EX-99.1 2 g07401exv99w1.htm EX-99.1 PRESS RELEASE Ex-99.1 Press Release
 

EXHIBIT 99.1
SUNAIR SERVICES CORPORATION REPORTS
FISCAL SECOND QUARTER 2007 FINANCIAL RESULTS
Boca Raton, FL — May 15, 2007— Sunair Services Corporation (AMEX: SNR) today announced its fiscal second quarter results for the period ended March 31, 2007.
Revenues from continuing operations for the three months ended March 31, 2007 were $18.3 million, compared to revenues of $13.1 million for the three months ended March 31, 2006. The Company reported a loss from continuing operations of $(218,978) for the three months ended March 31, 2007 or $(0.02) per basic and diluted share, compared to a loss of $(1,118,943) for the three months ended March 31, 2006 or $(0.09) per basic and diluted share.
There was no income or loss from discontinued operations for the three months ended March 31, 2007, compared to tax affected income for the three months ended March 31, 2006 of $321,054 or $0.03 per basic and diluted share.
The Company reported a net loss of $(218,978) for the three months ended March 31, 2007, or $(0.02) per basic and diluted share, compared to net loss of $(797,889) for the three months ended March 31, 2006, or $(0.06) per basic and diluted share.
Revenues from continuing operations for the six months ended March 31, 2007 were $34.2 million, compared to revenues of $24.3 million for the six months ended March 31, 2006. The Company reported a loss from continuing operations of $(980,763) for the six months ended March 31, 2007 or $(0.07) per basic and diluted share, compared to a loss of $(1,678,133) for the three months ended March 31, 2006 or $(0.14) per basic and diluted share.
Income from discontinued operations for the six months ended March 31, 2007 was $1,361,476, or $0.10 per basic and diluted share, including a gain on the sale of real estate property associated with the previously sold and discontinued high frequency radio business, compared to a tax affected gain for the six month period ended March 31, 2006 of $515,701 or $0.04 per basic and diluted share.
The Company reported net income of $380,713 for the six months ended March 31, 2007, or $0.03 per basic and diluted share, compared to net loss of $(1,162,432) for the six months ended March 31, 2006, or $(0.10) per basic and diluted share.
John Hayes, Chief Executive Officer of Sunair stated, “As we move ahead with plans to reignite our organic growth, we are pleased with our recent margin expansion and remain committed to meeting the needs of customers. We are focused on consistently delivering high service levels in our lawn and pest control services business and are implementing efforts to divest ourselves of non-core assets in the telephone communications segment as soon as practical.”

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ABOUT SUNAIR
Sunair Services Corporation, a Florida corporation, through its wholly owned subsidiary, Middleton Pest Control, Inc., with headquarters located in Orlando, Florida, provides pest control and lawn care 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.

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF MARCH 31, 2007 AND SEPTEMBER 30, 2006
(UNAUDITED)
                 
    MARCH 31, 2007     SEPTEMBER 30, 2006  
ASSETS
CURRENT ASSETS:
                
Cash and cash equivalents
   $ 2,199,441     $ 1,601,110  
Accounts receivable, net
     6,591,988       4,919,595  
Income tax receivable
     328,551       352,393  
Interest receivable
     29,074       11,084  
Inventories, net
     2,604,822       2,328,205  
Deferred tax asset
     31,379       137,387  
Prepaid and other current assets
     1,648,290       1,163,508  
Note receivable, current
     334,986       334,986  
 
            
Total Current Assets
     13,768,531       10,848,268  
 
            
PROPERTY, PLANT, AND EQUIPMENT, net
     2,240,024       2,538,434  
OTHER ASSETS:
                
Note receivable
     2,000,000       2,000,000  
Software costs, net
     3,825,102       3,938,465  
Customer list, net
     11,524,936       11,247,099  
Goodwill
     55,548,004       52,818,269  
Other assets
     229,100       522,427  
 
            
Total Other Assets
     73,127,142       70,526,260  
 
            
TOTAL ASSETS
   $ 89,135,697     $ 83,912,962  
 
            

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF MARCH 31, 2007 AND SEPTEMBER 30, 2006
(UNAUDITED)
                 
    MARCH 31, 2007     SEPTEMBER 30, 2006  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
CURRENT LIABILITIES:
                
Accounts payable
   $ 4,156,480     $ 2,743,523  
Accrued expenses
     3,948,411       2,831,162  
Unearned revenues
     1,334,224       589,365  
Customer deposits
     2,852,261       2,677,364  
Capitalized leases, current portion
     9,632       8,796  
Notes payable, current portion
     132,000       138,374  
 
            
Total Current Liabilities
     12,433,008       8,988,584  
 
            
LONG TERM LIABILITIES:
                
Capitalized leases, net of current portion
     14,947       20,027  
Notes payable, net of current portion
     3,177,553       1,723,642  
Note payable -related party
     5,000,000       5,000,000  
Revolving line of credit
     7,100,000       8,000,000  
Deferred tax liability
     275,318       112,226  
 
            
Total Long Term Liabilities
     15,567,818       14,855,895  
 
            
TOTAL LIABILITIES
     28,000,826       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 March 31, 2007 and September 30, 2006, respectively
     1,309,109       1,300,757  
Additional paid-in capital
     52,126,224       51,548,768  
Retained earnings
     7,580,910       7,200,197  
Accumulated other comprehensive gain — cumulative translation adjustment
     118,628       18,761  
 
            
Total Stockholders’ Equity
     61,134,871       60,068,483  
 
            
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 89,135,697     $ 83,912,962  
 
            

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
                 
    FOR THE THREE     FOR THE THREE  
    MONTHS ENDED     MONTHS ENDED  
    MARCH 31, 2007     MARCH 31, 2006  
SALES
   $ 18,275,055     $ 13,053,535  
COST OF SALES
     7,307,796       5,391,434  
 
            
GROSS PROFIT
     10,967,259       7,662,101  
SELLING AND ADMINISTRATIVE EXPENSES
     11,042,173       8,801,166  
 
            
LOSS FROM OPERATIONS
     74,914       1,139,065  
OTHER INCOME (EXPENSES):
                
Interest income
     51,644       1,026  
Interest expense
     (387,390 )     (257,270 )
Loss on disposal of assets
     32,224       —  
Other income
     —       9,789  
 
            
Total Other Income (Expenses)
     (303,522 )     (246,455 )
 
            
LOSS FROM CONTINUING OPERATIONS
                
BEFORE INCOME TAXES
     378,436       1,385,520  
INCOME TAX BENEFIT
     159,458       266,577  
 
            
LOSS FROM CONTINUING OPERATIONS
     218,978       1,118,943  
INCOME FROM DISCONTINUED OPERATIONS, NET
                
OF INCOME TAX PROVISION OF $0 AND $100,272
                
IN 2007 AND 2006, RESPECTIVELY
     —       321,054  
 
            
NET LOSS
   $ 218,978     $ 797,889  
 
            
BASIC AND DILUTED INCOME (LOSS) PER SHARE:
                
CONTINUING OPERATIONS
   $ (0.02 )   $ (0.09 )
 
            
DISCONTINUED OPERATIONS
   $ —     $ 0.03  
 
            
NET LOSS
   $ (0.02 )   $ (0.06 )
 
            
WEIGHTED AVERAGE SHARES OUTSTANDING:
                
BASIC
     13,066,578       12,805,558  
 
            
DILUTED
     13,066,578       12,805,558  
 
            

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SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
                 
    FOR THE SIX     FOR THE SIX  
    MONTHS ENDED     MONTHS ENDED  
    MARCH 31, 2007     MARCH 31, 2006  
SALES
   $ 34,161,310     $ 24,279,110  
COST OF SALES
     14,199,809       10,005,519  
 
            
GROSS PROFIT
     19,961,501       14,273,591  
SELLING AND ADMINISTRATIVE EXPENSES
     20,923,876       15,977,846  
 
            
LOSS FROM OPERATIONS
     962,375       1,704,255  
OTHER INCOME (EXPENSES):
                
Interest income
     119,418       2,495  
Interest expense
     (675,713 )     (668,445 )
Gain on disposal of assets
     9,423       —  
Other income
     —       5,000  
 
            
Total Other Income (Expenses)
     (546,872 )     (660,950 )
 
            
LOSS FROM CONTINUING OPERATIONS
                
BEFORE INCOME TAXES
     1,509,247       2,365,205  
INCOME TAX BENEFIT
     528,484       687,072  
 
            
LOSS FROM CONTINUING OPERATIONS
     980,763       1,678,133  
INCOME FROM DISCONTINUED OPERATIONS, NET
                
OF INCOME TAX PROVISION OF $821,426 AND $221,015 IN 2007 AND 2006, RESPECTIVELY
     1,361,476       515,701  
 
            
NET INCOME (LOSS)
   $ 380,713     $ (1,162,432 )
 
            
BASIC AND DILUTED INCOME (LOSS) PER SHARE:
                
CONTINUING OPERATIONS
   $ (0.07 )   $ (0.14 )
 
            
DISCONTINUED OPERATIONS
   $ 0.10     $ 0.04  
 
            
NET INCOME (LOSS)
   $ 0.03     $ (0.10 )
 
            
WEIGHTED AVERAGE SHARES OUTSTANDING:
                
BASIC
     13,041,634       11,646,412  
 
            
DILUTED
     13,041,634       11,646,412  
 
            

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