CSI Wireless Second Quarter Preliminary Results and Conference Call Notice27 July 2005
CSI Wireless Inc, a designer and manufacturer of advanced wireless and GPS products, today issued preliminary second quarter financial results for the period ended June 30, 2005 with notice that it will issue final results prior to the open of trading on the Toronto Stock Exchange on Thursday August 4, 2005. A conference call to discuss the results will follow at 10:00 a.m. Eastern Time the same day.
The Company's preliminary second quarter financial information indicates that second quarter revenues increased by approximately 23% year-over-year to more than C$23 million, compared to C$18.7 million in the second quarter of 2004. Total revenues for the first half of 2005 will be approximately C$45.2 million, an increase of approximately 34% compared to C$33.9 million for the first half of 2004.
Following the amortization of acquisition inventory step-up costs through cost of sales totaling C$1.6 million (see below) related to the second quarter acquisition of the Outback business from RHS Inc. (RHS), CSI expects to report a net loss for the quarter of C$1.1 million to C$1.4 million. As previously disclosed by the Company, the acquisition of the Outback business from RHS will contribute to revenue growth in 2005, however, due to the acquisition of inventory the Company advised that it did not expect that the acquisition would increase net income for the year.
These financial results are disclosed on a preliminary basis and may be subject to change as the Company's accounting firm, KPMG LLP, has not yet completed its review of the financial results. This review is expected to be completed prior to the issuance of the final results on August 4th prior to the open of trading on the Toronto Stock Exchange. Further financial details will be provided on that date.
A Web cast and conference call has been scheduled for Thursday August 4 at 10:00 a.m. Eastern Time to discuss the financial results and provide updates on operations.
To participate, please dial 1-416-640-4127 or-1-866-250-4892 approximately 10 minutes before the conference call.
Please note that a live Web cast of the call will be available on the CSI Wireless Web site at http://www.csi-wireless.com/investors/conference_calls.shtml. The Web cast will be archived there for later review.
A recording of the call will be available from noon Eastern Time on August 4 through Thursday, August 11. Please dial 1-877-289-8525 and enter the reservation number 21132673 followed by the number sign to listen to the rebroadcast.
GAAP Accounting Requirements for Acquisition
Under generally accepted accounting principles (GAAP), the inventory acquired with the acquisition of the Outback business during the second quarter of 2005 has been recorded at the carrying cost of RHS at the time of
the acquisition, which includes the margin that CSI earned on the sale of the product to RHS. As a result, the gross margin earned on sales of the Outback product line will include only the share of margins previously earned by RHS until the inventory on hand on the date of the acquisition has been consumed. Thereafter, margins on Outback product sales will reflect the combined margins previously earned by CSI and RHS.
The total CSI margin reflected in the purchased inventory is referred to as the "acquisition inventory step-up cost". In order to better understand the margins that are expected to be earned on this product line once the purchased inventory has been consumed, management will report the amount of "acquisition inventory step-up cost" that is included in cost of sales each quarter until the purchased inventory has been consumed. For the second quarter of 2005, the amortization of the acquisition inventory step-up cost through cost of sales totaled approximately C$1.6 million.
For 2006, once the acquired inventory has been drawn down, management expects that the Outback business will be very accretive to the Company's earnings and prove an excellent acquisition from a shareholder perspective.
About CSI Wireless
CSI Wireless designs and manufactures innovative, cost-effective, wireless and GPS products for mobile and fixed applications in the agriculture, marine, automotive and other industries. CSI is a leader in several high-growth markets including Precision Guidance in Agriculture, Telematics and Desktop Cellular Telephones. The Company, through its Wireless and its Hemisphere GPS divisions, owns numerous patents and other intellectual
property. It has licensed its cellular technology to GPS, cellular handset, and chipset manufacturers. CSI's common shares trade on The Toronto Stock Exchange under the trading symbol "CSY", with approximately 42 million outstanding. The company's head offices are in Calgary, Alberta, and it has major product development, sales and marketing facilities in California's Silicon Valley, Arizona and Kansas. For more information about CSI, go to www.csi-wireless.com.
For further information: please contact: Corbet Pala, Investor Relations, E-vestor Communications Inc., (416) 657-2400, cpala@e-vestorcom.com
Source: Groupe CNW
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