Telular Corporation Reports Fourth Quarter and Fiscal Year 2009 Results

November 5, 2009 4:05 PM EST

CHICAGO--(BUSINESS WIRE)-- Telular Corporation (NASDAQ: WRLS):

- Q409 Telguard Sales Up 35% Year-Over-Year

- Company Reaches 500,000 Total Subscribers Milestone, with Strong Subscriber Adds in Quarter

- Total Recurring Service Revenue Up 29% Year-Over-Year and Now Represents 50% of Total Revenue

Telular Corporation, a global leader in connecting businesses and machines over wireless networks, today announced financial results for the fourth quarter and fiscal year ended September 30, 2009. In the fourth quarter, Telular reported revenue of $12.2 million, about flat with last quarter, and grew net income sequentially to $1.4 million or $0.09 per diluted share, from $39,000 or $0.00 per diluted share. Fourth quarter net income included a benefit to cost of sales of $670,000 resulting from successfully negotiating a reduction of a contractual liability.

For the fourth quarter of 2009, income from continuing operations before non-cash items increased to $1.9 million, including the benefit to cost of sales, compared to $1.1 million in the prior quarter. Income from continuing operations before non-cash items is a non-GAAP measure which adds back depreciation, amortization and stock-based compensation expense to income from continuing operations. For further information, see the reconciliation of this measure to income from continuing operations in accordance with GAAP, on the last page of this press release.

In the fourth quarter of 2009, Telguard product revenues increased 56% year-over-year to $4.5 million. Telguard service revenues increased sequentially from $5.4 million to $5.8 million and were up approximately 22% from the prior year period. Recurring revenue from services now represents 50% of total revenue. In the fourth quarter of 2009, Telular sold approximately 33,000 Telguard units, within the expected range, and activated approximately 36,000 new Telguard subscribers, ending the period with approximately 500,000 subscribers. TankLink and Terminal product sales were $1.7 million in the fourth quarter of 2009.

"Demand for our Telguard product remains strong, as we increased Telguard sales 35% from the prior year period," commented Joe Beatty, president and chief executive officer of Telular Corporation. "Our growth is being fueled by the trend toward wireless as the primary communication path for security applications. Going forward, we expect Telguard unit sales to be in the range of 30,000 to 35,000 per quarter which will continue to drive our growth of recurring revenue."

"We had strong performance from Telguard activations in the quarter, reaching the 500,000 total subscribers milestone on September 29, 2009. Fourth quarter recurring revenue from our Telguard service business increased 22% over the prior year period and now, when combined with Tanklink recurring service revenue, represents 50% of total revenue. We demonstrated strong operational efficiencies in the quarter, translating to improved bottom line performance, even while revenues remained flat sequentially. We have $1.2 million remaining in our stock repurchase program, a solid balance sheet with cash and cash equivalents of $17.9 million, and remain focused on maximizing long-term, shareholder value," concluded Mr. Beatty.

For fiscal year 2009, the Company reported revenue of $47.2 million. The Company reported fiscal year 2009 income from continuing operations of $2.3 million, or $0.13 per diluted share. For fiscal year 2009, income from continuing operations before non-cash items was $4.7 million.

Investor Conference Call

Telular's quarterly conference call will be held today at 4:30 p.m. Eastern Time. To participate on the teleconference from the United States and Canada dial 877-941-2324 (International dial 480-629-9716). You may also monitor the call via webcast at www.telular.com (select Earnings Conference Calls in Investor Relations). A replay of the call will be available from Thursday, November 5, 2009 beginning at 6:30 p.m. ET through Sunday, November 8, 2009 ending at 11:59 p.m. ET by dialing 800-406-7325 (enter pass code 4177501#) or internationally at 303-590-3030 (enter pass code 4177501#).

About Telular

Telular Corporation provides event monitoring and wireless access solutions for business and residential customers, enabling devices such as phones, faxes, computers and commercial machinery to be connected using wireless technology. With over 20 years of experience in the wireless industry, Telular Corporation has developed solutions to deliver remote access for voice and data without significant network investment or disruption. Headquartered in Chicago, Telular Corporation has additional offices in Atlanta and Miami. For more information, please visit www.telular.com.

Please be advised that some of the information in this release presents the Company's intentions, beliefs, judgments and expectations of the future and are forward-looking statements. It is important to note that the Company's actual results could differ materially from these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's report on Form 10-K for the fiscal year ended September 30, 2008 Copies of these filings may be obtained by contacting the Company or the SEC.

TELULAR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

AND STATEMENTS OF CASH FLOWS

(Dollars in thousands, except share data)

BALANCE SHEETS

                                               September 30,  September 30,

                                               2009           2008

                                               (Unaudited)

ASSETS

 Cash and cash equivalents                     $ 17,904       $ 21,168

 Trade receivables, net                        7,589          6,904

 Inventories, net                              7,803          10,007

 Prepaid expenses and other current assets     273            1,023

 Assets of discontinued operations             -              4,709

  Total current assets                         33,569         43,811

 Property and equipment, net                   2,193          2,016

 Other assets                                  4,563          2,142

  Total assets                                 $ 40,325       $ 47,969

LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities                           $ 4,903        $ 7,802

 Total stockholders' equity                    35,422         40,167

 Total liabilities and stockholders' equity    $ 40,325       $ 47,969

 Outstanding shares of common stock            14,911,688     18,960,612

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               Twelve Months Ended
                                               September 30,

                                               2009           2008

                                               (Unaudited)    (Unaudited)

 Net cash (used in) provided by continuing
 operations:

  Net cash provided by operating activities    $ 5,453        $ 7,084

  Net cash used in investing activities        (3,341     )   (750       )

  Net cash (used in) provided by financing     (8,989     )   1,475
  activities

                                               (6,877     )   7,809

 Net cash provided by discontinued operations  3,613          3,105

 Net (decrease) increase in cash and cash      $ (3,264   )   $ 10,914
 equivalents

TELULAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share data)

Unaudited

                            Three Months Ended        Twelve Months Ended
                            September 30,             September 30,

                            2009          2008        2009          2008

 Revenues

  Net product sales         $ 6,153       $ 6,763     $ 24,754      $ 45,933

  Service revenue           6,092         4,740       22,440        20,221

   Total revenue            12,245        11,503      47,194        66,154

 Cost of Sales

  Net product cost of       4,422         4,691       18,270        31,805
  sales

  Service cost of sales     2,605         2,197       9,953         9,817

   Total cost of sales      7,027         6,888       28,223        41,622

 Gross margin               5,218         4,615       18,971        24,532

 Operating Expenses

  Engineering and           1,128         1,112       4,783         5,171
  development expenses

  Selling and marketing     1,408         1,208       6,039         6,287
  expenses

  General and               1,286         1,718       6,118         7,409
  administrative expenses

   Total operating          3,822         4,038       16,940        18,867
   expenses

 Income from operations     1,396         577         2,031         5,665

  Other income, net         90            148         319           436

 Income from continuing
 operations before income   1,486         725         2,350         6,101
 taxes

  Provision for income      52            -           65            -
  taxes

 Income from continuing     1,434         725         2,285         6,101
 operations

  Loss from discontinued    (22        )  -           (419       )  (7,480     )
  operations

 Net income (loss)          $ 1,412       $ 725       $ 1,866       $ (1,379   )

 Income (loss) per common
 share:

  Basic

   Continuing operations    $ 0.09        $ 0.04      $ 0.13        $ 0.32

   Discontinued operations  (0.00      )  -           (0.02      )  (0.39      )

   Net income               $ 0.09        $ 0.04      $ 0.11        $ (0.07    )

  Diluted

   Continuing operations    $ 0.09        $ 0.04      $ 0.13        $ 0.32

   Discontinued operations  (0.00      )  -           (0.02      )  (0.39      )

   Net income               $ 0.09        $ 0.04      $ 0.11        $ (0.07    )

 Weighted average number
 of common shares
 outstanding:

  Basic                     14,900,353    19,128,215  17,125,601    19,145,132

  Diluted                   15,231,145    19,172,400  17,205,307    19,145,132

Reconciliation of Non-GAAP Measures

We use income from continuing operations before non-cash items as an additional measure of our operating performance. This measure is not recognized under generally accepted accounting principles. The reconciliation below demonstrates how we calculate this measure from our financial statements

                                   Three Months Ended  Twelve Months Ended
                                   September 30        September 30,

                                   2009     2008       2009     2008

                                   (Unaudited)         (Unaudited)

Income from continuing operations  $ 1,434  $ 725      $ 2,285  $ 6,101

Non-cash compensation              210      352        1,384    1,705

Depreciation and amortization      280      184        1,071    674

Income from continuing operations  $ 1,924  $ 1,261    $ 4,740  $ 8,480
before non-cash items

Income from continuing operations before non-cash items should be considered in addition to, but not as a substitute for, other measures of performance reported in accordance with accounting principles generally accepted in the United States. While we believe that income from continuing operations before non-cash items, as defined above, is useful within the context described above, it is in fact incomplete and not a measure that should be used to evaluate the full performance of Telular Corporation. Such evaluation needs to consider all of the complexities associated with our business, including, but not limited to, how past actions are affecting current results and how they may affect future results, how we have chosen to finance the business and how regulations and other aforementioned items affect the final amounts that are or will be available to shareholders as a return on their investment. Net loss determined in accordance with U.S. GAAP is the most complete measure available today to evaluate all elements of our performance.

    Source: Telular Corporation

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