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CalAmp Reports Fiscal 2007 Second Quarter Results

10/12/06

OXNARD, Calif., Oct 12, 2006 (BUSINESS WIRE) -- CalAmp Corp. (Nasdaq:CAMP), a leading provider of wireless products and engineering services, today reported results for its fiscal 2007 second quarter ended August 31, 2006. Key highlights include:

-- Revenues of $57.9 million and earnings of $0.05 per diluted share

-- Consolidated gross margin increase to 24.2%, from 23.3% in the same period last year

"Our business performed as expected during the second quarter, with operating results in-line with our prior guidance," commented Fred Sturm, CalAmp's President and Chief Executive Officer. "CalAmp's revenues and gross margin were enhanced by our wireless connectivity business, which includes contributions from our existing Machine-to-Machine (M2M) and public safety products along with the recent acquisitions of Dataradio Inc. and the Mobile Resource Management (MRM) product line. During the quarter, we began the progress of integrating these acquisitions into our wireless connectivity businesses. We believe these acquisitions have significant long-term revenue growth opportunities, will improve our overall margins and increase our customer diversification. Also, as previously announced, Dataradio recently won a $3.8 million contract to provide a mobile data communications system for the police, fire and EMS personnel of Onondaga County, New York. Last month we began initial delivery of the system and we expect deliveries to continue through fiscal 2007 and concluding in fiscal 2008."

Mr. Sturm continued, "Consistent with our objective of maintaining CalAmp's leadership position in the outdoor DBS equipment marketplace, we also made further progress on product development initiatives for our next generation equipment. We anticipate receiving product approval from our key customers in the near future with initial shipments beginning in the latter part of our fiscal third quarter. We anticipate revenue from these new products to reach meaningful levels during our fourth quarter which is normally a seasonally lower period of demand for our DBS products."

Fiscal 2007 Second Quarter Results

Revenue for the fiscal 2007 second quarter was $57.9 million, essentially flat with the $57.7 million for the second quarter of fiscal 2006. Growth in the Company's wireless data connectivity business, due primarily to the May 2006 acquisitions of Dataradio and the MRM product line, more than offset lower DBS product sales and Solutions Division revenue in the quarter.

Net income for the fiscal 2007 second quarter was $1.2 million or $0.05 per diluted share compared to net income of $3.7 million or $0.16 per diluted share for the second quarter of last year. Included in the fiscal 2007 second quarter net income is additional expense of $1,001,000 for amortization of intangible assets related to the recent acquisitions of Dataradio and the MRM product line, $653,000 for stock option expense related to the current year adoption of FAS 123R, and an increase in net interest expense of $382,000, all amounts prior to income tax effects.

Gross profit for the second quarter of fiscal 2007 was $14.0 million, or 24.2% of revenues compared to $13.4 million or 23.3% 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, including growth of the Company's higher-margin wireless connectivity business, and ongoing actions taken to improve the financial performance of the Solutions Division.

Liquidity

At August 31, 2006, the Company had total cash of $25.5 million, with $38.0 million in total outstanding debt. Net cash provided by operating activities during the first six months of fiscal 2007 was $5.4 million after excluding a payment of cash bonuses totaling $5.4 million made to employees of Dataradio during the second quarter for incentives that were accrued as expenses in Dataradio's pre-acquisition income statement,. These bonuses were paid from cash that was on Dataradio's balance sheet at the time of acquisition by CalAmp. Inventories were $21.9 million at the end of the second quarter, representing annualized turns of 8 times based on cost of sales in the latest quarter. Accounts receivable outstanding at the end of the second quarter represents a 52 day average collection period.

Business Outlook

Commenting on the Company's fiscal 2007 third quarter outlook, Mr. Sturm said, "Based on our current forecasts, we estimate that fiscal 2007 third quarter revenues will be in the range of $59 to $65 million, with earnings in the range of $0.04 to $0.08 per diluted share. We expect that our consolidated gross margin for the third quarter will be impacted by heavier than normal costs for air freight shipments of incoming materials and lower margins on final shipments of end-of-life DBS products. In addition, our earnings forecast also includes amortization of intangible assets related to the recent acquisitions of Dataradio and the MRM product line of approximately $928,000, FAS 123R stock option expense of $725,000, and net interest expense of $345,000, all prior to income tax effects."

Conference Call, Webcast and 10-Q filing

A conference call and simultaneous webcast to discuss fiscal 2007 second 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.

The reader is also referred to the Company's quarterly report on Form 10-Q, filed today with the Securities and Exchange Commission.

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, private wireless networks, public safety communications and critical infrastructure and process control 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, the timing of customer approvals of new product designs, operating costs, the Company's ability to efficiently and cost-effectively integrate its acquired businesses, 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 Statements of Operations and
                Reconciliation of Non-GAAP Adjustments
          (Unaudited, in thousands except per share amounts)


                                                   Three months ended
                                                       August 31,
                                                  --------------------
                                                    2006        2005

Revenues                                          $57,934     $57,661

Cost of revenues                                   43,923      44,246
                                                   -------     -------

Gross profit                                       14,011      13,415
                                                   -------     -------

Operating expenses:
  Research and development                          3,792       2,360
  Selling                                           3,005       1,796
  General and administrative                        3,517       2,607
  Intangible asset amortization                     1,275         529
  In-process research and development                   -          27
  Impairment loss                                       -           -
                                                   -------     -------
                                                   11,589       7,319
                                                   -------     -------

Operating income (loss)                             2,422 (a)   6,096

Non-operating income (expense), net                  (246)         26
                                                   -------     -------

Income (loss) before income taxes                   2,176       6,122

Income tax provision                                 (941)     (2,441)
                                                   -------     -------

Net income (loss)                                 $ 1,235     $ 3,681
                                                   =======     =======

Net income (loss) per share:
  Basic                                           $  0.05     $  0.16
  Diluted                                         $  0.05     $  0.16

Shares used in per share calculations:
  Basic                                            23,337      22,490
  Diluted                                          23,689      23,314




                                 Six Months Ended              Six
                                 August 31, 2006              months
                       ------------------------------------    ended
                         GAAP       Non-GAAP       Adjusted  Aug. 31,
                        Basis      Adjustments      Basis       2005

Revenues              $104,247                    $104,247   $105,241

Cost of revenues        79,309                      79,309     81,128
                       --------                    --------   --------

Gross profit            24,938                      24,938     24,113
                       --------                    --------   --------

Operating expenses:
  Research and
   development           6,357                       6,357      4,557
  Selling                4,776                       4,776      3,668
  General and
   administrative        6,330                       6,330      5,221
  Intangible asset
   amortization          1,676                       1,676        972
  In-process research
   and development       6,850       $ (6,850)(b)        0        320
  Impairment loss       29,848        (29,848)(c)        0          -
                       --------       --------     --------   --------
                        55,837        (36,698)      19,139     14,738
                       --------       --------     --------   --------

Operating income
 (loss)                (30,899)(a)     36,698        5,799      9,375

Non-operating income
 (expense), net            715           (689)(d)       26         69
                       --------       --------     --------   --------

Income (loss) before
 income taxes          (30,184)        36,009        5,825      9,444

Income tax provision    (2,632)           276 (e)   (2,356)    (3,786)
                       --------       --------     --------   --------

Net income (loss)     $(32,816)      $ 36,285     $  3,469   $  5,658
                       ========       ========     ========   ========

Net income (loss) per
 share:
  Basic               $  (1.41)                   $   0.15   $   0.25
  Diluted             $  (1.41)                   $   0.15   $   0.24

Shares used in per
 share calculations:
  Basic                 23,230                      23,230     22,491
  Diluted               23,230                      23,714     23,112




(a) Operating income (loss) for the three and six months ended August
 31, 2006 includes share-based compensation expense pursuant to
 FAS123R of $653 and $1,073, respectively. Such expense is included in
 the following captions of the Statement of Operations:



                               Three Months   Six Months
Statement of Operations         Ended Aug.    Ended Aug.
 Caption                          31, 2006      31, 2006
-----------------------------  ------------- -------------

Cost of revenues                       $75           $105
Research and development
 expense                               117            158
Selling expense                         62            106
General and administrative
 expense                               399            704
                                      -----  -------------
                                      $653         $1,073
                                      =====  =============

(b) In-process research and development write-off arising from the
 acquisition of Dataradio

(c) Solutions Division goodwill and intangible assets impairment
 charge

(d) Foreign currency hedging gain realized in connection with the
 acquisition of Dataradio

(e) Tax expense associated with the foreign currency hedging gain

"GAAP" refers to financial information presented in accordance with
 Generally Accepted Accounting Principles in the United States.

This press release includes historical non-GAAP financial measures, as
 defined in Regulation G promulgated by the Securities and Exchange
 Commission, with respect to the six months ended August 31, 2006.
 CalAmp believes that its presentation of historical non-GAAP
 financial measures provides useful supplementary information to
 investors. The presentation of historical non-GAAP financial measures
 is not meant to be considered in isolation from or as a substitute
 for results prepared in accordance with accounting principles
 generally accepted in the United States.

In this press release, CalAmp reported the non-GAAP financial measures
 of Adjusted Basis net income and diluted earnings per share. CalAmp
 uses these non-GAAP financial measures to enhance the investor's
 overall understanding of the financial performance and prospects for
 the future of CalAmp's core business activities. Specifically, CalAmp
 believes that a report of Adjusted Basis net income and diluted
 earnings per share provides consistency in its financial reporting
 and facilitates the comparison of results of core business operations
 between its current, past and future periods.





                             CAL AMP CORP.
               Consolidated Statements of Operations and
                Reconciliation of Non-GAAP Adjustments
                              (continued)

                     Business Segment Information



                                  Three months ended August 31,
                           -------------------------------------------

                                    2006                    2005
                               ---------------        ----------------
Revenue
  Products Division           $        55,343         $        52,598
  Solutions Division                    2,591                   5,063
                               ---------------         ---------------

    Total revenue             $        57,934         $        57,661
                               ===============         ===============

Gross profit
  Products Division           $        12,644         $        11,724
  Solutions Division                    1,367                   1,691
                               ---------------         ---------------

    Total gross profit        $        14,011         $        13,415
                               ===============         ===============

Operating income (loss) (a)
  Products Division           $         4,374         $         7,691
  Solutions Division                     (423)                   (513)
  Corporate expenses                   (1,529)                 (1,082)
                               ---------------         ---------------

    Total operating income
     (loss)                   $         2,422         $         6,096
                               ===============         ===============




                           Six Months Ended August 31, 2006
                         -----------------------------------
                                                               Six
                                                              months
                                                               ended

                           GAAP     Non-GAAP        Adjusted Aug. 31,
                            Basis   Adjustments       Basis     2005
                         --------- ------------    --------- ---------
Revenue
  Products Division      $ 98,300                  $ 98,300  $ 93,766
  Solutions Division        5,947                     5,947    11,475
                          --------                  --------  --------

    Total revenue        $104,247                  $104,247  $105,241
                          ========                  ========  ========

Gross profit
  Products Division      $ 22,731                  $ 22,731  $ 20,534
  Solutions Division        2,207                     2,207     3,579
                          --------                  --------  --------

    Total gross profit   $ 24,938                  $ 24,938  $ 24,113
                          ========                  ========  ========

Operating income (loss)
 (a)
  Products Division      $  3,517      $ 6,850 (b) $ 10,367  $ 13,047
  Solutions Division      (31,605)      29,848 (c)   (1,757)   (1,656)
  Corporate expenses       (2,811)                   (2,811)   (2,016)
                          --------      -------     --------  --------

    Total operating
     income (loss)       $(30,899)     $36,698     $  5,799  $  9,375
                          ========      =======     ========  ========




(a) Operating income (loss) for the three and six months ended August
 31, 2006 includes share-based compensation expense pursuant to
 FAS123R of $653 and $1,073, respectively. Such expense is included in
 the operating income (loss) of the reporting segments as follows:

                                Three Months    Six Months
                                    Ended          Ended
Reporting Segment               Aug. 31, 2006  Aug. 31, 2006
----------------------------    -------------  -------------

Products Division                       $250           $390
Solutions Division                       119            191
Corporate expenses                       284            492
                                -------------  -------------
                                        $653         $1,073
                                =============  =============


(b) In-process research and development write-off arising from the
 acquisition of Dataradio

(c) Solutions Division goodwill and intangible assets impairment
 charge



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


                                                    August    February
                                                       31,       28,
                                                      2006      2006
                                                    --------  --------
                    Assets
Current assets:
  Cash and cash equivalents                        $ 25,485  $ 45,783
  Accounts receivable, net                           38,822    28,630
  Inventories                                        21,887    18,279
  Deferred income tax assets                          4,877     4,042
  Prepaid expenses and other current assets           7,705     2,502
                                                   --------- ---------

       Total current assets                          98,776    99,236

Equipment and improvements, net                       6,583     5,438

Deferred income tax assets                                -     2,344

Goodwill                                             89,829    91,386

Other intangible assets, net                         21,102     5,304

Other assets                                          1,532       638
                                                   --------- ---------

                                                   $217,822  $204,346
                                                   ========= =========
                    Liabilities and
                     Stockholders' Equity
Current liabilities:
  Current portion of long-term debt                $  1,521  $  2,168
  Accounts payable                                   17,077    12,011
  Accrued payroll and employee benefits               2,928     3,608
  Other accrued liabilities                           5,630     2,763
  Deferred revenue                                    1,346     1,323
                                                   --------- ---------

      Total current liabilities                      28,502    21,873
                                                   --------- ---------

Long-term debt, less current portion                 36,500     5,511
                                                   --------- ---------

Deferred income tax liability                         4,013         -
                                                   --------- ---------

Other non-current liabilities                         1,076       853
                                                   --------- ---------

Stockholders' equity:
  Common stock                                          233       232
  Additional paid-in capital                        136,925   135,022
  Common stock held in escrow                             -    (2,532)
  Retained earnings                                  11,372    44,188
  Accumulated other comprehensive loss                 (799)     (801)
                                                   --------- ---------

      Total stockholders' equity                    147,731   176,109
                                                   --------- ---------

                                                   $217,822  $204,346
                                                   ========= =========



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


                                                     Six Months Ended
                                                        August 31,
                                                    ------------------
                                                      2006      2005
                                                    --------- --------
Cash flows from operating activities:
    Net income (loss)                               $(32,816) $ 5,658
    Depreciation and amortization                      3,111    2,299
    Stock-based compensation expense                   1,073        -
    Write-off of in-process R&D                        6,850      320
    Impairment loss                                   29,848        -
    Excess tax benefit from stock-based
     compensation                                       (258)       -
    Deferred tax assets, net                            (261)   2,248
    Changes in operating working capital              (7,636)  (1,492)
    Other                                                 58       42
                                                    --------- --------

       Net cash provided by operating activities
        (A)                                              (31)   9,075
                                                    --------- --------

Cash flows from investing activities:
    Capital expenditures                              (1,382)  (1,060)
    Proceeds from sale of property and equipment          16      141
    Acquisition of Dataradio net of cash acquired    (48,038)       -
    Acquisition of TechnoCom product line             (2,478)       -
    Proceeds from Vytek escrow distribution              480        -
    Acquisition of Skybility assets                        -   (4,897)
                                                    --------- --------

       Net cash used in investing activities         (51,402)  (5,816)
                                                    --------- --------

Cash flows from financing activities:
    Proceeds from long-term debt                      38,000        -
    Debt repayments                                   (7,658)  (1,460)
    Proceeds from stock option exercises                 533      252
    Excess tax benefit from stock-based
     compensation                                        258        -
                                                    --------- --------

       Net cash provided (used) by financing
        activities                                    31,133   (1,208)
                                                    --------- --------

Effect of exchange rate changes on cash                    2        -
                                                    --------- --------

Net change in cash                                   (20,298)   2,051

Cash at beginning of period                           45,783   31,048
                                                    --------- --------

Cash at end of period                               $ 25,485  $33,099
                                                    ========= ========


(A) Net cash provided by operating activities for the six months ended
 August 31, 2006 is net of the payment of $5,355,000 of accrued
 incentives paid by Dataradio to its workforce shortly after the
 acquisition by CalAmp. These incentives were recorded as an expense
 in Dataradio's pre-acquisition income statement.

SOURCE: CalAmp Corp.

CalAmp Corp.
Rick Vitelle, Chief Financial Officer
805-987-9000
or
Financial Relations Board:
General Information
Lasse Glassen, 310-854-8313
lglassen@financialrelationsboard.com

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