EMRISE Sells Printed Circuit Board Division Assets To Sierra Circuits, Inc.
RANCHO CUCAMONGA, Calif.--(BUSINESS WIRE)--EMRISE CORPORATION (NYSE Arca:ERI), a multi-national manufacturer of defense and aerospace electronic devices and communications equipment, today announced that it has sold the assets of its printed circuit board (PCB) business, EMRISE Circuit Division (ECD), in Monrovia, CA., to Sierra Circuits, Inc. (Sierra), a leading provider of quick-turn printed circuit boards located in Sunnyvale, CA.
EMRISE President and Chief Executive Officer Carmine T. Oliva said that the sale of ECD generated modest proceeds but could produce meaningful cost savings over time for our Digitran division. In addition, this transaction will be followed by the implementation of EMRISE's previously disclosed plan to assess other much higher value non-core businesses and product lines for possible sale. Depending on the outcome of those assessments, the sale of non-core assets could generate sufficient proceeds to pay off a majority of the debt incurred to finance the acquisition of Advanced Control Components Inc. (ACC). "If we're successful in selling some or all of our non-core assets, we believe it will make EMRISE stronger financially and will allow us to better focus on our core strengths. And with less debt, our annual interest savings would be about equal to the annual income from those non-core assets." Under the terms of the ECD sale agreement, Sierra will pay EMRISE $160,000 over 18 months for the assets of ECD. In addition, Sierra has agreed to remove and dispose of substantially all of the manufacturing equipment at the Monrovia facility thus avoiding related expenses of $75,000 to $125,000, which EMRISE would have had to incur absent the sale of assets.
Sierra has also signed a long-term supplier agreement to sell PCBs to EMRISE's Digitran division at a substantial discount to its previous in-house-manufactured cost. As a result, Digitran expects to realize annual savings in PCB costs of approximately $200,000. The combination of the savings from reduced PCB costs and the other savings expected over the next 12 months should result in total cost savings in excess of $400,000.
Under the agreement, EMRISE is responsible for shutting down the facility and closing the building in which ECD operated. EMRISE is currently determining final costs and works associated with this activity and anticipate completion by December 2008. Net of all actual and expected costs of final closure, EMRISE anticipates a small one-time gain associated with the sale of ECD will be recorded in third-quarter 2008. Other than the anticipated one-time gain and ongoing cost benefits from the long term supplier agreement, EMRISE does not anticipate any material impact to its future financial results from this transaction.
About EMRISE Corporation
EMRISE designs, manufactures and markets electronic devices, sub-systems and equipment for aerospace, defense, industrial and communications markets. EMRISE products perform key functions such as power supply and power conversion; RF and microwave transmission; digital and rotary switching; network access and timing and synchronization of communications networks. Primary growth driver applications for EMRISE products include commercial avionic "In-Flight Entertainment and Communications" products and communications "Network Timing and Synchronization" equipment. EMRISE serves customers in North America, Europe and Asia through operations in the United States, England, France and Japan. The Company has built a worldwide base of customers including all of the Fortune 100 in the U.S. that do business in markets served by EMRISE and many similar-size companies in Europe and Asia. For more information go to www.emrise.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
With the exception of historical information, the matters discussed in this press release, including without limitation EMRISE's ability to produce meaningful cost savings over time for our Digitran division, ability to realize an additional $75,000 to $125,000 benefit as a result of Sierra removing and/or disposing of substantially all of the manufacturing equipment at the Monrovia facility, ability to realize annual savings of approximately $200,000 a year as a result of this new and beneficial supplier agreement, ability to realize an estimated contribution from the transaction in excess of $400,000 over the next 12 months, ability to record a small one-time gain during the 3rd quarter of 2008 associated with this transaction, ability to avoid any material impact to its revenue or profitability going forward as a result of this transaction, ability for the other three transactions planned in connection with EMRISE's strategic plan to assess non-core businesses and/or product lines for possible sale to be of potentially much greater financial significance, ability for proceeds from these possible transactions to be used to pay down acquisition debt, ability for such transactions to result in a stronger balance sheet, reduced financial risk, annual interest savings about equal to non-core annual profit, and/or to result in a stronger more focused company are all forward-looking statements that involve a number of risks and uncertainties. The actual future results of EMRISE CORPORATION could differ from those statements. Factors that could cause or contribute to such differences include, but are not limited to, failure of Sierra to remove and/or dispose of substantially all of the manufacturing equipment at the Monrovia facility and/or failure of EMRISE to accurately estimate its liability associated with the removal of such assets, failure of EMRISE to benefit as a result of this new and beneficial supplier agreement, failure of EMRISE to accurately estimate the contribution from the transaction as compared to the costs we would have incurred by shutting down this facility on our own without the benefit of a sale, failure to accurately estimate the anticipated costs associated with closure of the building which may impact EMRISE's ability to record a small one-time gain during the 3rd quarter of 2008 associated with this transaction, higher than anticipated future costs and/or less than anticipated future savings associated with this transaction, failure to complete and/or delays in completing any or all of the other three transactions planned in connection with EMRISE's strategic plan to assess non-core businesses and/or product lines for possible sale, failure of EMRISE to use proceeds from these possible transactions to pay down acquisition debt, failure of such transactions to result in a stronger balance sheet, reduced financial risk, and/or annual interest savings about equal to non-core annual profit, and/or failure of such transactions to result in a stronger more focused company, and those factors contained in the "Risk Factors" Section of the Company's Form 10-K for the year ended December 31, 2007, and other Company filings.
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