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Cal Amp Reports Fiscal 2006 Third Quarter Results

01/05/06

OXNARD, Calif., Jan 05, 2006 (BUSINESS WIRE) -- CalAmp Corp. (Nasdaq:CAMP):

-- Company Achieves 13% Revenue Growth and Earnings of $0.23 Per Diluted Share

-- Operating Income Sets New Record

CalAmp Corp. (Nasdaq:CAMP), a leading provider of wireless products and engineering services, today reported results for its fiscal 2006 third quarter ended November 30, 2005, which included record operating income performance.

Fiscal 2006 Third Quarter Results

Revenue in the latest quarter was $64.5 million, a 13% increase compared to $57.1 million for the third quarter of last year. The increase in revenue was driven by increased sales of DBS satellite products and 2-way wireless modules along with the inclusion of the Company's Machine-to-Machine (M2M) radio product line, which was acquired during the first quarter of fiscal 2006.

Operating income of $8.9 million in the latest quarter is $6 million higher than the third quarter of last year. Net income in the latest quarter was $5.4 million or $0.23 per diluted share. This compares favorably to net income of $1.8 million or $0.08 per diluted share for the third quarter of last year.

Gross profit for the third quarter of fiscal 2006 was $16.5 million, or 25.5% of revenues compared to $10.3 million or 18.0% of revenues for the same period last year. The increases in gross profit and gross margin were primarily the result of increased sales of higher margin products of the Products Division coupled with ongoing actions taken to improve the financial performance of the Solutions Division.

"During the fiscal third quarter, our performance was exceptionally strong across the board and we met or exceeded the guidance we provided for our key financial metrics," commented Fred Sturm, CalAmp's President and Chief Executive Officer. "These results reflect the steady progress we are making in improving CalAmp's profitability. While the increase in revenue was primarily driven by strong demand for our DBS products with higher average selling prices, our efforts to diversify our customer base and develop new product offerings are also beginning to take hold as evidenced by improving revenue contributions from our M2M and other wireless products."

Mr. Sturm continued, "Our operating income of $8.9 million in the latest quarter substantially surpassed the previous single quarter record of $6.1 million established just one quarter ago, and our earnings per share of $0.23 was better than expected. These achievements reflected increased gross profit contributed by our higher margin DBS, M2M and other wireless product offerings. We also benefited from improving operating efficiencies and focus on selling higher margin software products in our Solutions Division, where gross margins increased substantially from the same period last year. The Solutions Division continues to make good progress on the path to operating profitability."

Liquidity

At November 30, 2005, the Company had total cash of $38.2 million, with $8.4 million in total outstanding debt. During the first nine months of fiscal 2006 total cash and cash equivalents increased by $7.2 million due primarily to $14.4 million of cash provided from operating activities and $1.3 million of proceeds from stock option exercises, partially offset by cash used for the M2M product line acquisition of $4.9 million and debt reductions of $2.2 million. Inventory was $19.8 million at the end of the third quarter, representing annualized turns of about 9 times. Accounts receivable outstanding at the end of the third quarter represents a 47 day average collection period, which is within expectations.

Business Outlook

Commenting on the Company's fiscal 2006 fourth quarter outlook, Mr. Sturm said, "Based on our current projections, we estimate that fiscal 2006 fourth quarter revenues will be in the range of $50 to $58 million, and that earnings will be in the range of $0.13 to $0.18 per diluted share. The anticipated sequential decline in fourth quarter revenues is due primarily to the seasonality of DBS industry demand and the planned product transition by one of our DBS customers. We believe the underlying trends in the DBS industry remain very positive and that this does not represent a fundamental change in either the industry's long-term outlook or in our overall share of the DBS outdoor equipment market. We expect the increasing availability of HDTV programming and digital video recording technology will continue to require more advanced satellite TV reception products, which should be key drivers of our DBS business going forward."

Conference Call and Webcast

A conference call and simultaneous webcast to discuss fiscal 2006 third quarter financial results and business outlook will be held today at 4:30 p.m. Eastern / 1:30 p.m. Pacific. The live webcast of the call is available on CalAmp's web site at www.calamp.com. Participants are encouraged to visit the web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

CalAmp's President and CEO Fred Sturm and CFO Rick Vitelle will host the conference call. After the live webcast, a replay will remain available until the next quarterly conference call in the Investor Relations section of CalAmp's web site.

About CalAmp Corp.

CalAmp is a leading provider of wireless equipment, engineering services and software that enable anytime/anywhere access to critical information, data and entertainment content. With comprehensive capabilities ranging from product design and development through volume production, CalAmp delivers cost-effective high quality solutions to a broad array of customers and end markets. CalAmp is the leading supplier of Direct Broadcast Satellite (DBS) outdoor customer premise equipment to the U.S. satellite television market. The Company also provides wireless connectivity solutions for the telemetry and asset tracking markets, public safety communications, the healthcare industry and digital multimedia delivery applications. For additional information, please visit the Company's website at www.calamp.com.

Forward-Looking Statement

Statements in this press release that are not historical in nature are forward-looking statements, which involve known and unknown risks and uncertainties. Words such as "may", "will", "expect", "intend", "plan", "believe", "seek", "could", "estimate", "judgment", "targeting", "should", and variations of these words and similar expressions, are intended to identify forward-looking statements. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including general and industry economic conditions, competition, development factors, operating costs, the Company's ability to eliminate operating losses in its Solutions Division and make this business segment profitable, and other risks and uncertainties that are detailed from time to time in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

CAL AMP CORP.
                    CONSOLIDATED INCOME STATEMENTS
          (Unaudited, in thousands except per share amounts)

                               Three Months Ended  Nine Months Ended
                                  November 30,        November 30,
                               ------------------ --------------------
                                  2005     2004      2005       2004
                               --------- -------- --------- ----------

Revenues                        $64,463  $57,066  $169,704   $152,890

Cost of revenues                 47,999   46,767   129,127    123,966
                               --------- -------- --------- ----------

Gross profit                     16,464   10,299    40,577     28,924

  Research and development        2,585    2,315     7,142      6,190
  Selling                         1,914    1,847     5,582      4,651
  General and administrative      2,679    2,786     7,900      8,410
  Intangible asset
   amortization                     403      486     1,375      1,207
  In-process research and
   development                        -        -       320        471
                               --------- -------- --------- ----------
                                  7,581    7,434    22,319     20,929
                               --------- -------- --------- ----------

Operating income                  8,883    2,865    18,258      7,995

Non-operating income
 (expense), net                     162        8       231       (131)
                               --------- -------- --------- ----------

Income before income taxes        9,045    2,873    18,489      7,864

Income tax provision             (3,606)  (1,086)   (7,392)    (3,022)
                               --------- -------- --------- ----------

Net income                       $5,439   $1,787   $11,097     $4,842
                               ========= ======== ========= ==========

Net income per share:
  Basic                           $0.24    $0.08     $0.49      $0.23
  Diluted                         $0.23    $0.08     $0.48      $0.22
Shares used in per share
 calculations:
  Basic                          22,580   22,356    22,520     21,135
  Diluted                        23,592   23,113    23,272     21,891

Business Segment Information
                               Three Months Ended  Nine Months Ended
                                  November 30,        November 30,
                               ------------------ --------------------
                                  2005     2004      2005       2004
                               --------- -------- --------- ----------
Revenue
  Products Division             $59,565  $50,425  $153,331   $133,980
  Solutions Division              4,898    6,641    16,373     18,910
                               --------- -------- --------- ----------

    Total revenue               $64,463  $57,066  $169,704   $152,890
                               ========= ======== ========= ==========

Gross profit
  Products Division             $14,441   $8,737   $34,975    $24,506
  Solutions Division              2,023    1,562     5,602      4,418
                               --------- -------- --------- ----------

    Total gross profit          $16,464  $10,299   $40,577    $28,924
                               ========= ======== ========= ==========

Operating income (loss)
  Products Division             $10,406   $6,191   $23,453    $16,861
  Solutions Division               (373)  (2,379)   (2,029)    (5,971)
  Corporate expenses             (1,150)    (947)   (3,166)    (2,895)
                               --------- -------- --------- ----------

    Total operating income       $8,883   $2,865   $18,258     $7,995
                               ========= ======== ========= ==========


                             CAL AMP CORP.
                      CONSOLIDATED BALANCE SHEETS
                      (Unaudited - In thousands)

                                                    November  February
                                                       30,       28,
                                                      2005      2005
                                                   --------- ---------
                                Assets
Current assets:
  Cash and cash equivalents                         $38,205   $31,048
  Accounts receivable, net                           36,164    27,027
  Inventories                                        19,806    21,465
  Deferred income tax assets                          3,225     6,118
  Prepaid expenses and other current assets           2,227     2,876
                                                   --------- ---------

       Total current assets                          99,627    88,534


Equipment and improvements, net                       5,383     5,383

Deferred income tax assets                            2,747     5,285

Goodwill                                             92,605    92,834

Other intangible assets, net                          5,807     4,028

Other assets                                            473       691
                                                   --------- ---------

                                                   $206,642  $196,755
                                                   ========= =========
              Liabilities and Stockholders' Equity

Current liabilities:
  Current portion of long-term debt                  $2,425    $2,897
  Accounts payable                                   16,720    18,389
  Accrued payroll and employee benefits               3,623     3,652
  Other accrued liabilities                           4,366     3,127
  Deferred revenue                                    1,297     1,597
                                                   --------- ---------

      Total current liabilities                      28,431    29,662
                                                   --------- ---------

Long-term debt, less current portion                  5,964     7,679
                                                   --------- ---------

Other non-current liabilities                         1,091     1,126
                                                   --------- ---------

Stockholders' equity:
  Common stock                                          230       227
  Additional paid-in capital                        133,536   131,784
  Common stock held in escrow                        (2,532)   (2,548)
  Retained earnings                                  40,723    29,626
  Accumulated other comprehensive loss                 (801)     (801)
                                                   --------- ---------

      Total stockholders' equity                    171,156   158,288
                                                   --------- ---------

                                                   $206,642  $196,755
                                                   ========= =========


                             CAL AMP CORP.
                   CONSOLIDATED CASH FLOW STATEMENTS
                      (Unaudited - In thousands)

                                                     Nine Months Ended
                                                        November 30,
                                                     -----------------
                                                       2005     2004
                                                     -------- --------
Cash flows from operating activities:
 Net income                                          $11,097   $4,842
 Depreciation and amortization                         3,305    3,218
 Write-off of in-process R&D                             320      471
 Equipment impairment writedowns                           -      241
 Tax benefit of option exercises                         678      224
 Deferred tax assets, net                              5,432    2,609
 Changes in operating working capital                 (6,486)  (3,375)
 Other                                                    16     (128)
                                                     -------- --------

    Net cash provided by operating activities         14,362    8,102
                                                     -------- --------

Cash flows from investing activities:
 Capital expenditures                                 (1,555)  (1,970)
 Proceeds from sale of assets                            143      835
 Acquisition of Skybility business                    (4,897)       -
 Acquisition of Vytek Corp., net of cash acquired          -   (1,727)

    Net cash used in investing activities             (6,309)  (2,862)
                                                     -------- --------

Cash flows from financing activities:
 Debt repayments, net of borrowings                   (2,178)  (2,300)
 Proceeds from stock option exercises                  1,282      703
                                                     -------- --------

    Net cash used in financing activities               (896)  (1,597)
                                                     -------- --------

Net change in cash and cash equivalents                7,157    3,643

Cash and cash equivalents at beginning of period      31,048   22,885

Cash and cash equivalents at end of period           $38,205  $26,528
                                                     ======== ========

SOURCE: CalAmp Corp.

CalAmp Corp.
Rick Vitelle, 805-987-9000
or
Financial Relations Board
General Information:
Lasse Glassen, 310-854-8313
lglassen@financialrelationsboard.com
or
Investor/Analyst Information:
Amy Cozamanis, 310-854-8314
acozamanis@financialrelationsboard.com

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