EX-99.1 2 exh991.htm PRESS RELEASE United States Securities & Exchange Commission EDGAR Filing

Exhibit 99.1


Press Release



RELM Wireless Reports First Quarter 2007 Results


WEST MELBOURNE, FL, May 8, 2007 - RELM Wireless Corporation (Amex: RWC - News) today announced its financial and operating results for first quarter ended March 31, 2007.


For the quarter ended March 31, 2007, sales were approximately $4.6 million, compared to $7.2 million for the same period in 2006.  During the first quarter, sales of digital APCO Project 25 products were $1.6 million or 33.9% of total sales, compared to $3.4 million or 47.9% of total sales for the same period in 2006.  The net loss for the quarter was ($344,000), or ($0.03) per diluted share, compared to net income of $865,000, or $0.06 per diluted share for the same quarter last year.  The net loss for the first quarter was positively impacted by a tax benefit of approximately $0.2 million, compared to a tax expense of approximately $0.5 million for the same quarter last year.


Commenting on the quarter, RELM President and Chief Executive Officer David Storey, noted, “The first quarter of 2007 proved to be very challenging for RELM Wireless as budgetary and funding pressures, especially within our federal government customers, negatively impacted our sales and operating results.  Although the reduced level of government spending resulted in a decrease in the sales of our P25 digital products, we expect these funding constraints to abate as the year progresses and do not believe that they are indicative of a material weakness in our business.  We are well positioned to effectively compete for a significant and an increasingly large portion of future federal and state government spending.”


For the period ended March 31, 2007, gross margins were 42.4% compared to 53.3% for the prior year quarter, primarily the result of lower total sales and decreased sales of P25 digital products in the first quarter.  For the quarter, selling, general and administrative (SG&A) expenses as a percentage of sales were approximately $2.6 million, or 56.3%, of sales, compared to approximately $2.5 million, or 34.4%, for the same quarter last year, and compared to approximately $2.7 million, or 36.2%, for the fourth quarter 2006, reflecting relatively stable expenses spread over a smaller sales base.


At March 31, 2007, cash and cash equivalents were approximately $11.8 million, compared to approximately $13.3 million at December 31, 2006.  This decrease was due in part to additional inventory procured and built in anticipation of stronger sales than were realized during the quarter.


Mr. Storey concluded, “We are tightly focused on penetrating new customers and markets.  However, due to the uncertain nature of the federal budget and procurement process, it is difficult to predict the timing of orders.  We also concentrate on broadening our addressable market by developing and expanding our line of products and capabilities, particularly those with P25 digital specifications.”









About APCO Project 25 (P25)

APCO Project 25 (P25), which requires interoperability among compliant equipment regardless of the manufacturer, was established by the Association of Public-Safety Communications Officials-International and is approved by the U.S. Department of Homeland Security.  The shift towards interoperability has gained momentum as a result of the recent communications failures during the Oklahoma City bombings, 9/11 attacks and more recently Hurricane Katrina.  RELM was one of the first manufacturers to develop P25-compliant technology.


About RELM Wireless

For 60 years, RELM Wireless Corp. has manufactured and marketed high-specification two-way communications equipment for use by public safety professionals and government agencies, as well as radios for use in a wide range of commercial and industrial applications, including disaster recovery.  Revolutionary advances include new interoperable, low-cost digital two-way radios compliant with APCO Project 25 technical specifications. Products are manufactured and distributed worldwide under BK Radio, RELM/BK and RELM product lines. The company maintains its headquarters in West Melbourne, Florida and can be contacted through its web site at http://www.relm.com or directly at 1-800-821-2900.


This press release contains certain forward-looking statements that are made pursuant to the “Safe Harbor” provisions of the Private Securities Litigation Reform Act Of 1995.  These forward-looking statements concern the Company’s operations, economic performance and financial condition and are based largely on the Company’s beliefs and expectations.  These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors and risks include, among others, the following: reliance on contract manufacturers; heavy reliance on sales to the U.S. Government; federal, state and local budget deficits and spending limitations; limitations in available radio spectrum for use by land mobile radios; general economic and business conditions; changes in customer preferences; competition; changes in technology; changes in business strategy; the debt and inventory levels of the Company; quality of management, business abilities and judgment of the Company’s personnel; and the availability, terms and deployment of capital.  Certain of these factors and risks, as well as other risks and uncertainties, are stated in more detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 and in the Company’s subsequent filings with the SEC.  These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.





RELM WIRELESS CORPORATION

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

 

 

Three Months Ended

 

 

 

(Unaudited)

 

 

 

3/31/2007

 

3/31/2006

 

 

 

 

 

 

 

 

 

Sales, net

     

$

4,631

     

$

7,182

 

 

 

 

 

 

 

 

 

Costs & Expenses:

 

 

 

 

 

 

 

Cost of Products (Includes non-cash share-based employee compensation
expense of $9 and $58 for the three months ended March 31, 2007 and
2006, respectively)

 

 

2,668

 

 

3,357

 

Selling, General and Administrative Expenses (Includes non-cash
share-based employee compensation expense of $62 and $135 for
the three months ended March 31, 2007 and 2006, respectively)

 

 

2,609

 

 

2,473

 

Total Costs & Expenses

 

 

5,277

 

 

5,830

 

 

 

 

 

 

 

 

 

Operating (Loss) Income

     

 

(646

)     

 

1,352

 

 

 

 

 

 

 

 

 

Other Income (Expense):

 

 

 

 

 

 

 

Interest Expense

 

 

(3

)

 

(6

)

Interest Income

 

 

148

 

 

41

 

Other Income (Expense)

 

 

(2

)

 

0

 

 

 

 

 

 

 

 

 

Pretax (Loss) Income

 

 

(503

)

 

1,387

 

 

 

 

 

 

 

 

 

Income Tax (Benefit) Expense

 

 

(159

)

 

522

 

 

 

 

 

 

 

 

 

Net (Loss) Income

 

$

 (344)

 

$

865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Earnings per share – basic

 

$

 (0.03

)

$

0.07

 

 

 

 

 

 

 

 

 

(Loss) Earnings per share – diluted

 

$

 (0.03

)

$

0.06

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding, Basic

 

 

13,342

 

 

13,026

 

Weighted Average Common Shares Outstanding, Diluted

 

 

13,342

 

 

14,123

 





RELM WIRELESS CORPORATION

Condensed Consolidated Balance Sheets

(In Thousands, Except Share Data)

 

 

March 31,
2007

 

December 31,
2006

 

ASSETS

     

 

 

     

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash & Cash Equivalents

 

$

11,775

 

$

13,266

 

Trade Accounts Receivable, net

 

 

2,980

 

 

3,565

 

Inventories, net

 

 

8,187

 

 

7,440

 

Deferred tax assets, net

 

 

3,649

 

 

3,490

 

Prepaid Expenses & Other Current Assets

 

 

769

 

 

841

 

Total Current Assets

 

 

27,360

 

 

28,602

 

 

 

 

 

 

 

 

 

Property, Plant and Equipment, Net

 

 

905

 

 

913

 

Deferred tax assets, net

 

 

5,360

 

 

5,360

 

Other Assets

 

 

392

 

 

431

 

 

 

 

 

 

 

 

 

Total Assets

 

$

34,017

 

$

35,306

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

968

 

$

1,172

 

Accrued compensation and related taxes

 

 

581

 

 

1,234

 

Accrued warranty expense

 

 

240

 

 

205

 

Accrued other expenses and other current liabilities

 

 

200

 

 

394

 

Total Current Liabilities

 

 

1,989

 

 

3,005

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

Preferred stock; $1.00 par value; 1,000,000 authorized
shares, none issued or outstanding.

 

 

 

 

 

Common stock; $0.60 par value; 20,000,000 authorized
shares, 13,341,661 issued and outstanding shares at
March 31, 2007 and December 31, 2006, respectively.

 

 

8,004

 

 

8,004

 

Additional paid-in capital

 

 

23,712

 

 

23,641

 

Accumulated earnings

 

 

312

 

 

656

 

Total Stockholders' Equity

 

 

32,028

 

 

32,301

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$

34,017

 

$

35,306

 


__________________________________

Source:  RELM Wireless Corporation