-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WqB7LLDHaREBgnWfMtYsiPrueLfCEAyTu1lCkf6EIYuxURN9a6vNhmD1lUpxBnsy pFCYxcpqm5sZ3jVSj3eWZA== 0001157523-03-001882.txt : 20030514 0001157523-03-001882.hdr.sgml : 20030514 20030513195623 ACCESSION NUMBER: 0001157523-03-001882 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030514 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL RECORDERS INC CENTRAL INDEX KEY: 0000853695 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 561362926 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-82870-A FILM NUMBER: 03696755 BUSINESS ADDRESS: STREET 1: 4018 PATRIOT DRIVE STREET 2: SUITE 100 CITY: DURHAM STATE: NC ZIP: 27703 BUSINESS PHONE: 9193612155 MAIL ADDRESS: STREET 1: 4018 PATRIOT DRIVE STREET 2: SUITE 100 CITY: DURHAM STATE: NC ZIP: 27703 8-K 1 a4396042.txt DIGITAL RECORDERS 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): May 13, 2003 ------------ Digital Recorders, Inc. ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) North Carolina 1-13408 56-1362926 (State or Other Jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification No.) 5949 Sherry Lane, Suite 1050, Dallas, Texas 75225 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (214) 378-8992 Item 9. Regulation FD Disclosure (the following discussion is furnished under "Item 12. Results of Operations and Financial Condition") In accordance with SEC Release No. 33-8216, the following information, required to be furnished under "Item 12. Results of Operations and Financial Condition," is furnished under "Item 9. Regulation FD Disclosure." On May 13, 2003, Digital Recorders, Inc. (the "Company") announced in a press release the Company's preliminary results for its first quarter ended March 31, 2003. A copy of the Company's press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. This Form 8-K and the attached exhibit are provided under Item 12 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DIGITAL RECORDERS, INC. Date: May 13, 2003 By: /s/ DAVID L. TURNEY -------------------------------- David L. Turney Chairman, Chief Executive Officer and President Exhibit 99.1 Press Release Dated May 13, 2003 EX-99 3 a4396042_ex991.txt DIGITAL RECORDERS EXHIBIT 99.1 Exhibit 99.1 Digital Recorders, Inc. Announces First Quarter 2003 Financial Results; Revenues Increased 26.6 Percent With Improved Bottom Line DALLAS--(BUSINESS WIRE)--May 13, 2003--Digital Recorders, Inc. (DRI) (Nasdaq:TBUS), a market leader in transit, transportation and law enforcement digital-communications and audio-enhancement systems, announced today that its first quarter 2003 revenues were $10.9 million, an increase of 26.6 percent over revenues for the same period in fiscal year 2002. First Quarter 2003 Overview "The first quarter was a substantial improvement over the same period in 2002, with a loss of $211,466, as compared to the $703,808 loss posted in first quarter 2002. We are starting the year in a stronger position. Our law enforcement segment, which had been running well below expectations, produced a 70 percent increase in revenues over the prior year's period and a profitable quarter. Our transportation segment also saw notable gains both in Europe and North America," David L. Turney, the Company's Chairman, Chief Executive Officer and President, said. First Quarter 2003 Operating and Financial Results For the quarter ended March 31, 2003, the Company's revenues increased to $10.9 million and the net loss was $211,466, or 6 cents per share. This compares to revenues of $8.6 million and a net loss of $703,808, or 19 cents per share, for the same period in 2002. The results for both periods are after Series AAA Preferred Stock dividends of $44,250. Weighted-average shares outstanding for the three months were 3,804,475, compared to 3,704,475 a year ago reflecting a previously reported private sale in 2002 of common equity. As of March 31, 2003, the Company had $1.8 million in working capital and $7.5 million in shareholders' equity. This compares to $7.1 million in working capital and $4.4 million in shareholders' equity for the same period in 2002. The reduction in working capital is due to a previously reported balance-sheet reclassification from long-term to short-term debt of an asset-based lending relationship. As previously reported, that relationship is due to expire in third quarter 2003; management is presently reviewing replacement options. The increase in shareholder's equity is due to the Series AAA Preferred Stock, which previously carried a mandatory redemption date of December 31, 2003, now being redeemable at the Company's discretion. First Quarter 2003 Sales Highlights On Jan. 30, 2003, the Company announced a $278,000-plus order for its Digital Audio Corporation (DAC) business unit's newly released SR-200 Solid-State Recorder Kit -- designed specifically for law enforcement and security covert applications -- was received from the U.S. government. On Feb. 19, 2003, the Company announced its TwinVision na, Inc. (TVna) business unit received orders totaling more than $1.3 million from existing customers on behalf of public transit fleets in Miami-Dade County, Fla., and Pittsburgh, Pa., for TwinVision(R) amber, all-LED, electronic destination sign systems. Second Quarter 2003 Forecast "We presently expect to achieve second quarter 2003 revenues between $13 million to $13.8 million, compared to revenues of $12.4 million posted in the same quarter last year. We also expect the quarter to be profitable," Mr. Turney said. Fiscal Year 2003 Outlook "In fiscal year 2003, we expect to achieve between $52 million to $57 million in revenues given the demand for existing products and services, as well as due to an extension of the Company's services and product offerings, including new products in virtually all business units. We also expect earnings for fiscal year 2003 to be in the range of 20 cents to 35 cents per share without giving effect to any non-cash charges that might arise in connection with the Convertible Preferred equity financing, which we previously reported we were considering," Mr. Turney said. According to Mr. Turney, that rather wide range of expected revenues and earnings will be further refined in the third quarter when the Company's management team has more visibility on timing of larger contracts expected during the last half of the year. "As we have frequently noted, timing on larger orders can cause significant fluctuations in revenues and earnings in our industry." The Company has been less affected by the weakness in the U.S. economy during the last two years than might intuitively have been expected. According to Mr. Turney, this is due, in part, to the fact that the Company has stepped-up its introduction of new products and its entry into new served market sectors. "The longer term contract nature of our U.S. market and its somewhat counter cyclical nature, as well as strength in certain of our international markets, have contributed to stability in revenues for the Company up to this point. The continuation of this stability depends on the duration of the on-going weakness in the U.S. economy and our ability to maintain our market pace and product successes. I would like to note that the 70 percent revenue increase in our law enforcement segment is not yet viewed as being a trend, although business is gaining strength over the performance of the past two years," Mr. Turney said. Conference Call Information Senior management will discuss first quarter earnings results during an investor conference call Wednesday, May 14, 2003, at 11 a.m. (Eastern). To listen to, 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, 800/683-1575; or -- International, 973/935-2101. Replay will be available from 2 p.m. (Eastern) Wednesday, May 14, 2003 through 11:59 p.m. (Eastern) May 28, 2003 via the following telephone numbers: Domestic, 877/519-4471 (Pin Number 3923381); or International, 973/341-3080 (Pin Number 3923381). To participate via webcast, please go to www.viavid.com, search for TBUS events, click on the first quarter 2003 event description, and register to participate. The webcast also will be accessible via the Company's corporate website, 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 access to and use of 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. 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 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. For More Information, Please Refer to: www.digrec.com. DIGITAL RECORDERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2003 2002 ASSETS (Unaudited) (Note) - ----------------------------------------- ------------- ------------ Current Assets Cash and cash equivalents $136,900 $504,758 Trade accounts receivable, less allowance for doubtful accounts of $146,066 at March 31, 2003 and December 31, 2002 9,304,545 10,137,955 Other receivables 451,713 251,454 Inventories 8,795,566 8,830,522 Prepaids and other current assets 534,742 452,882 ------------ ------------ Total current assets 19,223,466 20,177,571 ------------ ------------ Property and equipment, less accumulated depreciation of $1,614,753 at March 31, 2003 and $1,459,953 at December 31, 2002 1,688,495 1,572,259 Goodwill, less accumulated amortization of $1,096,505 at March 31, 2003 and $1,066,643 at December 31, 2002 9,148,732 8,960,396 Intangible assets, less accumulated amortization of $407,926 at March 31, 2003 and $362,922 at December 31, 2002 1,391,695 1,392,533 Deferred tax assets 866,109 865,663 Other assets 538,015 414,764 ------------ ------------ TOTAL ASSETS $32,856,512 $33,383,186 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------------- Current Liabilities Lines of credit $6,950,011 $7,503,791 Current maturities of long-term debt 761,120 763,360 Accounts payable 6,201,759 6,339,537 Accounts payable, related party 1,216,053 859,425 Accrued expenses 2,060,673 2,162,309 Deferred tax liabilities 142,213 138,695 Preferred stock dividends payable 88,500 88,500 ------------ ------------ Total current liabilities 17,420,329 17,855,617 ------------ ------------ Long-term debt and other obligations, less current maturities 7,584,741 7,737,940 ------------ ------------ Other Liabilities 65,003 65,003 Series AAA Mandatory 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 305,000 267,566 ------------ ------------ Commitments and contingencies -- -- Stockholders' Equity Series AAA, Convertible, Nonvoting Preferred Stock, $ .10 par Liquidation Preference of $5,000 per share; 20,000 shares authorized 354 shares issued and outstanding at March 31, 2003; redeemable at the discretion of the Company 1,770,000 -- Common stock, $.10 par value, 10,000,000 shares authorized; 3,804,475 shares issued and outstanding at March 31, 2003 and December 31, 2002 380,447 380,447 Additional paid-in capital 12,305,476 12,349,726 Accumulated other comprehensive income - foreign currency translation 657,020 421,175 Accumulated deficit (7,566,501) (7,399,285) ------------ ------------ Total stockholders' equity 7,546,442 5,752,063 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $32,856,512 $33,383,186 ============ ============ Note: The 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 MONTHS ENDED MARCH 31, 2003 AND 2002 Three Months Ended March 31, ---------------------------- 2003 2002 ------------- -------------- Net sales $10,917,194 $8,623,648 Cost of sales 6,573,203 5,534,418 ------------- -------------- Gross profit 4,343,991 3,089,230 ------------- -------------- Operating expenses: Selling, general and administrative 3,562,696 2,826,822 Research and development 649,997 625,520 ------------- -------------- Total operating expenses 4,212,693 3,452,342 ------------- -------------- Operating income (loss) 131,298 (363,112) ------------- -------------- Other income (expense) 19,483 (10,682) Foreign currency translation gain 28,659 36,366 Interest expense, net (309,823) (275,680) ------------- -------------- Total other expense and interest expense (261,681) (249,996) ------------- -------------- Loss before income tax benefit (expense) (130,383) (613,108) Income tax benefit (expense) 601 (46,619) ------------- -------------- Loss before minority interest in income of consolidated subsidiary (129,782) (659,727) Minority interest in income of consolidated subsidiary (37,434) 169 ------------- -------------- Net loss (167,216) (659,558) Preferred stock dividend requirements (44,250) (44,250) ------------- -------------- Net loss applicable to common shareholders $(211,466) $(703,808) ============= ============== Earnings per share: Net loss per share: Basic $(0.06) $(0.19) ============= ============== Diluted $(0.06) $(0.19) ============= ============== Weighted average number of common shares and common equivalent shares outstanding: Basic 3,804,475 3,704,475 ============= ============== Diluted 3,804,475 3,704,475 ============= ============== CONTACT: Digital Recorders, Inc., Dallas Veronica B. Marks, 214/378-4776 Fax: 214/378-8437 veronicam@digrec.com -----END PRIVACY-ENHANCED MESSAGE-----