Exhibit 99.1
Digital Recorders, Inc. Announces First
Quarter 2003 Financial Results;
Revenues Increased 26.6 Percent With Improved Bottom Line
DALLAS--(BUSINESS WIRE)--May 13, 2003--Digital Recorders, Inc.
(DRI) (Nasdaq:TBUS), a market leader in transit, transportation and
law enforcement digital-communications and audio-enhancement systems,
announced today that its first quarter 2003 revenues were $10.9
million, an increase of 26.6 percent over revenues for the same period
in fiscal year 2002.
First Quarter 2003 Overview
"The first quarter was a substantial improvement over the same
period in 2002, with a loss of $211,466, as compared to the $703,808
loss posted in first quarter 2002. We are starting the year in a
stronger position. Our law enforcement segment, which had been running
well below expectations, produced a 70 percent increase in revenues
over the prior year's period and a profitable quarter. Our
transportation segment also saw notable gains both in Europe and North
America," David L. Turney, the Company's Chairman, Chief Executive
Officer and President, said.
First Quarter 2003 Operating and Financial Results
For the quarter ended March 31, 2003, the Company's revenues
increased to $10.9 million and the net loss was $211,466, or 6 cents
per share. This compares to revenues of $8.6 million and a net loss of
$703,808, or 19 cents per share, for the same period in 2002. The
results for both periods are after Series AAA Preferred Stock
dividends of $44,250. Weighted-average shares outstanding for the
three months were 3,804,475, compared to 3,704,475 a year ago
reflecting a previously reported private sale in 2002 of common
equity.
As of March 31, 2003, the Company had $1.8 million in working
capital and $7.5 million in shareholders' equity. This compares to
$7.1 million in working capital and $4.4 million in shareholders'
equity for the same period in 2002. The reduction in working capital
is due to a previously reported balance-sheet reclassification from
long-term to short-term debt of an asset-based lending relationship.
As previously reported, that relationship is due to expire in third
quarter 2003; management is presently reviewing replacement options.
The increase in shareholder's equity is due to the Series AAA
Preferred Stock, which previously carried a mandatory redemption date
of December 31, 2003, now being redeemable at the Company's
discretion.
First Quarter 2003 Sales Highlights
On Jan. 30, 2003, the Company announced a $278,000-plus order for
its Digital Audio Corporation (DAC) business unit's newly released
SR-200 Solid-State Recorder Kit -- designed specifically for law
enforcement and security covert applications -- was received from the
U.S. government.
On Feb. 19, 2003, the Company announced its TwinVision na, Inc.
(TVna) business unit received orders totaling more than $1.3 million
from existing customers on behalf of public transit fleets in
Miami-Dade County, Fla., and Pittsburgh, Pa., for TwinVision(R) amber,
all-LED, electronic destination sign systems.
Second Quarter 2003 Forecast
"We presently expect to achieve second quarter 2003 revenues
between $13 million to $13.8 million, compared to revenues of $12.4
million posted in the same quarter last year. We also expect the
quarter to be profitable," Mr. Turney said.
Fiscal Year 2003 Outlook
"In fiscal year 2003, we expect to achieve between $52 million to
$57 million in revenues given the demand for existing products and
services, as well as due to an extension of the Company's services and
product offerings, including new products in virtually all business
units. We also expect earnings for fiscal year 2003 to be in the range
of 20 cents to 35 cents per share without giving effect to any
non-cash charges that might arise in connection with the Convertible
Preferred equity financing, which we previously reported we were
considering," Mr. Turney said.
According to Mr. Turney, that rather wide range of expected
revenues and earnings will be further refined in the third quarter
when the Company's management team has more visibility on timing of
larger contracts expected during the last half of the year. "As we
have frequently noted, timing on larger orders can cause significant
fluctuations in revenues and earnings in our industry."
The Company has been less affected by the weakness in the U.S.
economy during the last two years than might intuitively have been
expected. According to Mr. Turney, this is due, in part, to the fact
that the Company has stepped-up its introduction of new products and
its entry into new served market sectors.
"The longer term contract nature of our U.S. market and its
somewhat counter cyclical nature, as well as strength in certain of
our international markets, have contributed to stability in revenues
for the Company up to this point. The continuation of this stability
depends on the duration of the on-going weakness in the U.S. economy
and our ability to maintain our market pace and product successes. I
would like to note that the 70 percent revenue increase in our law
enforcement segment is not yet viewed as being a trend, although
business is gaining strength over the performance of the past two
years," Mr. Turney said.
Conference Call Information
Senior management will discuss first quarter earnings results
during an investor conference call Wednesday, May 14, 2003, at 11 a.m.
(Eastern). To listen to, and participate in, the live
questions-and-answers exchange, please call one of the following
telephone numbers at least five minutes prior to the start time:
-- Domestic, 800/683-1575; or
-- International, 973/935-2101.
Replay will be available from 2 p.m. (Eastern) Wednesday, May 14,
2003 through 11:59 p.m. (Eastern) May 28, 2003 via the following
telephone numbers: Domestic, 877/519-4471 (Pin Number 3923381); or
International, 973/341-3080 (Pin Number 3923381).
To participate via webcast, please go to www.viavid.com, search
for TBUS events, click on the first quarter 2003 event description,
and register to participate. The webcast also will be accessible via
the Company's corporate website, www.digrec.com. For the convenience
of the Company's shareholders, the webcast will be archived for six
months.
About the Company
Digital Recorders, Inc. is a market leader in transit,
transportation and law enforcement digital-communications and
audio-enhancement systems using proprietary software applications. Our
products improve the flow and mobility of people through
transportation infrastructure, as well as enhance law enforcement
agencies' surveillance capabilities. Our transit communications
products -- TwinVision(R) and Mobitec route destination signage
systems, Talking Bus(R) voice announcement systems, and
Internet-based, automatic vehicle monitoring systems -- enhance access
to and use of public transportation around the globe. Our electronic
surveillance tools, including microphone amplifiers and processors,
countermeasures devices, speech activity detectors, and
radio/television noise cancellers, help law-enforcement agencies
worldwide capture, arrest and prosecute criminals.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
In particular, any statement, express or implied, concerning future
events or expectations is a forward-looking statement. Use of words
such as "expect," "fully expect," "expected," "appears," "believe,"
"plan," "anticipate," "would," "goal," "potential," "potentially,"
"range," "pursuit," "run rate," "stronger," "preliminarily," etc., is
intended to identify forward-looking statements that are subject to
risks and uncertainties, including those described below. There can be
no assurance that any expectation implied in a forward-looking
statement will prove correct, or that the contemplated event or result
will occur as anticipated. The risks associated with forward-looking
statements include, but are not limited to, product demand and market
acceptance risks, the impact of competitive products and pricing, the
effects of economic conditions and trade, legal, social and economic
risks, such as import, licensing and trade restrictions, the results
of implementing the Company's business plan, and the impact on the
Company of its relationship with its lender. Refer to the Company's
various Securities and Exchange Commission filings, such as its Forms
10-Q and 10-K, for further information about forward-looking
statements.
For More Information, Please Refer to: www.digrec.com.
DIGITAL RECORDERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2003 2002
ASSETS (Unaudited) (Note)
- ----------------------------------------- ------------- ------------
Current Assets
Cash and cash equivalents $136,900 $504,758
Trade accounts receivable, less allowance
for doubtful accounts of $146,066 at
March 31, 2003 and December 31, 2002 9,304,545 10,137,955
Other receivables 451,713 251,454
Inventories 8,795,566 8,830,522
Prepaids and other current assets 534,742 452,882
------------ ------------
Total current assets 19,223,466 20,177,571
------------ ------------
Property and equipment, less accumulated
depreciation of $1,614,753 at March 31,
2003 and $1,459,953 at December 31, 2002 1,688,495 1,572,259
Goodwill, less accumulated amortization of
$1,096,505 at March 31, 2003 and
$1,066,643 at December 31, 2002 9,148,732 8,960,396
Intangible assets, less accumulated
amortization of $407,926 at March 31, 2003
and $362,922 at December 31, 2002 1,391,695 1,392,533
Deferred tax assets 866,109 865,663
Other assets 538,015 414,764
------------ ------------
TOTAL ASSETS $32,856,512 $33,383,186
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------
Current Liabilities
Lines of credit $6,950,011 $7,503,791
Current maturities of long-term debt 761,120 763,360
Accounts payable 6,201,759 6,339,537
Accounts payable, related party 1,216,053 859,425
Accrued expenses 2,060,673 2,162,309
Deferred tax liabilities 142,213 138,695
Preferred stock dividends payable 88,500 88,500
------------ ------------
Total current liabilities 17,420,329 17,855,617
------------ ------------
Long-term debt and other obligations, less
current maturities 7,584,741 7,737,940
------------ ------------
Other Liabilities 65,003 65,003
Series AAA Mandatory Redeemable,
Convertible, Nonvoting Preferred Stock,
$.10 par value, Liquidation Preference of
$5,000 per share; 20,000 shares
authorized; 354 shares issued and
outstanding at December 31, 2002 -- 1,770,000
Minority interest in consolidated
subsidiary 305,000 267,566
------------ ------------
Commitments and contingencies -- --
Stockholders' Equity
Series AAA, Convertible, Nonvoting
Preferred Stock, $ .10 par Liquidation
Preference of $5,000 per share; 20,000
shares authorized 354 shares issued and
outstanding at March 31, 2003; redeemable
at the discretion of the Company 1,770,000 --
Common stock, $.10 par value, 10,000,000
shares authorized; 3,804,475 shares
issued and outstanding at March 31, 2003
and December 31, 2002 380,447 380,447
Additional paid-in capital 12,305,476 12,349,726
Accumulated other comprehensive income -
foreign currency translation 657,020 421,175
Accumulated deficit (7,566,501) (7,399,285)
------------ ------------
Total stockholders' equity 7,546,442 5,752,063
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $32,856,512 $33,383,186
============ ============
Note: The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date.
DIGITAL RECORDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Three Months Ended March 31,
----------------------------
2003 2002
------------- --------------
Net sales $10,917,194 $8,623,648
Cost of sales 6,573,203 5,534,418
------------- --------------
Gross profit 4,343,991 3,089,230
------------- --------------
Operating expenses:
Selling, general and administrative 3,562,696 2,826,822
Research and development 649,997 625,520
------------- --------------
Total operating expenses 4,212,693 3,452,342
------------- --------------
Operating income (loss) 131,298 (363,112)
------------- --------------
Other income (expense) 19,483 (10,682)
Foreign currency translation gain 28,659 36,366
Interest expense, net (309,823) (275,680)
------------- --------------
Total other expense and interest
expense (261,681) (249,996)
------------- --------------
Loss before income tax benefit (expense) (130,383) (613,108)
Income tax benefit (expense) 601 (46,619)
------------- --------------
Loss before minority interest in income
of consolidated subsidiary (129,782) (659,727)
Minority interest in income of
consolidated subsidiary (37,434) 169
------------- --------------
Net loss (167,216) (659,558)
Preferred stock dividend requirements (44,250) (44,250)
------------- --------------
Net loss applicable to common
shareholders $(211,466) $(703,808)
============= ==============
Earnings per share:
Net loss per share:
Basic $(0.06) $(0.19)
============= ==============
Diluted $(0.06) $(0.19)
============= ==============
Weighted average number of common shares
and common equivalent shares
outstanding:
Basic 3,804,475 3,704,475
============= ==============
Diluted 3,804,475 3,704,475
============= ==============
CONTACT: Digital Recorders, Inc., Dallas
Veronica B. Marks, 214/378-4776
Fax: 214/378-8437
veronicam@digrec.com