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KVH and Agility Agree to Settle Pending Litigation


MIDDLETOWN, R.I.--(BUSINESS WIRE)--Nov. 14, 2003--KVH Industries, Inc., (Nasdaq: KVHI) announced today that on November 3, 2003, KVH and Agility Robotics, Inc., and Ross-Hime Designs, Inc., (collectively, "Agility") agreed to settle pending litigation. Because this agreement was reached prior to the filing of KVH's third quarter Form 10-Q, the company is required to record the settlement costs in the company's financial statements for the three- and nine-month periods ended September 30, 2003. This is in accordance with generally accepted accounting principles, notably Statement on Financial Accounting Standards No. 5, "Accounting for Contingencies." To reflect this agreement and associated costs, the company has recorded a $305,000 operating expense accrual in its third quarter financial statements as filed on Form 10-Q with the SEC on November 14, 2003.

"We are pleased to have successfully resolved this issue," said Martin Kits van Heyningen, KVH's president and chief executive officer, "and that the terms of this settlement should not affect our future operating results."

Under the general terms of the settlement, all claims pending against the company will be released, the lawsuit will be dismissed, and Agility's rights under certain of its patents will be licensed to KVH.

KVH Industries, Inc., designs and manufactures products that enable mobile communication, navigation, and precision pointing through the use of its proprietary mobile satellite antenna and fiber optic technologies. The company is developing next-generation systems with greater precision, durability, and versatility for communications, navigation, and industrial applications. An ISO 9001-certified company, KVH has headquarters in Middletown, Rhode Island, with a fiber optic manufacturing facility in Tinley Park, Illinois, and a European sales, marketing, and support office in Hoersholm, Denmark.

               SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

                                           September 30,  December 31,
                                                2003          2002
    Current assets:
        Cash and cash equivalents           $  7,572,996   7,239,255
        Accounts receivable, net               9,523,479   9,716,292
        Costs and estimated earnings
         in excess of billings on
         uncompleted contracts                   438,971     377,058
        Inventories                            6,401,177   3,947,207
        Prepaid expenses and other deposits      585,726     587,647
        Deferred income taxes                    552,871     616,877
            Total current assets              25,075,220  22,484,336

     Property and equipment, net               8,739,411   7,384,888
     Other assets, less accumulated
      amortization                               346,707     441,225
     Deferred income taxes                     2,238,430   2,238,430
                Total assets                $ 36,399,768  32,548,879

Liabilities and stockholders' equity:
    Current liabilities:
        Current portion long-term debt      $     96,574      93,262
        Accounts payable                       4,486,200   2,321,104
        Accrued expenses                       2,593,895   2,007,470
        Customer deposits                         31,230      91,665
            Total current liabilities          7,207,899   4,513,501

    Long-term debt                             2,531,238   2,603,885
                Total liabilities              9,739,137   7,117,386

    Stockholders' equity:
        Common stock                             115,297     111,498
        Additional paid-in capital            36,208,567  35,134,093
        Accumulated deficit                   (9,663,233) (9,818,025)
        Accumulated other comprehensive
         income                                        -       3,927
            Total stockholders' equity        26,660,631  25,431,493
                Total liabilities and
                 stockholders' equity       $ 36,399,768  32,548,879


                         Three Months Ended      Nine Months Ended
                            September 30            September 30
                          2003        2002        2003        2002

Net sales            $ 13,514,792  12,435,313  41,017,886  34,718,070
   Cost of sales        7,712,109   6,837,186  22,680,578  19,515,902
   Gross profit         5,802,683   5,598,127  18,337,308  15,202,168

Operating expenses:
   Research &
    development         2,140,144   2,230,457   6,565,708   6,996,668
   Sales & marketing    2,917,349   2,316,560   8,150,129   7,410,575
   Administration       1,387,699     850,191   3,467,317   2,383,123

Income (loss) from
 operations              (642,509)    200,919     154,154  (1,588,198)
Other expense:
   Other expense          (21,892)    (16,398)    (68,361)    (47,054)
   Interest expense, net  (37,053)    (34,578)   (115,288)    (87,212)
Income (loss) before
 income taxes            (701,454)    149,943     (29,495) (1,722,464)

Income tax expense
 (benefit)               (235,293)          -    (184,287)     86,100
Net income (loss)    $   (466,161)    149,943     154,792  (1,808,564)

Per share information:
   Earnings (loss)
    per share
     Basic           $      (0.04)       0.01        0.01       (0.16)
     Diluted         $      (0.04)       0.01        0.01       (0.16)

Number of shares used
 in per share
   Basic               11,487,900  11,056,374  11,352,489  11,017,596
   Diluted             11,487,900  11,356,194  11,845,942  11,017,596

This press release may contain certain forward-looking statements that involve risks and uncertainties. For example, the statements regarding the license and settlement agreement and the impact of the costs under such agreement on the company's operating results are forward-looking statements. The actual results realized by the company could differ materially from the statements made herein. Factors that might cause such differences include, but are not limited to: the final terms and conditions agreed upon as a part of the definitive license and settlement agreement or any court order with respect to the settlement. Additional factors are discussed in the company's most recent Form 10-Q filed with the SEC on November 14, 2003. Copies are available through the company's Investor Relations department and web site, KVH assumes no obligation to update its forward-looking statements to reflect new information and developments.

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