INVESTOR RELATIONS CONTACT:
[NUMEREX LOGO] Alan B. Catherall 770-485-2527
PRESS RELEASE
FOR IMMEDIATE RELEASE
NUMEREX REPORTS FOURTH QUARTER AND FULL YEAR 2003 RESULTS
COMPANY STRENGTHENS ITS FINANCIAL POSITION AS IT
SUBSTANTIALLY NARROWS OPERATING LOSS
CONTINUES WITH NEW PRODUCT LAUNCHES AND STRATEGIC MARKETING INITIATIVES
ATLANTA, FEBRUARY 23, 2004 - NUMEREX CORP. (NASDAQ: NMRX), today announced a net
loss of $400 thousand for the fourth quarter of 2003 and a full year net loss of
$1.4 million. Included in these results is the gain on the sale of Data1Source
LLC of $1.7 million that occurred in September 2003. These results compare to
net losses of $3.8 million and $7.7 million for the comparable periods of 2002,
including full year acquisition costs of $1.9 million. Fully diluted losses per
share were $0.04 for the quarter and $0.13 year-to-date. This compares to fully
diluted losses per share, including acquisition costs, of $0.35 and $0.71 for
the comparable periods of 2002. Net sales were $5.3 million for the quarter and
$20.2 million for 2003 in total compared to $3.9 million and $24.5 million for
the comparable periods of 2002. Please see the attached financial statements for
more details.
"2003 was a very busy year for the Company," said Stratton Nicolaides, chairman
and CEO of Numerex, "and the fourth quarter was no exception. In December, we
announced the release of IPContact(R) 8.0, a desktop videoconferencing software
package that boasts industry-leading performance levels with multi-point
capabilities. IPContact supplements the Company's PowerPlay(TM) suite of turnkey
videoconferencing hardware solutions. Our fourth quarter revenues included the
initial sales of IPContact and we believe that this software package will gain
further traction in 2004. Also, in December, we announced a strategic marketing
initiative with Niigata Seimitsu and Toyota Industries Corporation to
manufacture and distribute Numerex's extensive suite of product offerings,
including Uplink(SM), MobileGuardian(TM) and VendView(TM). We are very excited
to be allied with a company such as Niigata who are committed to providing
Numerex with exceptionally high quality manufacturing and assembly resources."
"We also continued to strengthen our financial position, and in January 2004, we
issued a $4.5 million convertible Term Note. The net proceeds from the financing
were used primarily for the repayment of the Company's remaining $3.5 million
short-term debt to Cingular Wireless and to provide additional working capital.
The Note is repayable in cash or, under certain circumstances, stock. During
2004, cash payments, if required, would be limited to just over $800,000,
including interest."
Other key initiatives undertaken in 2003 included:
- - Launched the release of MobileGuardian(TM), a web-based vehicle location
and recovery solution that combines the accuracy of Global Positioning
System, or GPS, and Cellemetry(R)
- - Completed the purchase of Cingular's 40% interest in Cellemetry LLC, a
joint venture formed in 1998, giving Numerex full ownership of Cellemetry
LLC and its subsidiary, Uplink Security Inc.
- - Announced that Numerex's Australian subsidiary, DCX Systems, Inc., reached
a five-year agreement with Telstra, a leading Australian
telecommunications provider, to expand the availability of its Securitel
service, a derived channel based alarm security service offered in
Australia.
- - Reached an exclusive agreement with the nations largest automotive
dealership to market MobileGuardian(TM), providing point of sale access to
over 400 dealership locations.
- - Announced the sale of the our mobile messaging service bureau, Data1Source
LLC, to Wireless Services Corporation, allowed us to focus our resources on
growing our core wireless telemetry business.
- - Added VendView(TM) to our wireless data solutions portfolio, a service
providing remote monitoring of vending machines 24 hours a day, seven days
a week, utilizing our Cellemetry(R) network for ubiquitous communications
coverage throughout North America
-continued-
"Our financial results for the fourth quarter of 2003 included a 37% increase in
revenues over the same period last year and we continued to focus on solid,
creditworthy customers. Compared to the prior quarter, after eliminating
revenues of $378,000 and $154,000, respectively, attributable to Data1Source
LLC, total revenues increased slightly. However, this overall comparison masks
the strong revenue performance of the Wireless Data Division, which recorded
sequential growth of over 17% after eliminating revenues attributable to
Data1Source LLC. Finally, with regard to liquidity, only the payment of
accumulated interest to Cingular and fees related to the Data1Source transaction
prevented the Company from adding to our cash balance reported at the end of
September 2003. Our focus in 2004 will be sound revenue growth, continued cost
control and aggressive cash management."
A complete analysis of our 2003 quarterly revenues by division is included in
this press release.
CONFERENCE CALL AND WEBCAST INFORMATION
Numerex will conduct a conference call tomorrow, February 24, 2004, at 11:00
A.M., Eastern Time, accessible by calling (877) 822-9907 in the U.S. and Canada,
or (706) 679-7183 international. A live Webcast of the call will also be
available via Numerex's Web site at http://www.nmrx.com, under the Investor
Relations section. A replay of the conference call will be available via
Numerex's Web site beginning two hours after the call.
ABOUT NUMEREX
Numerex (Nasdaq:NMRX) is a technology company comprised of operating
subsidiaries that develop and market a wide range of communications products and
services. The Company's primary focus is wireless data communications utilizing
proprietary network technologies. The Company offers products and services in
wireless data communications through Cellemetry(R), Uplink(TM),
MobileGuardian(TM) and VendView(TM); and digital multimedia through
PowerPlay(TM) and IPContact(TM). These services enable customers around the
globe to monitor and move information for a variety of applications from home
and business security to distance learning. In addition, the Company offers
wireline alarm security products and services, as well as telecommunications
network operational support systems. For more information on Numerex, please
visit our Web site at: www.nmrx.com.
This document contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements include, among other things, statements
regarding trends, strategies, plans, beliefs, intentions, expectations, goals
and opportunities. Forward-looking statements are typically identified by words
or phrases such as "believe," "expect," "anticipate," "intend," "estimate,"
"assume," "strategy," "plan," "outlook," "outcome," "continue," "remain,"
"trend," and variations of such words and similar expressions, or future or
conditional verbs such as "will," "would," "should," "could," "may," or similar
expressions. All statements and information herein and incorporated by reference
herein, other than statements of historical fact, are forward-looking statements
that are based upon a number of assumptions concerning future conditions that
ultimately may prove to be inaccurate. Many phases of the Company's operations
are subject to influences outside its control. The Company cautions that these
forward-looking statements are subject to numerous assumptions, risks and
uncertainties, which may change over time. These forward-looking statements
speak only as of the date of this report, and the Company assumes no duty to
update forward-looking statements. Actual results could differ materially from
those anticipated in these forward-looking statements and future results could
differ materially from historical performance.
Any one or any combination of factors could have a material adverse effect on
the Company's results of operations or could cause actual results to differ
materially from forward-looking statements or historical performance. These
factors include: the pace of technological change; variations in quarterly
operating results; delays in the development, introduction and marketing of new
wireless products and services by us or our competitors or suppliers; delay in
implementation by customers of services; changes in our mix of products and
services and sources of revenues; changes in length of sales cycles of or demand
by our customers for existing and additional services; changes in the
productivity of our distribution channels; customer acceptance of our products
and services;; the inability to attain revenue and earnings growth; loss of key
strategic contracts; product failures; the introduction, withdrawal, success and
timing of business initiatives and strategies; competitive conditions; the
extent and timing of technological changes; changes in customer spending; the
loss of intellectual property protection; an impact of changes in currently
utilized telecommunications standards or Company's ability to adapt to such
changes. Actual events, developments and results could differ materially from
those anticipated or projected in the forward-looking statements as a result of
certain uncertainties set forth below and elsewhere in this document. Subsequent
written or oral statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the cautionary statements in
this report and those in the Company's reports previously and subsequently filed
with the Securities and Exchange Commission.
-continued-
NUMEREX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTH FOR THE TWELVE MONTH
PERIOD ENDED DECEMBER 31, PERIOD ENDED DECEMBER 31,
2003 2002 2003 2002
(UNAUDITED) (UNAUDITED)
-------- -------- -------- --------
NET SALES:
Wireless Data Communications $ 3,455 $ 1,689 $ 12,687 $ 14,209
Digital Multimedia and Networking 1,573 1,945 6,164 9,354
Wireline Data Communications 268 227 1,306 938
-------- -------- -------- --------
TOTAL NET SALES 5,296 3,861 20,157 24,501
Cost of sales 2,874 3,087 10,486 13,952
Depreciation and amortization 108 121 642 328
-------- -------- -------- --------
GROSS PROFIT 2,314 653 9,029 10,221
43.7% 16.9% 44.8% 41.7%
Selling, general, and administrative expenses 2,094 3,297 8,922 12,509
Research and development expenses 59 369 905 1,097
Depreciation and amortization 454 564 1,928 2,184
Costs related to non-recurring acquisition activity -- -- -- 1,899
-------- -------- -------- --------
OPERATING LOSS (293) (3,577) (2,726) (7,468)
Interest income and (expense), net (80) (84) (354) (212)
Gain on sale of business -- -- 1,712 --
Other income and (expense), net (15) (58) 56 --
Minority interest -- -- -- 326
-------- -------- -------- --------
Loss before taxes (388) (3,719) (1,312) (7,354)
Provision for income taxes 35 10 92 96
-------- -------- -------- --------
NET LOSS (423) (3,729) (1,404) (7,450)
Preferred stock dividend -- 60 -- 240
-------- -------- -------- --------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (423) $ (3,789) $ (1,404) $ (7,690)
======== ======== ======== ========
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.04) $ (0.35) $ (0.13) $ (0.71)
Number of shares used in per share calculation
Basic and diluted 10,790 10,973 10,934 10,766
-continued-
NUMEREX CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2003 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 734 $ 2,137
Accounts receivable, net 3,093 4,459
Notes Receivable 99 823
Inventory 3,461 5,189
Prepaid expenses and other current assets 700 976
-------- --------
TOTAL CURRENT ASSETS 8,087 13,584
PROPERTY AND EQUIPMENT, NET 1,296 2,475
GOODWILL, NET 15,014 10,983
OTHER INTANGIBLES, NET 7,979 8,050
SOFTWARE, NET 825 1,963
OTHER ASSETS 769 56
-------- --------
TOTAL ASSETS $ 33,970 $ 37,111
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,498 $ 5,238
Other current liabilities 1,487 1,866
Note payable, current 3,500 --
Deferred revenues 775 819
Obligations under capital leases, current portion 282 710
-------- --------
TOTAL CURRENT LIABILITIES 8,542 8,633
LONG TERM LIABILITIES
Obligations under capital leases and other long term liabilities 62 863
-------- --------
TOTAL LONG TERM LIABILITIES 62 863
SHAREHOLDERS' EQUITY
Preferred stock - no par value; authorized 3,000,000; none issued -- --
Class A common stock - no par value; authorized 30,000,000; issued 36,793 36,769
13,181,547 on December 31, 2003 and 13,168,889 on December 31, 2002
Additional paid-in-capital 439 439
Treasury stock, at cost, 2,391,400 shares on December 31, 2003 and (10,197) (9,222)
1,766,400 on December 31, 2002
Class B common stock - no par value; authorized 5,000,000; none issued -- --
Accumulated other comprehensive income 97 (9)
Retained earnings (1,766) (362)
-------- --------
$ 25,366 $ 27,615
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 33,970 $ 37,111
======== ========
-continued-
QUARTERLY REVENUES BY PRODUCT OR SERVICE
THREE MONTHS ENDED
----------------------------------------------------
March 31, June 30, September 30, December 31,
2003 2003 2003 2003
----------------------------------------------------
(in thousands, except per share data)
Net sales:
Wireless Data Communications
Product $1,027 $1,073 $1,229 $1,509
Service 1,859 2,081 1,964 1,945
------ ------ ------ ------
Sub-total 2,886 3,154 3,193 3,454
Digital Multimedia and Networking
Product 504 395 944 803
Service 1,042 809 898 770
------ ------ ------ ------
Sub-total 1,546 1,204 1,842 1,573
Wireline Security
Product 39 172 173 65
Service 216 190 248 202
------ ------ ------ ------
Sub-total 255 362 421 267
Total net sales
Product 1,570 1,640 2,346 2,377
Service 3,117 3,080 3,110 2,917
------ ------ ------ ------
Total net sales $4,687 $4,720 $5,456 $5,294
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