Exhibit 99.1
Digital Recorders, Inc. Announces First Quarter 2006 Results; Loss Narrows as
Expected Market Upturn Materializes
Business Editors/Technology Writers
DALLAS--(BUSINESS WIRE)--May 15, 2006--Digital Recorders, Inc. (DRI)
(Nasdaq:TBUS), a technology leader in transportation, law enforcement,
and security digital communications systems, announced today it posted
a net loss of 9 cents per share on $11.1 million in sales in the first
quarter 2006, as compared to a net loss of 10 cents per share on $10.6
million in sales in the same period last year.
"We posted moderately increased sales for the period. While better
on the bottom line than the same period of last year, it was not
sufficient to bring us to profitability. This is largely consistent
with what we have previously reported, i.e., that the market upturn,
while underway, is primarily focused in the last half of the year. We
are encouraged by the order flow and reports from our bus vehicle OEM
customers about production rate increases. Meanwhile, we continue to
have tight emphasis on expenses and we are seeking additional cost
reduction opportunities as we work our way through lean times," David
L. Turney, the Company's Chairman, Chief Executive Officer, and
President, said.
For the quarter ended March 31, 2006, sales increased by 4.5
percent to $11.1 million and the net loss to common shareholders was
$866 thousand, or 9 cents per share. This compares to sales of $10.6
million and a net loss to common shareholders of $1.0 million, or 10
cents per share, for the same period last year. The amounts are after
preferred stock dividends and amortization of discount on preferred
stock of $68 thousand and $49 thousand, respectively, in first quarter
2006 and preferred stock dividends of $41 thousand in first quarter
2005.
Weighted-average shares outstanding for the quarter ended March
31, 2006, were 9.8 million, as compared to 9.6 million a year ago, an
increase of 1.6 percent resulting primarily from previously announced
equity placements in fiscal year 2005.
As of March 31, 2006, the Company had $4.1 million in working
capital and $18.2 million in shareholders' equity. This compares to
$6.3 million in working capital and $21.8 million in shareholders'
equity as of March 31, 2005.
On May 15, 2006, the Company filed with the Securities and
Exchange Commission a Form 10-Q for the period ended March 31, 2006.
SECOND QUARTER 2006 OUTLOOK
"Subject to some as yet unresolved uncertainties related to
possible shortages in aluminum extrusion materials, we anticipate an
increase in revenues in second quarter 2006. The U.S. market upturn
that we believe to be underway should become more evident in terms of
our revenue in the last half of the year," Mr. Turney said.
CONFERENCE CALL INFORMATION
Given the proximity of the Annual Meeting of Shareholders, the
Company has decided against hosting a shareholder conference call to
discuss first quarter results.
ANNUAL MEETING OF SHAREHOLDERS
The DRI Annual Meeting of Shareholders will take place May 24,
2006, at the Hilton Raleigh-Durham Airport at Research Triangle Park,
located at 4810 Old Page Road in Research Triangle Park, N.C.
Registration and continental breakfast will begin at 9:30 a.m.
(Eastern) and the business meeting will begin at 10 a.m. (Eastern).
Shareholders of record at the close of business on April 4, 2006, are
entitled to receive notice of, and to vote at, the Annual Meeting and
any adjournment thereof. Meeting materials were mailed to shareholders
of record on April 24, 2006.
ABOUT THE COMPANY
Digital Recorders, Inc. is a technology leader in transportation,
law enforcement, and security digital communications systems using
proprietary hardware and software applications. Our products improve
the flow and mobility of people through transportation infrastructure,
mitigate security threats, and enhance law enforcement agencies'
surveillance capabilities. Our transportation communications products
- - TwinVision(R) and Mobitec(R) electronic destination sign systems,
Talking Bus(R) voice announcement systems, Digital Recorders(R)
Internet-based passenger information and automatic vehicle
location/monitoring systems, and VacTell(TM) video actionable
intelligence systems -- enhance public transportation and mitigate
security threats worldwide. Our electronic surveillance tools,
including microphone amplifiers and processors, countermeasures
devices, speech activity detectors, and noise cancellation equipment,
help law-enforcement agencies around the globe 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, statements concerning future trends in the markets,
both domestic and foreign, the magnitude and timing of an expected
recovery in the industry, expected results from profit improvement
initiatives, as well as 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
risks and uncertainties that we may incorrectly interpret current
indicators as trends, the risk that we might incorrectly estimate the
magnitude or timing of a recovery in the industry, if any, the risks
that profit improvement initiatives may not prove beneficial or
beneficial to the extent expected, the risk that recent results may
not reflect positive future developments, as well as other risks and
uncertainties set forth in our Annual Report on 10-K filed on April
17, 2006, particularly those identified in Risk Factors Affecting Our
Business. 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.
DIGITAL RECORDERS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and
per share amounts)
March 31, 2006 December 31, 2005
(Unaudited) (Note 1)
---------------- ------------------
ASSETS
Current Assets
Cash and cash equivalents $767 $807
Trade accounts receivable, net 9,604 8,425
Other receivables 211 211
Inventories 7,800 8,212
Prepaids and other current
assets 811 946
---------------- ------------------
Total current assets 19,193 18,601
---------------- ------------------
Property and equipment, net 3,562 3,741
Goodwill, net 9,973 9,762
Intangible assets, net 1,065 1,069
Deferred tax assets, net 236 231
Other assets 657 144
---------------- ------------------
Total assets $34,686 $33,548
================ ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Lines of credit $6,297 $5,000
Current portion of long-term
debt 399 1,177
Accounts payable 5,638 5,537
Accrued expenses 2,682 2,854
Preferred stock dividends
payable 77 72
---------------- ------------------
Total current liabilities 15,093 14,640
---------------- ------------------
Long-term debt and capital leases,
less current portion 62 68
---------------- ------------------
Deferred tax liabilities 387 382
---------------- ------------------
Minority interest in consolidated
subsidiary 906 892
---------------- ------------------
Commitments and contingencies -- --
Shareholders' Equity
Series E Redeemable,
Nonvoting, Convertible
Preferred Stock, $.10 par
value, liquidation preference
of $5,000 per share; 500
shares authorized; 183 and
207 shares issued and
outstanding at March 31,
2006, and December 31, 2005,
respectively. 495 615
Series G Redeemable,
Convertible Preferred Stock,
$.10 par value, liquidation
preference of $5,000 per
share; 600 shares authorized;
350 and 343 shares issued and
outstanding at March 31,
2006, and December 31, 2005,
respectively; redeemable at
the discretion of the Company
after five years. 1,468 1,434
Series H Redeemable,
Convertible Preferred Stock,
$.10 par value, liquidation
preference of $5,000 per
share; 600 shares authorized;
50 shares issued and
outstanding at March 31,
2006, and December 31, 2005,
respectively; redeemable at
the discretion of the Company
after five years. 202 202
Series I Redeemable,
Convertible Preferred Stock,
$.10 par value, liquidation
preference of $5,000 per
share; 200 shares authorized;
100 and 0 shares issued and
outstanding at March 31,
2006, and December 31, 2005,
respectively; redeemable at
the discretion of the Company
after five years. 451 --
Series AAA Redeemable,
Nonvoting, Convertible
Preferred Stock, $.10 par
value, liquidation preference
of $5,000 per share; 20,000
shares authorized; 178 shares
issued and outstanding at
March 31, 2006, and December
31, 2005, respectively;
redeemable at the discretion
of the Company. 890 890
Common stock, $.10 par value,
25,000,000 shares authorized;
9,773,509 and 9,733,515
shares issued and outstanding
at March 31, 2006, and
December 31, 2005,
respectively. 977 973
Additional paid-in capital 31,214 30,446
Accumulated other
comprehensive income -
foreign currency translation 1,810 1,526
Accumulated deficit (19,269) (18,520)
---------------- ------------------
Total shareholders' equity 18,238 17,566
---------------- ------------------
Total liabilities and
shareholders' equity $34,686 $33,548
================ ==================
DIGITAL RECORDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2005 AND 2004
(In thousands, except share and per share
amounts)
Three Months Ended March 31,
----------------------------
2006 2005
-------------- -------------
Net sales $11,112 $10,629
Cost of sales 7,669 6,361
-------------- -------------
Gross profit 3,443 4,268
-------------- -------------
Operating expenses
Selling, general and administrative 3,673 4,530
Research and development 258 384
-------------- -------------
Total operating expenses 3,931 4,914
-------------- -------------
Operating loss (488) (646)
-------------- -------------
Other income (loss) (76) 44
Foreign currency gain (loss) 26 (117)
Interest expense (213) (124)
-------------- -------------
Total other income and interest
expense (263) (197)
-------------- -------------
Loss before income tax expense (751) (843)
Income tax expense (46) (51)
-------------- -------------
Loss before minority interest in
income (loss) of consolidated
subsidiary (797) (894)
Minority interest in income (loss) of
consolidated subsidiary 48 (65)
-------------- -------------
Net loss (749) (959)
Provision for preferred stock
dividends (68) (41)
Amortization for discount on preferred
stock (49) --
-------------- -------------
Net loss applicable to common
shareholders $(866) $(1,000)
============== =============
Net loss per share applicable to common
shareholders
Basic and diluted $(0.09) $(0.10)
============== =============
Weighted average number of common shares
and common
share equivalent outstanding
Basic and diluted 9,751,290 9,601,096
============== =============
CONTACT: Veronica B. Marks
Manager, Corporate Communications
Digital Recorders, Inc.
Phone: (214) 378-4776
Fax: (214) 378-8437
E-Mail: veronicam@digrec.com