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CalAmp Reports Fiscal 2009 Fourth Quarter and Full Year Results

05/12/09

OXNARD, Calif.--(BUSINESS WIRE)--May. 12, 2009-- CalAmp Corp. (Nasdaq:CAMP), a leading provider of wireless products, services and solutions, today reported results for its fiscal 2009 fourth quarter and full year ended February 28, 2009. Key elements include:

  • Consolidated fourth quarter revenues of $21.3 million; Satellite products revenues of $8.1 million, 10% higher than prior quarter.
  • Fourth quarter GAAP loss from continuing operations of $45.8 million, or $1.85 per diluted share, includes non-cash pretax charge of $44.7 million for impairment loss; Adjusted basis (non-GAAP) income from continuing operations of $3.8 million or $0.15 per diluted share.
  • Fourth quarter net cash provided by operations of $10.5 million (includes $9.0 million received from out-of-court settlement of litigation with Rogers Corporation).
  • Bank term loan balance reduced by $7.7 million in fourth quarter to $17.6 million while cash balance increased to $6.9 million.

Rick Gold, CalAmp’s President and Chief Executive Officer, commented, “Our top line performance reflects the challenging economic environment that has resulted in key customers delaying projects and postponing orders for our wireless datacom products. However, I am encouraged with our operating execution where we continue to make good progress on our strategic initiatives, strengthen relationships with our key customers and generate positive cash flow from operating activities. Our ongoing efforts to rebuild our competitive position in the Direct Broadcast Satellite (DBS) market are moving forward. During the fourth quarter, unit volumes of our satellite products to our historically largest DBS customer continued to ramp, resulting in a 10% sequential quarter increase in satellite product revenues. I am also pleased with our recent product development activities where we remain on-track with next generation DBS product designs and have refreshed and extended our wireless datacom product portfolio. We are working closely with strategic launch customers for these new products and are well positioned for growth in our wireless datacom business as market conditions stabilize.”

Mr. Gold continued, “Although the recession presented the Company with significant challenges, restructuring initiatives taken during this past year have improved our financial flexibility while streamlining our operations. These actions are expected to result in annualized savings of approximately $6 million. We believe this will enable the Company to be more responsive to changing market dynamics and customer demand as we look ahead to fiscal 2010.”

Fiscal 2009 Fourth Quarter Results

Total revenue for the fiscal 2009 fourth quarter was $21.7 million compared to $29.8 million for the fourth quarter of fiscal 2008. The reduction in revenues was due primarily to lower sales of the Company’s wireless datacom products.

Gross profit for the fiscal 2009 fourth quarter was $13.6 million, or 63.7% of revenues compared to gross profit of $7.5 million, or 25.3% of revenue for the same period last year. Included in gross profit in the fiscal 2009 fourth quarter is a $9.0 million gain from the settlement of litigation with Rogers Corporation. Excluding the litigation settlement, fiscal 2009 fourth quarter gross profit was $4.6 million, or 21.5% of revenue. The reduction in gross profit and gross margin percentage in the latest quarter (excluding the settlement) was due primarily to lower wireless datacom revenues.

Results of operations for the fiscal 2009 fourth quarter as determined in accordance with Generally Accepted Accounting Principles ("GAAP") was a loss from continuing operations of $45.8 million, which is a loss of $1.85 per basic and diluted share. The Company’s annual goodwill impairment test resulted in the full impairment of the Company’s goodwill in the amount of $28.5 million, along with partial impairments of other intangible assets in the amount of $13.5 million and fixed assets in the amount of $1.6 million. In addition to amounts written-down as a result of the annual goodwill impairment test, the Company also recorded the impairment of $1.1 million related to holdings of preferred stock of a privately-held company. The aggregate amount of the aforementioned impaired assets was $44.7 million. Of note, the outcome of the impairment analysis was largely influenced by the Company’s stock price as of the impairment test date. As of December 31, 2008, the effective date of the impairment analysis, the Company’s stock price was $0.45 per common share, which equates to a market capitalization of $11.3 million based on the 25.2 million common shares outstanding.

The tax-deductible portion of the $44.7 million impairment charge gives rise to an income tax benefit of $12.9 million and a corresponding increase in the deferred income tax asset balance. Based on an evaluation of the deferred income tax asset carried out pursuant to the applicable accounting rules, the Company increased its deferred tax asset valuation allowance by $16.4 million. This results in an income tax provision for the three months and year ended February 28, 2009 of $5.9 million and $3.8 million, respectively.

The Adjusted Basis (non-GAAP) income from continuing operations for the fiscal 2009 fourth quarter was $3.8 million, or $0.15 per basic and diluted share. This compares to Adjusted Basis (non-GAAP) loss from continuing operations of $2.8 million, which is a loss of $0.11 per basic and diluted share, in the same period last year. Adjusted Basis income (loss) from continuing operations excludes the impact of impairment charges, changes in the deferred income tax asset valuation allowance, amortization of intangible assets, stock-based compensation expense and in-process research and development charges, each net of tax to the extent applicable. A reconciliation of the GAAP basis 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 February 28, 2009, the Company had total cash of $6.9 million, with $17.6 million in total outstanding bank debt and a $3.5 million note payable to a key DBS customer. Net cash provided by operating activities was $10.5 million for the three months ended February 28, 2009, which included $9.0 million received from the out-of-court settlement of litigation with Rogers Corporation. For the year ended February 28, 2009, net cash generated by operating activities was $13.8 million including the Rogers settlement. During the latest quarter, the principal on the Company’s bank term loan was paid down by $7.7 million and the principal on the note payable to the DBS customer was paid down by $0.9 million.

The bank term loan has a maturity date of December 31, 2009, and consequently the entire term loan balance is classified as a current liability in the Consolidated Balance Sheet at February 28, 2009. The Company believes that it will be able to refinance the term loan prior to the maturity date from the proceeds of an asset-based loan, possibly supplemented by proceeds from another funding source.

Business Outlook

Commenting on the Company's business outlook for the first quarter of fiscal 2010, Mr. Gold said, “Although we believe a full economic recovery is still several quarters ahead, there are signs that conditions are beginning to improve within several of the vertical markets we serve. That said, while we are forecasting sequential growth in our satellite business, we expect our wireless datacom business to remain sluggish in the near term. Based on our current forecast, we believe fiscal 2010 first quarter consolidated revenues will be in the range of $22 to $24 million, with a GAAP basis net loss in the range of $0.15 to $0.19 per diluted share. The Adjusted Basis (non-GAAP) results of operations for the first quarter, which exclude changes in the deferred income tax asset valuation allowance, amortization of intangible assets and stock-based compensation expense net of tax, are expected to be a net loss of $0.06 to $0.10 per diluted share. Notwithstanding this anticipated net loss, we expect to continue generating positive operating cash flow in the first quarter.”

Conference Call and Webcast

A conference call and simultaneous webcast to discuss fiscal 2009 fourth quarter financial results and business outlook will be held today at 4:30 p.m. Eastern / 1:30 p.m. Pacific. CalAmp's President and CEO Rick Gold and CFO Rick Vitelle will host the conference call. Participants can dial into the live conference call by calling 877-941-1848 (480-629-9692 for international callers). An audio replay will be available through May 19, 2009, by calling 800-406-7325 (303-590-3030 for international callers) and entering the access code 4074352.

Additionally, a 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. 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 provides wireless communications solutions that enable anytime/anywhere access to critical data and content. The Company serves customers in the public safety, industrial monitoring and controls, mobile resource management and direct broadcast satellite markets. The Company’s products are marketed under the CalAmp, Dataradio, SmartLink, Aercept, LandCell and Omega trade names. For more information, please visit www.calamp.com.

Forward-Looking Statements

Statements in this press release that are not historical in nature are forward-looking statements that 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 product demand, competitive pressures and pricing declines in the Company’s Satellite and Wireless markets, the timing of customer approvals of new product designs, the length and extent of the global economic downturn that has and may continue to adversely affect the Company's business, the Company's ability to refinance or extend its bank term loan prior to the December 31, 2009 maturity date, and other risks or uncertainties that are described in the Company's Annual Report on Form 10-K for fiscal 2009 as filed 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
(In thousands except per share amounts)
 
Three Months Ended Year Ended
February 28, February 28,
2009 2008 2009 2008
 
Revenues $ 21,327 $ 29,785 $ 98,370 $ 140,907
 
Cost of revenues   7,739   (a)   22,247     60,244   (a)   122,412  
 
Gross profit   13,588     7,538     38,126     18,495  
 
Operating expenses:
Research and development 3,369 3,728 12,899 15,710
Selling 2,384 3,414 8,959 10,633
General and administrative 2,735 4,809 12,087 14,966
Intangible asset amortization 617 1,558 4,429 6,418
In-process research and development - - - 310
Impairment loss   44,736     5,531     44,736     71,276  
  53,841     19,040     83,110     119,313  
 
Operating loss (40,253 ) (11,502 ) (44,984 ) (100,818 )
 
Non-operating income (expense), net   361     (760 )   (911 )   (2,472 )
 

Loss from continuing operations before income taxes

(39,892 ) (12,262 ) (45,895 ) (103,290 )
 
Income tax (provision) benefit   (5,940 )   3,046     (3,770 )   20,940  
 
Loss from continuing operations (45,832 ) (9,216 ) (49,665 ) (82,350 )
 
Loss from discontinued operations, net of tax -   (267 ) -   (1,799 )
 
 
Net loss $ (45,832 ) $ (9,483 ) $ (49,665 ) $ (84,149 )
 
 
Basic and diluted loss per share:
Loss from continuing operations $ (1.85 ) $ (0.37 ) $ (2.01 ) $ (3.45 )
Loss from discontinued operations   -     (0.01 )   -     (0.08 )
 
Total basic and diluted loss per share $ (1.85 ) $ (0.38 ) $ (2.01 ) $ (3.53 )
 
 
Shares used in per share calculations:
Basic 24,810 24,660 24,765 23,881
Diluted 24,810 24,660 24,765 23,881
 
 
(a) Includes a $9 million gain from a legal settlement with Rogers Corporation in January 2009.
 
         
CAL AMP CORP.
BUSINESS SEGMENT INFORMATION
( In thousands)
 
Three Months Ended Year Ended
February 28,   February 28,
2009 2008 2009 2008
Revenue
Satellite $ 8,126 $ 9,255 $ 26,327 $ 50,490
Wireless DataCom   13,201     20,530     72,043     90,417  
 
Total revenue $ 21,327   $ 29,785   $ 98,370   $ 140,907  
 
Gross profit (loss)
Satellite $ 9,349 (a) $ 722 $ 10,254 (a) $ (14,808 ) (d)
Wireless DataCom   4,239     6,816     27,872     33,303  
 
Total gross profit $ 13,588   $ 7,538   $ 38,126   $ 18,495  
 
Operating income (loss)
Satellite $ 6,110 (a)(b) $ (1,568 ) (c) $ 3,616 (a)(b) $ (63,924 ) (c)(d)
Wireless DataCom (43,886 ) (e)(f) (7,485 ) (g)(h) (42,206 ) (e)(f) (30,473 ) (g)(h)
Corporate expenses   (2,477 ) (i)   (2,449 )   (6,394 ) (i)   (6,421 )
 
Total operating loss $ (40,253 ) $ (11,502 ) $ (44,984 ) $ (100,818 )
 

(a)

Includes a $9 million gain from a legal settlement with Rogers Corporation in January 2009.

 

(b)

Includes a Satellite segment goodwill impairment charge of $2.3 million for the three months and year ended February 28, 2009.

 

(c)

Includes a Satellite segment goodwill impairment charge of $1.2 million and $44.4 million for the three months and year ended February 28, 2008, respectively.

 

(d)

Includes charges for estimated product warranty and related costs in the year ended February 28, 2008 of $17.9 million.

 

(e)

Includes a Wireless DataCom segment impairment charge of $41.3 million for the three months and year ended February 28, 2009.

 

(f)

Includes intangible asset amortization expense in the three months and year ended February 28, 2009 of $0.6 million and $4.4 million, respectively.

 

(g)

Includes a Wireless DataCom segment goodwill impairment charge of $4.3 million and $26.9 million for the three months and year ended February 28, 2008.

 

(h)

Includes intangible asset amortization expense in the three months and year ended February 28, 2008 of $1.6 million and $6.4 million, respectively.

 

(i)

Includes an impairment charge on investment in preferred stock of a privately held company of $1.1 million for the three months and year ended February 28, 2009.

 

   
CAL AMP CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
February 28,
2009 2008
Assets
Current assets:
Cash and cash equivalents $ 6,913 $ 6,588
Accounts receivable, net 13,682 20,043
Inventories 15,139 25,097
Deferred income tax assets 3,479 5,306
Prepaid expenses and other current assets   4,962     9,733  
 
Total current assets 44,175 66,767
 
Equipment and improvements, net 2,139 5,070
 
Deferred income tax assets, less current portion 13,111 14,802
 
Goodwill - 28,520
 
Other intangible assets, net 6,473 24,424
 
Other assets   3,749     3,458  
 
$ 69,647   $ 143,041  
 
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 21,078 $ 5,343
Accounts payable 5,422 10,875
Accrued payroll and employee benefits 3,380 4,218
Accrued warranty costs 3,286 3,818
Other accrued liabilities 8,683 11,800
Deferred revenue   3,609     4,005  
 
Total current liabilities   45,458     40,059  
 
Long-term debt, less current portion - 27,187
 
Other non-current liabilities 990 2,375
 
Stockholders' equity:
Common stock 252 250
Additional paid-in capital 144,881 144,318
Accumulated deficit (120,814 ) (71,149 )
Accumulated other comprehensive income (loss)   (1,120 )   1  
 
Total stockholders' equity   23,199     73,420  
 
$ 69,647   $ 143,041  
 
   
CAL AMP CORP.
CONSOLIDATED CASH FLOW STATEMENTS
(In thousands)
 
Year Ended February 28,
2009 2008
Cash flows from operating activities:
Net loss $ (49,665 ) $ (84,149 )
Depreciation and amortization 6,549 9,681
Stock-based compensation expense 1,268 2,238
Write-off of in-process research and development costs - 310
Impairment loss 44,736 71,276
Deferred tax assets, net 3,373 (20,784 )
Loss on sale of discontinued operations, net of tax - 1,202
Gain on sale of investment - (331 )
Changes in operating working capital 7,499 19,087
Other   -     (6 )
 
Net cash provided (used) by operating activities   13,760     (1,476 )
 
Cash flows from investing activities:
Capital expenditures (831 ) (1,359 )
Earn-out payments on TechnoCom acquisition (1,183 ) (985 )
Earn-out payments on Landcell acquisition (188 ) -
Proceeds from sale of discontinued operations 465 4,420
Proceeds from sale of property and equipment - 7
Proceeds from sale of investment - 1,045
Acquisition of Aercept - (19,318 )
Acquisition of SmartLink, net of refunds from escrow fund   296     (7,845 )
 
Net cash used in investing activities   (1,441 )   (24,035 )
 
Cash flows from financing activities:
Debt repayments (11,452 ) (6,728 )
Proceeds from stock option exercises   -     213  
 
Net cash used in financing activities   (11,452 )   (6,515 )
 
Effect of exchange rate changes on cash   (542 )   1,077  
 
Net change in cash and cash equivalents 325 (30,949 )
 
Cash and cash equivalents at beginning of period   6,588     37,537  
 
Cash and cash equivalents at end of period $ 6,913   $ 6,588  
 
       
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 Adjusted Basis Income (Loss) from Continuing Operations Per Diluted 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 Adjusted Basis Income (Loss) from Continuing Operations Per Diluted 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 Loss from Continuing Operations to Adjusted Basis Income (Loss) from Continuing Operations is as follows:

 
Three Months Ended Year Ended
February 28, February 28,
2009 2008 2009 2008
 
GAAP Basis Loss from Continuing Operations $ (45,832 ) $ (9,216 ) $ (49,665 ) $ (82,350 )
 

Adjustments to reconcile to Adjusted Basis Loss from Continuing Operations:

Impairment charge 32,558 5,069 32,558 62,776
Valuation allowance on deferred tax assets 16,396 - 16,396 -
Amortization of intangible assets, net of tax 379 953 2,718 3,925
Stock-based compensation expense, net of tax 264 387 778 1,369
In-process R&D, net of tax - - - 190
               
 

Adjusted Basis Income (Loss) from Continuing Operations

$ 3,765   $ (2,807 ) $ 2,785   $ (14,090 )
 

Adjusted Basis Income (Loss) from Continuing Operations per Diluted Share

$ 0.15 $ (0.11 ) $ 0.11 $ (0.59 )
 

Weighted average common shares outstanding on diluted basis

24,810 24,660 24,765 23,881
 
 

The reconciling items above are tax effected using the year-to-date effective tax rate. The computation of the year-to-date effective income tax rate is as follows:

 
Year Ended
February 28,
2009 2008
Pretax loss from continuing operations, as reported $ (45,895 ) $ (103,290 )
Add back nondeductible portion of impairment loss 13,220   49,397  
 
Pretax loss from continuing operations before nondeductible item (32,675 ) (53,893 )
 
Income tax (provision) benefit, as reported (3,770 ) 20,940
Add back valuation allowance 16,396   -  
 
Income tax benefit, as adjusted 12,626   20,940  
 
Effective income tax rate 38.6 % 38.9 %
 

 

Source: CalAmp Corp.

CalAmp Corp.:
Rick Vitelle, Chief Financial Officer, 805-987-9000
or
Financial Relations Board:
General Information, Lasse Glassen, 213-486-6546
lglassen@frbir.com

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