RALEIGH, NC--(Marketwire - May 17, 2010) - Law Enforcement Associates Corporation (LEA) (
First quarter net sales were $1.2 million versus $1.8 million in the same quarter last year. The decrease in revenue from the same period last year is a result of the Company shipping approximately $530,000 of its nonrecurring U.S. Census Bureau order in March of 2009. Gross margin was 26% versus 27% in the comparable quarter a year ago. This year's gross margin was negatively impacted by the Company's relatively fixed nature of labor and overhead costs in conjunction with its reduced sales volume.
The Company reported a first quarter net loss of $267,395, or approximately $0.01 per share, versus a net loss of $97,218, or less than $0.01 per share, in the first quarter last year. The decline was primarily due to a smaller gross margin, increases in legal and professional fees and research and development costs.
Increased legal fees that were associated with the Wortley and Feldman & Perry lawsuits negatively impacted operating results. Total operating expenses were $735,311, or 59% of revenue, versus $600,105, or 34% of revenue in the first quarter last year. Development work on new products and upgrades to existing equipment lines resulted in a $37,754 increase in R&D expense, which was $75,654, or 6% of net sales, versus $37,900, or 2% of net sales, in the first quarter last year.
"Our financial performance in the second quarter will benefit from having our product catalog produced and mailed to law enforcement agencies all across the United States as well as internationally," said Paul Briggs, president and CEO. He continued, "The catalog was mailed in early April and has been updated with our most recent product offerings and all new pricing. This catalog represents the Company's most comprehensive pricing update since 2008. We are very excited about our PDT Digital Audio offering and other digital technology that we are incorporating into our portfolio." As a result of the updated pricing and other internal changes, management expects gross margin to increase beginning in the second quarter.
Briggs added, "We are certainly disappointed with the first quarter results; however management continues to enhance its sales and marketing efforts. The decrease in revenues in the first quarter of 2010 is primarily due to decreases in sales orders entered in December 2009 and January 2010 related to management and sales turnover. However, we have made significant changes in both our production and sales departments and are continually monitoring them proactively in order to increase product margins and bring the Company back to profitability in the second quarter of 2010."
Briggs said LEA is currently pursuing a broad range of opportunities with a variety of customers including military, federal, state and local-level customer prospects. "We are optimistic that our new digital video product will be successful with our traditional law enforcement customers; however, we are exploring opportunities in ancillary markets." He continued, "I'm also very excited about our new director of training, Dan Heinz. His extensive law enforcement background and experience will be vital to our training programs and his real-world understanding will be a valuable resource to our customers as well as adding a new revenue stream in the form of product demonstration and training programs."
About Law Enforcement Associates Corporation
LEA is a leading security and surveillance technology Company that manufactures and markets a diverse product line to the worldwide law enforcement, military, security and corrections markets. The Company's Audio Intelligence Devices (AID) division has been serving the law enforcement sector for more than 30 years and is one of the most respected names in the surveillance equipment industry. LEA's products are used by a wide variety of government and non-governmental agencies, as well as public and private companies. These include military bases, nuclear facilities, embassies, government installations, oil refineries, United Nations and NATO locations. LEA's products have been used at high-profile events such as the Summer & Winter Olympics, Super Bowl, U.S. Golf Championship, and the Democratic and Republican National Conventions. Its products include the Under Vehicle Inspection System (UVIS), EDK123 (Explosive Detection Kit), Bloodhound and Birddog GPS Tracking Systems, Graffiti Cam, Letter-bomb Visualizer Spray, and a wide variety of Audio & Video Surveillance Equipment. Headquartered in Raleigh, N.C., the Company has been featured in many industry publications and websites. For more information, please visit www.leacorp.com.
Forward-Looking Information:
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Among other things, these statements relate to our financial condition, results of operations and future business plans, operations, opportunities and prospects. In addition, we and our representatives may from time to time make written or oral forward-looking statements, including statements contained in filings with the Securities and Exchange Commission and in our reports to stockholders. These forward-looking statements are generally identified by the words or phrases "may," "could," "should," "expect," "anticipate," "plan," "believe," "seek," "estimate," "predict," "project" or words of similar import. These forward-looking statements are based upon our current knowledge and assumptions about future events and involve risks and uncertainties that could cause our actual results, performance or achievements to be materially different from any anticipated results, prospects, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are not guarantees of future performance. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date that we make them. For a description of factors that may cause actual results to differ materially from such forward-looking statements, see the Company's Annual Report on Form 10-K for the year ended 2009, and other reports from time to time filed with or furnished to the Securities and Exchange Commission. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.
Contact Information:
CONTACT:
Tony Perry
919-872-6210