EX-99.1 2 g09003exv99w1.htm EX-99.1 PRESS RELEASE EX-99.1 Press Release
 

EXHIBIT 99.1
SUNAIR SERVICES CORPORATION REPORTS
FISCAL THIRD QUARTER 2007 FINANCIAL RESULTS
Boca Raton, FL — August 14, 2007— Sunair Services Corporation (AMEX: SNR) today announced its fiscal third quarter results for the period ended June 30, 2007.
Revenues from continuing operations for the three months ended June 30, 2007 were $17.4 million, compared to revenues of $13.8 million for the three months ended June 30, 2006. The Company reported a loss from continuing operations of $(333,541) for the three months ended June 30, 2007, or $(.03) per basic and diluted share, compared to a loss of $(298,342) for the three months ended June 30, 2006, or $(.02) per basic and diluted share.
The Company reported a tax affected loss from discontinued operations for the three months ended June 30, 2007 of $(332,226), or $(.02) per basic and diluted share, compared to $(185,234) for the three months ended June 30, 2006, or $(0.01) per basic and diluted share.
The Company reported a net loss of $(665,767) for the three months ended June 30, 2007, or $(0.05) per basic and diluted share, compared to a net loss of $(483,576) for the three months ended June 30, 2006, or $(0.03) per basic and diluted share.
Revenues from continuing operations for the nine months ended June 30, 2007 were $49.3 million, compared to revenues of $36.1 million for the nine months ended June 30, 2006. The Company reported a loss from continuing operations of $(1,006,397) for the nine months ended June 30, 2007, or $(.08) per basic and diluted share, compared to a loss of $(1,950,635) for the nine months ended June 30, 2006, or $(.16) per basic and diluted share.
The Company reported a tax affected loss from discontinued operations for the nine months ended June 30, 2007 of $(640,133) and a tax affected gain on the sale of assets from discontinued operations of $1,361,476, yielding a gain from all discontinued operations of $721,343 for the nine months ended June 30, 2007, or $0.06 per basic and diluted share, compared to a tax affected income from discontinued operations for the nine month period ended June 30, 2006 of $304,627, or $0.02 per basic and diluted share.
The Company reported a net loss of $(285,054) for the nine months ended June 30, 2007, or $(0.02) per basic and diluted share, compared to net loss of $(1,646,008) for the nine months ended June 30, 2006, or $(0.14) per basic and diluted share.
On November 20, 2006, the Company closed a transaction to sell the real estate property associated with its previously sold high frequency radio business for $2.7 million in cash and recognized a gain in the amount of $2,182,902. The Company reclassified the gain on the sale of this real estate property from continuing operations to a gain on the disposal of assets from discontinued operations for the nine months ended June 30, 2007.
On August 1, 2007, the Company completed the sale of all the outstanding shares of Percipia, Inc., a wholly-owned subsidiary in the Company’s Telephone Communications segment, for approximately $4.0 million in cash, subject to a post-closing adjustment. The results of operations for Percipia have been reclassified from continuing to discontinued operations.
John Hayes, Chief Executive Officer of Sunair, stated “The increase in revenues at Middleton for the three months ended June 30, 2007 fell below our expectations primarily due to a decrease in new business leads. We have addressed this issue by making significant investments in both our sales management team and additions to our sales force and we are currently in the process of a developing and launching a new marketing campaign designed to improve the generation of new business leads.
“Furthermore, we are most optimistic about Sunair’s future as we continue to focus on growing our company through acquisitions, organic growth and geographic expansion in our lawn and pest control services business within Florida. We were pleased to have completed two acquisitions during our third quarter. The first, Florida Exterminating Co., provides both residential and commercial service throughout the Tampa, St. Petersburg, Land O’Lakes and Lakeland areas of Florida. The second, Summer Rain Fertilization Company, provides our first entry into Broward and Palm Beach counties.

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“In addition, the divestiture of Percipia represents a key transaction for us. With the sale of this subsidiary, we continue to execute our strategy of divesting our non-core assets while growing our core lawn and pest control services business. A portion of the proceeds from the sale of Percipia were utilized to repay debt under our credit facility, and we expect to re-deploy those proceeds in future acquisitions in our core lawn and pest control services business.”
ABOUT SUNAIR
Sunair Services Corporation, a Florida corporation, through its wholly owned subsidiary, Middleton Pest Control, Inc., with headquarters located in Orlando, Florida, provides lawn and pest control services to both residential and commercial customers. Middleton provides essential pest control services and protection against termites and insects to homes and businesses. In addition, Middleton supplies lawn care services to homes and businesses, which includes fertilization treatments and protection against disease, weeds and insects for lawns and shrubs. Through a subsidiary, Sunair also is involved in the telephone communications business. For more information about Sunair, please visit http://www.sunairservices.com.
Information Regarding Forward Looking Statements
Some of the statements in this press release, including those that contain the words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “should,” “intend” and other similar expressions, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or those of our industry to be materially different from any future results, performance or achievements expressed or implied by those forward-looking statements. Among the factors that could cause actual results, performance or achievement to differ materially from those described or implied in the forward-looking statements include the inability to consummate future acquisitions or pursue growth opportunities, the inability to integrate acquisitions, the inability to raise additional capital to finance expansion, the risks inherent in the entry into new geographic markets, changes in regulatory conditions, competition, risks associated with general economic conditions and other factors included in Sunair’s filings with the SEC. Copies of Sunair’s SEC filings are available from the SEC or may be obtained upon request from Sunair. Sunair does not undertake any obligation to update the information contained herein, which speaks only as of this date.
- Financials Follow -

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2007 AND SEPTEMBER 30, 2006
(UNAUDITED)
                 
    JUNE 30, 2007     SEPTEMBER 30, 2006  
ASSETS
                
 
                
CURRENT ASSETS:
                
 
                
Cash and cash equivalents
   $ 2,589,970     $ 1,601,110  
Accounts receivable, net
     5,170,364       4,919,595  
Income tax receivable
     —       352,393  
Interest receivable
     55,000       11,084  
Inventories, net
     2,703,862       2,328,205  
Deferred tax asset
     —       137,387  
Prepaid and other current assets
     1,539,252       1,163,508  
Note receivable — current
     —       334,986  
 
            
Total Current Assets
     12,058,448       10,848,268  
 
            
 
                
PROPERTY, PLANT, AND EQUIPMENT, net
     2,205,401       2,538,434  
 
                
OTHER ASSETS:
                
Deferred tax asset
     45,541       —  
Note receivable
     2,000,000       2,000,000  
Software costs, net
     3,805,149       3,938,465  
Customer list, net
     11,532,919       11,247,099  
Goodwill
     56,894,723       52,818,269  
Other assets
     276,499       522,427  
 
            
Total Other Assets
     74,554,831       70,526,260  
 
            
 
                
TOTAL ASSETS
   $ 88,818,680     $ 83,912,962  
 
            

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2007 AND SEPTEMBER 30, 2006
(UNAUDITED)
                 
    JUNE 30, 2007     SEPTEMBER 30, 2006  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
CURRENT LIABILITIES:
                
 
                
Accounts payable
   $ 3,876,440     $ 2,743,523  
Accrued expenses
     3,574,984       2,831,162  
Unearned revenues
     1,317,896       589,365  
Customer deposits
     3,209,260       2,677,364  
Capitalized leases, current portion
     8,336       8,796  
Notes payable, current portion
     422,648       138,374  
 
            
Total Current Liabilities
     12,409,564       8,988,584  
 
            
 
                
LONG TERM LIABILITIES:
                
 
                
Capitalized leases, net of current portion
     13,999       20,027  
Notes payable, net of current portion
     3,629,957       1,723,642  
Note payable — related party
     5,000,000       5,000,000  
Revolving line of credit
     7,000,000       8,000,000  
Deferred tax liability
     —       112,226  
 
            
Total Long Term Liabilities
     15,643,956       14,855,895  
 
            
 
                
TOTAL LIABILITIES
     28,053,520       23,844,479  
 
            
 
                
COMMITMENTS & CONTINGENCIES
                
 
                
STOCKHOLDERS’ EQUITY:
                
 
                
Preferred stock, no par value, 8,000,000 shares authorized, none issued and outstanding
             —  
Common stock, $.10 par value, 100,000,000 shares authorized, 13,091,088 and 13,007,559 shares issued and outstanding at June 30, 2007 and September 30, 2006, respectively
     1,309,109       1,300,757  
Additional paid-in capital
     52,371,800       51,548,768  
Retained earnings
     6,915,152       7,200,197  
Accumulated other comprehensive gain — cumulative translation adjustment
     169,099       18,761  
 
            
Total Stockholders’ Equity
     60,765,160       60,068,483  
 
            
 
                
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 88,818,680     $ 83,912,962  
 
            

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2007 AND 2006
(UNAUDITED)
                 
    FOR THE THREE     FOR THE THREE  
    MONTHS ENDED     MONTHS ENDED  
    JUNE 30, 2007     JUNE 30, 2006  
SALES
   $ 17,440,730     $ 13,810,527  
 
                
COST OF SALES
     7,055,732       5,378,652  
 
            
 
                
GROSS PROFIT
     10,384,998       8,431,875  
 
                
SELLING AND ADMINISTRATIVE EXPENSES
     10,408,742       9,298,279  
 
            
 
                
LOSS FROM OPERATIONS
     (23,744 )     (866,404 )
 
                
OTHER INCOME (EXPENSES):
                
Interest income
     47,165       1,762  
Interest expense
     (273,683 )     (310,503 )
Other income
     —       47,946  
 
            
Total Other Income (Expenses)
     (226,518 )     (260,795 )
 
            
 
                
LOSS FROM OPERATIONS BEFORE INCOME TAXES
     (250,262 )     (1,127,199 )
 
                
INCOME TAX (PROVISION) BENEFIT
     (83,279 )     828,857  
 
            
 
                
LOSS FROM CONTINUING OPERATIONS
     (333,541 )     (298,342 )
 
                
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX BENEFIT OF $372,579 AND $111,298 IN 2007 AND 2006, RESPECTIVELY
     (332,226 )     (185,234 )
 
            
 
                
NET LOSS
   $ (665,767 )   $ (483,576 )
 
            
 
                
BASIC AND DILUTED LOSS PER SHARE:
                
CONTINUING OPERATIONS
   $ (0.03 )   $ (0.02 )
 
            
DISCONTINUED OPERATIONS
   $ (0.02 )   $ (0.01 )
 
            
NET LOSS
   $ (0.05 )   $ (0.03 )
 
            
 
                
WEIGHTED AVERAGE SHARES OUTSTANDING:
                
BASIC
     13,091,088       13,060,559  
 
            
DILUTED
     13,091,088       13,060,559  
 
            

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 2007 AND 2006
(UNAUDITED)
                 
    FOR THE NINE     FOR THE NINE  
    MONTHS ENDED     MONTHS ENDED  
    JUNE 30, 2007     JUNE 30, 2006  
 
                
SALES
   $ 49,306,413     $ 36,074,674  
 
                
COST OF SALES
     19,594,822       13,853,832  
 
            
 
                
GROSS PROFIT
     29,711,591       22,220,842  
 
                
SELLING AND ADMINISTRATIVE EXPENSES
     30,390,898       24,825,017  
 
            
 
                
LOSS FROM OPERATIONS
     (679,307 )     (2,604,175 )
 
                
OTHER INCOME (EXPENSES):
                
Interest income
     166,583       4,086  
Interest expense
     (949,391 )     (978,948 )
Gain on disposal of assets
     10,513       —  
Other income
     —       47,946  
 
            
Total Other Income (Expenses)
     (772,295 )     (926,916 )
 
            
 
                
LOSS FROM OPERATIONS BEFORE INCOME TAXES
     (1,451,602 )     (3,531,091 )
 
                
INCOME TAX BENEFIT
     445,205       1,580,456  
 
            
 
                
LOSS FROM CONTINUING OPERATIONS
     (1,006,397 )     (1,950,635 )
 
                
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX PROVISION FOR OR BENEFIT OF $372,759 AND $(174,244) IN 2007 AND 2006, RESPECTIVELY
     (640,133 )     304,627  
 
                
GAIN ON DISPOSAL ASSETS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX PROVISION OF $821,426
     1,361,476       —  
 
            
 
                
NET LOSS
   $ (285,054 )   $ (1,646,008 )
 
            
 
                
BASIC AND DILUTED INCOME (LOSS) PER SHARE:
                
CONTINUING OPERATIONS
   $ (0.08 )   $ (0.16 )
 
            
DISCONTINUED OPERATIONS
   $ 0.06     $ 0.02  
 
            
NET LOSS
   $ (0.02 )   $ (0.14 )
 
            
 
                
WEIGHTED AVERAGE SHARES OUTSTANDING:
                
BASIC
     13,058,119       12,117,794  
 
            
DILUTED
     13,058,119       12,117,794  
 
            

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