NDS Change in Financial Reporting.
LONDON -- NDS Group plc (NASDAQ/Euronext Brussels:NNDS), a News Corporation company, and the leading provider of technology solutions for digital pay-TV, today announced a change in the reporting of its financial information.
By reason of the re-incorporation of News Corporation from
The attached schedules contain selected unaudited financial information for the fiscal years ended June 30, 2003 and June 30, 2004 and the quarter ended September 30, 2004, re-presented in accordance with US GAAP and in US dollars.
NDS expects to publish its results for the quarter ended December 31, 2004 on February 1, 2005.
NDS Group plc (NASDAQ/Euronext Brussels:NNDS) is a leading supplier of open end-to-end digital pay TV solutions for the secure delivery of entertainment and information to television set-top boxes and IP devices. See www.nds.com for more information about NDS.
Cautionary Statement Concerning Forward-looking Statements
The statements contained in this release which are not historical facts may constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to the plans, projections or future performance of NDS, which involve certain risks and uncertainties, including risk of market acceptance, the effect of economic conditions, possible regulatory changes, technological developments, the impact of competitive pricing and the ability of NDS and its commercial partners to develop systems and solutions which meet the needs of the broadcasting industry in a timely and cost-efficient manner, as well as certain other risks and uncertainties which are detailed in NDS's filings with the SEC. Company or product names have been used for identification purposes only and may be the trademarks or registered trademarks of their respective companies.
NDS Group plc
Unaudited Consolidated Income Statements
Year ended Year ended 3 months 3 months
June 30, June 30, ended ended
2004 2003 September September
30, 2004 30, 2003
$'000 $'000 $'000 $'000
Revenue
Conditional access 178,286 260,709 90,324 45,780
Integration, development
& support 55,601 52,716 16,808 15,593
License fees & royalties 51,673 35,299 16,000 6,987
New technologies 64,942 51,474 16,970 11,134
Other 6,161 7,152 1,177 1,457
Total revenue 356,663 407,350 141,279 80,951
Cost of goods and
services sold
Smart card costs (26,708) (122,596) (38,799) (6,411)
Operations & support (47,708) (33,526) (15,553) (10,015)
Royalties (7,160) (7,144) (3,075) (1,217)
Other (2,811) (8,559) (140) (647)
Total cost of goods and
services sold (84,387) (171,825) (57,567) (18,290)
Gross profit 272,276 235,525 83,712 62,661
Operating expenses
Sales & marketing (25,145) (22,537) (6,066) (6,004)
Research & development (146,190) (99,764) (38,321) (28,305)
General & administration (34,140) (34,912) (12,102) (8,667)
Foreign exchange gains 1,192 1,256 1,162 580
Amortization of
intangibles (8,177) (3,000) (3,101) (778)
Impairment charge (11,391) - - -
Loss on investments (446) (738) - -
Total Operating Expenses (224,297) (159,695) (58,428) (43,174)
Operating income 47,979 75,830 25,284 19,487
Other expense - (444) - -
Interest 7,294 4,579 1,990 2,071
Income before income tax
expense and
minority interests in
subsidiaries, net of
tax 55,273 79,965 27,274 21,558
Income tax expense (19,061) (23,883) (9,657) (7,262)
Minority interests in
subsidiaries, net of
tax 843 161 - 93
Net Income 37,055 56,243 17,617 14,389
Net income per share
Basic net income per
share $0.69 $1.04 $0.32 $0.27
Diluted net income per
share $0.67 $1.04 $0.31 $0.26
NDS Group plc
Quarterly Unaudited Consolidated Income Statements
Year ended June 30, 2004
Year
ended
1st 2nd 3rd 4th June 30,
Quarter Quarter Quarter Quarter 2004
$'000 $'000 $'000 $'000 $'000
Revenue
Conditional access 45,780 41,478 35,677 55,351 178,286
Integration,
development &
support 15,593 11,458 16,181 12,369 55,601
License fees &
royalties 6,987 7,770 24,277 12,639 51,673
New technologies 11,134 13,915 20,685 19,208 64,942
Other 1,457 1,867 1,116 1,721 6,161
Total revenue 80,951 76,488 97,936 101,288 356,663
Cost of goods and
services sold
Smart card costs (6,411) (4,288) (5,242) (10,767) (26,708)
Operations &
support (10,015) (11,194) (12,664) (13,835) (47,708)
Royalties (1,217) (1,359) (3,032) (1,552) (7,160)
Other (647) (2,077) 246 (333) (2,811)
Total cost of goods
and services sold (18,290) (18,918) (20,692) (26,487) (84,387)
Gross profit 62,661 57,570 77,244 74,801 272,276
Operating Expenses
Sales & marketing (6,004) (6,094) (6,800) (6,247) (25,145)
Research &
development (28,305) (32,271) (41,632) (43,982) (146,190)
General &
administration (8,667) (8,466) (8,221) (8,786) (34,140)
Foreign exchange
gains (losses) 580 3,219 (437) (2,170) 1,192
Amortization of
intangibles (778) (1,161) (2,981) (3,257) (8,177)
Impairment charge - - - (11,391) (11,391)
Loss on investments - - - (446) (446)
Total operating
expenses (43,174) (44,773) (60,071) (76,279) (224,297)
Operating income 19,487 12,797 17,173 (1,478) 47,979
Interest 2,071 1,671 1,762 1,790 7,294
Income before
income tax expense
and minority
interests in
subsidiaries, net
of tax 21,558 14,468 18,935 312 55,273
Income tax expense (7,262) (4,149) (6,639) (1,011) (19,061)
Minority interests
in subsidiaries,
net of tax 93 - - 750 843
Net Income 14,389 10,319 12,296 51 37,055
Net income per
share
Basic net income
per share $0.27 $0.19 $0.23 $0.00 $0.69
Diluted net income
per share $0.26 $0.19 $0.22 $0.00 $0.67
NDS Group plc
Unaudited Consolidated Balance Sheets
September June 30,
30, 2004 2004
$'000 $'000
ASSETS
Current assets
Cash and cash equivalents 221,102 228,620
Investments 912 757
Accounts receivable 103,037 84,295
Accrued income 16,557 21,845
Prepaid expenses 15,816 15,843
Other current assets 5,579 6,079
Inventories 34,699 35,972
Total current assets 397,702 393,411
Non-current assets
Plant, property & equipment, net 29,640 29,472
Intangibles, net 57,761 61,681
Goodwill 65,266 66,296
Other non-current assets 17,941 17,146
Deferred tax assets 9,968 9,153
Total non-current assets 180,576 183,748
Total assets 578,278 577,159
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 16,417 48,445
Due to related parties 4,702 3,107
Customer deposits & deferred income 107,494 97,864
Accrued expenses 34,554 39,802
Income tax liabilities 14,164 6,812
Other current liabilities 17,948 15,393
Total current liabilities 195,279 211,423
Non-current liabilities
Accrued expenses 33,278 32,392
Shareholders' equity
Series A ordinary shares at par value 123 122
Series B ordinary shares at par value 420 420
Deferred shares at par value 64,103 64,103
Additional paid-in capital 269,831 266,521
Capital contribution 212,078 212,078
Accumulated deficit and other comprehensive
income (196,834) (209,900)
Total shareholders' equity 349,721 333,344
Total liabilities and shareholders' equity 578,278 577,159
NDS Group plc
Unaudited Consolidated Statements of Cash Flows
Year Year 3 months 3 months
ended ended ended ended
June 30, June 30, September September
2004 2003 30, 2004 30, 2003
$'000 $'000 $'000 $'000
Operating activities:
Net income 37,055 56,243 17,617 14,389
Adjustments to reconcile
net income
to net cash provided by
operating activities:
Depreciation 13,526 11,795 3,394 2,967
Amortization of
intangibles 8,177 3,000 3,101 778
Impairment charge 11,391 - - -
Share-based compensation 4,743 3,946 2,531 1,826
Loss on investments 446 738 - -
Other - 444 - -
Minority interest in
subsidiaries, net of tax (843) (162) - (93)
Change in operating assets
and liabilities,
net of acquisitions 17,164 (22,708) (28,445) (21,823)
Net cash provided (used)
by operating activities 91,659 53,296 (1,802) (1,956)
Investing activities:
Acquisition of property,
plant and equipment (17,206) (9,753) (3,694) (1,990)
Proceeds from sale of
investments - 3,437 - -
Business acquisitions (75,936) (7,703) - -
Cash balances of acquired
business 10,292 - - -
Cash balances of disposed
subsidiary (870) - - -
Net cash used in investing
activities (83,720) (14,019) (3,694) (1,990)
Financing activities:
Proceeds from issuance of
shares 2,212 - 780 616
Equity finance provided by
minority interests - 254 - -
Loan finance provided by
minority interests 40 581 - -
Net cash provided by (used
in) financing 2,252 835 780 616
activities
Net increase (decrease) in
cash and cash 10,191 40,112 (4,716) (3,330)
equivalents
Cash and cash equivalents,
beginning of period 202,185 150,846 228,620 202,185
Exchange movement of
opening cash balance 16,244 11,227 (2,802) (16)
Cash and cash equivalents,
end of period 228,620 202,185 221,102 198,839
NDS Group plc
Unaudited
Quarterly
Consolidated
Statements of
Cash Flows
Year ended June
30, 2004
Year
ended
1st 2nd 3rd 4th June 30,
Quarter Quarter Quarter Quarter 2004
$ '000 $ '000 $ '000 $ '000 $ '000
Operating
activities:
Net income 14,389 10,319 12,296 51 37,055
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 2,967 2,769 4,678 3,112 13,526
Amortization of
intangibles 778 1,161 2,981 3,257 8,177
Impairment charge - - - 11,391 11,391
Share-based
compensation 1,826 1,420 1,039 458 4,743
Loss on
investments - - - 446 446
Minority interest
in subsidiaries,
net of tax (93) - - (750) (843)
Change in
operating assets
and liabilities,
net of (21,823) 25,726 (8,957) 22,218 17,164
acquisitions
Net cash provided
(used) by
operating
activities (1,956) 41,395 12,037 40,183 91,659
Investing
activities:
Acquisition of
property, plant
and equipment (1,990) (1,349) (3,869) (9,998) (17,206)
Business
acquisitions - (75,767) (166) (3) (75,936)
Cash balances of
acquired business - 10,292 - - 10,292
Cash balances of
disposed
subsidiary - - - (870) (870)
Net cash used in
investing
activities (1,990) (66,824) (4,035) (10,871) (83,720)
Financing
activities:
Proceeds from
issuance of
shares 616 214 1,151 231 2,212
Loan finance
provided by
minority
interests - 40 - - 40
Net cash provided
by (used in)
financing
activities 616 254 1,151 231 2,252
Net increase
(decrease) in
cash and cash
equivalents (3,330) (25,175) 9,153 29,543 10,191
Cash and cash
equivalents,
beginning of
period 202,185 198,839 184,881 197,874 202,185
Exchange movement
of opening cash
balance (16) 11,217 3,840 1,203 16,244
Cash and cash
equivalents, end
of period 198,839 184,881 197,874 228,620 228,620
Basis of preparation
The selected financial information provided herein is calculated in accordance with accounting principles generally accepted in the United States ("US GAAP") and is presented in US Dollars. NDS Group plc has previously published financial information provided in accordance with UK accounting practice ("UK GAAP") in pounds sterling. The selected financial information has been derived from previously published UK GAAP financial information by adjusting for differences between UK GAAP and US GAAP and then translating the information into US Dollars.
The principle differences between UK GAAP and US GAAP are explained in Note 31 to our consolidated financial statements for the year ended June 30, 2004 included within our Annual Report on Form 20-F which was filed with the Securities and Exchange Commission on October 22, 2004.
In translating the selected financial information from pounds sterling into US Dollars, revenue, expenses and cash flows have been translated at the average exchange rate for the period. Assets and liabilities have been translated at the exchange rate prevailing at the end of the period. Share capital has been translated at the rates prevailing when the relevant shares were issued.
The exchange rates used were as follows:
Average
exchange Period end
rate for exchange
period rate
GBP1 = US$1 GBP1 = US$1
3 months ended September 30, 2003 1.6117 1.6613
3 months ended December 31, 2003 1.7051 1.7644
3 months ended March 31, 2004 1.8354 1.8112
3 months ended June 30, 2004 1.8102 1.8277
Year ended June 30, 2004 1.7449 1.8277
Year ended June 30,2003 1.5862 1.6638
3 months ended September 30, 2004 1.8135 1.7993
This selected financial information is unaudited.
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