EX-99 2 exhibit_99-1.txt THIRD QUARTER EARNINGS RELEASE Exhibit 99.1 NEWS BULLETIN FROM: CalAmp Logo FOR IMMEDIATE RELEASE CalAmp Reports FY 2007 Third Quarter Results OXNARD, Calif., January 11, 2007--CalAmp Corp. (Nasdaq: CAMP), a leading provider of wireless communications products, today reported results for its fiscal 2007 third quarter ended November 30, 2006. Key highlights of the latest quarter include: * Initial shipments of new generation Direct Broadcast Satellite (DBS) products to support service providers' rollout of high definition television (HDTV) programming * Revenues of $61.1 million, GAAP earnings of $0.04 per diluted share and Adjusted Basis (non-GAAP) earnings of $0.08 per diluted share within expectations. "During the fiscal third quarter, our core DBS business continued to generate solid cash flows, and we made progress executing on our business strategy to increase our market presence in wireless data communication markets," commented Fred Sturm, CalAmp's President and Chief Executive Officer. "On a sequential quarter basis, CalAmp's increase in revenues was driven by sales to our Direct Broadcast Satellite (DBS) customers along with growth in several of our wireless data communications offerings including products for Mobile Resource Management (MRM)." Mr. Sturm continued, "CalAmp achieved a number of important operational milestones during the third quarter, which position the Company for a solid finish to fiscal 2007. Toward the end of the quarter, we received product approval from both of our DBS customers and began shipping next generation outdoor reception equipment. During our fourth quarter, we expect meaningful revenues from the new DBS products. As an indication of our leadership position in this market, CalAmp is currently the only company supplying these latest products to both DBS service providers. In our wireless data communications business, we continue to aggressively execute our growth strategy. Dataradio recently won a $1.3 million contract to provide a mobile data communications system for the police, fire and EMS personnel of Genesee County, Michigan. Additionally, CalAmp was selected to provide key MRM components for GE Security's new NavLogix fleet tracking service." Fiscal 2007 Third Quarter Results Revenue for the fiscal 2007 third quarter was $61.1 million compared to $64.5 million for the third quarter of fiscal 2006. Growth in the Company's wireless data communications business, driven by the May 2006 acquisitions of Dataradio and the MRM product line, partially offset lower DBS product sales and Solutions Division revenue in the latest quarter. Net income for the fiscal 2007 third quarter was $0.9 million or $0.04 per diluted share compared to net income of $5.4 million or $0.23 per diluted share for the third quarter of last year. Adjusted Basis (non-GAAP) net income for the fiscal 2007 third quarter was $2.0 million or $0.08 per diluted share compared to Adjusted Basis net income of $5.7 million or $0.24 per diluted share for the same period last year. Adjusted Basis net income for the comparable periods exclude the impact of amortization of intangible assets, stock-based compensation expense, in-process research and development and impairment loss, each net of tax where applicable. A reconciliation of GAAP basis net income to Adjusted Basis net income is provided in the table at the end of this press release. Gross profit for the third quarter of fiscal 2007 was $12.7 million, or 20.8% of revenues compared to $16.5 million or 25.5% of revenues for the same period last year. The reduction in gross profit and gross margin were primarily the result of higher freight costs and lower margins on final shipments of end-of-life DBS products. The Company made the decision to incur higher freight costs to expedite incoming materials in response to supply chain disruptions and demand volatility in order to meet customer requirements. The Company expects the higher level of freight costs to persist through much of the fourth quarter until the supply pipeline for new DBS products has been filled. Liquidity During the nine months ended November 30, 2006, the Company generated operating cash flow of $11.7 million. At November 30, 2006, the Company had total cash of $33.3 million, with $34.3 million in total outstanding debt. Inventories were $20.8 million at the end of the third quarter, representing annualized turns of 9 times based on cost of sales in the latest quarter. Accounts receivable outstanding at the end of the third quarter represents a 51 day average collection period. Business Outlook Commenting on the Company's fiscal 2007 fourth quarter outlook, Mr. Sturm said, "Based on our current estimates, we anticipate fiscal 2007 fourth quarter revenues will be in the range of $54 to $60 million, with net income in the range of $0.03 to $0.07 per diluted share. Adjusted Basis (Non-GAAP) net income for the fourth quarter, which excludes amortization of intangible assets and stock-based compensation expense - each net of tax - is expected to be $0.07 to $0.11 per diluted share." Conference Call, Webcast and 10-Q filing A conference call and simultaneous webcast to discuss fiscal 2007 third quarter financial results and business outlook will be held today at 4:30 p.m. Eastern / 1:30 p.m. Pacific. The live webcast of the call is available on CalAmp's web site at www.calamp.com. Participants are encouraged to visit the web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. CalAmp's President and CEO Fred Sturm and CFO Rick Vitelle will host the conference call. After the live webcast, a replay will remain available until the next quarterly conference call in the Investor Relations section of CalAmp's web site. The reader is also referred to the Company's quarterly report on Form 10-Q, filed today with the Securities and Exchange Commission. About CalAmp Corp. CalAmp is a leading provider of wireless communications products that enable anytime/anywhere access to critical information, data and entertainment content. With comprehensive capabilities ranging from product design and development through volume production, CalAmp delivers cost- effective high quality solutions to a broad array of customers and end markets. CalAmp is the leading supplier of Direct Broadcast Satellite (DBS) outdoor customer premise equipment to the U.S. satellite television market. The Company also provides wireless data communication solutions for the telemetry and asset tracking markets, private wireless networks, public safety communications and critical infrastructure and process control applications. For additional information, please visit the Company's website at www.calamp.com. Forward-Looking Statement Statements in this press release that are not historical in nature are forward-looking statements, which involve known and unknown risks and uncertainties. Words such as "may", "will", "expect", "intend", "plan", "believe", "seek", "could", "estimate", "judgment", "targeting", "should", and variations of these words and similar expressions, are intended to identify forward-looking statements. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including general and industry economic conditions, competition, the timing of customer approvals of new product designs, operating costs, the Company's ability to efficiently and cost-effectively integrate its acquired businesses, and other risks and uncertainties that are detailed from time to time in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward- looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. AT THE COMPANY: AT FINANCIAL RELATIONS BOARD: Rick Vitelle Lasse Glassen Chief Financial Officer General Information (805)987-9000 (310)854-8313 lglassen@financialrelationsboard.com - Financial Tables to Follow- CAL AMP CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands except per share amounts) Three Months Ended Nine Months Ended November 30, November 30, ------------------ ---------------- 2006 2005 2006 2005 ----- ------ ----- ----- Revenues $61,092 $64,463 $165,339 $169,704 Cost of revenues 48,390 47,999 127,699 129,127 ------- ------- ------- ------- Gross profit 12,702 16,464 37,640 40,577 Operating expenses: Research and development 4,099 2,585 10,456 7,142 Selling 2,614 1,914 7,390 5,582 General and administrative 3,308 2,679 9,638 7,900 Intangible asset amortization 1,229 403 2,905 1,375 In-process research and development - - 6,850 320 Impairment loss - - 29,848 - ------ ------- ------- ------- 11,250 7,581 67,087 22,319 ------ ------- ------- ------- Operating income (loss) 1,452(a) 8,883 (29,447)(a) 18,258 Non-operating income (expense), net (141) 162 574 231 ------ ------- ------- ------- Income (loss) before income taxes 1,311 9,045 (28,873) 18,489 Income tax provision (415) (3,606) (3,047) (7,392) ------ ------- ------- ------- Net income (loss) $ 896 $ 5,439 $(31,920) $ 11,097 ====== ======= ======= ======= Net income (loss) per share: Basic $0.04 $0.24 $(1.37) $0.49 Diluted $0.04 $0.23 $(1.37) $0.48 Shares used in per share calculations: Basic 23,414 22,580 23,290 22,520 Diluted 23,679 23,592 23,290 23,272 (a) Operating income (loss) for the three and nine months ended November 30, 2006 includes share-based compensation expense pursuant to FAS123R of $541 and $1,614, respectively. Such expense is included in the following captions of the Statement of Operations: Three Months Nine Months Ended Ended Nov. 30, 2006 Nov. 30, 2006 ------------- ------------- Statement of Operations Caption ------------------------------- Cost of revenues $ 39 $ 112 Research and development expense 55 166 Selling expense 65 191 General and administrative 382 1,145 ----- ------ $ 541 $1,614 ===== ====== CAL AMP CORP. BUSINESS SEGMENT INFORMATION (Unaudited, in thousands except per share amounts) Three Months Ended Nine Months Ended November 30, November 30, ----------------- -------------------- 2006 2005 2006 2005 ----- ------ ----- ----- Revenue Products Division $59,484 $59,565 $157,784 $153,331 Solutions Division 1,608 4,898 7,555 16,373 ------- ------- ------- ------- Total revenue $61,092 $64,463 $165,339 $169,704 ======= ======= ======= ======= Gross profit Products Division $11,983 $14,441 $ 34,714 $ 34,975 Solutions Division 719 2,023 2,926 5,602 ------- ------- ------- ------- Total gross profit $12,702 $16,464 $ 37,640 $ 40,577 ======= ======= ======= ======= Operating income (loss) Products Division $ 3,819 $10,406 $ 7,336 $ 23,453 Solutions Division (779) (373) (32,384) (2,029) Corporate expenses (1,588) (1,150) (4,399) (3,166) ------- ------- ------- ------- Total operating income (loss) $ 1,452(a) $ 8,883 $(29,447)(a) $ 18,258 ======= ======= ======= ======= (a) Operating income (loss) for the three and nine months ended November 30, 2006 includes share-based compensation expense pursuant to FAS123R of $541 and $1,614, respectively. Such expense is included in the operating income(loss) of the reporting segments as follows: Three Months Nine Months Ended Ended Nov. 30, 2006 Nov. 30, 2006 ------------- ------------- Reporting Segment ----------------- Products Division $ 141 $ 531 Solutions Division 105 296 Corporate expenses 295 787 ----- ------ $ 541 $1,614 ===== ====== CAL AMP CORP. CONSOLIDATED BALANCE SHEETS (Unaudited - In thousands) November 30, February 28, 2006 2006 -------- -------- Assets Current assets: Cash and cash equivalents $ 33,284 $ 45,783 Accounts receivable, net 30,274 28,630 Inventories 20,821 18,279 Deferred income tax assets 4,139 4,042 Prepaid expenses and other current assets 8,443 2,502 -------- -------- Total current assets 96,961 99,236 Equipment and improvements, net 6,571 5,438 Deferred income tax assets - 2,344 Goodwill 89,835 91,386 Other intangible assets, net 19,872 5,304 Other assets 1,399 638 -------- -------- $214,638 $204,346 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $ 2,215 $ 2,168 Accounts payable 12,820 12,011 Accrued payroll and employee benefits 3,431 3,608 Other accrued liabilities 4,954 2,763 Deferred revenue 1,313 1,323 -------- -------- Total current liabilities 24,733 21,873 -------- -------- Long-term debt, less current portion 32,048 5,511 -------- -------- Deferred income tax liability 7,109 - -------- -------- Other non-current liabilities 1,034 853 -------- -------- Stockholders' equity: Common stock 235 232 Additional paid-in capital 138,199 135,022 Common stock held in escrow - (2,532) Retained earnings 12,268 44,188 Accumulated other comprehensive loss (988) (801) -------- -------- Total stockholders' equity 149,714 176,109 -------- -------- $214,638 $204,346 ======== ======== CAL AMP CORP. CONSOLIDATED CASH FLOW STATEMENTS (Unaudited - In thousands) Nine Months Ended November 30, ------------------ 2006 2005 ---- ---- Cash flows from operating activities: Net income (loss) $(31,920) $ 11,097 Depreciation and amortization 5,027 3,305 Stock-based compensation 1,614 - Write-off of in-process R&D 6,850 320 Goodwill impairment writedown 29,848 - Stock option income tax benefits - 678 Excess tax benefit from stock-based compensation (392) - Deferred tax assets, net 3,555 5,431 Changes in operating working capital (2,973) (6,485) Other 84 16 -------- ------- Net cash provided by operating activities (A) 11,693 14,362 -------- ------- Cash flows from investing activities: Capital expenditures (2,112) (1,555) Proceeds from sale of property and equipment 16 143 Acquisition of Dataradio net of cash acquired (48,047) - Acquisition of TechnoCom product line (2,478) - Proceeds from Vytek escrow distribution 480 - Acquisition of Skybility assets - (4,897) -------- ------- Net cash used in investing activities (52,141) (6,309) -------- ------- Cash flows from financing activities: Proceeds from long-term debt 38,000 - Debt repayments (11,416) (2,178) Proceeds from stock option exercises 1,130 1,282 Excess tax benefit from stock-based compensation 392 - -------- ------- Net cash provided (used) in financing activities 28,106 (896) -------- ------- Effect of exchange rate changes on cash (157) - -------- ------- Net change in cash and cash equivalents (12,499) 7,157 Cash and cash equivalents at beginning of period 45,783 31,048 -------- ------- Cash and cash equivalents at end of period $ 33,284 $ 38,205 ======== ======= (A) Net cash provided by operating activities for the nine months ended November 30, 2006 is net of the payment of $5,355,000 of accrued incentives paid by Dataradio to its workforce shortly after the acquisition of CalAmp. These incentives were recorded as an expense in Dataradio's pre-acquisition income statement. CAL AMP CORP. NON-GAAP EARNINGS RECONCILIATION (Unaudited, in thousands except per share amounts) Non-GAAP Earnings Reconciliation -------------------------------- "GAAP" refers to financial information presented in accordance with Generally Accepted Accounting Principles in the United States. This press release includes historical non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission. CalAmp believes that its presentation of historical non-GAAP financial measures provides useful supplementary information to investors. The presentation of historical non- GAAP financial measures is not meant to be considered in isolation from or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States. In this press release, CalAmp reported the non-GAAP financial measures of Adjusted Basis net income and diluted earnings per share. CalAmp uses these non-GAAP financial measures to enhance the investor's overall understanding of the financial performance and prospects for the future of CalAmp's core business activities. Specifically, CalAmp believes that a report of Adjusted Basis net income and diluted earnings per share provides consistency in its financial reporting and facilitates the comparison of results of core business operations between its current and past periods. The reconciliation of GAAP basis net income (loss) to Adjusted Basis net income is as follows: Three Months Ended Nine Months Ended November 30, November 30, ----------------- -------------------- 2006 2005 2006 2005 ----- ----- ----- ----- GAAP basis net income (loss) $ 896 $ 5,439 $(31,920) $ 11,097 Adjustments to reconcile to non-GAAP net income: Amortization of intangible assets, net of tax 693 242 1,638 825 Stock-based compensation expense, net of tax 305 - 910 - In-process R&D, net of tax in fiscal 2006 - - 6,850 192 Impairment loss - goodwill - - 29,012 - Impairment loss - intangible assets, net of tax - - 472 - ------ ------ ------- ------- $ 1,894 $5,681 $ 6,962 $ 12,114 ====== ===== ======= ======= Adjusted Basis net income $ 0.08 $ 0.24 $ 0.29 $ 0.52 Weighted average common shares outstanding on diluted basis 23,679 23,592 23,701 23,272
Reconciling items that are not treated as tax deductible in computing the GAAP basis income tax provision (in-process research and development in fiscal 2007 and goodwill impairment loss) are not tax effected in the non- GAAP Earnings Reconciliation. The remaining reconciling items are tax- effected using an adjusted year-to-date effective income tax rate that is computed by excluding from pretax income(loss) those reconciling items that are not treated as tax deductible in computing the GAAP basis income tax provision. The computation of the adjusted year-to-date effective income tax rate is as follows: Nine Months Ended November 30, ------------------ 2006 2005 ---- ---- Pretax income (loss) as reported $(28,873) $ 18,489 Add back nondeductible items: In process research and development in fiscal 2007 6,850 - Impairment loss - goodwill 29,012 - ------- ------- Pretax income before nondeductible items 6,989 18,489 Income tax provision as reported 3,047 7,392 ------- ------- Year-to-date effective income tax rate as adjusted 43.6% 40.0% ======= =======