstanding Remaining Average Exercisable Average
Exercise at August 31, Contractual Exercise at August 31, Exercise
Prices 2005 Life (years) Price 2005 Price
------------------------------------------------------------------------

$ 0.95
- 1.16 40,000 0.37 $1.02 40,000 $1.02
$ 1.28 870,000 3.50 $1.28 5,000 $1.28
$ 1.30 10,000 0.25 $1.30 10,000 $1.30
------------------------------------------------------------------------
920,000 55,000
------------------------------------------------------------------------
------------------------------------------------------------------------


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

Number of
Common Shares Weighted Average
Issuable Exercise Price
------------------------------------------------------------------------
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 975,000 $ 1.28

Options expired and cancelled (55,000) 1.46
------------------------------------------------------------------------

Outstanding, August 31, 2005 920,000 $ 1.28
------------------------------------------------------------------------
------------------------------------------------------------------------

Outstanding options expire between November 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.

3. Segmented Information

The Company operates in one industry segment, the Intelligent Transportation Systems industry, which involves the engineering, software development, manufacturing and integration of products and systems to highway departments and industry to improve the efficiency of traffic flows.



The Company had sales in the following geographic areas:

Three months ended August 31 Nine months ended August 31
2005 2004 2005 2004
----------------------------------------------------------
Canada $ 1,899,981 $ 656,730 $ 4,721,527 $ 1,313,595
United States 6,376,972 5,357,324 14,581,232 14,444,440
Offshore 1,804,647 2,731,419 6,594,141 7,204,387
----------------------------------------------------------
$10,081,600 $ 8,745,473 $25,896,900 $22,962,422
----------------------------------------------------------
----------------------------------------------------------


4. Comparative Figures

Certain of the 2004 numbers have been reclassified to conform with the 2005 financial statement presentation.

Contact Information

  • 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