[EMS TECHNOLOGIES LOGO] NEWS RELEASE
Atlanta, Georgia
July 11, 2003
Contact: Investor Relations
Phone: (770) 729-6510
E-mail: investor.relations@ems-t.com
WWW.EMS-T.COM
EMS TECHNOLOGIES ANNOUNCES
PLANS TO SELL ITS MONTREAL COMMERCIAL SPACE DIVISION
EMS Technologies, Inc. (Nasdaq - ELMG) today announced that its board of
directors has approved a formal plan to sell the Company's commercial space
division, based in Montreal.
Alfred G. Hansen, president and chief executive officer, commented,
"With world-class facilities, and outstanding technical ability in antennas and
power components, our Space & Technology/Montreal division has long been
established as a leading supplier to the commercial space industry. This
division has played a key role in a long list of successful programs, including
Intelsat, Radarsat, ANIK, and International Space Station.
"However like all competitors in the space industry, the financial
performance of our Montreal division has been volatile, and has been
significantly affected by the current period of slow orders activity. While it
is inevitable that current satellites will someday need to be replaced and new
services will spur demand for more satellites, the timing of this future
business is uncertain.
"Running the Montreal division during this period has required
considerable investment of management's time and energy, as well as the
Company's capital. At the same time, our four other main divisions - Space &
Technology/Atlanta, LXE, EMS Wireless and SATCOM - have experienced a period of
vigorous, profitable activity, with new opportunities presenting themselves
practically everyday. We have concluded that selling our commercial space
division would allow the Company to focus its resources and energies, both now
and in the future, toward capitalizing on the considerable momentum that we
have in our other businesses.
"As for the future of the Montreal division, we believe that its
impressive engineering capabilities and superb facilities, its strong base of
annual revenues ($70 million in 2002), and its unique role in Canada's
international space activities should make the division attractive to a larger
participant in the commercial space business.
"To support our sales efforts and to manage the transition process, we
have assembled strong teams both at Montreal and at EMS corporate. We will be
working diligently to conclude the sales process within a year, and we have
retained Needham & Company to serve as investment banker on this transaction.
"The only part of our Montreal operations that we expect to retain
rather than sell is the Satellite Networks (SatNet) division. This startup
operation is not yet material to the Company's financial statements, but we
believe it could make a major contribution in the future. SatNet's hubs and
terminals are based on the industry-standard DVB-RCS architecture that EMS
helped develop. The SatNet initiative will also support the development of
broadband capabilities in our other businesses."
NEWS RELEASE
(Continued)
July 11, 2003
Financial Implications
Under U.S. accounting rules, in the third quarter of 2003 the Company will
begin reporting the results of its continuing operations - comprising Space &
Technology/Atlanta (mainly defense), LXE, EMS Wireless, and SATCOM, as well as
SatNet and other small product lines - separate from the Space &
Technology/Montreal division, which will be described as discontinued
operations. Comparable historical periods will be restated on a similar basis.
The net assets to be sold have a total book value of approximately $54 million.
These assets include the Montreal division's SkyBridge LP interest, which is
closely linked to the division's potential participation in the development and
implementation of SkyBridge's plans to provide satellite-based high-data-rate
wireless services.
Following is a summary of recent historical financial results and a second
quarter 2003 forecast, each as it is expected to be restated for discontinued
operations. The forecasted results for the second quarter include a $13 million
charge for the estimated financial effect on the Montreal division of schedule
changes and technical problems on a commercial satellite program; major factors
contributing to this charge included delays in hardware deliveries from a key
supplier and the status of negotiations for additional funding with the
customer and appropriate government agency.
Statements of Operations
($ in millions, except per share data)
Forecast
Fiscal Year 2002 Q1 2003 Q2 2003
------------------- -------------------- ---------------
AS AS AS
EXPECTED EXPECTED EXPECTED
TO BE TO BE TO BE
RESTATED Reported RESTATED Reported RESTATED
-------- -------- -------- -------- ---------------
Net sales $ 238.7 310.4 58.4 66.5 66.0 to 68.0
Operating profit 17.7 15.4 2.7 0.6 4.3 to 4.8
Pre-tax earnings 16.1 12.8 2.1 -- 3.3 to 3.8
Income tax expense 4.8 4.2 0.7 -- 1.1 to 1.2
------- ----- ----------------
Earnings from 11.3 1.4 2.2 to 2.6
continuing operations
Loss from discontinued operations (2.7) (1.4) (16.5) to (15.5)
------- ----- ------ ---- ----------------
Net earnings (loss) $ 8.6 8.6 -- -- (14.3) to (12.9)
======= ===== ====== ==== ================
Diluted net earnings (loss) per share:
From continuing operations $ 1.05 0.13 0.21 to 0.24
From discontinued operations (0.25) (0.13) (1.54) to (1.45)
------- ----- ------ ---- ----------------
Net earnings (loss) per share $ 0.80 0.80 -- -- (1.33) to (1.21)
======= ===== ====== ==== ================
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NEWS RELEASE
(Continued)
July 11, 2003
As a result of today's announced decision, the Company expects that in the
third quarter of 2003 it will recognize a charge to discontinued operations of
approximately $20 million for the loss anticipated upon disposal of the Space &
Technology/Montreal division. This charge is based on management's preliminary
estimate of the fair value of the assets held for sale, as well as the opinion
of management and its advisors concerning a reasonable price under current
market conditions. The actual charge to be recognized may vary from this
estimate depending upon the results of further analysis. After recording this
charge, the net assets held for sale would be approximately $34 million. There
could be additional charges in the future if it became clear that the Company
would not be able to realize at least $34 million in net proceeds from the sale
of the Space & Technology/Montreal division.
Conference Call
Questions concerning EMS's sale of its Montreal operations and second quarter
2003 results will be deferred until the conference call on Tuesday, July 29,
2003, which is the scheduled release date for the Company's second quarter
results. Details for access to the conference call will be available at a later
date.
---------
EMS TECHNOLOGIES, INC. is a leading provider of technology solutions to
wireless and satellite markets. The Company focuses on mobile information
users, and increasingly on broadband applications. The Company is headquartered
in Atlanta, employs approximately 1,700 people worldwide, and has manufacturing
facilities in Atlanta, Montreal, Ottawa and Brazil.
The Company has four main families of products...
- - SPACE & TECHNOLOGY antennas and other hardware, for space and
satellite communications, radar, surveillance, military countermeasures, and
other specialized uses,
- - LXE mobile computers and wireless local area networks, for materials
handling and logistics,
- - EMS WIRELESS base station antennas and repeaters, for PCS/cellular
telecommunications,
- - SATCOM antennas and terminals, for aeronautical, land-mobile and
maritime communications via satellite.
Statements contained in this press release regarding the potential for various
businesses and products, potential proceeds from the sale of the Space &
Technology/Montreal division, and the Company's financial results for the
second and third quarters in 2003, are forward-looking statements. Actual
results could differ from those statements as a result of a wide variety of
factors. Such factors include, but are not limited to...
- - uncertainties related to identifying a purchaser of the Space &
Technology/Montreal division and the purchaser's willingness and ability to
complete the transaction on the terms and timing expected by the Company;
Page -3-
NEWS RELEASE
(Continued)
July 11, 2003
- - economic conditions in the U.S. and abroad and their effect on capital
spending in the Company's principal markets;
- - volatility of foreign exchange rates relative to the U.S. dollar and
their effect on purchasing power by international customers, as well as the
potential for realizing foreign exchange gains or losses associated with net
foreign assets held by the Company;
- - changes in the Company's consolidated effective income tax rate caused
by the extent to which actual taxable earnings in the U.S., Canada, and other
taxing jurisdictions may vary from expected taxable earnings;
- - successful completion of technological development programs by the
Company and the effects of technology that may be developed by competitors;
- - successful transition of products from development stages to an
efficient manufacturing environment;
- - customer response to new products and services, and general conditions
in our target markets (such as logistics, PCS/cellular telephony, and
space-based communications);
- - the availability of financing for satellite data communications
systems and for expansion of terrestrial PCS/cellular phone systems;
- - the extent to which terrestrial systems reduce market opportunities
for space-based broadband communications systems by providing extensive
broadband Internet access on a dependable and economical basis;
- - the growth rate of demand for various mobile and high-speed
communications services;
- - development of successful working relationships with local business
and government personnel in connection with distribution and manufacture of
products in foreign countries;
- - the Company's ability to attract and retain qualified personnel,
particularly those with key technical skills; and
- - the availability of sufficient additional credit or other financing,
on acceptable terms, to support the Company's expected growth.
Additional relevant factors and risks are identified in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.
FOR FURTHER INFORMATION PLEASE CONTACT: DON T. SCARTZ
CHIEF FINANCIAL OFFICER
770-729-6510
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