Metretek Technologies Reports Second-Quarter 2007 Results

  
    
  
  
    
      Metretek Technologies, Inc. (Amex:MEK) today reported financial results 
      for its second quarter ended June 30, 2007.
    
    
      For the second-quarter 2007, the Company reported revenues of $24.1 
      million and a net loss of $13.9 million, or $(0.87) per share (basic and 
      diluted), compared to revenues of $36.2 million and net income of $4.2 
      million, or $0.25 per diluted share, in the second quarter of 2006. 
      Second quarter financial results include $14.1 million of restructuring 
      charges related to the second quarter retirement of the Company's 
      founders and the relocation of the Company's principal executive offices 
      to Wake Forest. The Company's non-GAAP income from continuing operations 
      before restructuring charges for the second quarter 2007, which consists 
      of the Company's income from continuing operations but excludes the 
      restructuring expenses, was $425,000, or $0.02 per (diluted) share.
    
    
      The Company also announced it had closed $25 million of new business 
      contracts, including several that represent important relationships with 
      investor-owned utilities (IOUs). “We are 
      pleased with the level of business closed in the quarter,” 
      said Sidney Hinton, president and chief executive officer of Metretek 
      Technologies, “and we are particularly excited 
      about the new relationships with IOUs. These partners provide us the 
      opportunity to build long-term relationships that contribute to the 
      continued success of our core PowerSecure business, the engine of 
      Metretek’s growth.” 
      (In a separate release, Metretek today announced that it is changing its 
      name to PowerSecure International, Inc. and that its shares have been 
      approved for listing on the NASDAQ Global Select Market under the symbol 
      "POWR"; both actions are expected to become effective on August 22, 
      2007.)
    
    
      According to Hinton, the decrease in PowerSecure's second-quarter 
      revenues — from $31.1 million in 2006 to 
      $18.6 million in 2007, of which $7.4 million was related to Publix 
      projects — was attributable to two factors in 
      particular, each of which adversely affected the timing of revenues: 
      delays in the scheduling and completion of several projects in Florida 
      due to the slow permitting process in some jurisdictions within the 
      state; and the fact that the work completed on new projects during the 
      second quarter was primarily design work, which typically does not have 
      a high percentage of revenue associated with it under PowerSecure’s 
      percentage-of-completion revenue recognition methodology.
    
    
      Hinton noted that the decline in PowerSecure's revenues was accompanied 
      by a decline in gross margin, to 24.1% from 25.3% a year ago, reflecting 
      a variety of short-term factors including higher-than-expected material 
      usage costs, costs associated with opening a new switchgear production 
      facility for which associated revenues were limited during the period, 
      an increase in sales of diesel fuel to certain customers which carries a 
      smaller profit margin, and the fixed nature of certain operating costs 
      relative to fluctuations in revenues over short operating periods. 
      Hinton stated that he expects PowerSecure's gross margin to return to 
      historic levels in the coming quarters.
    
    
      "Despite the results of the second quarter, I want to emphasize that our 
      confidence in the future of the Company has never been stronger," added 
      Hinton. "The underlying strength of our business is not readily 
      discernable on a quarter-by-quarter basis, and the second-quarter 
      bottom-line results may belie the fact that operationally it was a good 
      quarter. With the new business just announced, we have a strong and 
      growing backlog of business orders in excess of $100 million. We expect 
      to see measurable improvements in PowerSecure's operating performance 
      over the course of the next twelve to twenty-four months."
    
    
      For the six months ended June 30, 2007, the Company reported revenues of 
      $51.0 million and a net loss of $11.6 million, or $(0.73) per share 
      (basic and diluted), compared to revenues of $51.1 million and net 
      income of $4.9 million, or $0.30 per diluted share, for the first six 
      months of 2006. The Company's non-GAAP income from continuing operations 
      for the first six months of 2007, which excludes the restructuring 
      expenses, was $2.7 million, or $0.16 per (diluted) share.
    
    
      “As we look ahead," said Hinton, "our 
      strategy is three-fold: focus the Company's efforts around growth in the 
      distributed generation sector by helping utilities and their customers 
      manage peak demand and load curtailment, work toward creating recurring 
      revenue opportunities in our core business, and expand our ability to 
      develop new energy conservation initiatives with utilities and their 
      customers. Accordingly, we are continually evaluating our business units 
      based on their ability to support this strategy."
    
    
      Updated 2007 Financial Guidance:
    
    
      "Although there are still a number of factors and risks that could and 
      will affect our operating results during the rest of fiscal 2007," said 
      Hinton, "based on recent events and the current status of our business 
      operations, we are estimating that our consolidated revenues for fiscal 
      2007 will be between $115 million and $125 million, and that our 
      non-GAAP income from continuing operations, which excludes the one-time 
      restructuring charges incurred in the second quarter, will be between 
      $11.0 million and $13.0 million, or approximately $0.60 to $0.75 per 
      (diluted) share."
    
    
      Non-GAAP Income from Continuing 
      Operations:
    
    
      References by the Company to non-GAAP income or loss from continuing 
      operations and non-GAAP income or loss from continuing operations per 
      share information are non-GAAP financial measures that refer to the 
      Company's income or loss from continuing operations or per share 
      information excluding restructuring costs related to the recent 
      retirements of the Company's founders and the relocation of the 
      Company's principal executive offices from Denver to Wake Forest.
    
    
      By eliminating the restructuring expenses in 2007 that are non-recurring 
      and not indicative of the results of the Company’s 
      operations, the Company believes non-GAAP income from continuing 
      operations and non-GAAP income from continuing operations per share are 
      useful tools permitting management and the board of directors to 
      measure, monitor and evaluate the Company’s 
      operating performance and to make operating decisions. Non-GAAP income 
      from continuing operations and non-GAAP income from continuing 
      operations per share are also used by management to assist it in 
      planning and forecasting future operations and making future operating 
      decisions.
    
    
      The Company also believes that non-GAAP income from continuing 
      operations and non-GAAP income from continuing operations per share 
      provide meaningful information to investors in terms of enhancing their 
      understanding of the Company’s core operating 
      performance and results and allowing investors to more easily compare 
      the Company's financial performance on an operating basis in different 
      fiscal periods. However, non-GAAP income from continuing operations and 
      non-GAAP income from continuing operations per share as defined by the 
      Company may not be directly comparable to similarly defined measures as 
      reported by other companies. Non-GAAP income from continuing operations 
      and non-GAAP income from continuing operations per share should be 
      considered only as supplements to, and not as substitutes for or in 
      isolation from, other measures of financial information prepared in 
      accordance with GAAP, such as GAAP net income, GAAP net income per 
      share, GAAP income from continuing operations, or GAAP income from 
      continuing operations per share.
    
    
      Conference Call and Webcast:
    
    
      At 11 a.m. EDT today, August 8, the Company will hold a teleconference 
      to discuss its financial results as well as its corporate developments 
      and future plans and prospects. To participate in the teleconference, 
      please call (toll free) 800-291-8929 (or 706-634-0478 for international 
      callers) approximately 10 minutes prior to the start time and indicate 
      that you are dialing in to the Metretek Technologies conference call.
    
    
      This call can also be accessed live via the Internet at the Company's 
      website, www.metretek.com; 
      to access the call, click on the “Investor 
      Info” button and then click on the icon for 
      the “2007 second-quarter results 
      teleconference.” The Webcast player will open 
      following completion of a brief registration process. The Webcast will 
      also be available at www.earnings.com; 
      to access the call, type in Metretek’s stock 
      symbol, MEK, in the top right corner of the home page to be taken to the 
      Company’s webcast page. These websites will 
      host an archive of the teleconference. Additionally, a telephone 
      playback will be available for 48 hours beginning at 2 p.m. EDT on 
      August 8. The playback can be accessed by calling 800-642-1687 (or 
      706-645-9291 for international callers) and providing Conference ID 
      10592037.
    
    
      About Metretek Technologies:
    
    
      Metretek Technologies, Inc. through its subsidiaries -- PowerSecure, 
      Inc.; Southern Flow Companies, Inc.; and Metretek, Incorporated 
      (Metretek Florida) -- is a diversified provider of energy measurement 
      products, services and data management systems to industrial and 
      commercial users and suppliers of natural gas and electricity.
    
    
      Safe-Harbor Statement:
    
    
      All forward-looking statements contained in this release are made 
      within the meaning of and pursuant to the safe harbor provisions of the 
      Private Securities Litigation Reform Act of 1995. Forward-looking 
      statements are all statements other than statements of historical facts, 
      including but not limited to statements concerning the business 
      operations and prospects for the Company and its subsidiaries; the 
      opportunities believed to be inherent in the relationships with 
      investor-owned utilities; the expectation of measurable improvements in 
      PowerSecure's operating performance and gross margin over the course of 
      the next twelve to twenty-four months; the outlook for the Company’s 
      consolidated revenues and non-GAAP income from continuing operations in 
      2007; and all other statements concerning the plans, 
      intentions, expectations, projections, hopes, beliefs, objectives, goals 
      and strategies of management, including statements about other future 
      financial and non-financial items, performance or events and about 
      present and future products, services, technologies and businesses; and 
      statements of assumptions underlying the foregoing. Forward-looking 
      statements are not guarantees of future performance or events and are 
      subject to a number of known and unknown risks, uncertainties and other 
      factors that could cause actual results to differ materially from those 
      expressed, projected or implied by such forward-looking statements. 
      Important risks, uncertainties and other factors include, but are not 
      limited to, the timely and successful development, production and market 
      acceptance of new and enhanced products, services and technologies of 
      the Company’s subsidiaries; the size, timing 
      and terms of sales and orders, including large customer orders, and the 
      risk of customers delaying, deferring or canceling purchase orders or 
      making smaller purchases than expected; the ability of the Company’s 
      subsidiaries to obtain adequate supplies of key components and materials 
      for their products and technologies on a timely and cost-effective 
      basis; the ability of PowerSecure to successfully expand its core 
      distributed generation products and services, to successfully develop 
      and achieve market acceptance of its new energy-related businesses, to 
      manage its growth and to address the effects of any future changes in 
      tariff structures and environmental requirements on its business 
      solutions; the effects from time to time of hurricanes and other severe 
      weather conditions on the demand for Southern Flow’s 
      products and services; the ability of Metretek Florida to successfully 
      develop and expand its products, services, technologies and markets; the 
      effects of competition; changes in customer and industry demand and 
      preferences; the ability of the Company to attract, retain and motivate 
      key personnel; changes in the energy industry in general and the natural 
      gas and electricity markets in particular, including price levels; the 
      effects of competition; the ability of the Company to secure and 
      maintain key contracts and relationships; general economic, market and 
      business conditions; the effects of pending and future litigation, 
      claims and disputes; changes in the energy industry generally and in the 
      natural gas and electricity industries in particular, including price 
      levels; general economic, market and business conditions; and other 
      risks, uncertainties and other factors identified from time to time in 
      the Company's Annual Report on Form 10-K for the year ended December 31, 
      2006, as well as in subsequent filings with the Securities and 
      Exchange Commission, including reports on Forms 10-Q and 8-K. 
      Accordingly, there can be no assurance that the results expressed, 
      projected or implied by any forward-looking statements will be achieved, 
      and readers are cautioned not to place undue reliance on any 
      forward-looking statements. The forward-looking statements in this press 
      release speak only as of the date hereof and are based on the current 
      plans, goals, objectives, strategies, intentions, expectations and 
      assumptions of, and the information currently available to, management. 
      The Company assumes no duty or obligation to update or revise any 
      forward-looking statements for any reason, whether as the result of 
      changes in expectations, new information, future events, conditions or 
      circumstances or otherwise.
    
    
      
        
          METRETEK TECHNOLOGIES, INC. AND SUBSIDIARIES
        
      
      
        
          Consolidated Statements of Operations (unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Second Quarter Ended
        
        
        
        
          Six Months Ended
        
      
      
        
        
        
        
        
          June 30,
        
        
        
        
          June 30,
        
      
      
        
        
        
        
        
           
        
        
          2007
        
        
           
        
        
        
        
           
        
        
          2006
        
        
           
        
        
        
        
           
        
        
          2007
        
        
           
        
        
        
        
           
        
        
          2006
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          REVENUES:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Sales and services
        
        
        
        
          $
        
        
          23,833,351
        
        
        
        
        
        
          $
        
        
          35,905,938
        
        
        
        
        
        
          $
        
        
          50,202,095
        
        
        
        
        
        
          $
        
        
          50,642,812
        
        
        
      
      
        
          Other
        
        
        
        
           
        
        
          232,459
        
        
           
        
        
        
        
           
        
        
          337,473
        
        
           
        
        
        
        
           
        
        
          842,944
        
        
           
        
        
        
        
           
        
        
          432,928
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total revenues
        
        
        
        
           
        
        
          24,065,810
        
        
           
        
        
        
        
           
        
        
          36,243,411
        
        
           
        
        
        
        
           
        
        
          51,045,039
        
        
           
        
        
        
        
           
        
        
          51,075,740
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          COSTS AND EXPENSES:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cost of sales and services
        
        
        
        
        
        
          17,477,336
        
        
        
        
        
        
        
        
          26,393,531
        
        
        
        
        
        
        
        
          35,894,569
        
        
        
        
        
        
        
        
          36,524,893
        
        
        
      
      
        
          General and administrative
        
        
        
        
        
        
          4,985,099
        
        
        
        
        
        
        
        
          4,502,431
        
        
        
        
        
        
        
        
          10,509,178
        
        
        
        
        
        
        
        
          7,937,780
        
        
        
      
      
        
          Selling, marketing and service
        
        
        
        
        
        
          1,010,352
        
        
        
        
        
        
        
        
          1,172,870
        
        
        
        
        
        
        
        
          1,874,635
        
        
        
        
        
        
        
        
          1,931,931
        
        
        
      
      
        
          Depreciation and amortization
        
        
        
        
        
        
          374,109
        
        
        
        
        
        
        
        
          203,898
        
        
        
        
        
        
        
        
          717,033
        
        
        
        
        
        
        
        
          376,304
        
        
        
      
      
        
          Research and development
        
        
        
        
        
        
          288,571
        
        
        
        
        
        
        
        
          195,058
        
        
        
        
        
        
        
        
          499,362
        
        
        
        
        
        
        
        
          372,684
        
        
        
      
      
        
          Restructuring charges
        
        
        
        
        
        
          14,139,216
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          14,139,216
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
          Interest, finance charges and other
        
        
        
        
           
        
        
          8,436
        
        
           
        
        
        
        
           
        
        
          46,336
        
        
           
        
        
        
        
           
        
        
          15,756
        
        
           
        
        
        
        
           
        
        
          134,711
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total costs and expenses
        
        
        
        
           
        
        
          38,283,119
        
        
           
        
        
        
        
           
        
        
          32,514,124
        
        
           
        
        
        
        
           
        
        
          63,649,749
        
        
           
        
        
        
        
           
        
        
          47,278,303
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) from operations
        
        
        
        
        
        
          (14,217,309
        
        
          )
        
        
        
        
        
        
          3,729,287
        
        
        
        
        
        
        
        
          (12,604,710
        
        
          )
        
        
        
        
        
        
          3,797,437
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income from litigation settlements, net
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          278,334
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Equity in income of unconsolidated affiliate
        
        
        
        
        
        
          672,735
        
        
        
        
        
        
        
        
          520,974
        
        
        
        
        
        
        
        
          1,321,295
        
        
        
        
        
        
        
        
          1,251,442
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Minority interest
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          (72,464
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income taxes
        
        
        
        
           
        
        
          (170,140
        
        
          )
        
        
        
        
           
        
        
          (22,999
        
        
          )
        
        
        
        
           
        
        
          (476,277
        
        
          )
        
        
        
        
           
        
        
          (111,514
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) from continuing operations
        
        
        
        
        
        
          (13,714,714
        
        
          )
        
        
        
        
        
        
          4,227,262
        
        
        
        
        
        
        
        
          (11,481,358
        
        
          )
        
        
        
        
        
        
          4,864,901
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Loss from disposal of discontinued operations
        
        
        
        
           
        
        
          (140,490
        
        
          )
        
        
        
        
           
        
        
          -
        
        
           
        
        
        
        
           
        
        
          (140,490
        
        
          )
        
        
        
        
           
        
        
          -
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Net income (loss)
          
          
             
          
        
        
        
        
          $
        
        
          (13,855,204
        
        
          )
        
        
        
        
          $
        
        
          4,227,262
        
        
           
        
        
        
        
          $
        
        
          (11,621,848
        
        
          )
        
        
        
        
          $
        
        
          4,864,901
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          PER SHARE AMOUNTS:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Income (loss) from continuing operations:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          $
        
        
          (0.86
        
        
          )
        
        
        
        
          $
        
        
          0.27
        
        
           
        
        
        
        
          $
        
        
          (0.72
        
        
          )
        
        
        
        
          $
        
        
          0.34
        
        
           
        
      
      
        
          Diluted
        
        
        
        
          $
        
        
          (0.86
        
        
          )
        
        
        
        
          $
        
        
          0.25
        
        
           
        
        
        
        
          $
        
        
          (0.72
        
        
          )
        
        
        
        
          $
        
        
          0.30
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss):
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
          $
        
        
          (0.87
        
        
          )
        
        
        
        
          $
        
        
          0.27
        
        
           
        
        
        
        
          $
        
        
          (0.73
        
        
          )
        
        
        
        
          $
        
        
          0.34
        
        
           
        
      
      
        
          Diluted
        
        
        
        
          $
        
        
          (0.87
        
        
          )
        
        
        
        
          $
        
        
          0.25
        
        
           
        
        
        
        
          $
        
        
          (0.73
        
        
          )
        
        
        
        
          $
        
        
          0.30
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          WEIGHTED AVERAGE COMMON
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          SHARES OUTSTANDING:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
           
        
        
          15,935,336
        
        
           
        
        
        
        
           
        
        
          15,513,274
        
        
           
        
        
        
        
           
        
        
          15,883,210
        
        
           
        
        
        
        
           
        
        
          14,354,964
        
        
           
        
      
      
        
          Diluted
        
        
        
        
           
        
        
          15,935,336
        
        
           
        
        
        
        
           
        
        
          17,071,389
        
        
           
        
        
        
        
           
        
        
          15,883,210
        
        
           
        
        
        
        
           
        
        
          16,065,350
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Condensed Consolidated Balance Sheets (unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
          June 30,
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
        
          2007
        
        
           
        
        
        
        
           
        
        
          2006
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total current assets
        
        
        
        
        
        
        
        
        
        
        
        
          $
        
        
          62,555,345
        
        
        
        
        
        
          $
        
        
          70,536,009
        
        
        
      
      
        
          Property, plant and equipment, net
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          4,539,234
        
        
        
        
        
        
        
        
          4,443,879
        
        
        
      
      
        
          Total other assets
        
        
        
        
        
        
        
        
        
        
        
        
           
        
        
          14,421,655
        
        
           
        
        
        
        
           
        
        
          14,719,547
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total Assets
        
        
        
        
        
        
        
        
        
        
        
        
          $
        
        
          81,516,234
        
        
           
        
        
        
        
          $
        
        
          89,699,435
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Total current liabilities
          
        
        
        
        
        
        
        
        
        
        
        
        
          $
        
        
          31,753,847
        
        
        
        
        
        
          $
        
        
          31,692,373
        
        
        
      
      
        
          Total noncurrent liabilities
        
        
        
        
        
        
        
        
        
        
        
        
        
        
          2,862,829
        
        
        
        
        
        
        
        
          7,431
        
        
        
      
      
        
          Total stockholders' equity
        
        
        
        
        
        
        
        
        
        
        
        
           
        
        
          46,899,558
        
        
           
        
        
        
        
           
        
        
          57,999,631
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
        
        
        
        
        
        
        
        
          $
        
        
          81,516,234
        
        
           
        
        
        
        
          $
        
        
          89,699,435
        
        
           
        
      
    
    
      
        
          
            RECONCILIATION OF NON-GAAP INCOME FROM CONTINUING OPERATIONS 
          
          
            TO GAAP INCOME FROM CONTINUING OPERATIONS
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            In accordance with Regulation G, set forth below is a 
            reconciliation of Non-GAAP income from continuing operations and 
            Non-GAAP income from continuing operations per share, non-GAAP 
            financial measures, to GAAP income from continuing operations and 
            GAAP income from continuing operations per share, their most 
            directly comparable financial measures computed in accordance with 
            GAAP.
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Second Quarter
        
        
        
        
          Six Months
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          Ended
        
        
        
        
          Ended
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          June 30, 2007
        
        
        
        
          June 30, 2007
        
        
        
        
          Guidance for Fiscal 2007
        
      
      
        
          GAAP income (loss) from continuing operations
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          $ (13,714,714
        
        
          )
        
        
        
        
          $ (11,481,358
        
        
          )
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add back: Restructuring charges
        
        
          14,139,216
        
        
           
        
        
        
        
          14,139,216
        
        
           
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Non-GAAP income from continuing operations
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          $ 424,502
        
        
           
        
        
        
        
          $ 2,657,858
        
        
           
        
        
        
        
          $ 11,000,000
        
        
           
        
        
        
        
          to
        
        
        
        
          $ 13,000,000
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          PER SHARE AMOUNTS-BASIC
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          GAAP income (loss) from continuing operations
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          $ (0.86
        
        
          )
        
        
        
        
          $ (0.72
        
        
          )
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add back: Restructuring charges
        
        
          0.89
        
        
           
        
        
        
        
          0.89
        
        
           
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Non-GAAP income from continuing operations
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          $ 0.03
        
        
           
        
        
        
        
          $ 0.17
        
        
           
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          PER SHARE AMOUNTS-DILUTED
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          GAAP income (loss) from continuing operations
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          $ (0.80
        
        
          )
        
        
        
        
          $ (0.67
        
        
          )
        
        
        
        
          $ (0.19
        
        
          )
        
        
        
        
          to
        
        
        
        
          $ (0.04
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add back: Restructuring charges
        
        
          0.82
        
        
           
        
        
        
        
          0.83
        
        
           
        
        
        
        
          0.79
        
        
           
        
        
        
        
        
        
        
        
          0.79
        
        
           
        
      
      
        
          Non-GAAP income from continuing operations
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          $ 0.02
        
        
           
        
        
        
        
          $ 0.16
        
        
           
        
        
        
        
          $ 0.60
        
        
           
        
        
        
        
          to
        
        
        
        
          $ 0.75
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Shares used in computing GAAP and non-GAAP per share amounts:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          BASIC
        
        
          15,935,336
        
        
           
        
        
        
        
          15,883,210
        
        
           
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          DILUTED
        
        
          17,145,463
        
        
           
        
        
        
        
          17,089,134