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RELM Wireless Reports Third Quarter & Nine Month 2012 Results

-Net Sales Increased 18.8% for Nine Months Ended September 30, 2012-

WEST MELBOURNE, Fla., Nov. 14, 2012 /PRNewswire/ -- RELM Wireless Corporation (NYSE MKT: RWC) today announced its financial and operating results for the quarter and nine months ended September 30, 2012.

For the quarter ended September 30, 2012, sales totaled approximately $8.1 million, compared with approximately $7.0 million for the third quarter last year.  Pretax income for the quarter ended September 30, 2012 was approximately $1.4 million, compared with approximately $939,000 for the third quarter last year.  The Company recognized income tax expense of approximately $508,000 for the third quarter 2012, compared with approximately $25,000 for the same quarter last year.  Income tax expense for the third quarter was largely non-cash due to the Company's deferred tax assets derived primarily from its net operating loss carryforwards.  Net income for the quarter ended September 30, 2012 was approximately $884,000, or $0.07 per diluted share, compared with approximately $914,000, or $0.07 per diluted share, for the same quarter last year.  

Gross profit margin for the third quarter 2012 was 49.7% of sales, versus 50.3% of sales for the same quarter last year.  Selling, general and administrative expenses totaled approximately $2.6 million (32.5% of sales) for the third quarter 2012, compared with $2.5 million (36.4% of sales) for the third quarter last year.

The Company had approximately $21.4 million in working capital as of September 30, 2012, of which $10.8 million was comprised of cash and trade receivables.  This compares with working capital of $19.5 million as of December 31, 2011, of which $6.8 million was comprised of cash and trade receivables. The Company had no balance outstanding under its revolving credit facility at September 30, 2012.

RELM President and Chief Executive Officer David Storey commented, "We were very pleased to follow-up our best second quarter in three years with solid financial and operating results for the third quarter and year-to-date.  Our sales increased for both the third quarter and nine-month periods compared with the same periods last year.  Also, for the nine month period, we realized pretax income of approximately $2.7 million; a noteworthy turnaround from a pretax loss of $603,000 for the same period last year.  We continued to benefit from a larger addressable market, made possible by our expansive KNG product line.  Consequently, we are making sales inroads beyond our federal legacy VHF customers.  A strong sales mix of new digital products enabled us to maintain combined gross profit margins of 49.7% for the third quarter.  Meanwhile, we continued to effectively manage our operating expenses.  These factors combined to yield our largest nine-month pretax income since 2009, and contribute to growing working capital and cash positions."

Mr. Storey continued, "We are encouraged by the momentum of the second and third quarters, which we believe establishes a foundation for consistency and growth moving forward."

For the nine months ended September 30, 2012, sales totaled approximately $21.8 million compared with approximately $18.4 million for the same period last year.  Pretax income for the nine months ended September 30, 2012 was approximately $2.7 million compared with a pretax loss of approximately $506,000 for the same period last year.  For the nine months ended September 30, 2012 the Company recognized income tax expense of approximately $996,000, compared with approximately $25,000 for the same period last year.  Income tax expense for the nine month period was largely non-cash due to the Company's deferred tax assets derived primarily from its net operating loss carryforwards.  Net income for the nine months ended September 30, 2012 totaled approximately $1.7 million, or $0.13 per diluted share, compared with a net loss of approximately $628,000, or $0.05 per share, for the same period last year.

Gross profit margins for the nine months ended September 30, 2012 were 47.4% of sales, versus 42.3% of sales for the same period last year.  Selling, general and administrative expenses for the nine months ended September 30, 2012 totaled approximately $7.6 million compared with approximately $8.3 million for the same period last year.

Conference Call and Webcast
The Company will host a conference call and webcast for investors at 9:00 a.m. Eastern Time, Thursday, November 15, 2012.  Shareholders and other interested parties may participate in the conference call by dialing 877-317-6789 (international/local participants dial 412-317-6789) and asking to be connected to the "RELM Wireless Corporation Conference Call" a few minutes before 9:00 a.m. Eastern Time on November 15, 2012.  The call will also be webcast at http://www.relm.com.  Please allow extra time prior to the call to visit the site and download any necessary software to listen to the Internet webcast.  An online archive of the webcast will be available on the Company's website for 30 days following the call at http://www.relm.com.

A replay of the conference call will be available one hour after the completion of the call until November 23, 2012, by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering the conference ID# 10019940. 

About APCO Project 25 (P25)

APCO Project 25 (P25), which requires interoperability among compliant equipment regardless of the manufacturer, was established by the Association of Public-Safety Communications Officials and is approved by the U.S. Department of Homeland Security.  The shift toward interoperability gained momentum as a result of significant communications failures in critical emergency situations.  RELM was one of the first manufacturers to develop P25-compliant technology.

About RELM Wireless Corporation

As an American Manufacturer for more than 60 years, RELM Wireless Corporation has produced high‑specification two‑way communications equipment of unsurpassed reliability and value for use by public safety professionals and government agencies, as well as radios for use in a wide range of commercial and industrial applications.  Advances include a broad new line of leading digital two‑way radios compliant with APCO Project 25 specifications.  RELM's products are manufactured and distributed worldwide under BK Radio and RELM brand names. The Company maintains its headquarters in West Melbourne, Florida and can be contacted through its web site at www.relm.com or directly at 1‑800‑821‑2900.  The Company's common stock trades on the NYSE MKT market under the symbol "RWC".

This press release contains certain forward-looking statements that are made pursuant to the "Safe Harbor" provisions of the Private Securities Litigation Reform Act Of 1995.  These forward-looking statements concern the Company's operations, economic performance and financial condition and are based largely on the Company's beliefs and expectations.  These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors and risks include, among others, the following: changes or advances in technology; the success of our LMR product line; competition in the land mobile radio industry; general economic and business conditions, including federal, state and local government budget deficits and spending limitations; the availability, terms and deployment of capital; reliance on contract manufacturers and suppliers; heavy reliance on sales to agencies of the U.S. government; our ability to utilize deferred tax assets; retention of executive officers and key personnel; our ability to manage our growth; government regulation; business with manufacturers located in other countries; our inventory and debt levels; protection of our intellectual property rights; acts of war or terrorism; and any infringement claims. Certain of these factors and risks, as well as other risks and uncertainties, are stated in more detail in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and in the Company's subsequent filings with the SEC.  These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.



Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

Three Months Ended

Nine Months Ended







Sales, net

$     8,112

$     6,976

$    21,809

$    18,361


Cost of products





Selling, general and administrative expenses





Total expenses





Operating income (loss)





Other expense:

Net interest expense





Other expense





Income (loss) before income taxes





Income tax expense





Net income (loss)

$        884

$        914

$     1,729

$       (628)

Net earnings (loss) per share - basic

$       0.07

$       0.07

$       0.13

$      (0.05)

Net earnings (loss) per share - diluted

$       0.07

$       0.07

$       0.13

$      (0.05)

Weighted average common shares outstanding, basic





Weighted average common shares outstanding, diluted







Condensed Consolidated Balance Sheets

(In Thousands, Except Share Data) (Unaudited)

 September 30, 

 December 31, 




Current assets:

Cash & cash equivalents

$              6,232

$           2,693

Trade accounts receivable, net



Inventories, net



Deferred tax assets, net



Prepaid expenses & other current assets



Total current assets



Property, plant and equipment, net



Deferred tax assets, net



Capitalized software, net



Other assets



Total assets

$            35,134

$          31,847


Current liabilities:

Accounts payable

$              2,551

$           1,756

Accrued compensation and related taxes



Accrued warranty expense



Accrued other expenses and other current liabilities



Note payable



Deferred revenue



Total current liabilities



Deferred revenue



Long-term debt



Commitments and contingencies

Stockholders' equity:

Preferred stock; $1.00 par value; 1,000,000 authorized

shares, none issued or outstanding.



Common stock; $0.60 par value; 20,000,000 authorized

shares; 13,545,482 and 13,519,323 issued and outstanding shares

at September 30, 2012 and December 31, 2011, respectively.



Additional paid-in capital



Accumulated deficit



Total stockholders' equity



Total liabilities and stockholders' equity

$            35,134

$          31,847



SOURCE RELM Wireless Corporation

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