Code-Alarm Posts Third-Quarter Results.

MADISON HEIGHTS, Mich.--(AutomotiveWire)--Nov. 17, 1997-- Code-Alarm Inc. (OTC:CODL) today reported continued progress in its efforts to restructure the company for the future, posting results for the third quarter ended Sept. 30, 1997.

The Madison Heights-based manufacturer of vehicle security and convenience products said charges totaling approximately $5.6 million for restructuring, litigation and additional reserves and writedown of assets resulted in the company posting a net loss of $5.2 million, or $2.25 per share, on net sales of $12.6 million for the 1997 third quarter. This compares with net income of $42,000 or 2 cents per share, on net sales of $15.3 million in the same period last year. The 1996 third-quarter results included approximately $3 million of net sales from the company's former European operations. Code-Alarm had approximately 2,321,000 weighted average common shares outstanding in both periods.

Excluding the charges, Code-Alarm would have posted pre-tax income of approximately $400,000 in the 1997 third quarter.

"Our third-quarter financial results don't fully portray the progress we made during the quarter and in recent weeks," Code-Alarm president and CEO Rand W. Mueller said. "Code-Alarm's October 1997 refinancing and increased capitalization, including a new senior lender and addition of Pegasus Investors, LP as a financial and strategic partner, has helped secure the Company's long-term future. The refinancing and capitalization, combined with our move to cell-based manufacturing, have enabled us to restructure the organization and continue the consolidation of operations into our Detroit-area facilities. While we still have several key operational issues to confront in the next few months, our order rates continue to be strong and the charges we took in the third quarter give us a very clear picture of Code-Alarm's earning assets for the future."

Code-Alarm said a substantial portion of the restructuring charge includes the writedown of assets as a result of the company's decision to close its Georgetown, Texas, manufacturing plant and Huntington Beach, Calif., distribution facility. These initiatives should be completed by the end of the first quarter of 1998. The company said it is working with local officials and offering outplacement assistance to the approximately 100 employees affected in the move.

Code-Alarm added that the third-quarter litigation charge includes a reserve related to patent litigation involving certain shock sensor designs the company no longer makes. In October, a United States District Court Judge in Detroit issued a Memorandum and Order relating to patent damages on a sensor that used a "Bootie" design. The judge rejected a motion by the opposing party to make the judgement final at this time. The judge's decision on a Code-Alarm sensor that used a "zig zag" design is pending.

North American increased 2 percent compared with the year-ago period, as sales to international customers doubled, offset by a decline in aftermarket sales. International shipments to distributors in Israel, Russia and South America have been strong through the first 10 months of 1997, reflecting growing acceptance overseas of Code-Alarm products, Mueller said. He noted that Code-Alarm had begun shipping security systems in September for factory installation on Ford trucks manufactured in Venezuela.

"We continue to make inroads in the international arena and as a Tier-One supplier," Mueller said. "At the same time, we are stepping up our efforts to provide new products and increased service to our core customers in the aftermarket, particularly 12-volt specialists and vehicle dealers."

Code-Alarm will introduce several new products, designed exclusively for 12-volt specialists, during the upcoming Consumer Electronics Show in January 1998. The company also said it recently launched a new initiative to provide dealers of one of the Big Three automakers with the first-ever factory labeled system to offer encrypted rolling code, a technology that prevents would-be thieves from "code-grabbing."

For the nine-month period ended Sept. 30, 1997, Code-Alarm reported a net loss of $4.8 million, or $2.08 per share, on net sales of $41.0 million, compared with net income of $60,000, or 3 cents per share, on net sales of $47.1 million in the same period last year. Code-Alarm had approximately 2,321,000 weighted average common shares outstanding in both periods.

Code-Alarm Inc., based in Madison Heights, is a leading manufacturer of branded and factory-labeled vehicle security and remote-keyless-entry devices. Code-Alarm is a QS-9000 certified Tier-One supplier to leading automakers and also supplies factory-label products to vehicle dealerships around the globe. The company also sells vehicle security systems bearing the Code-Alarm(R) and Chapman(R) brand names at over 2,000 locations worldwide.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that this news release may contain statements that include certain predictions and projections that may be considered forward-looking statements under securities laws. These statements involve a number of important risks and uncertainties that could cause actual results to differ materially, including, but not limited to economic, competitive, governmental, and technological factors affecting the company's operations, markets, products, services and prices.

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CONTACT: Code-Alarm Inc.

Brian Edwards, 248/583-9620, ext. 295

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