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CSI Wireless Earns $1,050,000 in First Quarter
CSI Wireless Inc., a leader in GPS and wireless products for automotive, consumer and commercial applications, has reported a $1.05-million profit in first-quarter 2002, after eight consecutive quarterly losses while the company was making heavy research and development investments. The latest quarter also saw CSI Wireless achieve a record-breaking $14 million of revenues.
Company also records record quarterly sales of $14,000,000
Toronto Stock Exchange Symbol: CSY
CALGARY, May 7, 2002 - CSI Wireless Inc. (TSX: CSY), a leader in GPS and wireless
technology products for automotive, consumer and commercial applications,
reported record sales and record net earnings for the three months ended March
31, 2002.
The most significant financial highlight for the first quarter of 2002
was achieving profitability following a period of losses as the Company
invested heavily in new product development. The Company posted net earnings
for the first quarter of 2002 of $1,050,000 or $0.06 per share, compared with
a net loss of $491,000, or ($0.03) per share, for the first quarter of 2001.
"Not only did we achieve our goal for positive cash flow ahead of
schedule, we were able to exceed our bottom line targets and produce net
earnings for the first time since the first quarter of 2000," stated Stephen
Verhoeff, President & CEO of CSI Wireless Inc.
First quarter sales increased 14% to $13,958,000, from $12,211,000 for
the same period in 2001 -- fueled by growth in both the GPS and the Wireless
Business Units. Gross margins were 39%, as compared with 41% in the previous
year.
Profitability was driven by increased sales and reduced operating
expenses for the quarter. Operating expenses were 31% lower than the same
period last year, largely due to improved operating efficiencies and expense
reduction efforts initiated during the second half of 2001.
The Company's investment in research and development related to next-
generation products increased 17% to $1,912,000 in the first quarter of 2002.
Several new products were launched during the quarter, with several more due
to be released throughout the remainder of the year. The CSI Wireless research
and development spending is strongly oriented toward specific products and
markets for which customers have been identified.
The value of this ongoing investing was demonstrated again today, as the
Company announced the signing of a $6.5 million sales contract with AirIQ for
its recently released Asset-Link(TM) 200, the second in a family of
innovative, cost-effective fleet-tracking, safety and security products that
employ GPS and wireless technologies.
"Our aggressive R&D investment is beginning to pay off," said Mr.
Verhoeff. "Our forward-thinking engineering, in partnership with customers
like AirIQ, ensures we are able to deliver what the market is looking for
today -- and tomorrow. We have already released six new products this year,
with just as many still to come during the rest of 2002."
Before the investment in research and development costs, the Company
posted earnings of $2,962,000 as compared with earnings, before R&D costs, in
the first quarter of 2001 of $1,149,000.
After investment in research and development, CSI Wireless reported
earnings before interest, taxes, depreciation & amortization ("EBITDA") for
the first quarter of 2002 of $1,646,000, as compared with EBITDA of $553,000
reported for the first quarter of last year.
Net income for the quarter benefited from not only increased sales and
lower operating expenses, but also from the non-amortization of goodwill,
which reflects the adoption of the new accounting rules. Effective January 1,
2002, the Company adopted the new accounting standards for goodwill and other
intangible assets. This new standard requires that goodwill not be amortized,
but written down only if impaired. In accordance with the new standard, the
carrying value of the CSI Wireless goodwill will be assessed for impairment
annually. On a proforma basis, goodwill amortization would have been $580,000
for the quarter.
"It is tremendously rewarding to begin 2002 with a stronger first quarter
than expected, and to see the significant investments and hard work returning
positive earnings," said Mr. Verhoeff.
Fixed Wireless Telephone Sale Opportunity
The last update on this deal opportunity (formerly described as a
conditional letter of intent) reported that 5,000 trial units were to be
shipped to the end customer. These units were shipped by the first week of
April and the end customer is continuing with its deployment and testing of
these trial units.
Conference Call for shareholders, analysts
A conference call for shareholders, analysts and other members of the
investment community has been scheduled for 11:00 EST (Eastern Standard Time)
on Monday, May 7 to discuss this press release and provide updates on
operations. To participate, please dial 1-888-881-4892, or 1-416-640-4127
approximately 10 minutes before the conference call. Please note that a live
web cast of this conference call will also be available on the CSI Wireless
Web site at <http://www.csi-wireless.com>. The web cast will also be archived
there for later reviewing. A recording of the conference call will be
available from 1:00 p.m. EST, Tuesday, May 7, until 11:59 p.m. EST Tuesday,
May 14. Please dial 1-877-289-8525 and enter the reservation number
188365(pound key) to listen to the rebroadcast.
Annual General Meeting
The Company also invites its shareholders and members of the investment
community to attend the CSI Wireless Annual General Meeting at 3:00 p.m.
(Calgary time) on Tuesday May 14 in Calgary. It will take place in the
Lakeview Endrooms of the Westin Hotel at 4th Avenue and 3rd Street S.W.
About CSI Wireless
CSI Wireless provides innovative, cost-effective, wireless and GPS
vehicle and asset management products for mobile and fixed applications in the
automotive, commercial and consumer markets. Through its integration of GPS
and wireless, CSI Wireless is pursuing emerging high-growth markets with
mobile-location solutions for Fleet Management, Asset Tracking, Automotive
Telematics, and Mobile Computing applications. The Company, with offices in
Calgary, Silicon Valley, and Phoenix, owns several patents and intellectual
property related to a variety of wireless networks and GPS technologies. CSI
Wireless has licensed its cellular technology to GPS, cellular handset, and
chipset manufacturers. The common shares of CSI Wireless trade on The Toronto
Stock Exchange under the trading symbol "CSY," with approximately 18.4 million
shares outstanding. Visit the Company's Web site at www.csi-wireless.com
The above disclosure contains certain forward-looking statements that
involve substantial known and unknown risks and uncertainties. These forward-
looking statements are subject to numerous risks and uncertainties, certain of
which are beyond CSI Wireless' control, including: the impact of general
economic conditions, industry conditions, increased competition, the lack of
availability of qualified personnel or management, fluctuations in foreign
exchange or interest rates, stock market volatility and market valuations of
companies with respect to the announced transactions and the final valuations
thereof, and obtaining required approvals of regulatory authorities. CSI
Wireless' actual results, performance or achievement could differ materially
from those expressed in, or implied by these forward-looking statements and,
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do
so, what benefits, including the amount of proceeds, CSI Wireless will derive
therefrom.
CSI WIRELESS INC.
Consolidated Balance Sheets
March 31, 2002 and December 31, 2001
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2002 2001
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Unaudited Audited
Assets
Current assets:
Accounts receivable $ 10,564,621 $ 8,986,632
Inventories 7,810,187 9,400,184
Prepaid expenses and deposits 308,726 346,927
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18,683,534 18,733,743
Capital assets 3,174,562 3,153,387
Deferred development costs 38,253 122,747
Goodwill 18,071,676 17,515,176
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$ 39,968,025 $ 39,525,053
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 1,263,459 $ 3,072,204
Accounts payable and accrued liabilities 11,995,936 11,393,179
Current portion of senior long-term debt 1,429,382 952,921
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14,688,777 15,418,304
Senior long-term debt 3,806,335 4,282,796
Shareholders' equity:
Share capital 38,850,758 38,251,773
Deficit (17,377,845) (18,427,820)
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21,472,913 19,823,953
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$ 39,968,025 $ 39,525,053
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CSI WIRELESS INC.
Consolidated Statements of Operations and Deficit
Period Ended March 31, 2002 and 2001
Unaudited
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2002 2001
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Sales $ 13,958,234 $ 12,210,864
Cost of sales 8,464,507 7,223,599
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5,493,727 4,987,265
Expenses:
Selling 1,007,292 1,111,845
General and administrative 928,088 1,681,566
Interest on long-term debt 312,502 251,290
Depreciation and amortization 283,862 261,499
Amortization of goodwill - 531,638
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2,531,744 3,837,838
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Earnings before undernoted item 2,961,983 1,149,427
Research and development costs 1,912,008 1,640,170
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Net earnings (loss) 1,049,975 (490,743)
Deficit, beginning of period (18,427,820) (9,425,396)
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Deficit, end of period $(17,377,845) $ (9,916,139)
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Earnings (loss) per common share:
Basic $ 0.06 $ (0.03)
Diluted $ 0.05 $ (0.03)
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CSI WIRELESS INC.
Consolidated Statements of Cash Flows
Period Ended March 31, 2002 and 2001
Unaudited
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2002 2001
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Cash flows from (used in) operating
activities:
Net earnings (loss) $ 1,049,975 $ (490,743)
Items not involving cash:
Depreciation and amortization 283,862 261,499
Amortization of goodwill - 531,638
Options granted to non-employees 39,311 -
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1,373,148 302,394
Change in non-cash operating working
capital:
Accounts receivable (1,703,266) (2,427,879)
Inventories 1,589,997 (3,147,237)
Prepaid expenses and deposits 38,201 (51,532)
Accounts payable and accrued liabilities 602,757 96,219
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1,900,837 (5,228,035)
Cash flows from (used in) financing
activities:
Decrease in bank indebtedness (1,808,745) (1,425,919)
Senior long-term debt - (190,836)
Subordinated debt - (2,790,704)
Issue of special warrants, net of
issue costs - 9,481,310
Issue of share capital, net of share
issue costs 3,174 1,098,679
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(1,805,571) 6,172,530
Cash flows from (used in) investing
activities:
Purchase of capital assets (95,266) (440,778)
Deferred development costs, net of
incentives and grants - 1,663
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(95,266) (439,115)
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Increase in cash position - 505,380
Cash and cash equivalents, beginning
of period - -
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Cash and cash equivalents, end of period $ - $ 505,380
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Supplemental disclosure:
Interest paid $ 165,849 $ 115,937
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For further information: please contact:
Stephen Verhoeff, President & CEO, CSI Wireless Inc., (403) 259-3311, sverhoeff@csi-wireless
Cory Pala, Investor Relations, E-vestor Communications Inc., (416) 657-2400, cpala@e-vestorcom.com
Jeff Adams, P.R. Manager, CSI Wireless Inc., (403) 259-3311/615-8747 (cell), jadams@csi-wireless.com
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