Interim Report January - March 2001

INTERIM REPORT January - March 2001 Operating result -20.2 (-31.8) msek Orders received 12.4 (27.0) msek Liquid funds 144,8 msek Jan Forssjö appointed as new President and CEO Proposal for new board of directors OPERATIONS Orders received for Pricer's ESL system (ESL = Electronic Shelf Label) grew during the first quarter compared with the last three quarters of 2000. Orders received amounted to 12.4 (27.0) MSEK and consisted mainly of an order from Pricer's partner Checkpoint Meto for nine stores in the German retail chain, Edeka. Pricer also received its first order in the South American market. Pricer's partner, RimpexChile S.A., placed an order for an initial installation in a Lider store within the D&S chain in Chile. An order was also received from ICA in Sweden relating to installations in four stores. At 31 March 2001, the backlog amounted to 32 (149) MSEK. The restructuring of the operations in the USA has started. In the future, Pricer will have fewer staff members located in the USA who, together with representatives from the Swedish organisation, will be responsible for sales, service and other support to Pricer's partners. This way of working in the market, which has been applied by Pricer in the Asian and European markets, has proved to be more successful. The cost of the restructuring is estimated to amount to 4.0 MSEK which has been charged to the period's result. One phase of the restructuring involves finding new sales and service partners with products which supplement Pricer's ESL system and are compatible with the new strategy. The agreement with Pricer's previous partner in the American market, Netplex Group Inc., has been terminated as a result of the restructuring. Pricer had no orders from Netplex Group Inc. at the time of the termination of the agreement. NET SALES AND RESULTS Net sales for the first quarter amounted to 8.3 (57.0) MSEK. Deliveries of ESL systems amounted to 4.0 MSEK during the corresponding period in 2000. The remaining net sales in 2000 relate to the Intactix operation whose sales and results were included until 31 March 2000. The gross result for the period amounted to 0.1 (45.6) MSEK. The decrease compared with the first quarter of 2000 is due to the fact that Intactix's high gross margin software sales were included in the first quarter results 2000. The cost of goods sold includes fixed costs which effects the gross margins of the ESL operation when net sales are low. Operating expenses for the quarter fell to 20.3 (71.9) MSEK and included once-off costs of approximately 3.7 (6.0) MSEK. Operating costs in the ESL operation amounted to 23.4 MSEK for the first quarter of 2000. For the quarter, the consolidated operating result amounted to -20.2 MSEK (-31.8 MSEK, of which -27,8 MSEK related to the ESL operation) including the before mentioned once-off costs. The net result for the same period was -23.2 (-30.4) MSEK. FINANCIAL POSITION The cash flow from the current operations was -20.4 (- 24.6) MSEK. The Group's disposable liquid funds - liquid funds adjusted for blocked bank deposits and unutilised bank overdraft facility - amounted to 122.6 (102.7) MSEK at 31 March 2001. In addition to this, there are liquid funds of 25.2 MSEK which, in accordance with the agreement about the divestment of Intactix, are deposited in a blocked bank account as security for potential contractual commitments. An increase of critical components, an inventory change due to exchange of supplier and prolonged delivery times resulted in an increase in inventories during the period. Expenses for the divestment of Intactix were charged to the cash flow of investment operations by 5.8 MSEK for the period. At the period end, expenses of approximately 10 MSEK remain and are included in the liabilities as per March 31. Interest-bearing liabilities amount to 61.6 (52.4) MSEK and consist of loans from Telxon Corp. The liability to Telxon Corp. also includes accrued interest of 21.3 (18.2) MSEK. It is estimated that the liability will amount to 8.4 MUSD at the 2001 year end. It will be repaid during 2002. If Pricer chooses, repayment of 5.2 MUSD of the 8.4 MUSD can be made with newly issued B shares. With the current cash flow, the existing liquid funds will last until the second half of 2002, on condition that the Annual General Meeting passes a resolution to authorise the Board of Directors to issue shares to settle the aforementioned parts of the liability to Telxon Corp. Increased net sales resulting in less negative cash flow will postpone that point in time. The need of additional financing can not be excluded. During the period, the financial net weakened due to unrealised translation differences attributable to the stronger USD. CAPITAL EXPENDITURE During the period, total capital expenditure amounted to 0.2 (0.7) MSEK and related mainly to computers and office equipment. All product development has been expensed. PERSONNEL During the quarter, the average number of employees amounted to 45 (212) whereas the number at 31 March 2001 amounted to 45 (214 of whom 47 within Pricer ESL). PARENT COMPANY The parent company's net sales for the period amounted to SEK 8.2 (4.0) MSEK and the result before appropriations for the same period was -18.1 (-21.0) MSEK. The capital expenditure amounted to 0,2 (0,5) MSEK.The parent company's liquid funds amounted to 115.2 (83.0) MSEK at 31 March 2001. ACCOUNTING PRINCIPLES This Interim Report has been prepared in accordance with the Swedish Financial Accounting Standards Council's (Redovisningsrådet) recommendation RR20 Interim Reports. The same accounting principles as in the Annual Report have been applied. From 1 January 2000, the parent company's receivable from the subsidiary Pricer Inc. is regarded as a permanent part of the financing and the translation difference is, therefore, reported directly against shareholders' equity in the consolidated accounts. For the period, this translation difference, which earlier was charged to the result, amounts to 8.4 (1.2) MSEK. IMPORTANT EVENTS AFTER THE END OF THE REPORT PERIOD Jan Forssjö is appointed by the Board of Directors as new President of Pricer and is taking position as soon as possible. The starting date to be announced later. The resigning President will receive severance pay equivalent to 12 months salary. Prior to the Annual General Shareholders' Meeting of Pricer AB on May 15, 2001, a large group of shareholders, representing more than 30 % of the votes, have agreed on a proposal for a new Board of Directors. New persons proposed to be elected are Mr Jan Forssjö and Mr Arve Kristoffersen. Mr Göran Lindén and Mr Salvatore Grimaldi are proposed to be re-elected. Ms Britt Sandberg and Mr Thomas Landberg are declining re-election. If the Annual General Shareholders' Meeting accepts this proposal of new Board of Directors, Mr Göran Lindén will be elected as new chairman. FORECAST The results of Pricer are dependent on the development of the ESL market. The negative operating result in the current ESL operations will be maintained at the level reported for the quarter and will improve in step with increased sales. NEXT REPORTING DATE The Interim Report for the period January-June 2001 will be published on 24 August 2001. Uppsala, 15 May 2001 Pricer AB (publ) Britt Sandberg President this report has not been the subject of examination by the auditors For further information, please contact: Britt Sandberg, President of Pricer AB: +46 18-18 81 00 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/15/20010515BIT00600/bit0001.doc The full report http://www.bit.se/bitonline/2001/05/15/20010515BIT00600/bit0001.pdf The full report