RELM Wireless Announces Results for Second Quarter 2002.

Business Editors

WEST MELBOURNE, Fla.--(BUSINESS WIRE)--Aug. 12, 2002

RELM Wireless Corporation (NASDAQ: RELM) today announced its operating results for the second quarter and six months ended June 30, 2002.

For the three months ended June 30, 2002, RELM reported net income of approximately $3,000, or $0.00 per diluted share, compared to net income of approximately $145,000, or $0.03 per diluted share, for the comparable quarter in 2001.

For the six months ended June 30, 2002, RELM reported a net loss of approximately $113,000, or ($0.02) per diluted share, excluding a one-time $900,000 loss on a note receivable, compared to a net loss of approximately $142,000, or ($0.03) per diluted share, for the comparable period in 2001. Including the loss on note receivable, the net loss for the six months ended June 30, 2002 was $1.0 million, or ($0.14) per diluted share.

Revenue for the three months ended June 30, 2002 decreased 19.4% to $5.0 million, from $6.2 million for the same period last year. Revenue for the six months ended June 30, 2002 decreased 11.0% to $9.7 million, from $10.9 million for the same period last year.

The decreases in revenues and net income are attributed primarily to the absence of BK Radio product sales to the Communications Electronics Command of the U. S. Army (CECOM). During the same period last year revenues from product shipments to CECOM totaled approximately $1.2 million. The contract under which those shipments were made expired in October 2001. In March 2002, the Company responded to a solicitation for a proposed new CECOM contract. The evaluation of proposals for this solicitation is in process and a contract has not yet been awarded.

Overall, revenues from BK Radio-branded products, which primarily serve the government and public safety market segment, decreased approximately $0.7 million for the second quarter. The previously mentioned decrease in revenues from CECOM was partially offset by increases in sales of BK Radio-branded products to various federal and state forest fire-fighting agencies, and increased sales of the S-Series family of repeaters and base stations.

Sales of Uniden-branded and RELM-branded products in the business and industrial market segment decreased approximately $0.6 million. Customer demand in this market segment continued to be weak, reflecting the lack of a sustained economic recovery. Modest revenue increases in the RELM product line were realized from the continued introduction of our new family of portable radios, the RP Series. The RP series is designed as a quality, full-featured, low-cost line to compete effectively in the business and industrial market. Also, customer orders totaling approximately $1.0 million were received during the quarter for Uniden  ESAS (Enhanced Sub-Audible Signaling) systems, one of which is for the expansion of a system installed earlier this year.

Gross margins for the three months ended June 30, 2002 were 31.1% compared to 28.1% for the same period in the prior year. For the six months ended June 30, 2002, gross margins were 29.9% compared to 27.4% for the same period in the prior year. The improvement in gross margins is a reflection of various and continuing initiatives to reduce direct product costs and manufacturing infrastructure costs. These initiatives, which began in 2000, have included facility and staff reductions, and leveraging strategic external manufacturing relationships, some of which are offshore. Additional initiatives designed to further reduce product costs are underway.

President and Chief Executive Officer, David P. Storey, commented: "Although revenues during the second quarter were disappointing, particularly in the business and industrial segment, we are continuing to execute the necessary steps, in all facets of the business, toward realizing our goal of profitable growth. A number of new products and technologies, such as EarthLoc tracking, have already been introduced and others are planned for the near future. Two new models of affordable portable radios for business and industrial users have hit the market and yielded some revenue growth in the RELM product line. With two additional portable models due shortly, and planned new mobile products, we intend to accelerate our growth rate. Customers have demonstrated considerable interest in our ESAS systems as evidenced by the previously announced expansion of an existing system totaling in excess of $900,000. The development of our digital portable radio, the DPH, is progressing as scheduled, and we expect to introduce the product later this year. Undoubtedly, this is an aggressive agenda during difficult economic times. I am delighted to see the entire company rising to the challenge."

Mr. Storey continued, "Throughout our second quarter, manufacturing initiatives continued to drive consistent improvement in gross margins, which enabled us to realize a small profit despite decreases in revenue. Gross margins for the second quarter this year were 31.1%, the highest of any quarter in recent years. By comparison, gross margins were a mere 14% as recently as 1997."

Mr. Storey concluded, "We believe that the combination of new products and highly effective operations is positioning RELM for a bright future."

For over 55 years, RELM has manufactured and marketed two-way FM business-band radios as well as high-specification public safety mobile and portable radios, repeaters and accessories, base station components and subsystems. Products are manufactured and distributed worldwide under RELM Communications, Uniden PRC and BK Radio brand names. The company maintains its headquarters in West Melbourne, Florida and can be contacted through its web site at www.relm.com or directly at 1-800-648-0947.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act Of 1995 and is subject to the safe-harbor created by such act. These forward-looking statements concern the Company's operations, economic performance and financial condition and are based largely on the Company's beliefs and expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors and risks include, among others, the following: the factors described in the Company's filings with the Securities and Exchange Commission; general economic and business conditions; changes in customer preferences; competition; changes in technology; changes in business strategy; the indebtedness of the Company; quality of management, business abilities and judgment of the Company's personnel; and the availability, terms and deployment of capital. Certain of these factors and risks, as well as other risks and uncertainties, are stated in more detail in the Company's Annual Report on Form 10-K. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

(Financial Tables to Follow)

                       RELM WIRELESS CORPORATION
           Condensed Consolidated Statements of Operations
               (In Thousands Except Per Share Amounts)
                             (Unaudited)


                            Three Months Ended      Six Months Ended
                            6/30/02    6/30/01    6/30/02     6/30/01
                            -------    -------    -------     -------

Sales                         4,950      6,188      9,683      10,908

Costs & Expenses:
Cost of Sales                 3,412      4,448      6,789       7,919
SG&A                          1,460      1,462      2,870       2,850
Loss On Notes Receivable          0          0        900           0
                            -------    -------    -------     -------
Total Costs & Exp             4,872      5,910     10,559      10,769

Operating Income (Loss)          78        278       (876)        139

Other Income (Expense):
Interest Expense               (111)      (145)      (221)       (303)
Other Income (Expense)           36         12         84          22
                            -------    -------    -------     -------
Income (Loss) From
 Continuing Operations            3        145     (1,013)       (142)

Tax Expense (Benefit)             0          0          0           0
                            -------    -------    -------     -------

Net Income (Loss)           $     3    $   145    $(1,013)    $  (142)
                            =======    =======    =======     =======
Earnings (Loss)
 per share - basic          $  0.00    $  0.03    $ (0.14)    $ (0.03)
                            =======    =======    =======     =======
Earnings (Loss)
 per share - diluted        $  0.00    $  0.03    $ (0.14)    $ (0.03)
                            =======    =======    =======     =======
Basic shares outstanding      8,327      5,346      6,989       5,346
Diluted shares outstanding    8,345      5,364      6,989       5,346