Interlink Electronics Announces Fourth-Quarter and 2000 Revenue and Earnings Estimates

Business Wire, Jan 25, 2001

Business Editors

CAMARILLO, Calif.--(BUSINESS WIRE)--Jan. 25, 2001

Interlink Electronics Inc. (Nasdaq:LINK) today announced its estimated record revenues and earnings for the fourth quarter and the year 2000.

Revenue is estimated to be between $9.2 million and $9.3 million for the quarter, approximately 25% growth over fourth quarter 1999 and approximately 8% growth over third quarter 2000. For the year 2000, revenue is estimated to be between $33.8 million and $33.9 million, approximately 20% growth over 1999. Operating income is estimated to be approximately $1 million for the quarter and approximately $3.5 million for the year.

Net income is estimated to be approximately $1.5 million for the quarter and approximately $3.1 million for the year. Earnings per diluted share are estimated to be approximately $0.13 for the quarter and approximately $0.27 for the year. The above estimates are tentative and are subject to verification and audit. Actual results may be materially different from the estimates.

"We are pleased with our results for the quarter and the year and remain optimistic about the future," said Paul Meyer, Interlink's chief financial officer. "Despite having to make a number of mid-course corrections as a result of the withdrawal of our scheduled public stock offering due to market conditions, Interlink continued to pursue its business plan and make significant progress toward its targeted growth goals.

"Interlink enhanced its cash position from $7.5 million at Dec. 31, 1999, to approximately $10 million at Dec. 31, 2000. Our quarter to quarter revenue growth was at record levels, providing the continued ability to fund investments in our two new business segments, Broadband Home Entertainment and E-Transactions.

"Additionally, our consistent record of profitability allowed us, for the first time, to begin accruing the tax benefit related to our net operating loss carry forwards. We recorded approximately $600,000 of this benefit in the fourth quarter of 2000 and expect to continue accruing approximately $500,000 per quarter throughout 2001.

"Revenue and earnings from Business Communication, Specialty Components and Home Entertainment segments generally met Interlink's internal estimates for the quarter and the year. Material royalty revenues from the Specialty Components segment continued to support our gross margins. Revenues from E-Transactions segment fell short of estimates as a result of longer than expected customer testing and trial phase," Meyer concluded.

E. Michael Thoben, Interlink Electronics' chairman, chief executive officer and president, said: "We are pleased with Interlink's performance in a year that brought a number of opportunities as well as a number of memorable challenges. Our Business Communications business continues to be robust despite some softening in world economies generally.

"While encountering overall industry delays, our Home Entertainment products and technologies continue to provoke enthusiastic reactions from our business partners and potential customers and we expect to capitalize on a number of opportunities in this market over the next 24 months. E-transactions represents an entirely new market which we, along with the rest of the world, are working hard to understand and develop.

"Interlink is currently in the evaluation stage with many major institutions in several vertical markets. We believe each of these markets represents significant future business. We anticipate that future customers will directly benefit from these initial evaluations and installations. However, it appears that this evaluation stage will last approximately six months longer than originally expected.

"Yet the benefits associated with using digital signatures to improve workflow, reduce time and paper or add security are becoming increasingly clear. We remain very optimistic in our ability to set the standard for digital signatures.

"Our focus for 2001 remains the following:

-- Continue to maintain our dominance of the Business Communications market;

-- Continue to develop critical strategic relationships to support our Home
Entertainment products, technology and strategies;

-- Establish our ePad products as the solution of choice for electronic
signature capture, binding and verification applications for key vertical
markets; and

-- Support our customer base in Specialty Components despite the maturity of
this industry."

The above information includes estimates and forward-looking statements that involve a number of risks and uncertainties. Changes resulting from verification and audit processes not yet completed could result in the definitive financial results for the fourth quarter on 2000 and the year being materially different from the estimates presented above. In addition, statements with respect to anticipated future performance could be materially and adversely affected by various factors. The following are among the factors that could cause actual results to differ materially from the forward-looking statements: business conditions and growth in the electronics industry and general economies, both domestic and international; lower than expected customer orders; delays in receipt of orders and cancellation of orders; competitive factors, including increased competition, new product offerings by competitors and price pressures; the availability of third-party parts and supplies at reasonable prices; changes in product mix; significant quarterly performance fluctuations due to the receipt of a significant portion of customer orders and products shipments in the last month of each quarter; and product shipment interruptions due to manufacturing problems. The forward-looking statements contained in this document regarding business activities should be considered in light of these factors.