Exhibit 99.1
NEWS BULLETIN
FROM:
CalAmp Logo
FOR IMMEDIATE RELEASE
CalAmp Reports FY 2007 Second Quarter Results
OXNARD, Calif., October 12, 2006--CalAmp Corp. (Nasdaq: CAMP), a leading
provider of wireless products and engineering services, today reported results
for its fiscal 2007 second quarter ended August 31, 2006. Key highlights
include:
* Revenues of $57.9 million and earnings of $0.05 per diluted share
* Consolidated gross margin increase to 24.2%, from 23.3% in the same
period last year
"Our business performed as expected during the second quarter, with operating
results in-line with our prior guidance," commented Fred Sturm, CalAmp's
President and Chief Executive Officer. "CalAmp's revenues and gross margin
were enhanced by our wireless connectivity business, which includes
contributions from our existing Machine-to-Machine (M2M) and public safety
products along with the recent acquisitions of Dataradio Inc. and the Mobile
Resource Management (MRM) product line. During the quarter, we began the
progress of integrating these acquisitions into our wireless connectivity
businesses. We believe these acquisitions have significant long-term revenue
growth opportunities, will improve our overall margins and increase our
customer diversification. Also, as previously announced, Dataradio recently
won a $3.8 million contract to provide a mobile data communications system for
the police, fire and EMS personnel of Onondaga County, New York. Last month
we began initial delivery of the system and we expect deliveries to continue
through fiscal 2007 and concluding in fiscal 2008."
Mr. Sturm continued, "Consistent with our objective of maintaining CalAmp's
leadership position in the outdoor DBS equipment marketplace, we also made
further progress on product development initiatives for our next generation
equipment. We anticipate receiving product approval from our key customers in
the near future with initial shipments beginning in the latter part of our
fiscal third quarter. We anticipate revenue from these new products to reach
meaningful levels during our fourth quarter which is normally a seasonally
lower period of demand for our DBS products."
Fiscal 2007 Second Quarter Results
Revenue for the fiscal 2007 second quarter was $57.9 million, essentially flat
with the $57.7 million for the second quarter of fiscal 2006. Growth in the
Company's wireless data connectivity business, due primarily to the May 2006
acquisitions of Dataradio and the MRM product line, more than offset lower DBS
product sales and Solutions Division revenue in the quarter.
Net income for the fiscal 2007 second quarter was $1.2 million or $0.05 per
diluted share compared to net income of $3.7 million or $0.16 per diluted
share for the second quarter of last year. Included in the fiscal 2007 second
quarter net income is additional expense of $1,001,000 for amortization of
intangible assets related to the recent acquisitions of Dataradio and the MRM
product line, $653,000 for stock option expense related to the current year
adoption of FAS 123R, and an increase in net interest expense of $382,000, all
amounts prior to income tax effects.
Gross profit for the second quarter of fiscal 2007 was $14.0 million, or 24.2%
of revenues compared to $13.4 million or 23.3% of revenues for the same period
last year. The increases in gross profit and gross margin were primarily the
result of increased sales of higher-margin products of the Products Division,
including growth of the Company's higher-margin wireless connectivity
business, and ongoing actions taken to improve the financial performance of
the Solutions Division.
Liquidity
At August 31, 2006, the Company had total cash of $25.5 million, with $38.0
million in total outstanding debt. Net cash provided by operating activities
during the first six months of fiscal 2007 was $5.4 million after excluding a
payment of cash bonuses totaling $5.4 million made to employees of Dataradio
during the second quarter for incentives that were accrued as expenses in
Dataradio's pre-acquisition income statement,. These bonuses were paid from
cash that was on Dataradio's balance sheet at the time of acquisition by
CalAmp. Inventories were $21.9 million at the end of the second quarter,
representing annualized turns of 8 times based on cost of sales in the latest
quarter. Accounts receivable outstanding at the end of the second quarter
represents a 52 day average collection period.
Business Outlook
Commenting on the Company's fiscal 2007 third quarter outlook, Mr. Sturm said,
"Based on our current forecasts, we estimate that fiscal 2007 third quarter
revenues will be in the range of $59 to $65 million, with earnings in the
range of $0.04 to $0.08 per diluted share. We expect that our consolidated
gross margin for the third quarter will be impacted by heavier than normal
costs for air freight shipments of incoming materials and lower margins on
final shipments of end-of-life DBS products. In addition, our earnings
forecast also includes amortization of intangible assets related to the recent
acquisitions of Dataradio and the MRM product line of approximately $928,000,
FAS 123R stock option expense of $725,000, and net interest expense of
$345,000, all prior to income tax effects."
Conference Call, Webcast and 10-Q filing
A conference call and simultaneous webcast to discuss fiscal 2007 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 equipment, engineering services and
software 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 the leading supplier of Direct Broadcast Satellite (DBS)
outdoor customer premise equipment to the U.S. satellite television market.
The Company also provides wireless connectivity 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", 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, competition, the timing of
customer approvals of new product designs, operating costs, the Company's
ability to efficiently and cost-effectively integrate its acquired businesses,
and other risks and uncertainties that are detailed from time to time in the
Company's filings 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.
AT THE COMPANY: AT FINANCIAL RELATIONS BOARD:
Rick Vitelle Lasse Glassen
Chief Financial Officer General Information
(805)987-9000 (310)854-8313
lglassen@financialrelationsboard.com
- Financial Tables to Follow-
<page>
CAL AMP CORP.
Consolidated Statements of Operations and
Reconciliation of Non-GAAP Adjustments
(unaudited, in thousands except per share amounts)
Three Months Ended
August 31,
---------------------
2006 2005
------- -------
Revenues $57,934 $57,661
Cost of revenues 43,923 44,246
------- -------
Gross profit 14,011 13,415
Operating expenses:
Research and development 3,792 2,360
Selling 3,005 1,796
General and administrative 3,517 2,607
Intangible asset amortization 1,275 529
In-process research and development - 27
------- -------
11,589 7,319
------- -------
Operating income 2,422 (a) 6,096
Non-operating income (expense), net (246) 26
------- -------
Income before income taxes 2,176 6,122
Income tax provision (941) (2,441)
------- -------
Net income $ 1,235 $ 3,681
======= =======
Net income per share:
Basic $ 0.05 $ 0.16
Diluted $ 0.05 $ 0.16
Shares used in per share calculations:
Basic 23,337 22,490
Diluted 23,689 23,314
<table>
Six months ended August 31, 2006
---------------------------------- Six
GAAP Non-GAAP Adjusted months ended
Basis Adjustments Basis Aug. 31, 2005
------- ----------- -------- -------------
<s> <c> <c> <c> <c>
Revenues $104,247 $104,247 $105,241
Cost of revenues 79,309 79,309 81,128
------- ------- -------
Gross profit 24,938 24,938 24,113
------- ------- -------
Operating expenses:
Research and development 6,357 6,357 4,557
Selling 4,776 4,776 3,668
General and administrative 6,330 6,330 5,221
Intangible asset amortization 1,676 1,676 972
In-process research and development 6,850 $ (6,850) (b) - 320
Impairment loss 29,848 (29,848) (c) - -
------- ------- -------- -------
55,837 (36,698) 19,139 14,738
------- ------- -------- -------
Operating income (loss) (30,899)(a) 36,698 5,799 9,375
Non-operating income (expense), net 715 (689) (d) 26 69
------- -------- -------- -------
Income (loss) before income taxes (30,184) 36,009 5,825 9,444
Income tax provision (2,632) 276 (e) (2,356) (3,786)
------- ------- -------- -------
Net income (loss) $(32,816) $ 36,285 $ 3,469 $ 5,658
======= ======= ======== =======
Net income (loss) per share:
Basic $ (1.41) $ 0.15 $ 0.25
Diluted $ (1.41) $ 0.15 $ 0.24
Shares used in per share
calculations:
Basic 23,230 23,230 22,491
Diluted 23,230 23,714 23,112
</table>
(a) Operating income (loss) for the three and six months ended August 31,
2006 includes share-based compensation expense pursuant to FAS123R of
$653 and $1,073, respectively. Such expense is included in the following
captions of the Statement of Operations:
Three Months Six Months
Ended Ended
Aug. 31, 2006 Aug. 31, 2006
------------- -------------
Statement of Operations Caption
-------------------------------
Cost of revenues $ 75 $ 105
Research and development expense 117 158
Selling expense 62 106
General and administrative 399 704
----- ------
$ 653 $1,073
===== ======
(b) In-process research and development write-off arising from the
acquisition of Dataradio
(c) Solutions Division estimated goodwill and intangible assets impairment
charge
(d) Foreign currency hedging gain realized in connection with the acquisition
of Dataradio
(e) Tax expense associated with the foreign currency hedging gain
"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, with
respect to the six months ended August 31, 2006. 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 reported the non-GAAP financial measures of
Adjusted Basis net income and diluted earnings per share. CalAmp uses these
non-GAAP financial measures to enhance the investor's overall understanding of
the financial performance and prospects for the future of CalAmp's core
business activities. Specifically, CalAmp believes that a report of Adjusted
Basis net income and diluted earnings per share provides consistency in its
financial reporting and facilitates the comparison of results of core business
operations between its current, past and future periods.
Business Segment Information:
Three Months Ended
August 31,
------------------
2006 2005
------ ------
Revenue
Products Division $55,343 $52,598
Solutions Division 2,591 5,063
------- -------
Total revenue $57,934 $57,661
======= =======
Gross profit
Products Division $12,644 $11,724
Solutions Division 1,367 1,691
------- -------
Total gross profit $14,011 $13,415
======= =======
Operating income (loss)
Products Division $ 4,374 $ 7,691
Solutions Division (423) (513)
Corporate expenses (1,529) (1,082)
------- -------
Total operating income $ 2,422 $ 6,096
======= =======
<table>
Six months ended August 31, 2006
--------------------------------- Six
GAAP Non-GAAP Adjusted months ended
Basis Adjustments Basis August 31, 2005
------- ----------- -------- ---------------
<s> <c> <c> <c> <c>
Revenue
Products Division $ 98,300 $ 98,300 $ 93,756
Solutions Division 5,947 5,947 11,475
------- ------- -------
Total revenue $104,247 $104,247 $105,241
======= ======= =======
Gross profit
Products Division $ 22,731 $ 22,731 $ 20,534
Solutions Division 2,207 2,207 3,579
------- ------- -------
Total gross profit $ 24,938 $ 24,938 $ 24,113
======= ======= =======
Operating income (loss) (a)
Products Division $ 3,517 $ 6,850 (b) $ 10,367 $ 13,047
Solutions Division (31,605) 29,848 (c) (1,757) (1,656)
Corporate Expenses (2,811) (2,811) (2,016)
------- ------- ------- -------
Total operating income (loss) $(30,899) $36,698 $ 5,799 $ 9,375
======= ====== ======= =======
</table>
(a) Operating income (loss) for the three and six months ended August 31,
2006 includes share-based compensation expense pursuant to FAS123R of
$653 and $1,073, respectively. Such expense is included in the operating
income(loss) of the reporting segments as follows:
Three Months Six Months
Ended Ended
Aug. 31, 2006 Aug. 31, 2006
------------- -------------
Reporting Segment
-----------------
Products Division $ 250 $ 390
Solutions Division 119 191
Corporate expenses 284 492
----- ------
$ 653 $1,073
===== ======
(b) In-process research and development write-off arising from the
acquisition of Dataradio
(c) Solutions Division estimated goodwill and intangible assets impairment
charge
<page>
CAL AMP CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands)
August 31, February 28,
2006 2006
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 25,485 $ 45,783
Accounts receivable, net 38,822 28,630
Inventories 21,887 18,279
Deferred income tax assets 4,877 4,042
Prepaid expenses and other current assets 7,705 2,502
-------- --------
Total current assets 98,776 99,236
Equipment and improvements, net 6,583 5,438
Deferred income tax assets - 2,344
Goodwill 89,829 91,386
Other intangible assets, net 21,102 5,304
Other assets 1,532 638
-------- --------
$217,822 $204,346
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,521 $ 2,168
Accounts payable 17,077 12,011
Accrued payroll and employee benefits 2,928 3,608
Other accrued liabilities 5,630 2,763
Deferred revenue 1,346 1,323
-------- --------
Total current liabilities 28,502 21,873
-------- --------
Long-term debt, less current portion 36,500 5,511
-------- --------
Deferred income tax liability 4,013 -
-------- --------
Other non-current liabilities 1,076 853
-------- --------
Stockholders' equity:
Common stock 233 232
Additional paid-in capital 136,925 135,022
Common stock held in escrow - (2,532)
Retained earnings 11,372 44,188
Accumulated other comprehensive loss (799) (801)
-------- --------
Total stockholders' equity 147,731 176,109
-------- --------
$217,822 $204,346
======== ========
<page>
CAL AMP CORP.
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited - In thousands)
Six Months Ended
August 31,
------------------
2006 2005
---- ----
Cash flows from operating activities:
Net income (loss) $(32,816) $ 5,658
Depreciation and amortization 3,111 2,299
Stock-based compensation 1,073 -
Write-off of in-process R&D 6,850 320
Goodwill impairment writedown 29,848 -
Excess tax benefit from stock-based compensation (258) -
Deferred tax assets, net (261) 2,248
Changes in operating working capital (7,636) (1,492)
Other 58 42
-------- -------
Net cash provided by operating activities (A) (31) 9,075
-------- -------
Cash flows from investing activities:
Capital expenditures (1,382) (1,060)
Proceeds from sale of property and equipment 16 141
Acquisition of Dataradio net of cash acquired (48,038) -
Acquisition of TechnoCom product line (2,478) -
Proceeds from Vytek escrow distribution 480 -
Acquisition of Skybility assets - (4,897)
-------- -------
Net cash used in investing activities (51,402) (5,816)
-------- -------
Cash flows from financing activities:
Proceeds from long-term debt 38,000 -
Debt repayments (7,658) (1,460)
Proceeds from stock option exercises 533 252
Excess tax benefit from stock-based compensation 258 -
-------- -------
Net cash provided (used) in financing activities 31,133 (1,208)
-------- -------
Effect of exchange rate changes on cash 2 -
-------- -------
Net change in cash (20,298) 2,051
Cash at beginning of period 45,783 31,048
-------- -------
Cash at end of period $ 25,485 $ 33,099
======== =======
(A) Net cash provided by operating activities for the six months ended August
31, 2006 is net of the payment of $5,355,000 of accrued incentives paid
by Dataradio to its workforce shortly after the acquisition of CalAmp.
These incentives were recorded as an expense in Dataradio's pre-
acquisition income statement.