EXHIBIT 99.1
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: Rory Mackin
John Donovan Hill & Knowlton
VP Finance & Administration (212) 885-0455
EMRISE CORPORATION rory.mackin@hillandknowlton.com
(909) 987-9220 ext. 3201
EMRISE CORPORATION ANNOUNCES SECOND QUARTER 2007 RESULTS
INCLUDING RECORD QUARTERLY SALES OF $12.1 MILLION
AND RECORD BACKLOG AT JUNE 30, 2007 OF $27.4 MILLION
RANCHO CUCAMONGA, CALIFORNIA, August 14, 2007 - EMRISE CORPORATION (NYSE ARCA:
ERI), a multi-national manufacturer of defense, aerospace and industrial
electronic devices and communications equipment, today announced its second
quarter 2007 financial results.
EMRISE's Chairman, President and CEO, Carmine T. Oliva, said, "We are pleased
with the $12.1 million of record sales that we achieved in the second quarter of
2007. This represents a 12% increase in sales over the same period in the prior
year. This sales level is reflective of our strong organic growth in sales of
military power supplies and network access equipment at our foreign subsidiaries
in England and France. We were able to achieve this top line growth even though
our sales were negatively affected by approximately $410,000 of delayed power
supply shipments this quarter as a result of moving our RO Associates ("RO")
power supply subsidiary from Sunnyvale California to our CXR Larus facility in
San Jose, California and simultaneously transitioning RO to an outsourced
contract manufactured production model. We have begun to ship, and anticipate
completing shipment, of these power supply orders during the fourth quarter. In
addition, our customer, the U.S. government Defense Supply Agency ("DSA"),
delayed the release of digital switch stocking orders, some of our Digitran
division's highest gross margin product. We had expected to receive and ship
approximately $620,000 of these orders, which we anticipate to be received and
shipped in the second half of 2007.
"We are especially pleased with our backlog at June 30, 2007, which reached a
record $27.4 million. We believe that when sales recorded during the first half
of 2007 are coupled with shipments of backlog orders and anticipated future
orders during the remainder of 2007, we will be able to achieve our previously
issued guidance of $55 million in annual sales for 2007, which would represent
18% organic growth in sales over 2006."
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Mr. Oliva added, "Although we are disappointed to report a loss for the quarter,
we are optimistic about our prospects for profit improvement in the remaining
two quarters of 2007, particularly given that the results for the second quarter
of 2007 include one-time negative net income impacts of approximately $90,000
related to the transition to a contract manufacturer for the manufacture of RO
products and $240,000 related to RO move costs. In addition, gross profit on the
delayed release of the digital switch stocking orders by the DSA would have been
approximately $500,000.
"Our cash position remained relatively unchanged from first quarter of 2007 and
was $2.8 million at June 30, 2007 as compared to $3.3 million at March 31,
2007."
SECOND QUARTER FINANCIAL SUMMARY
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o EMRISE reported net sales of $12.1 million for the quarter ended
June 30, 2007, an increase of 12% compared to net sales for the
second quarter of 2006.
o Gross margin for the second quarter of 2007 was $4.1 million or
34% of net sales. This compares to a gross margin of $3.8 million,
or 32% of net sales, in the first quarter of 2007 and a gross
margin of $3.8 million or 35% of net sales in the second quarter
of 2006.
o Operating loss for the second quarter of 2007 was $438,000. This
compares to an operating loss of $598,000 in the first quarter of
2007 and an operating loss of $798,000 in the second quarter of
2006.
o Net loss for the second quarter of 2007 was $623,000. This
compares to a net loss of $792,000 in the first quarter of 2007
and a net loss of $1.0 million in the second quarter of 2006.
o Loss per share for the second quarter of 2007 was $0.02, as
compared to a loss of $0.02 per share for the first quarter of
2007 and a loss of $0.03 per share in the second quarter of 2006.
Loss per share for each of these periods was based upon 38.1
million basic and diluted shares outstanding.
SECOND QUARTER FINANCIAL HIGHLIGHTS
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NET SALES, ELECTRONIC DEVICES SEGMENT - Our electronic devices segment reported
net sales of $8.4 million for the quarter ended June 30, 2007, an increase of 7%
compared to the second quarter of 2006 and a decrease of 1% over the quarter
ended March 31, 2007. The increase in sales for our electronic devices segment
is primarily the result of higher military power supply sales in our foreign
subsidiaries due to shipments for some key contracts delivered in the second
quarter of 2007 offset slightly by declines in our domestic operations due
primarily to the delayed receipt of DSA stocking orders for our digital
switches.
NET SALES, COMMUNICATIONS EQUIPMENT SEGMENT - Our communications equipment
segment reported net sales of $3.6 million for the quarter ended June 30, 2007,
an increase of 25% compared to the second quarter of 2006 and an increase of 7%
over the quarter ended March 31, 2007. The increase in net sales for our
communications equipment segment is primarily due to increased sales of network
access equipment at our French subsidiary as a result of long-term efforts to
focus on our core military and telecommunications markets partially offset by
declines in our domestic legacy network access and other timing equipment. We
expect communication equipment sales to continue to increase in future periods
due to the recent introduction of our new TiemPo(TM) edge network timing
equipment.
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GROSS PROFIT, ELECTRONIC DEVICES SEGMENT - Our electronic devices segment
reported a gross profit of $2.8 million or 33% of net sales for the quarter
ended June 30, 2007 compared to a gross profit of $2.7 million or 34% of net
sales for the second quarter of 2006 and $2.6 million or 31% of net sales for
the quarter ended March 31, 2007. The decrease in gross margin from second
quarter of 2006 is due, in part, to intentional changes in product mix to higher
growth, lower margin commercial avionics, especially for In-Flight Entertainment
and Communication products, as compared to lower growth, higher margin military
avionics. In addition, the second quarter gross margin was negatively impacted
by the delayed receipt of higher margin digital switch orders from the DSA as
well as temporary gross margin reductions incurred during RO's transition of
production to an outside contract manufacturer.
GROSS PROFIT, COMMUNICATIONS EQUIPMENT SEGMENT - Our communications equipment
segment reported a gross profit of $1.3 million or 35% of net sales for the
quarter ended June 30, 2007, compared to a gross profit of $1.1 million or 37%
of net sales for the second quarter of 2006 and $1.2 million or 36% of net sales
for the quarter ended March 31, 2007. The decrease in gross margins is due to
competitive pricing pressures related to our legacy network access and other
timing products offset, in part, by increased sales of higher margin military
network access products at our French subsidiary. We expect margins to improve
in future periods due to the recent introduction of our higher margin Tiempo(TM)
edge network timing device, which is being built for us by Hitachi.
OPERATING EXPENSES - Operating expenses were $4.5 million or 37% of net sales in
the second quarter of 2007 compared to $4.4 million or 37% of net sales in the
first quarter of 2007 and $4.6 million or 42% of net sales in second quarter of
2006.
OPERATING LOSS - Operating loss in the second quarter of 2007 was $438,000
compared to an operating loss of $598,000 in the first quarter of 2007 and an
operating loss of $798,000 in the second quarter of 2006.
NET LOSS - Net loss for the second quarter of 2007 was $623,000 as compared to a
net loss of $792,000 in the first quarter of 2007 and a net loss of $1.0 million
in the second quarter of 2006.
LIQUIDITY
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WORKING CAPITAL - Working capital at June 30, 2007 was $7.7 million compared to
$8.6 million at March 31, 2007 and $9.6 million at December 31, 2007.
CASH - Our cash balance at June 30, 2007 was $2.8 million compared to $3.3
million at March 31, 2007.
BACKLOG - Backlog at June 30, 2007 was a record $27.4 million, a significant
portion of which is shippable in 2007. This compares to backlog of $23.4 million
at March 31, 2007 and $24.9 million at June 30, 2006.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of EMRISE's second quarter 2007 financial results call will
be available at http://www.investorcalendar.com/. The call begins today at 8:00
AM (PDT) / 11:00 AM (EDT). To participate in the conference call, 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. A replay of the call will be available through
midnight November 14, 2007 by calling 877-660-6853 in the United States or
201-612-7415 for calls from outside the United States. The conference ID is
251617, Account number 286.
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ABOUT EMRISE CORPORATION
EMRISE Corporation is a multi-national manufacturer of defense, aerospace and
industrial electronic devices and communications equipment. EMRISE's electronic
devices group, which consists of EMRISE Electronics Corporation and its
international subsidiaries, provides power conversion, RF and microwave devices,
and digital and rotary switches to the North American, European and Asian
electronic markets. EMRISE's communications equipment group, consisting of CXR
Larus Corporation and its subsidiary, CXR Anderson Jacobson, provides network
access and communication timing and synchronization products to the North
American, European and Asian communications industry. Founded in 1983, EMRISE
operates out of facilities in the United States, England, France and Japan. As
June 30, 2007, EMRISE had a total of 304 employees in its various subsidiaries
and divisions. Website: www.EMRISE.com. Listed on NYSE Arca under the ticker
symbol: ERI.
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 without limitation, forecasts regarding orders, sales,
shipments, revenues, margins and profitability, and statements regarding
EMRISE's ability to achieve $55 million in annual sales for fiscal year 2007,
improve bottom line performance in 2007 or any future periods, generate positive
cash flow from operations, successfully increase sales and/or increase gross
profit as a result of increased shipments of the new Tiempo(TM) timing
equipment, 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 meet its working capital needs, fund
existing and anticipated product development efforts, identify and successfully
negotiate, fund and integrate past and future acquisitions and improve operating
efficiency and realize anticipated synergies; the ability to lower costs and
increase profitability due to the integration and growth of acquired or
potentially acquirable businesses; the receipt and timing of contracts, orders
and payments from existing and potential customers for EMRISE's products and
services, including, but not limited to, the receipt and shipment of anticipated
orders from the U.S. Government's Defense Supply Agency for digital switches and
the ability of EMRISE to ship delayed power supply orders for its RO subsidiary;
EMRISE's ability to produce and fulfill delayed and backlog orders; the receipt
of production materials and resale products in a timely fashion; market and
economic conditions; EMRISE's level of success in positioning itself in the
market for in-flight entertainment products; EMRISE's ability to continue or
improve on its existing organic growth rates in both its electronic device and
communication equipment segments; changes in technology, governmental
regulations and policies and customer requirements, competitive products and
services; unforeseen technical issues; unexpected changes in typical seasonal
sales trends and those factors contained in the "Risk Factors" Section of
EMRISE's latest Form 10-K and Form 10-Q and other public filings.
# # #
Tables follow
EMRISE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
2007 2006 2007 2006
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Net sales $ 12,067 $ 10,817 $ 23,989 $ 21,551
Cost of sales 7,991 7,025 16,065 13,375
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Gross profit 4,076 3,792 7,924 8,176
Operating expenses:
Selling, general and administrative 3,849 3,698 7,585 7,465
Engineering and product development 665 892 1,375 1,614
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Total operating expenses 4,514 4,590 8,960 9,079
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Loss from operations (438) (798) (1,036) (903)
Other income (expense):
Interest income 36 21 55 46
Interest expense (170) (93) (320) (217)
Other, net 100 (44) 165 (36)
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Total other income (expense), net (34) (116) (100) (207)
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Loss before income taxes (472) (914) (1,136) (1,110)
Income tax provision (benefit) 151 96 279 222
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Net loss $ (623) $ (1,010) $ (1,415) $ (1,332)
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Earnings per share:
Basic $ (0.02) $ (0.03) $ (0.04) $ (0.04)
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Diluted $ (0.02) $ (0.03) $ (0.04) $ (0.04)
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Weighted average shares outstanding
Basic 38,141 38,082 38,130 37,880
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Diluted 38,141 38,082 38,130 37,880
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EMRISE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
JUNE 30, DECEMBER 31,
2007 2006
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ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 2,824 $ 3,802
Accounts receivable, net of allowances for doubtful accounts of
$297 at June 30, 2007 and $391 at December 31, 2006 8,224 9,220
Inventories 11,473 10,575
Deferred income taxes 729 726
Prepaid and other current assets 1,227 1,082
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Total current assets 24,477 25,405
Property, plant and equipment, net 2,309 2,245
Goodwill 13,091 12,995
Intangible assets other than goodwill, net 3,384 3,546
Other assets 743 594
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Total assets $ 44,004 $ 44,785
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,283 $ 4,640
Accrued expenses 5,658 5,309
Borrowings under lines of credit 4,017 4,310
Current portion of long-term debt 501 516
Notes payable to stockholders, current portion 500 500
Income taxes payable 775 519
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Total current liabilities 16,734 15,794
Long-term debt 301 533
Notes payable to stockholders, less current portion 1,000 1,250
Deferred income taxes 1,053 1,053
Other liabilities 917 982
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Total liabilities 20,005 19,612
Commitments and contingencies (See Note 7)
Stockholders' equity:
Preferred stock,$0.01 par value. Authorized 10,000,000 shares,
zero shares issued and outstanding -- --
Common stock,$0.0033 par value. Authorized 150,000,000 shares;
38,144,000 and 38,082,000 shares issued and outstanding at
June 30, 2007 and December 31, 2006, respectively 126 125
Additional paid-in capital 43,149 43,083
Accumulated deficit (20,148) (18,733)
Accumulated other comprehensive income 872 698
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Total stockholders' equity 23,999 25,173
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Total liabilities and stockholders' equity $ 44,004 $ 44,785
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