CalAmp F1Q10 (Qtr End 5/31/09) Earnings Call Transcript

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2009-07-09 16:29:23.0

Tags: Call Transcript, Quarter, Earnings, Operational Accounting, Finance, Seeking Alpha, CalAmp Corp.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Wes [Cummings] with B. Riley. Please go ahead.

Wes Cummings - B. Riley & Company

A quick question related to your DBS customers you’re doing the rework for, I think I heard you on the call say that you are about 40% complete on reworking the amount of units they returned to you?

Richard B. Gold

That’s correct.

Wes Cummings - B. Riley & Company

When do you anticipate completing the rework and does that have an impact on your income statement as far as demand, you know, I guess true demand from this customer, or are we already seeing I guess the true demand from this customer in the income statement and they are just taking the reworks and that wouldn’t have any impact on your new business with them once you complete that?

Richard B. Gold

Okay, let me take that in a couple of pieces. As to the first question, the timeframe for completing that, the current schedule we are working to has us completing that during the first quarter of next fiscal year. So roughly four quarters to go from the end of the quarter we’re just reporting here. That could move plus or minus a quarter just depending on how we balance that schedule working with the customer.

In terms of the second piece of the question, it’s roughly at the current rate that it’s been for the last couple of quarters and that we project for the next couple of quarters, it’s about $3 million a quarter of equivalent revenue that we are not booking because we are shipping non-revenue product. We’ve reserved the cost of those repairs as part of what we did, gosh, almost two years ago now, at the time that that issue came up. So from a P&L standpoint, the cost of that, there’s a cash impact to that but the P&L impact is nil as we work through that. But there is a -- essentially I guess you could look at it as an opportunity cost of the revenue that’s on the order of $3 million a quarter, which we are fulfilling real customer demand but we are not seeing that flow through our financials.

Wes Cummings - B. Riley & Company

Okay. That’s the only question I had. Thank you.

Operator

Thank you. Our next question comes from the line of Richard [Tidaro] with [Kennedy] Capital. Please go ahead.

 

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