OXNARD, Calif.--(BUSINESS WIRE)--Oct. 11, 2007--CalAmp Corp.
(Nasdaq:CAMP), a leading provider of wireless communications products,
today reported results for its fiscal 2008 second quarter ended August
31, 2007. Key elements include:
- Second quarter revenues of $32.7 million, GAAP loss from
continuing operations of $0.14 per diluted share and Adjusted
Basis (non-GAAP) loss from continuing operations of $0.08 per
diluted share.
- Wireless DataCom second quarter revenues of $22.8 million
nearly 50% higher than prior year.
- Completed the sale of the TelAlert software business in a
transaction valued at approximately $9.4 million.
"Similar to last quarter, our operating results were driven by the
continued strength of our Wireless DataCom Division, which generated
revenues of $22.8 million--a 46% increase compared to the same period
last year," commented Fred Sturm, CalAmp's President and Chief
Executive Officer. "During the second quarter, the Wireless DataCom
Division benefited from contributions by the recent acquisitions of
SmartLink Radio Networks and AirIQ's Vehicle Tracking business.
Furthermore, we are pleased that several new wireless communications
products that the Company recently developed and launched earlier in
calendar year 2007 for mobile resource management (MRM) applications
are achieving increased market penetration and are producing solid
revenue growth. We continue to believe that our wireless datacom
business provides significant growth opportunities and enhances
CalAmp's overall profitability and competitiveness."
Regarding the previously announced product performance issues with
a key DBS customer that resulted in the customer suspending orders for
new products, Mr. Sturm stated, "We are still in discussions with this
customer working towards resolution of this matter, and although it is
taking longer than previously anticipated, we expect that we will soon
achieve that resolution and resume making volume shipments to this
customer."
Fiscal 2008 Second Quarter Results
Total revenue for the fiscal 2008 second quarter was $32.7 million
compared to $54.6 million for the second quarter of fiscal 2007. Lower
revenue from the Satellite Division in the latest quarter was
partially offset by growth in the Company's Wireless DataCom Division,
which was driven by recent acquisitions and organic growth.
The net loss for the fiscal 2008 second quarter was $4.4 million
or $0.19 per diluted share compared to net income of $1.2 million or
$0.05 per diluted share for the second quarter of last year. As noted
above, during the fiscal 2008 second quarter, the Company completed
the sale of its TelAlert software business, the last remaining
business within the Solutions Division, in a transaction valued at
approximately $9.4 million. The operating results of the Solutions
Division have been presented in the accompanying consolidated
statement of operations as a discontinued operation for all periods
presented. Excluding the effect of discontinued operations, the fiscal
2008 second quarter loss from continuing operations was $3.3 million
or $0.14 per diluted share compared to income from continuing
operations of $1.7 million, or $0.07 per diluted share, for the same
period last year.
The Adjusted Basis (non-GAAP) loss from continuing operations for
the fiscal 2008 second quarter was $2.0 million or $0.08 per diluted
share compared to Adjusted Basis income from continuing operations of
$2.8 million or $0.12 per diluted share for the same period last year.
Adjusted Basis income (loss) from continuing operations excludes the
impact of amortization of intangible assets, stock-based compensation
expense and write-off of acquired in-process research and development
costs, each net of tax where applicable. A reconciliation of the GAAP
basis income (loss) from continuing operations to Adjusted Basis
income (loss) from continuing operations is provided in the table at
the end of this press release. Excluding the effect of discontinued
operations, both GAAP-basis EPS and Adjusted Basis (non-GAAP) EPS for
the fiscal 2008 second quarter would have been within previously
announced guidance.
Gross profit for the fiscal 2008 second quarter was $6.3 million,
or 19.3% of revenues compared to $12.7 million or 23.2% of revenues
for the same period last year. The reduction in gross profit and gross
margin were primarily the result of lower sales of Satellite Division
products.
Liquidity
At August 31, 2007, the Company had total cash of $8.4 million,
with $32.8 million in total outstanding debt. As previously disclosed,
the loss recorded in the first quarter of fiscal 2008 has caused the
Company to become noncompliant with the financial covenants under the
Company's bank credit agreement that preclude additional borrowing
under the revolving credit facility until the Company is able to
obtain a waiver from its lenders and/or an amendment of the credit
agreement. The Company is in discussions with its lenders to resolve
the issue. In the near term the Company believes that it has
sufficient liquidity such that the restriction on borrowing under the
revolving credit facility will not materially affect its operations.
However, if the lenders are unwilling to agree to a waiver or an
amendment or exercise their rights to accelerate borrowings
outstanding under the credit agreement, the inability to borrow under
the revolving credit facility and/or the acceleration of such
indebtedness could materially adversely affect the Company's financial
position and operations, including its ability to fund its currently
anticipated working capital and capital expenditure needs.
Because the lenders have the right to call the loan until such
time as a waiver is obtained, the entire $32.8 million outstanding
balance of the bank loan is classified as a current liability in the
August 31, 2007 balance sheet.
Net cash used in operating activities was $2.1 million for the six
months ended August 31, 2007. Inventory was $27.0 million at the end
of the second quarter, representing annualized turns of approximately
4 times. Accounts receivable outstanding of $24.8 million at the end
of the second quarter represents a 67 day average collection period.
Business Outlook
Commenting on the Company's business outlook, Mr. Sturm said,
"Based on our current forecast, we believe fiscal 2008 third quarter
consolidated revenues will be in the range of $32 to $35 million, with
a loss from continuing operations in the range of $0.07 to $0.11 per
diluted share. The Adjusted Basis (non-GAAP) loss from continuing
operations for the second quarter, which excludes amortization of
intangible assets, stock-based compensation expense and write-off of
acquired research and development costs--each net of tax--is expected
to be $0.01 to $0.05 per diluted share. During the third quarter, we
expect revenue contributions from our Wireless DataCom Division in the
range of $22 million to $25 million."
Conference Call, Webcast and Form 10-Q Filing
A conference call and simultaneous webcast to discuss fiscal 2008
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 communications products
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 a supplier of Direct Broadcast
Satellite (DBS) outdoor customer premise equipment to the U.S.
satellite television market. The Company also provides wireless data
communication 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", "anticipate", "goal" 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,
product demand, increased competition, competitive pricing and
continued pricing declines in the DBS market, the timing of customer
approvals of new product designs, operating costs, the Company's
ability to efficiently and cost-effectively integrate its acquired
businesses, the Company's ability to obtain a waiver from the lenders
under its bank credit agreement of the event of default under the
credit agreement, the Company's ability to successfully requalify with
respect to the sale of newer generation products to one of its key DBS
customers, the risk that the ultimate cost of resolving a product
performance issue with that DBS customer may exceed the amount of
reserves established for that purpose, and other risks or
uncertainties that are described in the Company's fiscal 2007 Annual
Report on Form 10-K on May 17, 2007 today 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
(Unaudited, in thousands except per share amounts)
Three Months
Ended Six Months Ended
August 31 , August 31 ,
----------------- -------------------
2007 2006 2007 2006
-------- -------- --------- ---------
Revenues $32,668 $54,629 $ 79,061 $ 97,586
Cost of revenues 26,353 41,973 78,132 74,842
-------- -------- --------- ---------
Gross profit 6,315 12,656 929 22,744
-------- -------- --------- ---------
Operating expenses:
Research and development 3,795 3,613 8,114 6,119
Selling 2,373 2,067 4,642 2,724
General and administrative 3,457 2,600 6,659 4,655
Intangible asset
amortization 1,558 1,150 3,302 1,309
In-process research and
development - - 310 6,850
-------- -------- --------- ---------
11,183 9,430 23,027 21,657
-------- -------- --------- ---------
Operating income (loss) (4,868) 3,226 (22,098) 1,087
Non-operating income
(expense), net (507) (237) (1,090) 727
-------- -------- --------- ---------
Income (loss) from continuing
operations
before income taxes (5,375) 2,989 (23,188) 1,814
Income tax benefit
(provision) 2,117 (1,291) 8,985 (3,525)
-------- -------- --------- ---------
Income (loss) from continuing
operations (3,258) 1,698 (14,203) (1,711)
Loss from discontinued
operations, net of tax (180) (463) (597) (31,105)(a)
Loss on sale of discontinued
operations,
net of tax (935) - (935) -
-------- -------- --------- ---------
Net income (loss) $(4,373) $ 1,235 $(15,735) $(32,816)
======== ======== ========= =========
Basic and diluted earnings
(loss) per share:
Income (loss) from
continuing operations $ (0.14) $ 0.07 $ (0.60) $ (0.07)
Loss from discontinued
operations (0.01) (0.02) (0.03) (1.34)
Loss on sale of
discontinued operations (0.04) - (0.04) -
-------- -------- --------- ---------
Total basic and diluted
earnings (loss)
per share $ (0.19) $ 0.05 $ (0.67) $ (1.41)
======== ======== ========= =========
Shares used in per share
calculations:
Basic 23,623 23,337 23,612 23,230
Diluted 23,623 23,689 23,612 23,230
(a) Includes a goodwill and intangible asset impairment charge of
$29.8 million on discontinued operations in the quarter ended May 31,
2006.
CAL AMP CORP.
BUSINESS SEGMENT INFORMATION
(Unaudited, in thousands except per share amounts)
Three Months Ended Six Months Ended
August 31 , August 31 ,
------------------- --------------------
2007 2006 2007 2006
-------- -------- --------- --------
Revenue
Satellite Division $ 9,851 $38,955 $ 32,882 $73,046
Wireless DataCom
Division 22,817 15,674 46,179 24,540
-------- -------- --------- --------
Total revenue $32,668 $54,629 $ 79,061 $97,586
======== ======== ========= ========
Gross profit (loss)
Satellite Division $(1,835)(a)$ 6,123 $(15,751)(a)$13,047
Wireless DataCom
Division 8,150 6,533 16,680 9,697
-------- -------- --------- --------
Total gross profit $ 6,315 $12,656 $ 929 $22,744
======== ======== ========= ========
Operating income (loss)
Satellite Division $(3,064)(a)$ 4,232 $(18,295)(a)$ 9,249
Wireless DataCom
Division (500)(b) 523 (1,146)(b) (5,351)(c)
Corporate expenses (1,304) (1,529) (2,657) (2,811)
-------- -------- --------- --------
Total operating income
(loss) $(4,868) $ 3,226 $(22,098) $ 1,087
======== ======== ========= ========
(a) Includes charges for estimated product warranty and related costs
in the three and six-month periods ended August 31, 2007 of $1.5
million and $17.8 million, respectively.
(b) Includes intangible asset amortization expense in the three and
six-month periods ended August 31, 2007 of $1.6 million and $3.3
million, respectively.
(c) Includes a charge of $6.85 million in the quarter ended May 31,
2006 for the write-off of in-process research and development costs
associated with the acquisition of Dataradio.
CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands)
August February
31, 28,
2007 2007
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 8,370 $ 37,537
Accounts receivable, net 24,837 38,439
Inventories 26,987 25,729
Deferred income tax assets 1,817 4,637
Prepaid expenses and other current assets 13,124 7,182
--------- ---------
Total current assets 75,135 113,524
Equipment and improvements, net 5,952 6,308
Deferred income tax assets, less current portion 6,828 -
Goodwill 100,602 90,001
Other intangible assets, net 27,539 18,643
Other assets 4,550 1,227
--------- ---------
$220,606 $229,703
========= =========
Liabilities and
Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 32,782 $ 2,944
Accounts payable 14,184 26,186
Accrued payroll and employee benefits 3,194 3,478
Accrued warranty costs 11,449 1,295
Other accrued liabilities 11,193 2,799
Deferred revenue 5,659 1,935
--------- ---------
Total current liabilities 78,461 38,637
--------- ---------
Long-term debt, less current portion - 31,314
--------- ---------
Deferred income tax liabilities - 7,451
--------- ---------
Other non-current liabilities 4,701 1,050
--------- ---------
Stockholders' equity:
Common stock 236 236
Additional paid-in capital 140,423 139,175
Retained earnings (accumulated deficit) (2,735) 13,000
Accumulated other comprehensive loss (480) (1,160)
--------- ---------
Total stockholders' equity 137,444 151,251
--------- ---------
$220,606 $229,703
========= =========
CAL AMP CORP.
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited - In thousands)
Six Months Ended
August 31 ,
-------------------
2007 2006
--------- ---------
Cash flows from operating activities:
Net loss $(15,735) $(32,816)
Depreciation and amortization 5,201 3,111
Stock-based compensation expense 1,027 1,073
Write-off of in-process research and development
costs 310 6,850
Impairment loss - 29,848
Excess tax benefit from stock-based
compensation (55) (258)
Deferred tax assets, net (14,388) (261)
Loss on sale of discontinued operations, net of
tax 935 -
Gain on sale of investment (331) -
Changes in operating working capital 20,934 (7,636)
Other (2) 58
--------- ---------
Net cash used in operating activities (2,104) (31)
--------- ---------
Cash flows from investing activities:
Capital expenditures (920) (1,382)
Proceeds from sale of property and equipment 4 16
Proceeds from sale of investment 1,045 -
Proceeds from sale of discontinued operations 4,000 -
Acquisition of Aircept (19,315) -
Acquisition of SmartLink (7,944) -
Cash restricted for repayment of debt (3,309) -
Acquisition of Dataradio net of cash acquired - (48,038)
Acquisition of TechnoCom product line - (2,478)
Proceeds from Vytek escrow distribution - 480
--------- ---------
Net cash used in investing activities (26,439) (51,402)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt - 38,000
Debt repayments (1,476) (7,658)
Proceeds from stock option exercises 157 533
Excess tax benefit from stock-based
compensation 55 258
--------- ---------
Net cash provided (used) by financing
activities (1,264) 31,133
--------- ---------
Effect of exchange rate changes on cash 640 2
--------- ---------
Net change in cash and cash equivalents (29,167) (20,298)
Cash and cash equivalents at beginning of period 37,537 45,783
--------- ---------
Cash and cash equivalents at end of period $ 8,370 $ 25,485
========= =========
CAL AMP CORP.
NON-GAAP EARNINGS RECONCILIATION
(Unaudited, in thousands except per share amounts)
Non-GAAP Earnings Reconciliation
---------------------------------------------------------------------
"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. 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 reports the non-GAAP
financial measures of Adjusted Basis Income
(Loss) from Continuing Operations and Diluted
Income (Loss) from Continuing Operations Per
Share. CalAmp uses these non-GAAP financial
measures to enhance the investor's overall
understanding of the financial performance and
future prospects of CalAmp's core business
activities. Specifically, CalAmp believes that a
report of Adjusted Basis Income (Loss) from
Continuing Operations and Diluted Income (Loss)
from Continuing Operations Per Share provides
consistency in its financial reporting and
facilitates the comparison of results of core
business operations between its current and past
periods.
The reconciliation of the GAAP Basis Income (Loss)
from Continuing Operations to Adjusted Basis
Income (Loss) from Continuing Operations is as
follows:
Three Months Six Months Ended
Ended
August 31, August 31,
---------------- ------------------
2007 2006 2007 2006
-------- ------- --------- --------
GAAP Basis Income (Loss) from
Continuing Operations $(3,258) $ 1,698 $(14,203) $(1,711)
Adjustments to reconcile to
Adjusted Basis
Income (Loss) from Continuing
Operations:
Amortization of intangible
assets, net of tax 954 682 2,022 776
Stock-based compensation
expense, net of tax 331 387 629 636
In-process R&D, net of tax in
fiscal 2008 - - 190 6,850
-------- ------- --------- --------
Adjusted Basis Income (Loss) from
Continuing Operations $(1,973) $ 2,767 $(11,362) $ 6,551
======== ======= ========= ========
Adjusted Basis Income (Loss) from
Continuing Operations per diluted
share $ (0.08) $ 0.12 $ (0.48) $ 0.28
Weighted average common shares
outstanding on diluted basis 23,623 23,689 23,612 23,230
Reconciling items that are not treated as tax deductible in computing
the GAAP basis income tax provision (in-process research and
development in fiscal 2007) are not tax-effected in the Non-GAAP
Earnings Reconciliation. The remaining reconciling items are tax-
effected using an adjusted year-to-date effective income tax rate
that is computed by excluding from pretax income (loss) those
reconciling items that are not treated as tax deductible in
computing the GAAP basis income tax provision. The computation of
the adjusted year-to-date effective income tax rate is as follows:
Six Months Ended
August 31,
------------------
2007 2006
--------- --------
Income (Loss) from Continuing
Operations Before Income
Taxes, as reported $(23,188) $ 1,814
Add back nondeductible items:
In-process research and
development in fiscal 2007 - 6,850
-------- -------
Pretax income before
nondeductible items (23,188) 8,664
Income tax benefit (provision)
as reported 8,985 (3,525)
-------- -------
Year-to-date effective income
tax rate as adjusted 38.8% 40.7%
======== =======
CONTACT: CalAmp Corp.
Rick Vitelle, Chief Financial Officer
805-987-9000
or
FINANCIAL RELATIONS BOARD
General Information
Lasse Glassen,
213-486-6546
lglassen@frbir.com
SOURCE: CalAmp Corp.