Contact: RAE Systems Reports Record Third Quarter Revenue SUNNYVALE, Calif. – October 27, 2003 –RAE Systems Inc. (AMEX: RAE), a leading global developer and manufacturer of rapidly-deployable, multi-sensor chemical detection monitors and networks for homeland security and industrial applications, today announced record revenue for the third quarter ended September 30, 2003. For the quarter, RAE Systems reported total revenues of $8.0 million compared to revenues of $5.9 million in the third quarter of 2002, an increase of 35.8%. Worldwide consolidated net income for the third quarter was $724,800 or 2 cents per share (1 cent per share fully diluted), compared to a net income of $360,300 or 1 cent per share for the same quarter in 2002, an increase of over 100%. The growth in revenue was largely due to the continued growth of the homeland defense market, an increase in industrial sales to monitor air quality, and accelerating adoption of the AreaRAE mobile sensor network. Net income for the quarter of $724,800 takes into effect, a non-cash fair value compensation charge related to options in the amount of $216,600. “The record third quarter revenue reflects our success in providing our homeland defense, environmental and industrial customers comprehensive, robust sensing solutions that contribute to the protection of lives and property,” said Robert I. Chen, president and CEO of RAE Systems. “Our installed base is growing rapidly as we continue to innovate cutting-edge sensor networks and new applications for a diverse range of industries. RAE Systems’ solutions provide the data that drives better response and better safety in situations such as detection of weapons of mass destruction, offshore oil platform crew protection, superfund site remediation, public venue protection, and equipping Civil Support Teams around the country.” Selected highlights of the third quarter include: North and South America
Asia/Pacific
Technology and products
About RAE SystemsFounded in 1991, RAE Systems is a leading global developer and manufacturer of rapidly-deployable, multi-sensor chemical detection monitors and networks for homeland security and industrial applications. In addition, RAE Systems offers a full line of portable single-sensor chemical and radiation detection products. RAE Systems’ products are used by many U.S. government agencies, including the Department of Homeland Security, the Department of Justice, and the Department of State, as well as all branches of the U.S. military, and by numerous city and state agencies. RAE Systems’ end users also include many of the world’s leading corporations in the airline, automotive, computer and oil industries. RAE Systems’ products are used in civilian and government atmospheric monitoring programs in over 50 countries. Several government agencies and departments have standardized their programs based on our products for hazardous materials incident response.For more information about RAE Systems, please visitwww.RAESystems.com. Safe Harbor StatementThis press release contains “forward- looking” statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are denoted by such words as “continued growth” and “growing rapidly”. These types of statements address matters that are subject to risks and uncertainties, which could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the general economic and industry factors and receptiveness of the market to RAE and its products. In addition, our forward- looking statements should be considered in the context of other risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to our annual report on Form 10-K and 10-Q filings, available online at http://www.sec.gov. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements. |
RAE Systems Inc. Condensed Consolidated Balance Sheets |
September 30, 2003 | December 31, 2002 | |||||||
---|---|---|---|---|---|---|---|---|
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 6,678,300 | $ | 7,193,500 | ||||
Accounts receivable, net of allowance for doubtful accounts | ||||||||
of $175,700 and $175,700, respectively | 4,736,300 | 2,475,700 | ||||||
Inventories | 3,884,100 | 3,176,400 | ||||||
Prepaid expenses and other current assets | 834,700 | 402,000 | ||||||
Deferred income taxes | 528,800 | 528,800 | ||||||
Total Current Assets | 16,662,200 | 13,776,400 | ||||||
Property and Equipment, net | 1,805,600 | 2,026,800 | ||||||
Deposits and Other Assets | 150,100 | 81,800 | ||||||
Investment in Unconsolidated Affiliate | 586,600 | 784,700 | ||||||
$ | 19,204,500 | $ | 16,669,700 | |||||
Liabilities and Shareholders' Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 1,204,300 | $ | 942,400 | ||||
Accounts payable to affiliate | 608,500 | 757,900 | ||||||
Accrued expenses | 2,044,600 | 1,689,700 | ||||||
Income taxes payable | 630,300 | 1,726,200 | ||||||
Current portion of deferred revenue | 50,800 | 149,700 | ||||||
Current portion of capital lease obligations | 132,200 | 159,600 | ||||||
Total Current Liabilities | 4,670,700 | 5,425,500 | ||||||
Deferred Revenue, net of current portion | 84,500 | -- | ||||||
Capital Leases Obligations, net of current portion | 15,100 | 107,300 | ||||||
Deferred Income Taxes | 277,200 | 277,200 | ||||||
Total Liabilities | 5,047,500 | 5,810,000 | ||||||
Commitments and Contingencies | ||||||||
Shareholders' Equity: | ||||||||
Common stock, $0.001 par value; 200,000,000 shares authorized; | ||||||||
46,591,721 and 45,516,675 shares issued and outstanding, respectively | 46,600 | 45,500 | ||||||
Additional paid-in capital | 18,437,500 | 17,955,800 | ||||||
Deferred compensation | -- | (516,600 | ) | |||||
Cumulative other comprehensive income | 3,300 | -- | ||||||
Accumulated deficit | (4,330,400 | ) | (6,625,000 | ) | ||||
Total Shareholders' Equity | 14,157,000 | 10,859,700 | ||||||
$ | 19,204,500 | $ | 16,669,700 | |||||
Condensed Consolidated Statements of Operations |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||
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2003 | 2002 | 2003 | 2002 | |||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
Net Sales | $ | 7,969,300 | $ | 5,869,100 | $ | 22,767,800 | $ | 15,581,700 | ||||||
Cost of Sales | 3,283,600 | 2,401,700 | 8,812,100 | 6,577,900 | ||||||||||
Gross Margin | 4,685,700 | 3,467,400 | 13,955,700 | 9,003,800 | ||||||||||
Operating Expenses: | ||||||||||||||
Sales and marketing | 1,681,200 | 1,431,600 | 5,062,800 | 3,971,200 | ||||||||||
Research and development | 716,900 | 741,600 | 2,179,900 | 1,946,900 | ||||||||||
General and administrative | 1,282,400 | 515,000 | 3,630,400 | 3,311,600 | ||||||||||
Legal fees and settlement costs | 39,500 | 331,100 | 130,000 | 575,100 | ||||||||||
Merger costs | -- | -- | -- | 8,734,700 | ||||||||||
Total Operating Expenses | 3,720,000 | 3,019,300 | 11,003,100 | 18,539,500 | ||||||||||
Operating Income (Loss) | 965,700 | 448,100 | 2,952,600 | (9,535,700 | ) | |||||||||
Other Income (Expense): | ||||||||||||||
Interest income | 7,200 | 14,400 | 23,900 | 46,400 | ||||||||||
Interest expense | (5,600 | ) | (10,100 | ) | (19,800 | ) | (110,200 | ) | ||||||
Other, net | (37,000 | ) | 14,300 | (14,000 | ) | (1,600 | ) | |||||||
Equity in loss of unconsolidated affiliate | (65,000 | ) | (77,800 | ) | (198,100 | ) | (198,400 | ) | ||||||
Total Other Income (Expense) | (100,400 | ) | (59,200 | ) | (208,000 | ) | (263,800 | ) | ||||||
Income (Loss) Before Income Taxes | 865,300 | 388,900 | 2,744,600 | (9,799,500 | ) | |||||||||
Income Taxes | 140,500 | 28,600 | 450,000 | 36,400 | ||||||||||
Net Income (Loss) | $ | 724,800 | $ | 360,300 | $ | 2,294,600 | $ | (9,835,900 | ) | |||||
Basic Earnings (Loss) Per Common Share | $ | 0.02 | $ | 0.01 | $ | 0.05 | $ | (0.26 | ) | |||||
Diluted Earnings (Loss) Per Common Share | $ | 0.01 | $ | 0.01 | $ | 0.05 | $ | (0.26 | ) | |||||
Weighted-average common shares outstanding | 46,246,408 | 45,153,990 | 45,914,155 | 37,976,136 | ||||||||||
Stock options | 4,566,384 | -- | 3,995,622 | -- | ||||||||||
Diluted weighted-average common shares | ||||||||||||||
outstanding | 50,812,792 | 45,153,990 | 49,909,777 | 37,976,136 | ||||||||||