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EXHIBIT 99.1
[ELTRAX LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE, DATE
MEDIA CONTACT: INVESTOR RELATIONS CONTACT:
Pam Sanders Jennifer Pepper
Director of Marketing Director of Investor Relations
Eltrax Systems, Inc. Eltrax Systems, Inc.
678.589.3565 678.589.3579
[email protected] [email protected]
ELTRAX ANNOUNCES PRELIMINARY SECOND QUARTER FINANCIAL
RESULTS
COMPANY WILL REPORT HOSPITALITY GROUP AS DISCONTINUED OPERATIONS
Atlanta, Ga. July 27, 2000 - Eltrax Systems, Inc. (Nasdaq: ELTX), a full service
applications service provider (ASP), today announced preliminary second quarter
operating results. The company also announced that it would begin reporting its
hospitality segment as discontinued operations in anticipation of that group's
sale or other disposition as the company focuses on its core technology services
and ASP businesses.
As previously announced, the company continues to pursue the disposition of its
hospitality services group, consisting of its lodging systems business, its
Squirrel restaurant POS business, its Senercomm energy management business, and
its international hospitality operations. In order to provide more meaningful
information on the financial performance of the company's continuing operations,
the company will report the operating results of the hospitality services group
as discontinued operations beginning with the second quarter of 2000.
As a result of the presentation of the hospitality services group as
discontinued operations, the company will record a one-time charge of
approximately $12 million during the second quarter. Management believes that
this charge will establish a reasonable reserve for losses resulting from the
disposition of the hospitality services group and operating losses from the
group after the second quarter until the group is sold. Additionally, the second
quarter operating loss from the discontinued operations, which will be shown
separately, is estimated to be approximately $3.5 million.
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William P. O'Reilly, chairman and chief executive officer of Eltrax, commented,
"The presentation of the hospitality services group as discontinued operations
reflects the company's determination to focus the company's resources on its
technical strengths. We firmly believe that the future of our company is in the
technical services group."
In addition to presenting the hospitality services group as discontinued
operations, the company has undertaken an overhaul of its continuing operations
in preparation for its merger with Cereus Technology Partners, Inc. (Nasdaq:
CEUS), which is expected to close in the fourth quarter. This will result in
additional losses in the second quarter, but should position the company better
for the future. The second quarter operating results from continuing operations
will reflect the results of the technology services group and most of the
corporate expenses. For the second quarter, revenue is estimated to be
approximately $17.5 million, and the loss from continuing operations is
estimated to be approximately $14 million. The loss from continuing operations
includes expenses totaling approximately $5 million related to the following:
the reevaluation of inventories; an increase in the bad debt reserve; an
increase in the reserves for local tax and other exposures; and restructuring
charges related to the previously announced streamlining of operations and
related staff reductions. Management has taken these actions to improve the
Company's efficiency and future financial performance.
O'Reilly commented further, "Results for this quarter for the technology
services group were lower than expected. The group suffered from lower than
expected revenue growth and higher than expected losses. This was the result of
several factors, including inefficient utilization of technical resources and
too much overhead. We have taken the right steps to solve these problems."
"As previously announced, we initiated several cost reduction measures,
including a staff realignment that will save approximately $1 million per
month," added O'Reilly. "More significantly, we are moving forward with the
integration of the management team from Cereus Technology Partners to provide
the experienced and entrepreneurial leadership that the company needs. This was
one of the primary motivating factors behind our agreement to merge the company
and Cereus. I want to emphasize that the disappointing results do not reflect
any lack of acceptance of our services by the marketplace. The demand of our
clients for our services
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remains very strong. The company will be commenting more extensively on these
issues in the near future."
FORWARD-LOOKING STATEMENTS
Certain statements contained in this release that are not statements of
historical facts are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The words "believe," "expect,"
"anticipate," "intend," "will" and similar expressions are examples of words
that identify forward-looking statements. Forward-looking statements include,
without limitation, statements regarding our future financial position, business
strategy and expected cost savings. These forward-looking statements are based
on our current beliefs, as well as assumptions we have made based upon
information currently available to us. Each forward-looking statement reflects
our current view of future events and is subject to risks, uncertainties and
other factors that could cause actual results to differ materially from any
results expressed or implied by our forward-looking statements. Such factors
include our ability to dispose of the hospitality services group; the actual
losses suffered on the disposition of that group; actual operating losses
incurred by that group during the disposition process; our ability to
successfully penetrate the network applications and ASP markets; trends for
continued growth of the business of Eltrax and of Cereus; the consummation of
the merger with Cereus; our ability to successfully access the capital we need
to operate our business and fund its growth and other factors set forth in our
Form 10-K and other documents we file with the Securities and Exchange
Commission. All subsequent forward-looking statements relating to the matters
described in this release attributable to us or to persons acting on our behalf
are expressly qualified in their entirety by such factors. We have no obligation
to publicly update or revise these forward-looking statements to reflect new
information, future events, or otherwise, except as required by applicable
federal securities laws, and we caution you not to place undue reliance on these
forward-looking statements.
ABOUT ELTRAX SYSTEMS
Eltrax Systems is a full service application services provider (ASP) that plans,
builds and runs the technology that high-growth businesses need to take care of
their internal and external customers. Eltrax offers a front and back office
suite of native web applications including, a CRM solution (customer
relationship management), iMessaging(TM), (email and collaboration),
HRe-source(TM)
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(human resource) and NetWATCH OnLINE(TM) (remote monitoring and network
management). As a full service ASP, Eltrax delivers end-to-end customer
solutions, including custom and packaged applications, software integration
services, IT consulting, hosting and customer care. Eltrax is headquartered in
Atlanta, Georgia, and is continually expanding its portfolio of services to new
offices, business partners and agents worldwide. For more information visit the
Eltrax Web site at http://www.eltrax.com or contact Pam Sanders at 678-589-3565
or [email protected].
