Frisco Bay Industries Ltd., an international provider of integrated security and financial transaction processing systems, announces its operating results for the period ended July 31.

Revenues for the quarter were C$11.4 million compared to C$13.7 million recorded in the corresponding period of the previous year. For the first half of the year, revenues decreased 6 percent to C$23.9 million, compared to C$25.5 million in the same period last year. Service revenues for the six months were 19 percent higher than the previous year as a result of the continued growth in the company’s recurring revenue base. The decrease in product sales was due to reduced capital spending in Canada, a direct result of difficult economic conditions in the second quarter due to unforeseen events such as the SARS outbreak in Toronto and the Mad Cow disease event in Alberta.

Net earnings for the quarter ended July 31 were C$543,219, or 18 cents (US 13 cents) per share, compared to C$1 million, or 45 cents (US 29 cents) per share, in the same period last year. Net earnings generated for the six months ended July 31 totaled C$1.1 million, or C 41 cents (US 29 cents) per share, versus net earnings of C$1.8 million, or 75 cents (US 48 cents) per share, in the corresponding period of the previous year. Reductions in net earnings were the result of reduced product sales in the quarter, combined with a higher effective income tax rate due to the full utilization of income tax loss carryforwards from prior years.

“In spite of a reduction in product sales, the company was able to remain profitable in large part due to the strength of its recurring revenue model,” states Barry Katsof, Frisco Bay’s chairman and CEO. “With the acquisition of Frisco/ATMS in the first quarter, the company now derives more than 40 percent of its revenues (in excess of C$20 million on an annualized basis) from recurring revenue sources, including monitored access control, service contracts and ATM transaction fees. Frisco Bay’s unrealized recurring revenue derived from long-term noncancelable contracts that will be realized over the next several fiscal years currently exceeds C$49 million, an increase of more than $3 million since the beginning of the current fiscal year. In addition, our revenue backlog for the balance of the current fiscal year is 16 percent higher than the backlog at the same date last year,” concludes Katsof.

In the quarter, the company concluded a private placement of 243,100 shares of common stock at US $9 per share for gross proceeds of just under US $2.2 million. The shares were acquired by a group of leading Canadian investment funds, and the proceeds were used to retire a portion of the debt incurred with the acquisition of Frisco/ATMS.

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