EMRISE Corporation Announces Results of Annual Stockholders' Meeting

On Friday June 26, 2009, 8:45 am EDT
EATONTOWN, N.J.--(BUSINESS WIRE)--EMRISE CORPORATION (NYSE Arca:ERI), a multi-national manufacturer of defense and aerospace electronic devices and communications equipment, today announced that it held its annual meeting of stockholders at 11:30 am EDT on June 25, 2009, at the Staybridge Suites in Eatontown, NJ. Approximately 83% of the Company’s stockholders were present in person or by proxy at the meeting.
EMRISE stockholders approved the proposal to elect Otis W. Baskin, 63, as a Class I director to serve a three-year term, and also approved the proposal to ratify the selection of BDO Seidman LLP as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for 2009.
In prepared remarks, EMRISE Chairman, President and Chief Executive Officer, Carmine T. Oliva discussed key strategic initiatives designed to enhance stockholder value that have been launched by the Company and he reviewed a number of opportunities and challenges faced by the Company.
“As many of you know, EMRISE Corporation completed a major strategic initiative in the 18-month period beginning in November 2007 and ending in March 2009. This initiative was undertaken in order to focus our Electronic Devices business segment on new higher growth, higher revenue core businesses while shedding lower growth, smaller non-core businesses. The core business this strategic effort was focused on was the acquisition of Advanced Control Components (ACC), which has an RF devices business in the US that would allow EMRISE to address the large U.S. military market from which it was precluded from doing previously since all of our RF device manufacturing was located in Europe. The non-core businesses we divested included our Digitran digital and rotary switch business, our Japanese switch and outside sourced resale business and our printed circuit board manufacturing business. In order to implement this strategy, we arranged a $26 million debt financing in November 2007 followed by the acquisition of ACC in August 2008. We then sold the last of the three divested, non-core electronic devices businesses by March 2009 and paid down our debt from $26 million to $16 million, primarily with the $11.5 million gained from the sale of non-core assets,” Oliva said.
“We believe that the bullish global military market represents a significant opportunity for us in 2009. In particular, some of our products are targeted at the U.S. priority spending categories of 'force protection' and terrorist interdiction. We are delivering products for numerous military programs such as 'IED' jamming devices and unmanned air vehicles just to name two. Our expectation for revenue from ACC, which is a driver of this opportunity, is running at or above the top of the range of the previous guidance we provided for ACC, which was in the range of $17 million to $18 million, up from $12 million for the trailing 12 months before we acquired ACC. In our communications products segment, sales of test instruments for the FAA and U.S. military have been robust and we believe that these sales will be a major contributor to our overall revenues in the second half of 2009. Despite the impact of current economy on our communication business, our timing and synchronization communication equipment products remain one of our best opportunities for significant growth in the future,” Oliva said.
Oliva also noted some of the challenges faced by the Company, including the overall weakness in the economy which is affecting among other things, EMRISE’s In-Flight Entertainment business, spending reductions by the French military which is negatively impacting EMRISE’s European communication business, and the current impact of exchange rates on EMRISE’s foreign operations, Oliva added, “Despite these challenges, we believe we are on track to achieve revenue this year of around $60 million from continuing operations, up from about $51 million in revenue from continuing operations in 2008, which represents a growth rate of approximately 18%.”
Oliva said that going into the second half of 2009, EMRISE will begin to experience the favorable impact of approximately $1 million in annualized cost reductions at the corporate G&A level and approximately $2 million in annualized cost reductions at the business unit level. Of the remaining severance costs associated with the Company’s cost reduction programs, most will be absorbed in the second and third quarters of 2009.
He closed his remarks with a brief discussion of the appointment earlier this week of Boenning & Scattergood, Inc. as the Company’s financial advisors. He said that Boenning will initially be focused on helping EMRISE secure a new credit facility, but their ultimate mission is to identify and negotiate potential strategic mergers, acquisitions or alliance targets to help the Company execute its ongoing strategic business plans, which are designed to continue to enhance shareholder value.
Commenting on the recent decline in the Company’s stock price Oliva said, “Over the last several weeks we have seen our stock price decline from more than $1.50 a share to around a $1.20 a share, and I have no idea why, since nothing has happened at the Company that would explain it. The situation is as frustrating and difficult for me as I know it is for our stockholders. We have recently added several new stockholders to the roles and we are continuing to work hard to meet an increasing number of potential new investors and to make sure that our story and prospects are well understood. All of these efforts are designed to help the financial markets recognize the value of EMRISE and to enhance stockholder value.”
About EMRISE Corporation
EMRISE designs, manufactures and markets electronic devices, sub-systems and equipment for aerospace, defense, industrial and communications markets. EMRISE products perform key functions such as power supply and power conversion; RF and microwave signal processing; network access and timing and synchronization of communications networks. Primary growth driver applications for EMRISE products include RF devices for RCIED jamming systems and Edge Network Timing and Synchronization equipment. EMRISE serves customers in North America, Europe and Asia through operations in the United States, England and France. The Company has built a worldwide base of customers including a majority of the Fortune 100 in the U.S. that do business in markets served by EMRISE and many similar-size companies in Europe and Asia. For more information go to www.emrise.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
With the exception of historical information, the matters discussed in this press release, including without limitation, EMRISE’s expectation that revenues contributed by ACC for 2009 will be in the range of $17 million to $18 million and that overall revenues for EMRISE during 2009 will be approximately $60 million; EMRISE’s expectation that sales of test instruments to the FAA and the U.S. military will be a major contributor to EMRISE’s overall revenue for 2009; EMRISE’s expectation that it will experience a favorable impact of approximately $3 million in annualized cost reductions as a result of certain actions taken in the first half of 2009 and EMRISE’s expectation that most of the remaining severance costs associated with EMRISE’s cost reduction programs will be absorbed in the second and third quarters of 2009. The actual future results of EMRISE could differ from those statements. Factors that could cause or contribute to such differences include, but are not limited to, EMRISE’s ability to manufacture products to meet expected demand and existing and future orders; the realization of expected orders, including orders of test instruments from the FAA and the U.S. military; general market and economic conditions; changes in technology and governmental regulations and policies, competitive products and services; unforeseen technical issues; the ability of EMRISE to achieve the perceived financial benefits of its cost reduction programs, both in terms of the amounts of such benefits and the timing of those benefits, and the ability to fully absorb the associated severance costs during the second and third quarters of 2009; and those factors contained in the “Risk Factors” section of EMRISE’s Form 10-K for the year ended December 31, 2008, Form 10-Q for the quarterly period ended March 31, 2009, and other EMRISE filings with the Securities and Exchange Commission.
Contact:
EMRISE Corporation
John Donovan,
Vice President Finance and Administration
732-387-5790
jdonovan@emrise.com
ORAllen & Caron,
IncRene Caron (investors)
Len Hall (media)
949-474-4300
rene@allencaron.com
len@allencaron.com
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