SOURCE: Law Enforcement Associates

August 12, 2009 06:00 ET

Law Enforcement Associates Reports Record Second Quarter and Six-Month Financial Results; Year-to-Date Revenue Reaches $8.5 Million Versus $3.8 Million in Six-Month Period Last Year

RALEIGH, NC--(Marketwire - August 12, 2009) - Law Enforcement Associates Corporation (LEA) (OTCBB: LAWE)

SELECTED HIGHLIGHTS:

--  Q2 operating income reported at $1.4 million; net income at $789,000,
    or $0.03 per share
--  Year-to-date operating cash flow reaches $1.1 million
--  Quoting and booking activity accelerating as stimulus funds reaching
    customers
    

Law Enforcement Associates Corporation (LEA) (OTCBB: LAWE), the largest U.S.-based developer and manufacturer of electronic surveillance equipment, today announced record financial results for its second quarter and six-month period ended June 30, 2009.

Second quarter revenue increased by approximately $5 million, or 267%, to a record $6.8 million from $1.8 million in last year's second quarter. The increase was attributable to strong shipping volume, a significant portion of which was associated with a record contract signed in the first quarter. Gross margin improved to 33% from 28% in the comparable year-ago quarter. Income from operations was $1.4 million, an improvement of $1.6 million when compared to a loss from operations of $171,000 in the second quarter a year ago. Net income was $789,000, or $0.03 per share, a positive swing of nearly $1.0 million when compared to a net loss of $167,000, or $0.01 per share, in the second quarter last year.

For the six-month period, revenue increased 123% to a record $8.5 million from $3.8 million in the 2008 six-month period. Gross margin was 31% versus 35% in the comparable period a year ago. Operating income was $1.3 million, an improvement of $1.4 million when compared to a loss from operations of $118,000 in the same period last year. Six-month net income was $692,000, or $0.03 per share, a positive swing of $840,000 when compared to a net loss of $148,000, or $0.01 per share, at the six-month mark last year.

"We have achieved the strongest six-month financial performance in Company history, and are positioned to deliver record revenue and profitability for our full-fiscal year as well," said Paul Feldman, president. "We've seen a marked improvement in sales activity during recent weeks, as the $4 billion in law enforcement funding from the American Recovery and Reinvestment Act has begun to reach our customers."

"There is a growing spectrum of new business opportunities emerging on the horizon, and we are taking aggressive action to capitalize on them," Feldman added. "Our increased investments in research and development should result in the launch of a key new product offering in the coming months. In addition, we are strengthening our business development efforts and strategic initiatives, and hope to announce details of some of these programs in the coming weeks."

In commenting on the 1.2 million shares of LEA redeemable common stock that became exercisable on August 1, 2009, Feldman said, "We are in discussions with the party holding these redeemable shares, and remain confident that we will be able to resolve the issue in a manner favorable to both the Company and the holder."

Paul Briggs, chief financial officer, said, "Our balance sheet as of June 30 reflects LEA's improving financial strength. Subsequent to the close of the quarter, we have added significantly to the Company's cash and working capital positions, and we remain free of any long-term debt."

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:

The statements in this news release contain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that use words such as "believe," "anticipate," "estimate," "intend," "could," "plan," "expect," "project," "predict," "forecast," "outlook," "potential," "continue," "may," "future," "can," "enhance," and "should," or the negative of these, as well as similar expressions, can be used to identify forward-looking statements. Such forward-looking statements involve certain risks, assumptions and uncertainties, including the inability to generate and secure the necessary product sales, or the lack of acceptance of the Company's products by its customers. In each case actual results may differ materially from such forward-looking statements. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results (expressed or modified) will not be realized.

                  Law Enforcement Associates Corporation
                   Consolidated Statement of Operations
            Three Months ended June 30, 2009 and June 30, 2008


                                                    June 30,     June 30,
                                                      2009         2008
                                                  -----------  -----------
Revenues                                          $ 6,786,665  $ 1,848,700
Cost of goods sold                                  4,568,594    1,327,259
                                                  -----------  -----------
        Gross profit                                2,218,071      521,441
                                                  -----------  -----------
Research and development                              138,199       30,688
Operating expenses                                    683,538      662,238
                                                  -----------  -----------
        Total operating expenses                      821,737      692,926
                                                  -----------  -----------
Net income (loss) before other income (expenses)
 and income taxes                                   1,396,334     (171,485)
                                                  -----------  -----------
Other income (expense)
    Loss on sale of assets                             (8,361)     (43,666)
    Other income                                        7,504            -
    Interest income                                        25          308
    Interest expense                                 (111,113)     (30,919)
                                                  -----------  -----------
        Total other income (expense)                 (111,945)     (74,277)
                                                  -----------  -----------
Net income (loss) before income taxes               1,284,389     (245,762)
Income tax (expense) benefit                         (495,131)      78,824
                                                  -----------  -----------
Net income (loss)                                 $   789,258  $  (166,938)
                                                  ===========  ===========
Net income (loss) per weighted average share,
 basic and diluted                                $      0.03  $     (0.01)
                                                  ===========  ===========
Weighted average number of shares, basic and
 diluted                                           25,782,436   25,782,436
                                                  ===========  ===========


                  Law Enforcement Associates Corporation
                   Consolidated Statement of Operations
             Six Months ended June 30, 2009 and June 30, 2008


                                                    June 30,     June 30,
                                                      2009         2008
                                                  -----------  -----------

Net sales                                         $ 8,538,399  $ 3,828,359
Cost of sales                                       5,854,309    2,499,910
                                                  -----------  -----------
        Gross profit                                2,684,090    1,328,449
                                                  -----------  -----------
Research and development                              176,099       39,892
Operating expenses                                  1,245,743    1,406,544
                                                  -----------  -----------
        Total operating expenses                    1,421,842    1,446,436
                                                  -----------  -----------
Net income (loss) before other income (expense)
 and income taxes                                   1,262,248     (117,987)
                                                  -----------  -----------
Other income (expense)
    Loss on sale of assets                             (8,361)     (43,666)
    Other income                                       10,338        6,606
    Interest income                                        25        1,320
    Interest expense                                 (136,664)     (62,045)
                                                  -----------  -----------
        Total other income (expense)                 (134,662)     (97,785)
                                                  -----------  -----------
Net income (loss) before income taxes               1,127,586     (215,772)
Income tax (expense) benefit                         (435,546)      67,428
                                                  -----------  -----------
Net income (loss)                                 $   692,040  $  (148,344)
                                                  ===========  ===========
Net income (loss) per weighted average share,
 basic and diluted                                $      0.03  $     (0.01)
                                                  ===========  ===========
Weighted average number of shares, basic and
 diluted                                           25,782,436   25,782,436
                                                  ===========  ===========


                  Law Enforcement Associates Corporation
                        Consolidated Balance Sheets
                    June 30, 2009 and December 31, 2008



                                                    June 30,    December
                                                      2009      31, 2008
                   ASSETS                         (Unaudited)   (Audited)
                                                  -----------  -----------
CURRENT ASSETS
  Cash                                            $   734,550  $   254,705
  Trade accounts receivable (net of allowance
   for doubtful accounts of $30,000 and $30,000
   at June 30, 2009 and December 31, 2008,
   respectively)                                    1,876,973    2,011,293
  Accounts receivable - other                          49,253            -
  Inventories                                       1,529,329    1,368,049
  Prepaid expenses                                     49,837       45,629
  Deferred tax asset - current                        304,326      244,741
                                                  -----------  -----------
      Total current assets                          4,544,268    3,924,417
                                                  -----------  -----------
PROPERTY AND EQUIPMENT - net                          158,620      170,027
                                                  -----------  -----------
OTHER NON-CURRENT ASSETS
  Intangibles - net                                 2,092,431    2,174,564
  Assets held for sale                                335,505      335,505
  Deferred tax asset less current portion             565,995      820,425
                                                  -----------  -----------
      Total non-current assets                      2,993,931    3,330,494
                                                  -----------  -----------
Total assets                                      $ 7,696,819  $ 7,424,938
                                                  ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Trade accounts payable                          $   362,926  $   331,451
  Line of credit                                      439,450    1,038,809
  Accrued expenses:
      Income taxes                                    240,702            -
      Compensation and payroll taxes                  139,961      126,695
      Profit sharing plan                              29,994       76,769
      Warranty provision                               54,865       58,809
      Other accrued expenses                           65,392       97,205
      Deferred expenses                                56,336      104,628
  Customer deposits                                     4,019       30,540
                                                  -----------  -----------
      Total current liabilities, before shares
       subject to redemption                        1,393,645    1,864,906
                                                  -----------  -----------
  Common stock, subject to possible redemption,
   1,200,000 shares, at redemption value            1,491,476            -
      Total current liabilities                     2,885,121    1,864,906
                                                  -----------  -----------
      Total liabilities                             2,885,121    1,864,906
                                                  -----------  -----------
Commitments and contingencies
Common stock, subject to possible redemption,
 1,200,000 shares, at redemption value                      -    1,440,374
                                                  -----------  -----------
STOCKHOLDERS' EQUITY
  Common stock, $0.001 par value, 50,000,000
   authorized, 25,782,436 issued and outstanding
   at June 30, 2009 and December 31, 2008              25,782       25,782
  Treasury stock at cost, 595 shares of common
   stock held by the Company                             (625)        (625)
  Paid in capital in excess of par                  4,995,595    4,995,595
  Retained earnings/(accumulated deficit)            (209,054)    (901,094)
                                                  -----------  -----------
      Total stockholders' equity                    4,811,698    4,119,658
                                                  -----------  -----------
Total liabilities and stockholders' equity        $ 7,696,819  $ 7,424,938
                                                  ===========  ===========

Contact Information

  • Contact:
    Pfeiffer High Investor Relations, Inc.
    Geoff High
    303-393-7044