ATLANTA, April 9, 2009 (GLOBE NEWSWIRE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today announced that it is adjusting the low end of the range of its previous earnings guidance for the 2009 fiscal year from $1.55 to $1.35 per share from continuing operations based on accounting standards used in 2008 and prior years, which excluded acquisition-related charges from the income statement. The effects of the slowing economy in 2009 on the Company's LXE business, including delays in customer orders, especially in North America, are an increasing concern, and the guidance has been adjusted accordingly. The Company expects to continue pursuing its plan of restructuring for LXE, which is now not expected to be profitable for the first quarter or the full year. Management believes that the remainder of the Company's business -- comprising the defense and space segment, as well as the communications and tracking segment (principally aeronautical SATCOM) -- are on course to meet expectations for the year. Recent acquisitions in the communications and tracking segment are performing quite well and integration is proceeding on plan.
The Company expects to announce results for the fiscal quarter ended April 4, 2009 late in the month.
Effect of New Accounting Standard
As noted above, the Company's earnings guidance for 2009 is based on accounting standards used in 2008 and prior years. Effective in 2009, a new accounting standard, Statement of Financial Accounting Standards ("SFAS") 141(R), "Business Combinations," changes the accounting for business combinations. One of the changes required by SFAS 141(R) is that expenditures for transaction services such as legal advice, third-party due diligence and asset valuation will no longer be capitalized as part of the cost of an acquisition but will be expensed in the income statement. In addition, SFAS 141(R) requires that an earnout provision (purchaser to pay seller for achieving specific post-closing performance targets) must be recorded at fair value on a discounted basis; the accretion of the discounted liability, as well as any subsequent material changes, favorable or unfavorable, in the fair value of the earnout will affect the income statement. The Company now estimates that the charges to the 2009 income statement for transaction costs and accounting for the earnout related to acquisitions completed in the first quarter of 2009 will be approximately $.25 - $.27 per share, which is not included in the guidance above.
In addition, further significant acquisition activity not currently anticipated in 2009, would reduce earnings under generally accepted accounting principles by the amount of related transaction expenses and accretion charges for an earnout, if any.
EMS Technologies, Inc. (Nasdaq:ELMG) is a leading innovator in the design, manufacture, and marketing of wireless communications technologies addressing the enterprise mobility, communications-on-the-move and in-flight connectivity markets for both the commercial and government industries. EMS focuses on the needs of the mobile information user and the increasing demand for wireless broadband communications. EMS products and services enable communications across a variety of coverage areas, ranging from global, to regional, to within a single facility. EMS has three operating segments:
* Communications and Tracking supplies a broad array of terminals and antennas that enable end-users in aircraft and other mobile platforms to communicate over satellite networks at a variety of data speeds; this segment (formerly Satellite Communications) was renamed in 2009 to reflect recent acquisitions and their highly complementary connectivity products, including aeronautical wi-fi communications and data storage, aeronautical voice and tracking, and satellite-based machine-to-machine mobile communications. * Defense & Space supplies highly-engineered subsystems for defense electronics and sophisticated satellite applications - from military communications, radar, surveillance and countermeasures to commercial high-definition television, satellite radio, and live TV for today's most innovative airlines; and * LXE is a leading provider of rugged computers and wireless data networks used for logistics applications such as distribution centers, warehouses and container ports. LXE's automatic identification and data capture products serve mobile information users at over 7,500 sites worldwide;
For more information, visit EMS at www.ems-t.com.
The EMS Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5502
Statements contained in this press release regarding the Company's expectations for its financial results for 2009, and concerning the potential for various businesses and products, are forward-looking statements. Actual results could differ from those statements as a result of a wide variety of factors. Such factors include, but are not limited to
* economic conditions in the U.S. and abroad and their effect on
capital spending in the Company's principal markets;
* difficulty predicting the timing of receipt of major customer
orders, and the effect of customer timing decisions on our results;
* successful completion of technological development programs by the
Company and the effects of technology that may be developed by, and
patent rights that may be held or obtained by, competitors;
* U.S. defense budget pressures on near-term spending priorities;
* uncertainties inherent in the process of converting contract awards
into firm contractual orders in the future;
* volatility of foreign exchange rates relative to the U.S. dollar
and their effect on purchasing power by international customers,
and the cost structure of the Company's non-U.S. operations, as
well as the potential for realizing foreign exchange gains and
losses associated with non-U.S. assets or liabilities held by the
Company;
* successful resolution of technical problems, proposed scope changes,
or proposed funding changes that may be encountered on contracts;
* changes in the Company's consolidated effective income tax rate
caused by the extent to which actual taxable earnings in the U.S.,
Canada and other taxing jurisdictions may vary from expected
taxable earnings;
* successful transition of products from development stages to an
efficient manufacturing environment;
* changes in the rates at which our products are returned for repair
or replacement under warranty;
* customer response to new products and services, and general
conditions in our target markets (such as logistics and space-based
communications), and whether these responses and conditions develop
according to our expectations;
* the success of certain of our customers in marketing our line of
high-speed commercial airline communications products as a
complementary offering with their own lines of avionics products;
* the continued availability of financing for aero-connectivity data
communications systems;
* development of successful working relationships with local business
and government personnel in connection with distribution and
manufacture of products in foreign countries;
* the demand growth for various mobile and high-speed data
communications services;
* the Company's ability to attract and retain qualified senior
management and other personnel, particularly those with key
technical skills;
* the ability to negotiate successfully with potential acquisition
candidates, finance acquisitions, or effectively integrate the
acquired businesses, products or technologies into our existing
businesses and products, and the risk that any such acquisitions do
not perform as expected or are otherwise dilutive to our earnings;
* the increased potential for asset impairment charges as a result of
generally unfavorable economic conditions and the required use of
fair value accounting;
* the potential effects of implementing Statement of Financial
Accounting Standards ("SFAS") 141(R ), "Business Combinations,"
which requires, for acquisitions completed in 2009 and thereafter,
that certain acquisition-related expenditures should be accounted
for as period expenses in the income statement, and that the
acquisition-date fair value will become the measurement objective
for all assets acquired and liabilities assumed, resulting in
potential unfavorable effects on the income statement if there are
subsequent changes in fair values of certain assets and liabilities;
* the potential effects, on cash and results of discontinued
operations, of final resolution of potential liabilities under
warranties and representations made by the Company, and obligations
assumed by purchasers, in connection with the Company's
dispositions of discontinued operations;
* the availability, capabilities and performance of suppliers of
basic materials, electronic components and sophisticated subsystems
on which the Company must rely in order to perform according to
contract requirements, or to introduce new products on the desired
schedule; and
* uncertainties associated with U.S. export controls and the export
license process, which restrict the Company's ability to hold
technical discussions with customers, suppliers and internal
engineering resources and can reduce the Company's ability to
obtain sales from foreign customers or to perform contracts with
the desired level of efficiency or profitability.
Further information concerning relevant factors and risks are identified under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.