Exhibit 99.1
Digital Recorders, Inc. Announces Third Quarter 2006 Results
Loss Narrows Substantially Over Same Quarter a Year Ago
DALLAS--(BUSINESS WIRE)--xx--Digital Recorders, Inc. (DRI)
(NASDAQ: TBUS), a digital communications technology leader in the
transportation, law enforcement, and security industries, announced
today it posted a net loss of 11 cents per share on $13.1 million in
sales for third quarter 2006, as compared to a net loss of 20 cents
per share on $10.9 million in sales posted in the same period last
year.
"Our third quarter 2006 results reflect continued progress, as
we've substantially narrowed our loss in comparison to last year's
same-period results. We are seeing improvement in our domestic
business as the fundamental uptrend in the U.S. transit market
continues. Internal growth projections for our international market
reflect opportunities for continued sales growth. Trimming expenses
remains a priority across all domestic and foreign business and
product lines. We remain upbeat about our prospects for posting
additional operating improvements in the quarters ahead," David L.
Turney, the Company's Chairman, President, and Chief Executive
Officer, said.
On Nov. 14, 2006, the Company filed with the Securities and
Exchange Commission a Form 10-Q for the quarter and nine-months ended
Sept. 30, 2006.
THIRD QUARTER 2006 RESULTS
For the quarter ended Sept. 30, 2006, sales increased by 20.2
percent to $13.1 million and the net loss to common shareholders was
$1.1 million, or 11 cents per share. This compares to sales of $10.9
million and a net loss to common shareholders of $2.0 million, or 20
cents per share, for the same period last year. Weighted-average
shares outstanding were 9.8 million, as compared to 9.7 million a year
ago.
For the nine months ended Sept. 30, 2006, sales increased by 10.5
percent to $37.8 million and the net loss to common shareholders was
$2.2 million, or 22 cents per share. This compares to sales of $34.2
million and a net loss to common shareholders of $4.2 million, or 43
cents per share, for the same period last year. Weighted-average
shares outstanding for the nine-month period were 9.8 million,
compared to 9.7 million a year ago.
As of Sept. 30, 2006, the Company had $3.6 million in working
capital and $17.9 million in shareholders' equity. This compares to
$6.2 million in working capital and $20.3 million in shareholders'
equity for the same period in 2005.
ABOUT THE COMPANY
Digital Recorders, Inc. is a digital communications technology
leader in the transportation, law enforcement, and security
industries. Using proprietary hardware and software applications, our
products improve the flow and mobility of people through
transportation infrastructure, improve energy efficiency, 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. By assisting transit vehicle operators'
quest to increase ridership, our products also help reduce dependence
on fuel. Our DAC(R) 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 the impact of U.S. federal
funding legislation, the ongoing turn-around in our domestic market,
the growth in our international markets, the impact of cost reductions
we expect to continue to achieve, our future revenue projections, and
the acceptance of future product and service offerings by our
customers, 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 the assumptions behind U.S. federal
funding legislation, the ongoing turn-around in our domestic market,
the growth in our international markets, the impact of cost reductions
we continue to achieve, our future revenue projections, and the
acceptance of future product and service offerings by our customers
may not prove beneficial to the Company, as well as other risks and
uncertainties set forth in our Annual Report on Form 10-K filed 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)
September 30,
2006 December 31,
(Unaudited) 2005
--------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 384 $ 807
Trade accounts receivable, net 10,538 8,425
Other receivables 475 211
Inventories 9,016 8,212
Prepaids and other current assets 536 946
-------- ---------
Total current assets 20,949 18,601
-------- ---------
Property and equipment, net 3,191 3,741
Goodwill, net 10,564 9,762
Intangible assets, net 1,071 1,069
Deferred tax assets, net 251 231
Other assets 770 144
-------- ---------
Total assets $ 36,796 $ 33,548
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Lines of credit $ 6,804 $ 5,000
Notes payable, net 1,572 -
Current portion of long-term debt 254 1,177
Accounts payable 5,649 5,537
Accrued expenses 3,001 2,854
Preferred stock dividends payable 22 72
-------- ---------
Total current liabilities 17,302 14,640
-------- ---------
Long-term debt and capital leases, less
current portion 49 68
-------- ---------
Deferred tax liabilities 394 382
-------- ---------
Minority interest in consolidated subsidiary 1,121 892
-------- ---------
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 September 30, 2006, and
December 31, 2005, respectively; redeemable
at the discretion of the Company at any time. 495 615
Series G Redeemable, Convertible Preferred
Stock, $.10 par value, liquidation preference
of $5,000 per share; 600 shares authorized;
371 and 343 shares issued and outstanding at
September 30, 2006, and December 31, 2005,
respectively; redeemable at the discretion of
the Company after five years. 1,573 1,434
Series H Redeemable, Convertible Preferred
Stock, $.10 par value, liquidation preference
of $5,000 per share; 600 shares authorized;
53 and 50 shares issued and outstanding at
September 30, 2006, and December 31, 2005,
respectively; redeemable at the discretion of
the Company after five years. 217 202
Series I Redeemable, Convertible Preferred
Stock, $.10 par value, liquidation preference
of $5,000 per share; 200 shares authorized;
103 and 0 shares issued and outstanding at
September 30, 2006, and December 31, 2005,
respectively; redeemable at the discretion of
the Company after five years. 466 -
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 September 30, 2006, and December 31, 2005,
respectively; redeemable at the discretion of
the Company at any time. 890 890
Common stock, $.10 par value, 25,000,000
shares authorized; 9,803,868 and 9,733,515
shares issued and outstanding at September
30, 2006, and December 31, 2005,
respectively. 980 973
Additional paid-in capital 31,154 30,446
Accumulated other comprehensive income -
foreign currency translation 2,602 1,526
Accumulated deficit (20,447) (18,520)
-------- ---------
Total shareholders' equity 17,930 17,566
-------- ---------
Total liabilities and shareholders' equity $ 36,796 $ 33,548
======== =========
DIGITAL RECORDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(In thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net sales $ 13,096 $ 10,890 $ 37,766 $ 34,185
Cost of sales 9,369 7,456 26,183 21,416
---------- ---------- ---------- ----------
Gross profit 3,727 3,434 11,583 12,769
---------- ---------- ---------- ----------
Operating expenses
Selling, general and
administrative 3,911 4,414 11,452 13,911
Research and
development 314 605 919 1,376
---------- ---------- ---------- ----------
Total operating
expenses 4,225 5,019 12,371 15,287
---------- ---------- ---------- ----------
Operating loss (498) (1,585) (788) (2,518)
---------- ---------- ---------- ----------
Other income (loss) 24 67 (17) 191
Foreign currency gain
(loss) 11 30 100 (203)
Interest expense (330) (108) (818) (370)
---------- ---------- ---------- ----------
Total other income
and interest
expense (295) (11) (735) (382)
---------- ---------- ---------- ----------
Loss before income
tax expense (793) (1,596) (1,523) (2,900)
Income tax expense (59) (121) (175) (227)
---------- ---------- ---------- ----------
Loss before minority
interest in income of
consolidated
subsidiary (852) (1,717) (1,698) (3,127)
Minority interest in
income of
consolidated
subsidiary (159) (181) (229) (343)
---------- ---------- ---------- ----------
Net loss (1,011) (1,898) (1,927) (3,470)
Provision for
preferred stock
dividends (77) (63) (221) (410)
Amortization for
discount on
preferred stock - - (49) (275)
---------- ---------- ---------- ----------
Commitments and
contingencies
Net loss applicable
to common
shareholders $ (1,088) $ (1,961) $ (2,197) $ (4,155)
========== ========== ========== ==========
Net loss per share
applicable to common
shareholders
Basic and diluted $ (0.11) $ (0.20) $ (0.22) $ (0.43)
========== ========== ========== ==========
Weighted average
number of common
shares and common
share equivalent
outstanding
Basic and diluted 9,801,789 9,696,765 9,777,044 9,656,660
========== ========== ========== ==========
CONTACT: Veronica B. Marks
Manager, Corporate Communications
Digital Recorders, Inc.
Phone: (214) 378-4776
Fax: (214) 378-8437
E-Mail: veronicam@digrec.com