EXHIBIT 99
NEWS EMRISE
CORPORATION
9485 Haven Avenue Suite 100
Rancho Cucamonga, CA 91730
(909) 987-9220 o (909) 987-5186
www.emrise.com
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FOR IMMEDIATE RELEASE
CONTACT:
Randolph D. Foote, CFO Matt Hayden/Brett Maas
EMRISE CORPORATION Hayden Communications
(909) 987-9220 ext. 3201 843-272-4653
EMRISE CORPORATION ANNOUNCES RECORD FINANCIAL RESULTS
FOR 2004 FOURTH QUARTER AND FULL YEAR
FULL YEAR REVENUE INCREASED 17%; NET INCOME UP 27%
FOURTH QUARTER REVENUE INCREASED 48%; NET INCOME UP 248%
RANCHO CUCAMONGA, CALIFORNIA, March 31, 2005 - EMRISE CORPORATION (OTCBB: EMRI),
a multi-national manufacturer of defense and aerospace electronic components and
subsystems and communications equipment, today announced record financial
results for the fourth quarter and fiscal year ended December 31, 2004.
For the quarter, the Company reported revenue of $9.8 million, an increase of
48% compared to the $6.6 million reported in the fourth quarter of 2003. The
increase in revenues was primarily due to a $1.5 million increase in test
equipment sales and the inclusion of $2 million of sales attributable to our
acquisition of Larus Corporation (Larus) which was partially offset by a
$628,000 decrease in sales of power supplies. The Company reported gross profit
of $4.8 million, up 61% compared to $3.0 million for the fourth quarter of 2003.
Selling, general and administrative expenses were $3.5 million, an increase of
52% from the $2.3 million reported for the fourth quarter of 2003, reflecting
higher administrative expense primarily due to the addition of our recently
acquired Larus administrative expenses and management incentives which were
deferred to the 4th quarter. In addition we incurred planned increases in sales
and marketing expenses. Engineering and product development expenses were
$488,000 compared to $254,000 reported for the fourth quarter of 2003,
reflecting the Company's ongoing commitment to new product development. As a
percentage of revenues, engineering and product development expenses were 5.0%
for the fourth quarter of 2004 and 3.9% for the fourth quarter of 2003. The
Company reported net income of $883,000 compared to net income of $254,000 for
the fourth quarter of 2003. Net income for the fourth quarter of 2004 was $0.04
per basic and $0.03 per diluted share, compared to $0.01 per basic and diluted
share for the fourth quarter of 2003.
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Among other factors, the fourth quarter of 2004 reflects increased auditing and
legal fees, the inclusion of Larus into earnings and increased test instrument
sales to a regional bell operating company as announced in December 2004.
For the 2004 full year, revenue was $29.9 million, up 17% compared to $25.5
million reported for the 2003 full year. The increase in sales for 2004 was
primarily due to a 56% increase in sales of the Company's communications
equipment products and services, including $3.4 million in sales attributable to
the Company's Larus acquisition. Gross profit was $13.7 million, up 27% compared
to $10.7 million reported for 2003. Selling, general and administrative expenses
were $10.2 million, a 30% increase compared to $7.8 million for 2003. The 2004
general and administration portion included expenses related to implementing
Sarbanes-Oxley requirements, as well as expenses from Larus acquired during
2004, that were not present in 2003. The Company also recorded planned selling
expense increases across almost all operating units. Engineering and product
development expenses were $1.5 million, or 5% of sales for 2004, compared to
$951,000, or 3.7% of sales, for 2003, reflecting a higher planned commitment to
product development, especially for digital and rotary switches and
communications products. Net income was $1.5 million, a 25% increase from the
$1.2 million reported for 2003. Net income per share was $0.06 per basic and
diluted share, compared to $0.05 per basic and diluted share for 2003.
For 2004, the Company reported $1.0 million, or 4%, organic revenue growth, and
$3.4 million in revenue growth due to the Larus acquisition completed in July
2004.
The Company's cash flow from operations for 2004 was $3.8 million, up 263% from
the $1.0 million reported for fiscal 2003. The Company's cash position decreased
to $1.06 million as of December 31, 2004 compared to $1.17 million as of
December 31, 2003, primarily due to payment of the cash portion and associated
costs of acquiring Larus. The Company's working capital position was $4.8
million as of December 31, 2004 compared to $5.7 million as of December 31, 2003
due to the payment of approximately $1.5 million net cash portion of the Larus
purchase price and costs incurred in the acquisition. The Company's backlog
remained strong at $7.7 million at December 31, 2004, compared to $9.6 million
at December 31, 2003. Stockholders' equity increased 38% to $10.9 million as of
December 31, 2004 from $7.9 million as of December 31, 2003 due to earnings and
the issuance of 1,213,592 shares of common stock for the acquisition of Larus.
Carmine T. Oliva, president and chief executive officer of EMRISE CORPORATION,
commented, "We are pleased to report our ninth consecutive profitable quarter
and another profitable year. In fact, 2004 was productive in terms of revenue
expansion, building our core businesses in both the areas of communication
products and defense and aerospace electronic components. In 2005 we believe we
have reached approximately a $50 million annualized run rate by completing the
acquisition of Pascall Electronics Ltd. This acquisition not only brings our
anticipated 2005 revenue run rate to approximately $50 million it provides an
ideal entree into the key U.S. civil aerospace market to complement our
predominately military-based business, and should bolster our growth in 2005 and
beyond. Based on current forecasts, we expect Pascall will contribute
approximately $12 million in revenue with positive contributions to net income
in 2005. Integration of Pascall with EMRISE's existing U.K. business, XCEL Power
Systems in Ashford, will provide additional contribution through the use of
in-house manufacturing facilities rather than external subcontractors for
various critical components, and consolidation of administration functions,
providing additional incremental savings."
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2004 YEAR IN REVIEW:
EMRISE CORPORATION completed several key strategic initiatives during the year,
including the acquisition of Larus Corporation and new business across the
entire organization. Highlights include:
o In July 2004, the Company completed the acquisition of Larus and its
wholly-owned engineering subsidiary, Vista Labs, Inc. Larus designed,
manufactured and marketed its own proprietary communications products.
Management expects the 12-month forward revenue contribution as of
August 2004 from the business attributable to the Larus acquisition
should exceed $7.0 million with positive contributions to net income.
o CXR Larus Corporation received orders in the fourth quarter totaling $2
million from one of the three regional bell operating companies for
immediate delivery of telecommunications test instruments.
o XCEL Power Systems was selected as a strategic tier-one supplier by a
world-leading printing technology company, Domino Printing Sciences
PLC. The new business will provide significant additional non-military
revenue for XCEL and is expected to exceed $1.6 million annually.
o CXR-Anderson Jacobson launched three new products during the year to
complement its range of DSL products. The new products, CopperLan(C),
SpeederLan(C) and MD4000(C), provide a full 4 port switch operating at
up to 4.6Mbps, aggregation of up to 4 copper pairs to provide up to
13.8Mbps, covering the SDSL to VDSL and G-SHDSL, respectively.
Shipments should exceed $500,000 over the next 12 months in the
European market alone.
o In September 2004, EMRISE CORPORATION announced that it had initiated a
$1 million facilities and capital equipment program. The program
includes new capital equipment for its XET subsidiary's Digitran
Division and XCEL Circuits Division, facilities upgrades and capital
equipment for its XCEL Power Systems subsidiary, and facilities
upgrades for its CXR Larus Corporation subsidiary.
o In October 2004, CXR Larus Corporation commenced shipments of
satellite-based communication network timing products to Hitron
Technologies Inc. (Hitron) in Taiwan. Hitron intends to introduce these
products in the Peoples' Republic of China.
SUBSEQUENT TO THE END OF THE YEAR, HIGHLIGHTS INCLUDE:
o XCEL Corporation Limited (XCEL), a U.K.-based subsidiary of EMRISE,
acquired all of the outstanding capital stock of Pascall Electronics
Ltd (Pascall), a second-tier U.K.-based subsidiary of Intelek PLC
(LSE:ITK), on March 18, 2005. The acquisition is expected to contribute
$15 million in revenue over the 12 months following closing of the
acquisition with positive contributions to net income.
o CXR Larus Corporation entered into a new agreement with Power and
Telephone Supply Company, a major independent distributor of products
serving the telecommunications and cable TV industries, to distribute
all of CXR Larus Corporation's new network timing and other network
access products as well as the full line of CXR-Anderson Jacobson
network access products.
o The Company completed a common stock financing which resulted in gross
proceeds of approximately $18 million (approximately $16.9 million on a
net-cash basis).
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"We are now building on the momentum from 2004 in the early part of 2005,
setting the stage for another record year for the Company," Mr. Oliva continued.
"We have taken significant steps to increase our efficiency including combining
our domestic communications operations at our CXR Larus Corporation facility and
consolidating our two U.K. based Xcel Power System Ltd. factories, resulting in
approximate annual cost savings of $500,000. We are taking steps to reduce our
administrative expenses. We are also looking to expand our ability to benefit
from our increased scale and technical capacity, as we certify
internally-produced products for use by other EMRISE subsidiaries. Finally, we
are focused on cross-selling to our large installed customer base, driving
revenues organically while pursuing additional accretive acquisitions to further
augment growth. We are pleased with the progress we have made in the last year,
and believe we have set the stage for a successful 2005."
TELECONFERENCE INFORMATION
To participate in today's conference call scheduled for 11:30 a.m. EST (8:30
a.m. PST), dial the following phone number 5 to 10 minutes prior to the
scheduled conference: 877-407-9210. International callers should dial
201-689-8049. There is no pass code required for this call.
This conference call will also be broadcast live over the Internet and can be
accessed at www.vcall.com. To listen to the live call, go to the Web site at
least 15 minutes prior to the start of the call to register, download and
install any necessary audio software.
For those unable to participate during the live broadcast, a replay will be
available shortly after the call on the Vcall site for 90 days. Also, for 24
hours after the conference call, a replay will be available by dialing the
toll-free number 877-660-6853 or, for international callers, dialing
201-612-7415. The conference ID number "145111" and account number "286" should
be used to access the recording by phone.
ABOUT EMRISE CORPORATION
EMRISE CORPORATION is a multi-national manufacturer of defense and aerospace
electronic components and subsystems and communications equipment. EMRISE's
electronic components group, which includes XET Corporation and its
international subsidiaries, provides custom power conversion and RF component
and subsystem products, digital and rotary switches and subsystem assemblies to
the North American, European and Asian electronic components market and are
primarily used for defense, aerospace and industrial applications. EMRISE's
communications group, consisting of CXR Larus Corporation and CXR-Anderson
Jacobson, provides network access and transmission products, communications
timing and synchronization products and communications test equipment to the
North American, European and Asian communications market. Founded in 1983,
EMRISE operates out of facilities in the United States, England, France and
Japan. As of March 18, 2005, EMRISE had a total of 336 employees in its various
subsidiaries and divisions. www.emrise.com
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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
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With the exception of historical information, the matters discussed in this
press release, including, EMRISE's anticipation that its 2005 revenue run rate
will approximate $50 million and that its results of operations in 2005 and
beyond will be bolstered by positive contributions from business, including
non-military business, acquired or resulting from the Pascall and Larus
acquisitions as well as by the various products, arrangements, relationships and
planned integration and sales and marketing activities described above, are
forward-looking statements that involve a number of risks and uncertainties. The
actual future results of EMRISE could differ from those statements. Factors that
could cause or contribute to such differences include, but are not limited to,
EMRISE's ability to identify and successfully negotiate, fund and integrate
recent and future acquisitions and to improve operating efficiency and realize
anticipated synergies, lowered costs and increased profitability due to the
integration and growth of recently acquired or potentially acquirable
businesses, the receipt and timing of contracts and orders from existing and
potential customers for EMRISE's products and services, EMRISE's ability to
fulfill backlog orders, market and economic conditions, changes in technology
and governmental regulations and policies, competitive products and services,
unforeseen technical issues, and those factors contained in the "Risk Factors"
Section of the Company's latest Form 10-K and other public filings.
# # #
Tables follow
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EMRISE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three months ended Twelve months ended
December 31, December 31,
2004 2003 2004 2003
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(in thousands except per share amounts)
Net sales $ 9,768 $ 6,597 $ 29,861 $ 25,519
Cost of sales 4,929 3,598 16,146 14,838
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Gross profit 4,839 2,999 13,715 10,684
Operating expenses:
Selling, general and administrative 3,477 2,280 10,226 7,812
Engineering and product development 488 254 1,521 951
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Income from operations 874 465 1,968 1,921
Other income (expense)
Interest expense (128) (99) (433) (416)
Other income (expense) 58 (62) (6) (58)
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Income before income taxes 804 304 1,529 1,447
Income tax expense (benefit) (79) 50 49 286
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Net income $ 883 $ 254 $ 1,480 $ 1,161
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Earnings per share:
Basic $ 0.04 $ 0.01 $ 0.06 $ 0.05
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Diluted $ 0.03 $ 0.01 $ 0.06 $ 0.05
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EMRISE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2004 2003
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Current assets:
Cash and equivalents $ 1,057 $ 1,174
Accounts receivable 5,796 5,393
Inventories 6,491 6,683
Prepaid expenses and other 769 555
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Total current assets 14,113 13,805
909 322
Property, plant and equipment, net
Goodwill, net and other intangibles 8,041 2,447
Other assets 623 595
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$ 23,686 $ 17,169
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Liabilities and stockholders' equity:
Current liabilities:
Notes payable $ 878 $ 2,882
Current portion of long-term debt 1,412 316
Accounts payable 3,398 1,637
Income tax payable 572 413
Accrued expenses 3,014 2,861
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Total current liabilities 9,274 8,109
Long term debt, less current portion 2,539 819
Other liabilities 964 325
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Total liabilities 12,777 9,253
Stockholders' equity
Preferred stock -- 4
Common stock 82 77
Additional paid in capital 26,746 25,613
Accumulated deficit (16,406) (17,886)
Accumulated other comprehensive income 487 108
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Total stockholders' equity 10,909 7,916
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$ 23,686 $ 17,169
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