DRI (TBUSQ) 8-K DRI Corporation Posts Record High Net Sales for Second Quarter 2008

Exhibit 99.1

DRI Corporation Posts Record High Net Sales for Second Quarter 2008

• Profit of $593 Thousand Significantly Exceeds Last Year’s Same Quarter Results
• Six-Month Profit Swings to 11 Cents vs. Loss of 6 Cents for Same Period Last Year

DALLAS--(BUSINESS WIRE)--DRI Corporation (DRI) (NASDAQ: TBUS), a digital communications technology leader in the domestic and international surface transportation and transit security markets, announced today that it posted record high second quarter 2008 net sales of $19.4 million, an increase of 30 percent over net sales for the same period last year.

David L. Turney, Chairman, President, and Chief Executive Officer, said: “Our second quarter net sales of $19.4 million is the highest net sales ever posted for a quarterly period in the 25-year history of the Company. Our second quarter earnings of 5 cents per share exceeds the 3 cents per share posted on continuing operations for the same period last year. Contributing factors to this improved performance include strong order trends, an increased backlog, and improved gross margins.”

Earlier today, the Company filed with the Securities and Exchange Commission a Form 10-Q for the period ended June 30, 2008.

SECOND QUARTER RESULTS

For the quarter ended June 30, 2008, net sales increased by 30 percent to $19.4 million and the net profit to common shareholders was $593 thousand, or 5 cents per diluted common share outstanding. This compares to net sales of $14.9 million for continuing operations and net income of $244 thousand, or 2 cents per diluted common share outstanding – inclusive of a loss of $42 thousand from discontinued operations – for the same period last year.

The Company had $7.7 million in working capital and $22.3 million in shareholders’ equity as of June 30, 2008. This compares to $5.7 million in working capital and $19.5 million in shareholders’ equity for the same period last year.

Basic and diluted weighted-average shares outstanding for the three-month period were 11.2 million and 13.1 million, respectively, as compared to 10.5 million (basic) and 11.4 million (diluted) a year ago.

SIX MONTH RESULTS

For the six months ended June 30, 2008, sales of continuing operations increased by 35 percent to $36.4 million and the net income to common shareholders was $1.2 million, or 11 cents per diluted common share outstanding. This compares to net sales of continuing operations of $26.9 million and a net loss to common shareholders of $602 thousand, or 6 cents per common share outstanding (basic and diluted) – inclusive of a loss of $219 thousand, or 2 cents per common share outstanding (basic and diluted), from discontinued operations – for the same period last year.

Basic and diluted weighted-average shares outstanding for the six-month period were 11.2 million and 13.0 million, respectively, as compared to 10.3 million (basic and diluted) a year ago.

OUTLOOK

“In third quarter 2008, we expect to exceed the revenues posted in the same period last year and to post a profit. We reaffirm our prior earnings guidance in the upper end of the 14 cents to 17 cents range. We are presently evaluating probable delivery schedules and potential earnings on expected new orders related to the fourth quarter and, thus, we are continuing to study this matter. As a reminder, due to the fact that our revenue stream normally has a significant level of larger contract content – the delivery of which can be difficult to predict – our business will always have a degree of quarterly variability. Looking in a very preliminary manner at 2009, we are tracking favorably to prior revenue guidance of a $100 million run rate by the end of 2010; the longer term outlook will be further addressed later this year when we add 2011 to our long-range strategic planning window,” Mr. Turney said.

CONFERENCE CALL INFORMATION

The Company will host an investors’ conference call to review second quarter 2008 results on Aug. 15, 2008, at 11 a.m. (Eastern).

To participate in the live call, dial one of the following telephone numbers at least five minutes prior to the start time: Domestic, (800) 853-3895; or International, (334) 323-7224. The conference passcode is “DRI.”

Telephone replay will be available through Nov. 14, 2008, via the following telephone numbers: Domestic, (877) 656-8905; or International, (334) 323-9859. The replay pin number is 35799094.

To participate via webcast, go to http://www.viavid.net/detailpage.aspx?sid=00005404. The webcast will be archived until Nov. 14, 2008.

ABOUT THE COMPANY

DRI Corporation is a digital communications technology leader in the domestic and international public transportation and transit security markets. Our products include: TwinVision® and Mobitec® electronic destination sign systems, Talking Bus® voice announcement systems, Digital Recorders® Internet-based passenger information and automatic vehicle location/monitoring systems, and VacTell™ video actionable intelligence systems. Our products help increase the mobility, flow, safety, and security of people who rely upon transportation infrastructure around the globe. Using proprietary hardware and software applications, our products provide easy-to-understand, real-time information that assists users and operators of transit bus and rail vehicles in locating, identifying, boarding, tracking, scheduling, and managing those vehicles. Our products also aid transit vehicle operators in their quest to increase ridership and reduce fuel consumption, as well as to identify and mitigate security risks on transit vehicles. Positioned not only to serve and address mobility, energy conservation, and environmental concerns, our products also serve the growing U.S. Homeland Security market. For more information about the Company and its operations worldwide, go to www.digrec.com.

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements concerning the timing or amount of future revenues, expectations of profitability, expected business and revenue growth trends, future annualized revenue run rates, anticipated increases in shareholder value, and expectations regarding the Company’s ongoing business plan and working capital position, expectations for transit industry support for the Company; as well as any statement, express or implied, concerning future events or expectations or which use words such as “suggest,” “expect,” “fully expect,” “expected,” “appears,” “believe,” “plan,” “anticipate,” “would,” “goal,” “potential,” “potentially,” “range,” “pursuit,” “run rate,” “stronger,” “preliminarily,” “guidance,” etc., is a forward-looking statement. These forward-looking statements are subject to risks and uncertainties, including risks and uncertainties that forecasted the timing or amount of future revenues, that our expectations as to future business and revenue growth trends, future annualized run rates, increases in shareholder value, and expectations regarding the Company’s ongoing business plan and/or working capital position may not prove accurate over time, or that the transit industry does not provide the expected support we anticipate, as well as other risks and uncertainties set forth in our Annual Report on Form 10-K filed March 31, 2008, and as updated in our Quarterly Report on Form 10-Q filed Aug. 14, 2008, particularly those identified in Risk Factors Affecting Our Business. There can be no assurance that any expectation, express or implied, in a forward-looking statement will prove correct or that the contemplated event or result will occur as anticipated.

DRI CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
(Unaudited)
			June 30, 2008			December 31, 2007
ASSETS
Current Assets
	Cash and cash equivalents		$	1,476		$	729
	Trade accounts receivable, net			16,038			11,919
	Current portion of note receivable			86			86
	Other receivables			654			465
	Inventories			11,611			9,603
	Prepaids and other current assets			751			495
		Total current assets		30,616			23,297
Property and equipment, net				3,458			2,890
Long-term portion of note receivable				258			258
Goodwill				11,842			11,033
Intangible assets, net				1,087			1,097
Deferred tax assets, net				10			56
Other assets				332			283
		Total assets	$	47,603		$	38,914
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
	Lines of credit		$	8,248		$	6,043
	Notes payable, net			-			500
	Loans payable			817			391
	Current portion of long-term debt			2			254
	Current portion of foreign tax settlement			557			499
	Accounts payable			8,064			6,246
	Accrued expenses			5,202			3,681
	Preferred stock dividends payable			22			18
		Total current liabilities		22,912			17,632
Long-term debt and capital leases, long-term				18			14
Foreign tax settlement, long-term				962			1,043
Liability for uncertain tax positions				605			311
Minority interest in consolidated subsidiary				762			422
Commitments and contingencies
Shareholders' Equity
	Series E Redeemable, Nonvoting, Convertible Preferred Stock, $.10 par value,
		liquidation preference of $5,000 per share; 500 shares authorized; 80 and 85 shares issued and outstanding at June 30, 2008, and December 31, 2007, respectively; redeemable at the discretion of the Company at any time.		337			355
	Series G Redeemable, Convertible Preferred Stock, $.10 par value,
		liquidation preference of $5,000 per share; 600 shares authorized; 426 and 410 shares issued and outstanding at June 30, 2008, and December 31, 2007, respectively; redeemable at the discretion of the Company after five years from date of issuance.		1,848			1,768
	Series H Redeemable, Convertible Preferred Stock, $.10 par value,
		liquidation preference of $5,000 per share; 600 shares authorized; 61 and 59 shares issued and outstanding at June 30, 2008, and December 31, 2007, respectively; redeemable at the discretion of the Company after five years from date of issuance.		257			247
	Series J Redeemable, Convertible Preferred Stock, $.10 par value,
		liquidation preference of $5,000 per share; 250 shares authorized; 90 shares issued and outstanding at June 30, 2008, and December 31, 2007; redeemable at the discretion of the Company at any time.		388			388
	Series AAA Redeemable, Nonvoting, Convertible Preferred Stock, $.10 par value,
		liquidation preference of $5,000 per share; 20,000 shares authorized; 166 and 172 shares issued and outstanding at June 30, 2008, and December 31, 2007, respectively; redeemable at the discretion of the Company at any time.		830			860
	Common stock, $.10 par value, 25,000,000 shares authorized; 11,448,703 and
		11,187,993 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively.		1,145			1,119
	Additional paid-in capital			32,345			32,079
	Accumulated other comprehensive income - foreign currency translation			5,698			4,570
	Accumulated deficit			(20,504	)		(21,894	)
		Total shareholders' equity		22,344			19,492
		Total liabilities, minority interest and shareholders' equity	$	47,603		$	38,914

DRI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(In thousands, except share and per share amounts)
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
		2008			2007			2008			2007
Net sales	$	19,403		$	14,885		$	36,428		$	26,885
Cost of sales		12,651			10,352			23,644			18,675
Gross profit		6,752			4,533			12,784			8,210
Operating expenses
Selling, general and administrative		4,814			3,608			9,123			7,209
Research and development		237			363			524			695
Total operating expenses		5,051			3,971			9,647			7,904
Operating income		1,701			562			3,137			306
Other income (loss)		(114	)		28			(22	)		39
Foreign currency gain		1			45			164			21
Interest expense		(358	)		(333	)		(661	)		(648	)
Total other income and expense		(471	)		(260	)		(519	)		(588	)
Income (loss) from continuing operations before income tax (expense) benefit		1,230			302			2,618			(282	)
Income tax (expense) benefit		(518	)		57			(888	)		23
Income (loss) from continuing operations before minority interest in (income) loss of consolidated subsidiary		712			359			1,730			(259	)
Minority interest in (income) loss of consolidated subsidiary		(44	)		(5	)		(340	)		20
Income (loss) from continuing operations		668			354			1,390			(239	)
Loss from discontinued operations		-			(42	)		-			(219	)
Net income (loss)		668			312			1,390			(458	)
Provision for preferred stock dividends		(75	)		(68	)		(149	)		(144	)
Net income (loss) applicable to common shareholders	$	593		$	244		$	1,241		$	(602	)
Net income (loss) per share - basic
Continuing operations	$	0.05		$	0.03		$	0.11		$	(0.04	)
Discontinued operations	$	0.00		$	(0.00	)	$	0.00		$	(0.02	)
Income (loss) per share applicable to common shareholders	$	0.05		$	0.02		$	0.11		$	(0.06	)
Net income (loss) per share - diluted
Continuing operations	$	0.05		$	0.03		$	0.11		$	(0.04	)
Discontinued operations	$	0.00		$	(0.00	)	$	0.00		$	(0.02	)
Income (loss) per share applicable to common shareholders	$	0.05		$	0.02		$	0.11		$	(0.06	)
Weighted average number of common shares and common share equivalent outstanding
Basic		11,227,274			10,503,691			11,207,633			10,339,546
Diluted		13,053,576			11,434,320			12,979,343			10,339,546

CONTACT:
DRI Corporation Contact:
Veronica B. Marks
Manager, Corporate Communications
Phone: (214) 378-4776
Fax: (214) 378-8437
E-Mail: ir@digrec.com
or
Sharon Merrill Associates, Inc. Contact:
David C. Calusdian
Executive Vice President and Partner
Phone: (617) 542-5300
Fax: (617) 423-7272
E-Mail: tbus@investorrelations.com