Exhibit 99.1
 

 
 PRESS RELEASE        SOURCE: WPCS International Incorporated
  
WPCS Reports 4th Quarter and FY2011 Results


EXTON, PA - (Marketwire - July 29, 2011) - WPCS International Incorporated (NASDAQ: WPCS), a leader in design-build engineering services for communications infrastructure, today announced financial results for the fourth quarter and fiscal year 2011 ended April 30, 2011. In the fourth quarter, WPCS reported revenue of $17.8 million compared to $29.2 million for the same period a year ago. The decrease in revenue is due primarily to delays in projects and bid awards.

For the fourth quarter, the company incurred goodwill and other intangible asset impairment charges of $27.5 million, as the company determined that certain intangible assets exceeded their fair value. The company emphasized that these impairment charges are non-cash charges and will have no impact on the company’s operations or cash flow. Including the non-cash charges, for the fourth quarter ended April 30, 2011, WPCS reported a net loss of approximately $27.0 million or $3.89 per diluted share. This compares to net income of $12,000 or $0.00 per diluted share for the same period a year ago.

For the fiscal year ended April 30, 2011, WPCS reported revenue of $96.8 million compared to $105.8 million for the same period a year ago. For the fiscal year ended April 30, 2011, WPCS reported a net loss of approximately $36.8 million or $5.30 per diluted share which includes goodwill and other intangible asset impairment charges of $34.4 million and the one-time charges of $624,000 associated with seeking strategic alternatives including the possible sale of the company. This compares to net income of $854,000 or $0.12 per diluted share for the same period a year ago.

On June 16, 2011, Multiband Corporation, traded under the NASDAQ symbol MBND, announced that it entered into a non-binding letter of intent to acquire WPCS at $3.20 per share in cash. In addition, Multiband Corporation has acquired approximately 10% of the outstanding shares of WPCS in an open market transaction and deposited $1 million in escrow which will be forfeited to WPCS unless WPCS materially breaches the definitive agreement to be acquired or if another bidder tops the existing bid. The proposed merger is subject to customary due diligence and the negotiation of a definitive merger document as well as WPCS shareholder approval. The transaction is expected to close by the end of the third quarter of calendar year 2011.

Andrew Hidalgo, CEO of WPCS, commented, “Although fiscal year 2011 was a difficult year for WPCS, it is behind us and we look forward to a profitable fiscal year 2012. Of the $36.8 million in net income loss for the year, $34.4 million was due to goodwill and other intangible asset impairment charges that are non-cash and that have no impact on our operations or cash flow. The remaining loss was primarily related to cost overruns on certain projects and the cost of the strategic alternatives effort as has been reported throughout the year. WPCS maintains a healthy balance sheet with approximately $4.9 million in cash and $14.8 million in working capital as of April 30, 2011. Due to the relative strength of our balance sheet, the company expects to be able to finance our growth internally and meet our short term liquidity needs. As of April 30, 2011, the backlog of official projects awarded stands at $45 million and our bid list is at $147 million which gives us an optimistic outlook for the quarters ahead. We are also expecting to generate a positive EBITDA for the first quarter of fiscal year 2012 which is ending on July 31, 2011.  We define EBITDA as earnings before interest, taxes, acquisition-related contingent earn-out costs, one-time charges related to seeking strategic alternatives and depreciation and amortization.”

As a reminder, there will be an investor conference call at 5:00 pm ET today. To participate on the conference call, please dial 888-299-4099 for calls within the U.S. or 302-709-8337 for calls from international locations. Upon reaching the operator, verbally transmit the participant code VH31453. When the overview concludes, your questions can be asked by pressing *1 and your questions can be removed from the queue by pressing the number sign. Replays of the conference call will be available for a period of five days by dialing 402-220-2946 and entering 31453 # as the program identification number.

The attached press release references a financial measure, EBITDA that is not in accordance with GAAP.  Management uses EBITDA to evaluate the Company's operating and financial performance in light of business objectives, for planning purposes, when publicly providing our business outlook and to facilitate period-to-period comparisons.  WPCS believes that this measure is useful to investors because it enhances investors' ability to review the Company's business from the same perspective as our management and to facilitate comparisons of this period's results with prior periods.  Non-GAAP measures are used by some investors when assessing the ongoing operating and financial performance of our Company. These financial measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. The presentation of the additional information should not be considered a substitute for net income or net income per diluted share prepared in accordance with GAAP. The primary material limitations associated with the use of non-GAAP measures as compared to the most directly comparable GAAP financial measures are (i) they may not be comparable to similarly titled measures used by other companies in our industry, and (ii) they exclude financial information that some may consider important in evaluating our performance.

About WPCS International Incorporated:

WPCS is a design-build engineering company that focuses on the implementation requirements of communications infrastructure. The company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. For more information, please visit www.wpcs.com

Statements about the company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such forward looking statements involve risks and uncertainties and are subject to change at any time.  The company’s actual results could differ materially from expected results.  In reflecting subsequent events or circumstances, the company undertakes no obligation to update forward looking statements.
_________________________________________________________________________________________________



CONTACT:

WPCS International Incorporated
610-903-0400 x101
ir@wpcs.com





 
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
                         
   
Three Months Ended
   
Years Ended
 
   
April 30,
   
April 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
REVENUE
  $ 17,826,423     $ 29,211,709     $ 96,836,728     $ 105,769,432  
                                 
COSTS AND EXPENSES:
                               
Cost of revenue
    15,787,950       22,458,658       78,910,135       77,930,126  
Selling, general and administrative expenses
    7,263,284       5,653,229       24,920,538       23,454,081  
Depreciation and amortization
    660,303       759,034       2,754,961       2,729,882  
Goodwill and intangible assets impairment
    27,470,285       -       34,370,285       -  
Change in fair value of acquisition-related contingent consideration
    39,141       125,092       217,571       125,092  
                                 
Total costs and expenses
    51,220,963       28,996,013       141,173,490       104,239,181  
                                 
OPERATING (LOSS) INCOME
    (33,394,540 )     215,696       (44,336,762 )     1,530,251  
                                 
OTHER EXPENSE (INCOME):
                               
Interest expense
    245,933       203,834       655,944       397,765  
Interest income
    (12,560 )     (6,497 )     (48,364 )     (15,849 )
                                 
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) PROVISION
    (33,627,913 )     18,359       (44,944,342 )     1,148,335  
                                 
Income tax (benefit) provision
    (6,347,893 )     95,792       (7,938,430 )     576,226  
                                 
CONSOLIDATED NET (LOSS) INCOME
    (27,280,020 )     (77,433 )     (37,005,912 )     572,109  
                                 
Net loss attributable to noncontrolling interest
    (250,532 )     (89,304 )     (174,491 )     (282,292 )
                                 
NET (LOSS) INCOME ATTRIBUTABLE TO WPCS
  $ (27,029,488 )     11,871       (36,831,421 )   $ 854,401  
                                 
Basic net (loss) income per common share attributable to WPCS
  $ (3.89 )   $ 0.00     $ (5.30 )   $ 0.12  
                                 
Diluted net (loss) income per common share attributable to WPCS
  $ (3.89 )   $ 0.00     $ (5.30 )   $ 0.12  
                                 
Basic weighted average number of common shares outstanding
    6,954,766       6,952,800       6,954,766       6,945,280  
                                 
Diluted weighted average number of common shares outstanding
    6,954,766       6,983,970       6,954,766       6,970,065  
 
 
 
 
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
             
   
April 30,
   
April 30,
 
ASSETS
 
2011
   
2010
 
             
CURRENT ASSETS:
           
             
Cash and cash equivalents
  $ 4,879,106     $ 5,584,309  
Accounts receivable, net of allowance of $1,662,168 and $206,617 at April 30, 2011 and 2010, respectively
    22,474,024       26,011,955  
Costs and estimated earnings in excess of billings on uncompleted contracts
    4,669,012       8,859,056  
Inventory
    1,972,905       2,720,052  
Prepaid expenses and other current assets
    1,413,151       848,626  
Prepaid income taxes
    173,700       -  
Income taxes receivable
    1,166,225       -  
Deferred tax assets
    2,621,329       666,000  
Total current assets
    39,369,452       44,689,998  
                 
PROPERTY AND EQUIPMENT, net
    6,035,353       6,468,787  
                 
OTHER INTANGIBLE ASSETS, net
    803,171       2,112,058  
                 
GOODWILL
    2,044,856       34,919,384  
                 
DEFERRED TAX ASSETS
    2,675,511       -  
                 
OTHER ASSETS
    134,654       162,858  
                 
Total assets
  $ 51,062,997     $ 88,353,085  



 
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)

LIABILITIES AND EQUITY
 
April 30,
   
April 30,
 
   
2011
   
2010
 
             
CURRENT LIABILITIES:
           
             
Current portion of loans payable
  $ 35,724     $ 63,683  
Income taxes payable
    -       107,417  
Borrowings under line of credit
    7,000,000       -  
Current portion of capital lease obligations
    54,496       81,950  
Accounts payable and accrued expenses
    10,249,503       10,962,016  
Billings in excess of costs and estimated earnings on uncompleted contracts
    2,039,117       1,853,131  
Deferred revenue
    792,414       503,502  
Due joint venture partner
    3,415,641       3,288,294  
Acquisition-related contingent consideration
    1,008,200       851,516  
Total current liabilities
    24,595,095       17,711,509  
                 
Acquisition-related contingent consideration, net of current portion
    -       726,677  
Borrowings under line of credit
    -       5,626,056  
Loans payable, net of current portion
    10,554       46,364  
Capital lease obligations, net of current portion
    15,465       69,961  
Deferred tax liabilities
    -       2,018,462  
Total liabilities
    24,621,114       26,199,029  
                 
                 
COMMITMENTS AND CONTINGENCIES
               
                 
EQUITY:
               
Preferred stock - $0.0001 par value, 5,000,000 shares authorized, none issued
    -       -  
Common stock - $0.0001 par value, 25,000,000 shares authorized, 6,954,766
               
     shares issued and outstanding at April 30, 2011 and 2010
    695       695  
Additional paid-in capital
    50,433,626       50,346,655  
Retained earnings (deficit)
    (26,595,831 )     10,235,590  
Accumulated other comprehensive income on foreign currency translation, net of
               
   tax effects of $185,060 and $133,648 at April 30, 2011 and 2010, respectively
    1,564,965       398,116  
                 
Total WPCS shareholders' equity
    25,403,455       60,981,056  
                 
Noncontrolling interest
    1,038,428       1,173,000  
                 
Total equity
    26,441,883       62,154,056  
                 
Total liabilities and equity
  $ 51,062,997     $ 88,353,085  




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