RANCHO CUCAMONGA, Calif., 20 Sept. 2005. Emrise Corp. today announced that its defense and aerospace subsidiary, Emrise Electronics Corp., had completed the acquisition of RO Associates Inc.
Emrise purchased RO for $4.6 million cash including the payoff of RO's bank debt and the possible contingent payout of $600,000. The all-cash acquisition is expected to be immediately accretive to Emrise earnings.
Based in Sunnyvale, Calif. and organized in 1963, RO is a pioneer in patented, high-efficiency, high-quality power conversion products. RO manufactures its products in a "state-of-the-art," highly-automated, 30,000 square foot facility, producing standard and semi-custom DC-DC and AC-DC converters and other related components for military and commercial avionics, communications and high-end industrial customers.
This family of products will complement Emrise's business as a multi-national manufacturer of defense and aerospace electronic components and subsystems and communications equipment.
RO currently manufacturers 13 product ranges with multiple variants between 10 and 20 products in each range, produced for its customer base of several hundred customers throughout the industrialized world. Due to the fact that the majority of RO's products are patented, once a customer designs them into an end product, RO's power converters are typically utilized throughout the life cycle of the product.
Graham Jefferies, the executive vice president and CEO of Emrise, commented, "The acquisition of RO is the culmination of a two-year effort to secure an engineering, manufacturing and sales and marketing presence in the U.S. with established sales channels complementary to ours in the strategic U.S. power conversion market. RO will provide U.S. content to support our various European-based defense and aerospace customers who are incorporating our custom U.K.-manufactured Xcel Power Systems Ltd. and our newly acquired Pascall Electronics Ltd. products into their products that are being sold into the U.S. defense and aerospace market. In addition, our U.K.-based subsidiaries are incorporating certain outside manufactured standard converter products into their full custom military power conversion products which can now be manufactured in-house by RO."
Carmine T. Oliva, the chairman, president and CEO of Emrise, added, "The acquisition of RO completes our strategy to establish EMRISE as both a U.S.- and European-based manufacturer of power conversion and related radio frequency ("RF") and microwave components and subsystems. With the addition of RO, our power conversion business collectively will total more than $30 million in annualized revenue during 2006. In addition, the acquisition of RO serves to broaden our market penetration into the important 'In Flight Entertainment' commercial aircraft market. We believe that with a U.S. presence we will be well positioned to increase our penetration into the three suppliers to this market. RO also complements our significant military aircraft market penetration while improving our revenue diversification."
Based on historical financial results for RO, and expected operational efficiencies following the integration of RO with existing Emrise subsidiaries, management expects this acquisition to contribute approximately $7 million in annualized revenues in 2006.
RO marks the third acquisition completed by Emrise in a 13-month period beginning with the acquisition of Larus Corp. in July 2004 and including Pascall Electronics Ltd. completed in March 2005. These three acquisitions are expected to add over $30 million in revenue in 2006 and thereby doubling the revenue base of approximately $30 million achieved by Emrise Corp. in 2004 to approximately $60 million in 2006.
Emrise Corp. is a multi-national manufacturer of defense and aerospace electronic components and subsystems and communications equipment. Emrise's electronic components group, which includes Emrise Electronics Corp. and its international subsidiaries, provides custom power conversion and RF component and subsystem products, digital and rotary switches and subsystem assemblies to the North American, European and Asian electronic components market and are primarily used for defense, aerospace and industrial applications.
Emrise's communications group, consisting of CXR Larus Corp. and CXR-AJ, provides network access and timing and synchronization and transmission products and communications test equipment to the North American, European and Asian communications industry. Founded in 1983, Emrise operates out of facilities in the United States, England, France and Japan. As of August 31, 2005, Emrise had a total of 305 employees in its various subsidiaries and divisions. For more information, see www.emrise.com.
