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CSI Wireless Reports Six-Month Profits
In an environment in which very few wireless companies are profitable, CSI Wireless Inc. reported C$472,000 of profits for the six months ended June 30, 2002, compared to a C$2.1-million loss during the same period a year ago.
CALGARY, Aug. 14 /CNW/ - CSI Wireless Inc. (TSE:CSY), a leader in GPS and wireless technology products for automotive, consumer and commercial applications, today reported financial results for the period ended June 30, 2002.
For the six months ended June 30, 2002, CSI reported net earnings of $472,000, or $0.03 per share - a substantial improvement from the net loss of $2,123,000, or ($0.13) per share, in the first-half of 2001. EBITDA for the first six months of the year was $1,569,000, as compared with $67,000 in the first six months of 2001, and gross margins improved to 41% from 38% for the same periods. The Company also reported improved revenues to $24,719,000 from $24,172,000 achieved in the same period of 2001.
Total expenses, excluding 2001 goodwill amortization, decreased in the first six months of 2002 to $9,755,000 from $10,272,000 for the first six months of 2001 - reflecting a focused effort on expense management and cost containment. Sales and general and administration expenses were all reduced as operating efficiencies improved. Amortization of goodwill was zero for the period, as compared with $1,063,000 in the first half of 2001, which reflects the new accounting rules for goodwill and other intangible assets adopted by the Company on January 1, 2002.
"The Company continues to make strong progress in improving the efficiency of operations, resulting in improved margins and reduced expenses," said Stephen Verhoeff, President and CEO of CSI Wireless. "As our recently released products begin to gain momentum in the markets, we anticipate further
improvements in our financial results."
The Company continued its focused investment in research and development activities, with $4.1 million invested during the first half of 2002 in the Company's next generation wireless and GPS products. Investment in research and development remains vitally important for CSI Wireless, and has helped enable the Company to release several new leading products for both the GPS and Telematics markets during the first half of this year. Several more new products will be unveiled during the rest of the year.
The Company's working capital at June 30 increased to $5,889,000, up 47% from March 31, 2002. During the second quarter, the Company generated $1,868,000 from the exercising of 705,000 warrants related to the financing of February, 2001.
"The capital generated from these warrants has been important in strengthening our balance sheet," said Verhoeff. "We view the exercising of these warrants as a vote of confidence from our major shareholders."
For the three-month period ended June 30, consolidated revenues were $10,761,000 in 2002, as compared with $11,961,000 in 2001. Gross margins in the second quarter increased to 44% in 2002 from 35% in 2001. The improvement stems from higher gross margins associated with the Company's license and non-recurring engineering fee payments received in the second quarter and on new products released during the past several quarters.
CSI Wireless' GPS Business Unit produced another profitable quarter in the three months ended June 30, 2002. Its profits were reinvested into the Company's Wireless Business Unit, resulting in an overall second-quarter loss of $578,000, or ($0.03) per share, in 2002 compared with a substantially larger net loss of $1,632,000, or ($0.09) per share, in the same three months of 2001.
CSI invested $2,187,000 in research and development during the second quarter, which was focused on the Company's next generation of wireless and GPS products. Management expects the investment will generate significant revenues and margins in the coming years.
Fixed Wireless Telephone Sale Opportunity
On May 14, 2002, in conjunction with the official launch of its fixed wireless telephone, CSI Wireless announced it had signed a Development and Supply Agreement with a new partner. The partner will maintain exclusivity on the fixed wireless telephone for as long as it purchases a minimum of approximately $12.5 million per quarter.
CSI Wireless has recently received a second non-recurring engineering payment from the new partner, based upon product approval being received from the end customer. While the deliveries under this agreement remain subject to the conditions listed in the May 14, 2002 news release, management is satisfied with the progress to date. Final modifications, testing and approvals are proceeding and first deliveries are still planned to begin in the third quarter of 2002.
Conference Call - Today at 11:00 AM (Eastern Standard Time)
A conference call for shareholders, analysts and other members of the investment community has been scheduled for 11:00 EST (Eastern Standard Time) on Wednesday, August 14, 2002 to discuss the second quarter financial results and provide an update on operations. To participate, please dial 1-800-427-6791 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 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, Wednesday, August 14, until 11:59 p.m. EST Wednesday, August 21. Please dial 1-877-289-8525 and enter the reservation number 204716(pound key) to listen to the rebroadcast.
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 19.1 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
June 30, 2002 and December 31, 2001
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2002 2001
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Unaudited Audited
Assets
Current assets:
Cash $ 346,810 $ -
Accounts receivable 8,214,594 8,986,632
Inventories 7,485,052 9,400,184
Prepaid expenses and deposits 285,026 346,927
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16,331,482 18,733,743
Capital assets 3,568,476 3,153,387
Deferred development costs 5,178 122,747
Goodwill 18,071,676 17,515,176
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$ 37,976,812 $ 39,525,053
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ - $ 3,072,204
Accounts payable and accrued liabilities 6,467,206 11,393,179
Current portion of senior long-term debt 1,905,842 952,921
Current portion of other long-term debt 2,069,309 -
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10,442,357 15,418,304
Senior long-term debt 3,329,874 4,282,796
Other long-term debt 1,423,701 -
Shareholders' equity:
Share capital 40,736,692 38,251,773
Deficit (17,955,812) (18,427,820)
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22,780,880 19,823,953
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$ 37,976,812 $ 39,525,053
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CSI WIRELESS INC.
Consolidated Statements of Operations and Deficit
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Three months ended Six months ended
June 30, June 30,
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2002 2001 2002 2001
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Unaudited Unaudited Unaudited Unaudited
Sales $ 10,761,162 $ 11,961,496 $ 24,719,396 $ 24,172,360
Cost of sales 6,028,034 7,736,290 14,492,542 14,959,889
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4,733,128 4,225,206 10,226,854 9,212,471
Expenses:
Selling 1,049,370 1,111,256 2,056,662 2,223,101
General and
administrative 1,574,331 1,498,520 2,502,419 3,180,086
Interest on
long-term debt 228,819 302,388 541,321 553,678
Depreciation and
amortization 271,292 310,981 555,154 572,480
Amortization of
goodwill - 531,625 - 1,063,263
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3,123,812 3,754,770 5,655,556 7,592,608
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Earnings before
undernoted item 1,609,316 470,436 4,571,298 1,619,863
Research and
development costs 2,187,283 2,102,568 4,099,290 3,742,738
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Net earnings (loss) (577,967) (1,632,132) 472,008 (2,122,875)
Deficit, beginning
of period (17,377,845) (9,916,139) (18,427,820) (9,425,396)
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Deficit, end
of period $(17,955,812) $(11,548,271) $(17,955,812) $(11,548,271)
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Earnings (loss)
per common share:
Basic $ (0.03) $ (0.09) $ 0.03 $ (0.13)
Diluted $ (0.03) $ (0.09) $ 0.02 $ (0.13)
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CSI WIRELESS INC.
Consolidated Statements of Cash Flows
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Three months ended Six months ended
June 30, June 30,
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2002 2001 2002 2001
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Unaudited Unaudited Unaudited Unaudited
Cash flows from (used in)
operating activities:
Net earnings
(loss) $ (577,967) $ (1,632,132) $ 472,008 $ (2,122,875)
Items not
involving cash:
Depreciation
and amortization 271,292 310,981 555,154 572,480
Amortization of
goodwill - 531,625 - 1,063,263
Options granted
to non-employees 5,126 - 44,437 -
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(301,549) (789,526) 1,071,599 (487,132)
Change in non-cash
operating working
capital:
Accounts
receivable 2,475,304 1,870,655 772,038 (557,224)
Inventories 325,135 (1,009,551) 1,915,132 (4,156,788)
Prepaid expenses
and deposits 23,700 (98,510) 61,901 (150,042)
Accounts payable
and accrued
liabilities (2,035,720) (665,025) (1,432,963) (568,806)
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486,870 (691,957) 2,387,707 (5,919,992)
Cash flows from (used in)
financing activities:
Bank indebtedness (1,263,459) 728,198 (3,072,204) (697,721)
Senior
long-term debt - (95,418) - (286,254)
Other
long-term debt - - - (2,790,704)
Issue of share
capital, net of
share issue costs 1,880,807 (96,827) 1,883,981 10,483,162
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617,348 535,953 (1,188,223) 6,708,483
Cash flows from (used in)
investing activities:
Purchase of
capital assets (757,408) (347,713) (852,674) (788,491)
Deferred development
costs, net of
incentives and grants - (1,663) - -
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(757,408) (349,376) (852,674) (788,491)
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Increase (decrease)
in cash position 346,810 (505,380) 346,810 -
Cash and cash equivalents,
beginning of period - 505,380 - -
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Cash and cash equivalents,
end of period $ 346,810 $ - $ 346,810 $ -
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Supplemental disclosure:
Interest paid $ 98,451 $ 395,293 $ 165,849 $ 511,230
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For further information: please contact:
- ephen Verhoeff, President & CEO, CSI Wireless Inc., (403) 259-3311, sverhoeff@csi-wireless.com
- 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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