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Share Name | Share Symbol | Market | Type |
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Rae Systems Common Stock | AMEX:RAE | AMEX | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.00 | - |
Fourth Quarter 2010 Financial Results
For the fourth quarter of 2010, RAE Systems reported revenue from continuing operations of $23.3 million, compared with $21.1 million for fourth quarter of 2009. The Americas contributed 53 percent of total revenue, Asia contributed 29 percent and Europe contributed 18 percent. Gross margin from continuing operations for the quarter was 61 percent, compared with 53 percent for the same quarter of 2009. Total operating expenses for the fourth quarter 2010 were $13.3 million, including legal and financial advisory expenses of approximately $1.5 million related to the company's previously announced merger with a private equity firm, compared with $10.7 million for the fourth quarter of 2009.
On January 13, 2011, the company announced that it had signed a definitive agreement to sell its interest in its RAE Fushun joint venture. As a result, the company is accounting for RAE Fushun as a discontinued operation in 2010. This transaction resulted in a net loss from discontinued operations in the fourth quarter of $4.6 million, or $0.08 per basic and fully diluted share. Income from continuing operations was $1.9 million, or $0.04 per basic and fully diluted share. The consolidated net loss for the quarter was $2.7 million, or $0.04 per basic and fully diluted share compared with net income of $968,000, or $0.01 per basic and fully diluted share in the fourth quarter of 2009.
The net income from continuing operations in the fourth quarter of 2010 was primarily due to a favorable income tax benefit of $1.1 million. The principal factors contributing to this benefit were an increase in the company's China entities' deferred tax assets due to a tax rate adjustment in China and a decrease in the current tax provision related to passage of new U.S. tax legislation in the fourth quarter.
Full Year 2010 Financial Results
For the full year 2010, RAE Systems reported revenue from continuing operations of $87.1 million, compared with $75.0 million in 2009. The Americas contributed 54 percent of total revenue, Asia contributed 28 percent and Europe contributed 18 percent. For the full year 2010, gross margin from continuing operations was 60 percent compared with 53 percent for 2009. Total operating expenses for the full year 2010 were $46.3 million, including legal and financial advisory expenses of approximately $3.1 million related to the company's previously announced merger with a private equity firm, compared with $43.5 million for 2009.
The 2010 net loss for the full year included a $7.8 million loss, or $0.13 per basic and fully diluted share from the discontinuation of the RAE Fushun joint venture. 2010 income from continuing operations was $5.3 million, or $0.09 per basic and fully diluted share. The consolidated net loss for the full year of 2010 was $2.6 million, or $0.04 per basic and fully diluted share, compared with a net loss of $5.8 million, or $0.10 per basic and fully diluted share for the same period in 2009.
About RAE Systems
RAE Systems is a leading global provider of rapidly deployable sensor networks that enable customers to identify safety and security threats in real time. Products include disposable gas detection tubes, single gas personal monitors, multi-sensor chemical detection monitors, photoionization (PID) monitors for volatile organic compounds (VOCs), wireless gas detection systems, and radiation monitoring networks for energy production and refining, industrial and environmental safety, and public and government first responder security sectors. RAE Systems' products are used in over 95 countries by many of the world's leading corporations and by many U.S. government agencies. For more information about RAE Systems, please visit www.RAESystems.com.
Safe Harbor Statement
This press release may contain "forward-looking" statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include, without limitation: expressions of "belief," "anticipation," or "expectations" of management; statements as to industry trends or future results of operations of RAE Systems and its subsidiaries; and other statements that are not historical fact. These types of statements address matters that are subject to risks and uncertainties, which could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the general economic and industry factors, investigation and receptiveness of the market to RAE Systems and its products. In addition, our forward-looking statements should be considered in the context of other risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to our annual report on Form 10-K and Form 10-Q filings, available online at http://www.sec.gov. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements.
[Tables to Follow]
RAE Systems Inc. Consolidated Balance Sheets (in thousands, except share and par value data) (unaudited) December 31, December 31, 2010 2009 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 16,296 $ 17,153 Restricted cash 2,000 2,000 Trade notes receivable 2,018 1,527 Accounts receivable, net of allowances of $3,539 and $2,675, respectively 14,286 14,735 Accounts receivable from affiliate 200 322 Inventories 11,546 9,308 Prepaid expenses and other current assets 4,557 3,339 Income taxes receivable 130 659 Current assets of discontinued operation 6,093 10,130 ------------ ------------ Total current assets 57,126 59,173 ------------ ------------ Property and equipment, net 10,730 7,582 Intangible assets, net 196 544 Investments in unconsolidated affiliates 184 358 Other assets 393 1,325 Noncurrent assets of discontinued operation 3,478 9,892 ------------ ------------ Total assets $ 72,107 $ 78,874 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,475 $ 5,725 Accounts payable to affiliate 25 92 Bank lines of credit 1,814 4,026 Accrued liabilities 11,957 11,962 Notes payable to related parties, current 278 370 Income taxes payable 128 - Deferred revenue, current 557 603 Current liabilities of discontinued operation 5,790 4,719 ------------ ------------ Total current liabilities 26,024 27,497 ------------ ------------ Deferred revenue, non-current 776 615 Deferred tax liabilities, non-current 141 - Deferred gain on sale of real estate 3,809 4,444 Other long-term liabilities 1,491 761 Notes payable to related parties, non-current - 363 Noncurrent liabilities of discontinued operation 182 1,639 ------------ ------------ Total liabilities 32,423 35,319 ------------ ------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock, $0.001 par value, 200,000,000 shares authorized; 59,512,064 and 59,438,328 shares issued and outstanding, respectively 59 59 Additional paid-in capital 65,041 63,832 Accumulated other comprehensive income 7,786 6,844 Accumulated deficit (34,311) (31,706) ------------ ------------ Total RAE Systems Inc. shareholders' equity 38,575 39,029 Noncontrolling interest 1,109 4,526 ------------ ------------ Total shareholders' equity 39,684 43,555 ------------ ------------ Total liabilities and shareholders' equity $ 72,107 $ 78,874 ============ ============ RAE Systems Inc. Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Year Ended December 31, December 31, ------------------ ------------------ 2010 2009 2010 2009 -------- -------- -------- -------- Net sales $ 23,341 $ 21,138 $ 87,053 $ 74,993 Cost of sales 9,137 10,000 34,752 35,415 -------- -------- -------- -------- Gross profit 14,204 11,138 52,301 39,578 -------- -------- -------- -------- Operating expenses: Sales and marketing 5,333 4,617 19,494 16,354 Research and development 1,847 1,549 7,077 5,956 General and administrative 6,084 4,534 19,691 21,149 -------- -------- -------- -------- Total operating expenses 13,264 10,700 46,262 43,459 -------- -------- -------- -------- Operating income (loss) from continuing operations 940 438 6,039 (3,881) Other income (expense): Interest income 4 17 66 46 Interest expense (51) (76) (185) (390) Other, net (42) 73 (177) 277 Equity in gain (loss) of unconsolidated affiliates (60) 71 (173) (109) -------- -------- -------- -------- Income (loss) from continuing operations before income taxes 791 523 5,570 (4,057) Income tax (expense) benefit 1,124 946 (297) 800 -------- -------- -------- -------- Income (loss) from continuing operations 1,915 1,469 5,273 (3,257) Discontinued operations: Loss from discontinued operations, net of tax (7,331) (683) (11,178) (3,457) Net loss attributable to the noncontrolling interest 2,721 178 3,342 952 -------- -------- -------- -------- Loss from discontinued operations (4,610) (505) (7,836) (2,505) -------- -------- -------- -------- Net income (loss) (2,695) 964 (2,563) (5,762) Net income (loss) attributable to the noncontrolling interest (42) 4 (42) 3 -------- -------- -------- -------- Net income (loss) attributable to RAE Systems Inc. $ (2,737) $ 968 $ (2,605) $ (5,759) ======== ======== ======== ======== Earnings per common share - basic: Continuing operations $ 0.04 $ 0.02 $ 0.09 $ (0.06) Discontinued operations (0.08) (0.01) (0.13) (0.04) -------- -------- -------- -------- Net loss per share - basic and diluted $ (0.04) $ 0.01 $ (0.04) $ (0.10) ======== ======== ======== ======== Diluted net loss per share Continuing operations $ 0.04 $ 0.02 $ 0.09 $ (0.06) Discontinued operations (0.08) (0.01) (0.13) (0.04) -------- -------- -------- -------- Diluted net loss per share $ (0.04) $ 0.01 $ (0.04) $ (0.10) ======== ======== ======== ======== Weighted average common shares outstanding - Basic 59,512 59,390 59,439 59,367 Stock options 477 179 136 - -------- -------- -------- -------- Weighted average common shares outstanding - Diluted 59,989 59,569 59,575 59,367 ======== ======== ======== ======== The following table sets forth the components of our Consolidated Statements of Operations as a percentage of net sales: Three Months Ended Year Ended December 31, December 31, ------------------ ------------------ 2010 2009 2010 2009 -------- -------- -------- -------- Net sales 100% 100% 100% 100% Cost of sales 39% 47% 40% 47% -------- -------- -------- -------- Gross profit 61% 53% 60% 53% -------- -------- -------- -------- Operating expenses: Sales and marketing 23% 22% 23% 22% Research and development 8% 7% 8% 8% General and administrative 26% 22% 23% 28% -------- -------- -------- -------- Total operating expenses 57% 51% 54% 58% -------- -------- -------- -------- Operating income (loss) from continuing operations 4% 2% 6% -5% Other income (expense): Interest income 0% 0% 0% 0% Interest expense 0% 0% 0% 0% Other, net 0% 0% 0% 0% Equity in gain (loss) of unconsolidated affiliates -1% 0% 0% 0% -------- -------- -------- -------- Income (loss) from continuing operations before income taxes 3% 2% 6% -5% Income tax (expense) benefit 5% 5% 0% 1% -------- -------- -------- -------- Income (loss) from continuing operations 8% 7% 6% -4% Discontinued operations: Loss from discontinued operations, net of tax -32% -3% -13% -5% Net loss attributable to the noncontrolling interest 12% 1% 4% 1% -------- -------- -------- -------- Loss from discontinued operations -20% -2% -9% -4% -------- -------- -------- -------- Net income (loss) -12% 5% -3% -8% Net (income) loss attributable to the noncontrolling interest 0% 0% 0% 0% -------- -------- -------- -------- Net income (loss) attributable to RAE Systems Inc. -12% 5% -3% -8% ======== ======== ======== ========
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Company Contact: Investor Relations 408-952-8449 investorrelations@raesystems.com IR Agency Contact: Becky Herrick Lippert/Heilshorn & Associates, Inc. 415-433-3777 bherrick@lhai.com
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