Exhibit 99.1
Digital Recorders, Inc. Announces Third Quarter 2003 Earnings Results
DALLAS--(BUSINESS WIRE)--Nov. 11, 2003--Digital Recorders, Inc.
(DRI) (Nasdaq:TBUS), a market leader in transit, transportation and
law enforcement digital communications and audio enhancement systems,
announced today it posted fully diluted earnings of 2 cents per share
on $10.6 million in revenue in third quarter 2003, as compared to a
loss of 8 cents on $11.0 million in revenue posted in the same period
last year.
"Third quarter 2003 was profitable as projected even though we
were below our target revenue range for the quarter. The lower
revenue, as previously reported, was due to delays in expected orders,
as well as an unexpected, short-term disruption in order flow from one
of our international customers. In the same quarter last year, we
recorded a loss on slightly higher revenue. This indicates that we are
progressing on our plans to achieve on-going profitability. Those
plans include actions in virtually all areas affecting profitability,
including marketing programs, product cost reductions, and operating
expenses. These actions started benefiting the bottom line in third
quarter 2003," David L. Turney, the Company's Chairman, Chief
Executive Officer, and President, said.
For the three months ended Sept. 30, 2003, revenue decreased by 4
percent to $10.6 million with a net income of $104,360, or 2 cents per
share on 6,320,130 fully diluted shares outstanding. This compares to
revenue of $11.0 million and a net loss of $319,053, or 8 cents per
share on 3,769,692 basic and fully diluted shares outstanding for the
same period last year. The results are after $65,114 and $44,250 in
dividends to preferred shareholders for the three months ended Sept.
30, 2003 and Sept. 30, 2002, respectively.
For the nine months ended Sept. 30, 2003, revenue increased by 6.1
percent to $34.1 million with a net income of $108,721, or 3 cents per
share on 3,992,626 fully diluted shares outstanding. This compares to
revenue of $32.1 million and a net loss of $404,281, or 11 cents per
share on 3,726,453 basic and fully diluted shares outstanding for the
same period last year. The results are after $153,614 and $132,750 in
dividends to preferred shareholders for the nine months ended Sept.
30, 2003 and Sept. 30, 2002, respectively.
As of Sept. 30, 2003, the Company had $6.8 million in working
capital and $10.5 million in shareholders' equity. This compares to
$2.3 million in working capital and $5.8 million in shareholders'
equity as of Dec. 31, 2002.
The increase of $4.5 million in working capital is primarily the
result of the reclassification of the Company's asset-based line of
credit from a short- to long-term obligation due to securing a new
long-term loan and security agreement prior to issuance of the
financial statements. The Company's obligation under the prior line of
credit was reported as a current liability as of Dec. 31, 2002 due to
the expiration date of the prior facility then being within one year
of the balance sheet date. This transaction was addressed with other
financing actions in a separate news release dated Nov. 11, 2003.
The increase in shareholders' equity is primarily due to the newly
issued Series E preferred stock and the long-existing Series AAA
preferred stock - which is now redeemable only at the Company's
discretion - being reclassified to shareholders' equity. The Series
AAA preferred stock previously carried a mandatory redemption date of
Dec. 31, 2003.
THIRD QUARTER 2003 HIGHLIGHTS
-- On Aug. 5, 2003, the Company announced that two new law
enforcement products became available for sale to core law
enforcement, intelligence, military and security markets
through its Digital Audio Corporation (DAC) business unit in
Raleigh, N.C.
-- On Aug. 7, 2003, the Company announced its Digital Recorders
(DR) division in Research Triangle Park, N.C., received a
notice of pending award that is expected to lead to a
significant order for computer-aided dispatch automatic
vehicle location (CAD-AVL) systems and another product option
from the Riverside Transit Agency (RTA) in Riverside, Calif.
-- On Sept. 10, 2003, the Company announced that recent
appropriation actions involving more than $7 billion by both
the U.S. Senate and House include increased funding to
programs directly related to the Company's served domestic
markets.
-- On Sept. 16, 2003, the Company announced it had been named to
Deloitte & Touche's prestigious Technology Fast 50 Program for
Texas, a ranking of the 50 fastest growing technology
companies in Austin, the Dallas-Fort Worth Metroplex, Houston,
and San Antonio by Deloitte & Touche LLP.
-- On Sept. 17, 2003, the Company announced that, through its DR
division, it had signed a three-year Teaming Agreement with GE
Transportation Systems Global Signaling, LLC (GETSGS) through
General Electric's Advanced Communications division. With this
Teaming Agreement, DRI and GETSGS will work together to
deliver advanced technology systems integration projects.
RECENT FINANCING DEVELOPMENTS
The Company recently announced it has secured a new
domestic-operations $10 million asset-based financing agreement with
LaSalle Business Credit, LLC, of Chicago, Ill., and raised an
additional $3.29 million through private placements of Class E and
Class F Convertible Preferred stock. For more information about these
transactions, refer to the Company's separate news release dated Nov.
11, 2003.
FOURTH QUARTER 2003 FORECAST
"We presently expect to achieve a profit in fourth quarter 2003 --
exclusive of any non-cash, one-time charges that will be incurred due
to financing transactions completed during the quarter -- on revenue
of approximately $12.2 million, which compares to revenue of $13.0
million, or 1 cent per share on basic and fully diluted shares
outstanding posted in the same period last year," Mr. Turney said.
FISCAL YEAR 2003 OUTLOOK
"The Company's fiscal year 2003 revenue is presently projected to
be approximately $46.3 million. We expect 2003 to be profitable,
exclusive of any non-cash, one-time charges that will be incurred in
fourth quarter 2003 due to financing transactions completed during the
fourth quarter. This compares to revenue of $45.1 million and a loss
of 10 cents per share on basic and fully diluted shares outstanding
last year. We remain concerned that some orders may not be received in
a timely fashion for shipping to take place in fiscal year 2003, which
is why we have projected a more cautionary revenue range," Mr. Turney
said.
CONFERENCE CALL INFORMATION
As previously announced, DRI senior management will discuss third
quarter 2003 earnings results, as well as the fiscal year 2003
outlook, during an investors' conference call today, Nov. 11, 2003, at
1 p.m. (Eastern).
To listen to management's presentation 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, (888) 858-4066, or International, (973) 935-2404.
Replay will be available today, Nov. 11, 2003 from 4 p.m.
(Eastern) until Nov. 25, 2003 at 11:59 p.m. (Eastern) via the
following telephone numbers: Domestic, (877) 519-4471 (Pin Number
4279525); or International, (973) 341-3080 (Pin Number 4279525).
To listen and participate via webcast, please go to
www.viavid.com, search for TBUS events, click on the third quarter
2003 event description, and register to participate. The webcast also
will be accessible via the Company's corporate Web site,
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 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. For more information about DRI and its operations
worldwide, go to www.digrec.com.
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, express or 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.
DIGITAL RECORDERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2003 2002
(Unaudited) (Note)
------------- ------------
ASSETS
- ----------------------------------------
Current Assets
Cash and cash equivalents $ 447,940 $ 504,758
Trade accounts receivable, less
allowance for doubtful accounts of
$96,529 at September 30, 2003 and
$146,066 at December 31, 2002 7,354,100 10,137,955
Other receivables 335,132 251,454
Inventories 9,439,145 8,830,522
Prepaids and other current assets 376,108 452,882
----------- -------------
Total current assets 17,952,425 20,177,571
----------- -------------
Property and equipment, less accumulated
depreciation of $2,000,639 at September
30, 2003 and $1,459,953 at December 31,
2002 2,257,689 1,572,259
Goodwill, less accumulated amortization
of $1,125,885 at September 30, 2003 and
$1,066,643 at December 31, 2002 10,082,547 8,960,396
Intangible assets, less accumulated
amortization of $519,781 at September
30, 2003 and $362,922 at December 31,
2002 1,481,972 1,392,533
Deferred tax assets 518,078 865,663
Other assets 715,062 414,764
----------- -------------
TOTAL ASSETS $33,007,773 $ 33,383,186
=========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------
Current Liabilities
Lines of credit $ 1,431,139 $ 7,503,791
Current maturities of long-term debt 1,010,550 763,360
Accounts payable 6,432,190 7,198,962
Accrued expenses 1,977,350 2,162,309
Deferred tax liabilities 157,730 138,695
Preferred stock dividends payable 109,364 88,500
----------- -------------
Total current liabilities 11,118,323 17,855,617
----------- -------------
Long-term debt and other obligations,
less current maturities 11,039,912 7,737,940
----------- -------------
Series AAA Manadatory 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 356,712 267,566
----------- -------------
Commitments and contingencies
Stockholders' Equity
Series E Redeemable, Convertible,
Nonvoting Preferred Stock, $.10 par
value,
Liquidation Preference of $5,000 per
share; 500 shares authorized; 323 and
zero shares issued and outstanding at
September 30, 2003 and December 31,
2002, respectively 1,372,277 -
Series AAA Convertible, Nonvoting
Preferred Stock, $.10 par value,
Liquidation Preference of $5,000 per
share; 20,000 shares authorized; 354
shares issued and outstanding at
September 30, 2003; redeemable at the
discretion of the Company 1,770,000 -
Common stock, $.10 par value,
25,000,000 and 10,000,000 shares
authorized; 3,944,475 and
3,804,475 shares issued and outstanding
at September 30, 2003 and December 31,
2002 , respectively 394,449 380,447
Additional paid-in capital 12,532,113 12,349,726
Accumulated other comprehensive income
- foreign currency translation 1,560,947 421,175
Accumulated deficit (7,136,960) (7,399,285)
----------- -------------
Total stockholders' equity 10,492,826 5,752,063
----------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $33,007,773 $ 33,383,186
=========== =============
Note: The consolidated 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 AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales $10,612,407 $11,044,009 $34,050,514 $32,102,112
Cost of sales 6,262,212 7,295,111 20,209,804 20,602,883
----------- ----------- ----------- -----------
Gross profit 4,350,195 3,748,898 13,840,710 11,499,229
----------- ----------- ----------- -----------
Operating expenses:
Selling, general
and
administrative 3,591,308 3,150,542 11,130,658 9,093,949
Research and
development 241,106 516,015 1,423,066 1,916,070
----------- ----------- ----------- -----------
Total operating
expenses 3,832,414 3,666,557 12,553,724 11,010,019
----------- ----------- ----------- -----------
Operating income 517,781 82,341 1,286,986 489,210
----------- ----------- ----------- -----------
Other income
(expense) 25,355 (22,515) 58,976 (59,953)
Foreign currency
translation gain
(loss) 82,137 (36,709) 210,810 249,335
Interest expense,
net (243,556) (289,854) (832,998) (841,474)
----------- ----------- ----------- -----------
Total other
expense and
interest expense (136,064) (349,079) (563,212) (652,093)
----------- ----------- ----------- -----------
Income (loss)
before income
tax expense 381,717 (266,738) 723,774 (162,882)
Income tax benefit
(expense) (172,721) 29,811 (372,293) (54,488)
----------- ----------- ----------- -----------
Income (loss)
before minority
interest in
income of
consolidated
subsidiary 208,996 (236,927) 351,481 (217,371)
Minority interest
in income of
consolidated
subsidiary (39,522) (37,876) (89,146) (54,160)
----------- ----------- ----------- -----------
Net income
(loss) 169,474 (274,803) 262,335 (271,531)
Preferred stock
dividends (65,114) (44,250) (153,614) (132,750)
----------- ----------- ----------- -----------
Net income
(loss)
applicable to
common
shareholders $ 104,360 $ (319,053) $ 108,721 $ (404,281)
=========== =========== =========== ===========
Earnings per share:
Net income
(loss) per
share:
Basic $ 0.03 $ (0.08) $ 0.03 $ (0.11)
=========== =========== =========== ===========
Diluted $ 0.02 $ (0.08) $ 0.03 $ (0.11)
=========== =========== =========== ===========
Weighted average
number of
common shares
and common
equivalent
shares
outstanding:
Basic 3,944,475 3,769,692 3,854,219 3,726,453
=========== =========== =========== ===========
Diluted 6,320,130 3,769,692 3,992,626 3,726,453
=========== =========== =========== ===========
CONTACT: Digital Recorders, Inc.
Veronica B. Marks, 214-378-4776
Fax: 214-378-8437
veronicam@digrec.com