OXNARD, Calif.--(BUSINESS WIRE)--Jan. 15, 2008--CalAmp Corp.
(Nasdaq:CAMP), a leading provider of wireless products, services, and
solutions, today reported results for its fiscal 2008 third quarter
ended November 30, 2007. Key elements include:
- Consolidated third quarter revenues of $32.1 million within
expectations; Wireless DataCom Division revenues of $23.7
million nearly 70% higher than prior year.
- Third quarter GAAP loss from continuing operations of $58.9
million, or $2.49 per diluted share, includes non-cash pre-tax
charge of $65.7 million for goodwill impairment; Adjusted
basis (non-GAAP) income from continuing operations of $67,000
or $------ per share exceeded guidance.
- Completed settlement agreement with key Direct Broadcast
Satellite (DBS) customer.
Fred Sturm, CalAmp's President and Chief Executive Officer,
commented, "Overall, operational performance in the third quarter was
within expectations. I am pleased with our continued progress in
executing our strategy to profitably grow our Wireless DataCom
business, which has been our strategic growth initiative for the past
two years. During the third quarter our Wireless DataCom Division
generated record revenues of $23.7 million driven by sequential
quarter growth in our public safety, industrial monitoring and
controls and OEM businesses. Additionally, Wireless DataCom gross
margins benefited from higher margin new products introduced in 2007."
Mr. Sturm added, "Reaching a settlement agreement last month with
a key DBS customer was an important step in getting our Satellite
Division back to profitability. The agreement is structured in a way
that reduces CalAmp's future cash requirements, and more closely
aligns the interests of our two companies. We are continuing to work
closely with this valued customer to requalify our products, and we
expect increasing revenues throughout fiscal year 2009."
Mr. Sturm concluded, "The settlement agreement with this key DBS
customer has allowed CalAmp to start meaningful negotiations with our
lenders to address the previously announced noncompliance related to
financial covenants under our credit facility. We are working to
resolve this matter expeditiously, but we do not believe that the
current restriction on borrowing under the credit facility will
adversely impact our near term operations."
Fiscal 2008 Third Quarter Results
Total revenue for the fiscal 2008 third quarter was $32.1 million
compared to $59.1 million for the third quarter of fiscal 2007. Lower
sales of Satellite Division products in the latest quarter were
partially offset by higher Wireless DataCom Division revenues.
Gross profit for the fiscal 2008 third quarter was $10.0 million,
or 31.3% of revenues compared to $12.0 million or 20.4% of revenues
for the same period last year. The reduction in gross profit was
primarily the result of lower sales of Satellite Division products.
The improvement in gross margin percentage was due primarily to a
change in product mix favoring increased sales of higher margin
Wireless DataCom products.
Results of operations for the fiscal 2008 third quarter as
determined in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP") was a net loss from continuing operations of $58.9
million, or $2.49 per diluted share. As a result of a significant
decrease in recent business with a key DBS customer due to a product
performance issue, coupled with the substantial decline in the
Company's market capitalization, the Company conducted an interim
goodwill impairment analysis as of November 30, 2007. This analysis
indicated that goodwill in the aggregate amount of $65.7 million was
impaired, comprised of impairments in the Satellite and Wireless
DataCom divisions of $43.2 million and $22.5 million, respectively.
The Wireless DataCom Division's revenue and gross profit are higher in
the current three and nine-month periods than the comparable periods
of the prior year. Nonetheless, both reporting segments were
determined to be impaired because of the decline in the Company's
market capitalization.
The Adjusted Basis (non-GAAP) income from continuing operations
for the fiscal 2008 third quarter was $67,000 or breakeven per diluted
share compared to Adjusted Basis income from continuing operations of
$2.3 million or $0.10 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 the impairment loss, each net of tax to the extent
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.
Liquidity
At November 30, 2007, the Company had total cash of $5.0 million,
with $32.0 million in total outstanding debt. As previously disclosed,
the net loss reported in the first quarter of fiscal 2008 caused the
Company to become noncompliant with the financial covenants under its
bank credit agreement, and as a result the Company cannot borrow under
the working capital revolver of this credit agreement until it 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 $32.0 million outstanding
balance of the bank loan is classified as a current liability in the
November 30, 2007 balance sheet.
Net cash used in operating activities was $4.9 million for the
nine months ended November 30, 2007. Inventory was $27.7 million at
the end of the third quarter, representing annualized turns of
approximately 3 times. Accounts receivable outstanding at the end of
the third quarter represents a 60 day average collection period.
Business Outlook
Commenting on the Company's business outlook, Mr. Sturm said,
"Based on our current projections, we believe fiscal 2008 fourth
quarter consolidated revenues will be in the range of $29 to $33
million, with a GAAP basis loss from continuing operations in the
range of ($0.06) to ($0.10) per diluted share. The Adjusted Basis
(non-GAAP) loss from continuing operations for the fourth quarter,
which excludes amortization of intangible assets and stock-based
compensation expense net of tax, is expected to be ($0.01) to ($0.05)
per diluted share. During the fourth quarter, we expect revenue
contributions from our Wireless DataCom Division in the range of $20
million to $24 million."
Conference Call, Webcast and Form 10-Q Filing
A conference call and simultaneous webcast to discuss fiscal 2008
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.
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 an amendment of its bank
credit agreement to eliminate the event of default under the credit
agreement, the Company's ability to successfully requalify certain
newer generation products and resume selling these 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 filed on May 17, 2007 with the Securities and
Exchange Commission (SEC) and in the Quarterly Report on Form 10-Q
filed today with the SEC. 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 Nine Months Ended
November 30, November 30,
------------------ -------------------
2007 2006 2007 2006
--------- -------- --------- ---------
Revenues $ 32,061 $59,103 $111,122 $156,689
Cost of revenues 22,033 47,062 100,165 121,904
--------- -------- --------- ---------
Gross profit 10,028 12,041 10,957 34,785
--------- -------- --------- ---------
Operating expenses:
Research and
development 3,868 3,404 11,982 9,523
Selling 2,577 1,959 7,219 4,683
General and
administrative 3,498 2,762 10,157 7,417
Intangible asset
amortization 1,558 1,077 4,860 2,386
In-process research and
development - - 310 6,850
Impairment loss 65,745 - 65,745 -
--------- -------- --------- ---------
77,246 9,202 100,273 30,859
--------- -------- --------- ---------
Operating income (loss) (67,218) 2,839 (89,316) 3,926
Non-operating income
(expense), net (622) (136) (1,712) 591
--------- -------- --------- ---------
Income (loss) from
continuing operations
before income taxes (67,840) 2,703 (91,028) 4,517
Income tax benefit
(provision) 8,909 (1,264) 17,894 (4,789)
--------- -------- --------- ---------
Income (loss) from
continuing operations (58,931) 1,439 (73,134) (272)
Loss from discontinued
operations, net of tax - (543) (597) (31,648)(a)
Loss on sale of
discontinued
operations, net of tax - - (935) -
--------- -------- --------- ---------
Net income (loss) $(58,931) $ 896 $(74,666) $(31,920)
========= ======== ========= =========
Basic and diluted
earnings (loss) per
share:
Income (loss) from
continuing operations $ (2.49) $ 0.06 $ (3.10) $ (0.01)
Loss from discontinued
operations - (0.02) (0.06) (1.36)
--------- -------- --------- ---------
Total basic and
diluted earnings
(loss) per share $ (2.49) $ 0.04 $ (3.16) $ (1.37)
========= ======== ========= =========
Shares used in per share
calculations:
Basic 23,640 23,414 23,621 23,290
Diluted 23,640 23,679 23,621 23,290
(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 Nine Months Ended
November 30, November 30,
------------------------ -------------------------
2007 2006 2007 2006
--------- -------- --------- ---------
Revenue
Satellite
Division $ 8,353 $45,045 $ 41,235 $118,091
Wireless
DataCom
Division 23,708 14,058 69,887 38,598
--------- -------- --------- ---------
Total
revenue $ 32,061 $59,103 $111,122 $156,689
========= ======== ========= =========
Gross profit
(loss)
Satellite
Division $ 221 $ 6,514 $(15,530)(a) $ 19,561
Wireless
DataCom
Division 9,807 5,527 26,487 15,224
--------- -------- --------- ---------
Total gross
profit $ 10,028 $12,041 $ 10,957 $ 34,785
========= ======== ========= =========
Operating income
(loss)
Satellite
Division $(44,061)(a)(b) $ 5,154 $(62,356)(a)(b) $ 14,812
Wireless
DataCom
Division (21,842)(c) (727) (22,988)(c) (6,487)(d)
Corporate
expenses (1,315) (1,588) (3,972) (4,399)
--------- -------- --------- ---------
Total
operating
income
(loss) $(67,218) $ 2,839 $(89,316) $ 3,926
========= ======== ========= =========
(a) Includes charges for estimated product warranty and related costs
in the three and nine-month periods ended November 30, 2007 of $0.1
million and $17.9 million, respectively.
(b) Includes a Satellite Division goodwill impairment charge of $43.2
million.
(c) Includes a Wireless DataCom Division goodwill impairment charge of
$22.5 million.
(d) Includes a charge of $6.8 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)
November 30, February 28,
2007 2007
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 5,036 $ 37,537
Accounts receivable, net 21,715 38,439
Inventories 27,744 25,729
Deferred income tax assets 7,638 4,637
Prepaid expenses and other current
assets 13,166 7,182
------------ -------------
Total current assets 75,299 113,524
Equipment and improvements, net 5,461 6,308
Deferred income tax assets, less current
portion 9,949 -
Goodwill 35,039 90,001
Other intangible assets, net 25,982 18,643
Other assets 4,288 1,227
------------ -------------
$ 156,018 $ 229,703
============ =============
Liabilities and
Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 32,048 $ 2,944
Accounts payable 10,990 26,186
Accrued payroll and employee benefits 3,207 3,478
Accrued warranty costs 9,551 1,295
Other accrued liabilities 10,601 2,799
Deferred revenue 4,626 1,935
------------ -------------
Total current liabilities 71,023 38,637
------------ -------------
Long-term debt, less current portion - 31,314
Deferred income tax liabilities - 7,451
Other non-current liabilities 5,469 1,050
Stockholders' equity:
Common stock 236 236
Additional paid-in capital 141,058 139,175
Retained earnings (accumulated deficit) (61,666) 13,000
Accumulated other comprehensive loss (102) (1,160)
------------ -------------
Total stockholders' equity 79,526 151,251
------------ -------------
$ 156,018 $ 229,703
============ =============
CAL AMP CORP.
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited - In thousands)
Nine Months Ended
November 30,
-------------------
2007 2006
--------- ---------
Cash flows from operating activities:
Net loss $(74,666) $(31,920)
Depreciation and amortization 7,469 5,027
Stock-based compensation expense 1,605 1,614
Write-off of in-process research and development
costs 310 6,850
Impairment loss 65,745 29,848
Excess tax benefit from stock-based compensation (64) (392)
Deferred tax assets, net (23,296) 3,555
Loss on sale of discontinued operations, net of
tax 935 -
Gain on sale of investment (331) -
Changes in operating working capital 18,080 (2,973)
Other 25 84
--------- ---------
Net cash provided (used) by operating
activities (4,188) 11,693
--------- ---------
Cash flows from investing activities:
Capital expenditures (1,106) (2,112)
Proceeds from sale of property and equipment 8 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 (3,340) -
Acquisition of Dataradio net of cash acquired - (48,047)
Acquisition of TechnoCom product line (703) (2,478)
Proceeds from Vytek escrow distribution - 480
--------- ---------
Net cash used in investing activities (27,355) (52,141)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt - 38,000
Debt repayments (2,210) (11,416)
Proceeds from stock option exercises 206 1,130
Excess tax benefit from stock-based compensation 64 392
--------- ---------
Net cash provided (used) by financing
activities (1,940) 28,106
--------- ---------
Effect of exchange rate changes on cash 982 (157)
--------- ---------
Net change in cash and cash equivalents (32,501) (12,499)
Cash and cash equivalents at beginning of period 37,537 45,783
--------- ---------
Cash and cash equivalents at end of period $ 5,036 $ 33,284
========= =========
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
Ended Nine Months Ended
November 30, November 30,
----------------- ------------------
2007 2006 2007 2006
--------- ------- --------- --------
GAAP Basis Income (Loss) from
Continuing Operations $(58,931) $ 1,439 $(73,134) $ (272)
Adjustments to reconcile to
Adjusted Basis
Income (Loss) from Continuing
Operations:
Amortization of intangible
assets, net of tax 952 623 2,968 1,381
Stock-based compensation
expense, net of tax 353 313 980 934
In-process R&D, net of tax in
fiscal 2008 - - 189 6,850
Impairment loss, net of tax
on deductible portion 57,693 - 57,693 -
--------- ------- --------- --------
Adjusted Basis Income (Loss) from
Continuing Operations $ 67 $ 2,375 $(11,304) $ 8,893
========= ======= ========= ========
Adjusted Basis Income (Loss) from
Continuing
Operations per diluted share $ - $ 0.10 $ (0.48) $ 0.38
Weighted average common shares
outstanding on diluted basis 23,640 23,679 23,621 23,290
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 and the nondeductible portion of the
impairment charge in fiscal 2008) 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:
Nine Months Ended
November 30,
------------------
2007 2006
--------- --------
Pretax income (loss) from
continuing operations, as
reported $(91,028) $ 4,517
Add back nondeductible items:
In-process research and
development in fiscal 2007 - 6,850
Nondeductible portion of
impairment loss 45,056 -
-------- -------
Pretax income (loss) from continuing
operations before nondeductible items (45,972) 11,367
Income tax benefit (provision)
as reported 17,894 (4,789)
-------- -------
Year-to-date effective income
tax rate as adjusted 38.9% 42.1%
======== =======
CONTACT: CalAmp Corp.
Rick Vitelle, Chief Financial Officer
805-987-9000
or
At Financial Relations Board:
Lasse Glassen, General Information
213-486-6546,
lglassen@frbir.com
SOURCE: CalAmp Corp.