EFJI Efjohnson Technologies, (MM)

EFJ, Inc. Reports Revenue Growth of 64% in the Second Quarter WASHINGTON, Aug. 3 /PRNewswire-FirstCall/ -- EFJ, Inc. (NASDAQ:EFJI) today announced second quarter 2004 revenue of $17.6 million. This represents a 64% increase from revenue of $10.7 million in the second quarter of 2003. The increase in revenue in the second quarter was driven by increased sales in both homeland security communications for first responders and international security products. EFJ, Inc. reported a loss of $1.5 million or $0.08 loss per share. This includes a non-cash expense of $3.4 million, or $0.19 per share, to reflect the variable accounting treatment of re-priced options. Excluding the impact of variable accounting treatment of re-priced options, net income for the second quarter of 2004 was $1.9 million, or $0.11 per share. In the second quarter of 2003, the company reported a net loss of $0.1 million or $0.01 loss per share, which included a non-cash benefit of $0.1 million or $0.01 per share, to reflect the variable accounting treatment of re-priced stock options. "Significant margin improvement in the second quarter brought our gross margin to 44% on a year to date basis which is in line with our 2004 guidance. Our backlog also increased to $11.4 million at the end of the second quarter compared to $5.6 million for the same period a year ago," said Michael E. Jalbert, EFJ, Inc. chairman and chief executive officer. "We continue to confirm our 2004 annual guidance. Our guidance reflects fluctuations due to the timing of customer funding which may result in uneven year over year quarterly performance. However, we believe that our ongoing investment in people for research and development, sales/marketing and our accelerated facilities relocation and outsourcing initiatives are positioning EFJ, Inc. for continued growth in 2005 and beyond," Jalbert said. Conference Call and Web Cast The Company announced on July 15, 2004 that it has scheduled an investor conference call at 1:00 p.m. Eastern Time today. The call is available via 800-967-7185. Replays of the call will be available starting at 2:00 p.m. EDT on Tuesday, August 3rd and continuing until 11:59 p.m. Friday August 6, 2004. The replay number is 888-203-1112, and the reservation number is 508233. The call will be accessible via webcast at http://www.vcall.com/ by clicking EFJI under "Today's VCalls." About EFJ, Inc. EFJ, Inc. is the Washington, DC based parent company to industry-leading wireless telecommunications solutions businesses. EFJ, Inc. is home to the EFJohnson Company, one of the first developers of Project 25 mobile communications products compliant with federal government interoperability standards, and Transcrypt International, a leader in secure voice communication solutions. For more information, visit http://www.efji.com/. Safe Harbor Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other matters, R&D expenses, sales/marketing, facility move and outsourcing expenses. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward-looking statements due to a number of risk factors including, but not limited to, the percentage of backlog which is filled during the quarter, the level of demand for the Company's products and services, the timely procurement of necessary manufacturing components, the timing of future product development, the actual operational expense experienced, dependence on continued funding of governmental agency programs, the successful completion of the relocation of facilities from Minnesota to Texas, and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10K for the year ended December 31, 2003. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements. EFJ, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the three and six months ended June 30, 2004 and 2003 (Unaudited and in thousands, except share and per share data) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2004 2003 2004 2003 Revenues $17,571 $10,723 $39,815 $19,724 Cost of sales 8,554 6,079 22,240 11,121 Gross profit 9,017 4,644 17,575 8,603 Operating expenses: Research and development 2,694 1,813 5,270 3,215 Sales and marketing 2,090 1,533 4,336 2,844 General and administrative, inclusive of non-cash stock option repricing (benefit) expense adjustment of $3,398 and $2,311 for the three and six months ended June 30, 2004 and $(150) and $296 for the three and six months ended June 30, 2003 5,672 1,386 6,359 3,196 Total operating expenses 10,456 4,732 15,965 9,255 Income (loss) from operations (1,439) (88) 1,610 (652) Other income (expense) 4 - (5) 27 Interest income 9 9 20 21 Interest expense (35) (53) (91) (92) Income (loss) before income taxes (1,461) (132) 1,534 (696) Income tax provision - - - - Net income (loss) $(1,461) $(132) $1,534 $(696) Net income (loss) per share - Basic $(0.08) $(0.01) $0.09 $(0.04) Net income (loss) per share - Diluted $(0.08) $(0.01) $0.08 $(0.04) Weighted average common shares - Basic 17,716,875 17,577,315 17,650,585 17,577,315 Weighted average common shares - Diluted 17,716,875 17,577,315 18,840,271 17,577,315 EFJ, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2004 and December 31, 2003 (in thousands, except share data) JUNE 30, DECEMBER 31, ASSETS 2004 2003 (unaudited) Current assets: Cash and cash equivalents $8,849 $4,644 Accounts receivable, net of allowance for returns and doubtful accounts of $166 and $104, respectively 13,104 19,754 Receivables - other 186 157 Cost in excess of billings on uncompleted contracts 1,006 869 Inventories 12,825 18,040 Deferred income taxes 2,000 1,500 Prepaid expenses 717 587 Total current assets 38,687 45,551 Property, plant and equipment, net 3,111 2,779 Deferred income taxes 6,000 6,500 Intangible assets, net of accumulated amortization 6,749 6,753 Other assets 590 686 TOTAL ASSETS $55,137 $62,269 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Revolving line of credit $- $7,500 Current portion of long-term debt obligations 130 127 Accounts payable 5,150 8,582 Billings in excess of cost on uncompleted contracts - 30 Deferred revenue - current 893 1,191 Accrued expenses 3,309 3,406 Total current liabilities 9,482 20,836 Long-term debt obligations, net of current portion 356 426 Deferred revenue, net of current portion 951 601 TOTAL LIABILITIES 10,789 21,863 Stockholders' equity: Preferred stock ($0.01 par value; 3,000,000 shares authorized; none issued) - - Common stock ($0.01 par value; 50,000,000 voting shares authorized, 17,784,925 and 17,359,973 issued and outstanding as of June 30, 2004 and December 31, 2003; 600,000 non-voting shares authorized, 217,542 issued and outstanding at December 31, 2003, which shares were converted to voting shares in 2004) 178 176 Additional paid-in capital 103,251 100,845 Accumulated deficit (59,081) (60,615) TOTAL STOCKHOLDERS' EQUITY 44,348 40,406 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $55,137 $62,269 DATASOURCE: EFJ, Inc. CONTACT: Investor Relations: Jim Stark of EFJ, Inc., +1-800-295-1772, Web site: http://www.efji.com/

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