IRVING, Texas, March 31 /PRNewswire-FirstCall/ -- EF Johnson
Technologies, Inc. (Nasdaq: EFJI) today announced its results for
the fourth quarter and year ended December
31, 2009.
Revenues for the fourth quarter of 2009 were $16.3 million, a decrease from $25.3 million for the same period of 2008.
The net loss for the fourth quarter of 2009 was $9.6 million, or $0.36 per share, compared to a net loss of
$20.8 million, or $0.79 per share, for the same period in the prior
year. This decline in fourth quarter revenue was primarily
due to delays in shipping land mobile radio ("LMR") products to
certain federal, state and local customers.
Michael E. Jalbert, chairman and
chief executive officer of EFJohnson Technologies, Inc., said, "We
were very disappointed in our fourth quarter results. We had
multiple orders in backlog at the end of the quarter that could not
ship due to specific customer change requests. So while over
$10 million of these orders shipped
in the first quarter of 2010, we were not able to achieve our
profitability targets for 2009."
Revenues for 2009 were $92.3
million, a decrease from $126.3
million for 2008. As noted above, the decline was
attributable to lower federal, state and local revenues resulting
from delays in shipments of LMR radio products from backlog into
2010 and delays in finalizing certain re-banding agreements. The
LMR revenue decline was partially offset by the increases in our
secure broadband revenue, driven by significant deliveries under
key programs to the Department of Defense.
Gross profit was $27.9 million for
2009, a decrease from $42.7 million
for 2008. The decrease was mainly attributable to the decline in
revenue volume coupled with a write off of approximately
$4.1 million "X"-platform LMR
inventory during the fourth quarter of 2009 relating to a decision
to end the life of the "X"-platform product and legacy service
stock. Gross margin was 30.2% for 2009, as compared to 33.8% for
2008. The decision to end the life of the "X"-platform product
negatively impacted the gross margin by 4 points for the year.
Net loss was $12.2 million in 2009
as compared to a net loss of $20.9
million in 2008. The loss per share for 2009 was
$0.46 compared to a loss of
$0.79 per share for 2008.
As previously announced, the Company was not in compliance with
certain financial covenants under its loan agreement with Bank of
America, N. A. for the quarter ending December 31, 2009 due to the fourth quarter
shipping delays. The Company executed an amendment to the loan
agreement effective March 1, 2010
which waived these covenant violations on a one-time basis, waived
compliance with the financial covenants for the Company's first
quarter ended March 31, 2010, and
contained additional restrictions. The loan agreement, which
governs our revolving line of credit and $15
million term loan, expires June 30,
2010. As a result, the $15.0
million term note will be due and payable in full at that
time. The Company has pledged $3.0
million to Bank of America for the repayment of the term
loan, which is shown as Restricted Cash on our balance sheet.
As discussed more fully below, the Company is pursuing
strategic alternatives, including the refinancing of its credit
facility, to enable the Company to repay its term loan and provide
ongoing working capital. As a result of this liquidity
situation and recurring losses, the audit opinion included in our
annual report contains a going concern explanatory paragraph.
The Company's unrestricted cash position at the end of
December 31, 2009 was $16.0 million and is projected to be ~$14 million on March 31,
2010.
"We have developed and are implementing a specific action plan
to improve profitability and resolve our liquidly issue in the
first half of 2010," Jalbert stated. "As part of this plan,
we have: i) flattened the organizational structure and reduced
employee and operational expenses in January
2010; and ii) retained the services of an outside investment
banking firm, Raymond James &
Associates, Inc., to explore what options may be available to the
Company to refinance the debt, or raise additional funds through
private equity or debt financing, sales of assets, or other
strategic alternatives."
"We entered 2010 with solid customer acceptance of our "ES" LMR
radio platform, momentum in our systems business, multiple
broadband contracts, and backlog of $70.2
million. In addition to the delayed fourth quarter
orders which were shipped in the first quarter, we also announced
several key first quarter 2010 orders and milestones including:
- Securing and shipping a $1.8
Million LMR order from US Dept of Defense Customer
- Capturing and shipping a $3.4
Million LMR order from a State Transportation
Department
- Receiving and shipping a $3.0
Million LMR order from a public safety customer
- Winning a $0.6 million
strategic award for our new Stargate Consoles; upgrading
the dispatch center in Clay County,
Florida
- Reaching major milestone in delivery of City of Wilson, North Carolina - system
passes Factory Acceptance Test
We believe the combination of shipping revenue from backlog,
coupled with several convertible orders, will result in solid first
quarter 2010 results, with revenues greater than either the first
or fourth quarter of 2009. We anticipate that the stronger
revenue quarter will also drive increasing receivables and lower
inventory for the first quarter of 2010," Jalbert continued.
Conference Call and Webcast
The Company's management plans to discuss its financial results
and provide an operational progress report on its investor call
Wednesday, March 31, 2010 at
3:30p.m. (CDT). The investor
conference call will be available via live webcast on the EF
Johnson Technologies, Inc. website at www.efjohnsontechnologies.com
under the tab "Investor Relations." Investors are advised to
go to the website at least 10 minutes prior to the call to
register, download and install any necessary audio software.
The webcast will be archived for 30 days.
To participate by telephone, the domestic dial-in number is
(877) 407-9205 and the international dial-in number is (201)
689-8054.
About EF Johnson Technologies, Inc.
Headquartered in Irving, Texas,
EF Johnson Technologies, Inc. focuses on innovating, developing and
marketing the highest quality secure communications solutions to
organizations whose mission is to protect and save lives. The
Company's customers include first responders in public safety and
public service, the federal government, and industrial
organizations. The Company's products are marketed under the
EFJohnson, 3e Technologies International, and Transcrypt
International names and are Made in America. For more information,
visit http://www.EFJohnsonTechnologies.com.
Safe Harbor
Certain matters discussed in this press release constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to certain risks and uncertainties that
could cause the actual results, performance or achievements to
differ materially from those expressed, suggested or implied by the
forward-looking statements due to a number of risk factors
including, but not limited to, our ability to repay our bank debt
when due, continued access to bank lines of credit, the timing and
receipt of orders, the level of demand for the Company's products
and services, dependence on continued funding of governmental
agency programs, reliance on contract manufacturers, the timely
procurement of necessary manufacturing components, software feature
development and the implementation of application
software, successful integration of the system components,
general economic and business conditions, and other risks detailed
in the Company's reports filed with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the period
ended December 31, 2009 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 undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements.
EF JOHNSON
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
December 31, 2009 and
2008
(in thousands, except share
and per share data)
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
16,030
|
|
$
|
11,267
|
|
|
Restricted
cash
|
|
|
5,032
|
|
|
-
|
|
|
Accounts
receivable, net of allowance for returns and doubtful accounts of
$1,490 and $1,969, respectively
|
|
|
7,477
|
|
|
18,234
|
|
|
Accounts
receivable due from related parties
|
|
|
-
|
|
|
1,281
|
|
|
Receivables -
other
|
|
|
796
|
|
|
849
|
|
|
Cost in excess of
billings on uncompleted contracts
|
|
|
5,096
|
|
|
5,116
|
|
|
Inventories,
net
|
|
|
31,295
|
|
|
37,322
|
|
|
Prepaid
expenses
|
|
|
912
|
|
|
1,632
|
|
|
Total current
assets
|
|
|
66,638
|
|
|
75,701
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
|
4,425
|
|
|
5,996
|
|
|
Restricted
cash
|
|
|
-
|
|
|
2,021
|
|
|
Goodwill
|
|
|
5,126
|
|
|
5,126
|
|
|
Other intangible
assets, net of accumulated amortization
|
|
|
7,778
|
|
|
8,770
|
|
|
Other
assets
|
|
|
178
|
|
|
73
|
|
|
TOTAL
ASSETS
|
|
$
|
84,145
|
|
$
|
97,687
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt obligations
|
|
$
|
15,476
|
|
$
|
9
|
|
|
Accounts
payable
|
|
|
8,470
|
|
|
11,728
|
|
|
Accrued
expenses
|
|
|
7,754
|
|
|
10,786
|
|
|
Billings in excess
of cost on uncompleted contracts
|
|
|
3,610
|
|
|
217
|
|
|
Deferred
revenues
|
|
|
1,118
|
|
|
1,235
|
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
36,428
|
|
|
23,975
|
|
|
Long-term debt
obligations, net of current portion
|
|
|
-
|
|
|
15,006
|
|
|
Deferred income
taxes
|
|
|
631
|
|
|
631
|
|
|
Other
liabilities
|
|
|
715
|
|
|
1,106
|
|
|
TOTAL
LIABILITIES
|
|
|
37,774
|
|
|
40,718
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred stock
($0.01 par value; 3,000,000 shares authorized; none
issued)
|
|
|
—
|
|
|
—
|
|
|
Common stock
($0.01 par value; 50,000,000 voting shares authorized, 26,477,611
and 26,336,735 issued and outstanding as of December 31, 2009
and December 31, 2008, respectively)
|
|
|
264
|
|
|
262
|
|
|
Additional paid-in
capital
|
|
|
155,795
|
|
|
154,688
|
|
|
Accumulated other
comprehensive loss
|
|
|
(470)
|
|
|
(1,088)
|
|
|
Accumulated
deficit
|
|
|
(109,089)
|
|
|
(96,861)
|
|
|
Less: Treasury
stock (118,989 and 18,083 shares at cost at December 31, 2009 and
December 31, 2008, respectively)
|
|
|
(129)
|
|
|
(32)
|
|
|
TOTAL
STOCKHOLDERS' EQUITY
|
|
|
46,371
|
|
|
56,969
|
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
$
|
84,145
|
|
$
|
97,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EF JOHNSON TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
Years Ended December 31,
2009, 2008 and 2007
(in thousands, except share
and per share data)
|
|
|
Year ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
92,341
|
|
$
126,286
|
|
$
154,610
|
|
Cost of sales
|
|
64,425
|
|
83,560
|
|
113,606
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
27,916
|
|
42,726
|
|
41,004
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and
development
|
|
11,532
|
|
10,099
|
|
15,677
|
|
Sales and
marketing
|
|
9,432
|
|
12,218
|
|
13,640
|
|
General and
administrative
|
|
19,861
|
|
24,435
|
|
24,193
|
|
Amortization of
intangibles
|
|
992
|
|
1,526
|
|
1,613
|
|
Impairment of
goodwill
|
|
-
|
|
14,914
|
|
5,475
|
|
Escrow fund
settlement
|
|
(2,804)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
39,013
|
|
63,192
|
|
60,598
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(11,097)
|
|
(20,466)
|
|
(19,594)
|
|
Interest income
|
|
22
|
|
197
|
|
1,074
|
|
Interest expense
|
|
(1,394)
|
|
(1,177)
|
|
(1,108)
|
|
Other expense, net
|
|
(5)
|
|
(1)
|
|
(1)
|
|
Loss before income
taxes
|
|
(12,474)
|
|
(21,447)
|
|
(19,629)
|
|
Income tax benefit
(expense)
|
|
246
|
|
574
|
|
(21,470)
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(12,228)
|
|
$
(20,873)
|
|
$
(41,099)
|
|
|
|
|
|
|
|
|
|
Net loss per share—Basic
|
|
$
(0.46)
|
|
$
(0.79)
|
|
$
(1.58)
|
|
|
|
|
|
|
|
|
|
Net loss per share—Diluted
|
|
$
(0.46)
|
|
$
(0.79)
|
|
$
(1.58)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares—Basic
and diluted
|
|
26,386,388
|
|
26,261,062
|
|
26,039,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE EF Johnson Technologies, Inc.