Cyalume Technologies Holdings, Inc. Reports Continued Strong Improvement in Second Quarter 2015 Financial Results

FORT LAUDERDALE, FL -- (Marketwired) -- 08/14/15 -- Cyalume Technologies Holdings, Inc. (OTCQB: CYLU) ("the Company" or "Cyalume") today reported its financial results for the second quarter ended June 30, 2015.



----------------------------------------------------------------------------
                 $ in thousands                   3 Months Ended     Change
                                               --------------------
                                                 6/30/15   6/30/14
----------------------------------------------------------------------------
Revenues                                        $  9,916  $  8,887     11.6%
----------------------------------------------------------------------------
Gross profit                                    $  4,590  $  3,551     29.3%
----------------------------------------------------------------------------
Gross margin                                        46.3%     40.0% 630 bps
----------------------------------------------------------------------------
Net income                                      $  2,053  $  3,272    -37.3%
----------------------------------------------------------------------------
Net income (loss) excluding "other non-
 operating income" *                            $    657  $   (823)   NM***
----------------------------------------------------------------------------
Adjusted EBITDA **                              $  2,267  $    835    171.5%
----------------------------------------------------------------------------


* A reconciliation of net income (loss) excluding "other non-operating income" to GAAP net income is contained later in this release.
** The Company views Adjusted EBITDA as an important measure in its analysis of the Company's business because it presents a view of the Company's performance on an ongoing basis without regard to capital structure, capital investment cycles and corresponding ages of related assets among comparable companies. A more detailed description of Adjusted EBITDA and a reconciliation to GAAP net income (loss) is contained later in this release.
*** NM - Not meaningful

Cyalume's President & CEO, Zivi Nedivi noted, "Continuing to build on a solid Q1 2015, gross profit for the second quarter of 2015 benefited from a favorable sales mix of higher margin products, in addition to a notable increase in overall revenues, as compared to the prior year. Revenues benefited by the start-up of a new M1110 training ammunition sales contract. We are extremely pleased with these results and expect to demonstrate a continuance of this improvement trend in the coming quarters."

Dale Baker, Chief Operating Officer, stated, "Our continued focus on controlling costs and improving manufacturing efficiencies again contributed to the improved profitability for the quarter. Cost reduction, in both production and administrative areas, remains a high priority."

About Cyalume Technologies Holdings, Inc.
Cyalume designs and manufactures non-pyrotechnic tactical products and training solutions for the world's militaries and law enforcement agencies, as well as for certain safety markets. Cyalume is the exclusive supplier to the U.S. and NATO-country militaries for all of their chemical light needs and operates manufacturing facilities in the U.S. and France. Through its subsidiary Cyalume Specialty Products, Cyalume also manufactures specialty chemical components for various markets.

Forward-Looking Statements
This press release includes forward-looking statements, including statements concerning anticipated future financial results. These forward-looking statements are based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to: the effect of regional and global economic and industrial market conditions including our expectations concerning their impact on the markets we serve; the effect of conditions in the financial and credit markets and their impact on the Company and our customers and suppliers; the impact of the Company's cost reduction initiatives; the Company's ability to execute its business plan to meet its sales, operating income, cash flow and capital expenditure guidance; the impact on the Company's gross profit margins as a result of changes in product mix; the Company's vulnerability to industry conditions and competition; the effect of any interruption in the Company's supply of raw materials or a substantial increase in the price of raw materials; ongoing capital expenditures and investment in research and development; compliance with any changes in government regulations and environmental and health and safety laws; the effect on the Company's international operations of unexpected changes in legal and regulatory requirements, export restrictions, currency controls, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, political and economic instability, difficulty in accounts receivable collection and potentially adverse tax consequences; the effect of foreign currency exchange rates as the Company's non-U.S. sales continue to increase; reliance for a significant portion of the Company's total revenues on a limited number of large organizations and the continuity of business relationships with major customers; the loss of key personnel; the nature and extent of military operations being conducted by customers.

Actual results and events may differ significantly from those projected in the forward-looking statements. Reference is made to Cyalume's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

The footnotes and other disclosures contained in the Company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and other periodic filings are an integral part of its financial statements and should be read in conjunction with any review of its financial statements.



                     Cyalume Technologies Holdings, Inc.
           Condensed Consolidated Statements of Comprehensive Loss
           (in thousands, except shares and per share information)


                         Three         Three          Six           Six
                     Months Ended  Months Ended  Months Ended  Months Ended
                       June 30,      June 30,      June 30,      June 30,
                         2015          2014          2015          2014
                     ------------  ------------  ------------  ------------
Revenues             $      9,916  $      8,887  $     16,858  $     16,156
Cost of revenues            5,326         5,336         9,130         9,728
                     ------------  ------------  ------------  ------------
Gross profit                4,590         3,551         7,728         6,428

Other expenses
 (income):
  Sales and
   marketing                  562           911         1,108         1,865
  General and
   administrative           1,912         1,554         3,486         3,473
  Research and
   development                287           379           599           754
  Interest expense,
   net                        857           524         1,360         1,037
  Interest expense -
   related party               37           117           100           223
  Amortization of
   intangible assets          238           497           477           993
  Legal Settlement         (1,381)            0        (1,381)            0
  Change in warrant
   liability fair
   value                      (15)       (4,095)            5        (5,042)
  Other expenses,
   net                          6           291          (131)          352
                     ------------  ------------  ------------  ------------
Total other
 expenses, net              2,503           178         5,623         3,655

Income before income
 taxes                      2,087         3,373         2,105         2,773
Provision for income
 taxes                         34           101           119           175
                     ------------  ------------  ------------  ------------
Net income                  2,053         3,272         1,986         2,598

Other comprehensive
 (loss) income, net
 of tax:
  Foreign currency
   translation
   adjustments                 73           (44)         (268)          (52)
                     ------------  ------------  ------------  ------------
Other comprehensive
 income (loss)                 73           (44)         (268)          (52)
                     ------------  ------------  ------------  ------------
Comprehensive income $      2,126  $      3,228  $      1,718  $      2,546
                     ============  ============  ============  ============

Net income           $      2,053  $      3,272  $      1,986  $      2,598
  Series A
   convertible
   preferred stock
   dividends                 (141)         (125)         (276)         (245)
  Series C preferred
   stock dividends            (65)            0          (127)            0
                     ------------  ------------  ------------  ------------
Net income available
 to common
 stockholders        $      1,847  $      3,147  $      1,583  $      2,353
                     ============  ============  ============  ============

Earnings per common
 share:
  Basic              $       0.09  $       0.15  $       0.07  $       0.11
  Diluted            $       0.02  $       0.10  $       0.02  $       0.08
Weighted average
 shares to compute
 net earnings per
 common share:
  Basic                21,400,244    21,362,564    21,400,244    21,184,567
  Diluted             100,479,954    32,153,976   100,370,051    29,322,654


                     Cyalume Technologies Holdings, Inc.
                    Condensed Consolidated Balance Sheets
           (in thousands, except shares and per share information)


                                                   June 30,    December 31,
Assets                                               2015          2014
                                                 ------------  ------------
Current assets:
  Cash                                           $      1,073  $      2,358
  Accounts receivable, net of allowance for
   doubtful accounts of $21 and $22,
   respectively                                         4,554         3,622
  Inventories, net                                      8,168         7,826
  Income taxes refundable                                 130             0
  Prepaid expenses and other current assets             1,184           648
                                                 ------------  ------------
Total current assets                                   15,109        14,454
                                                 ------------  ------------

  Property, plant and equipment, net                    6,869         7,120
  Goodwill                                              7,992         7,992
  Other intangible assets, net                          6,111         6,591
  Debt issue costs, noncurrent                            880             0
  Other noncurrent assets                                   0            18
                                                 ------------  ------------
Total assets                                     $     36,961  $     36,175
                                                 ------------  ------------

Liabilities and Stockholders' Equity
Current liabilities:
  Line of credit                                 $      3,000  $      2,050
  Current portion of notes payable                        598         5,775
  Accounts payable                                      2,230         2,144
  Accrued expenses                                      2,223         2,690
  Deferred revenue and deferred rent                      166           181
  Income taxes payable                                    400           644
  Capital lease obligation                                  0             7
  Warrants liability                                       30            25
  Legal obligation                                      1,400             0
                                                 ------------  ------------
Total current liabilities                              10,047        13,516
                                                 ------------  ------------

  Notes payable, net of current portion                16,598        10,214
  Note payable due to related parties                       0         2,100
  Deferred income taxes                                   376           430
  Legal obligation                                          0         2,781
  Other noncurrent liabilities                            280           282
                                                 ------------  ------------
Total liabilities                                      27,301        29,323
                                                 ------------  ------------

Series C preferred stock, $0.001 par value;
 1,000,000 shares authorized; 1,000 shares
 issued and outstanding                                 2,230         2,103
Series D convertible preferred stock, $0.001 par
 value; 1,000,000 shares authorized; 10 shares
 issued and outstanding                                   830             0
Series A convertible preferred stock, $0.001 par
 value; 1,000,000 shares authorized; 123,097
 shares issued and outstanding                          4,840         4,564
Stockholders' equity:
  Series B convertible preferred stock, $0.001
   par value; 1,000,000 shares authorized; 1,000
   shares issued and outstanding                        1,401         1,401
  Common stock, $0.001 par value; 150,000,000
   shares authorized; 21,400,244 shares issued
   and outstanding                                         21            21
  Additional paid-in capital                          102,871       103,014
  Accumulated deficit                                (101,604)     (103,590)
  Accumulated other comprehensive loss                   (929)         (661)
                                                 ------------  ------------
Total stockholders' equity                              1,760           185
                                                 ------------  ------------
Total liabilities and stockholders' equity       $     36,961  $     36,175
                                                 ------------  ------------


Adjusted EBITDA (a Non-GAAP Financial Measure)

Cyalume defines Adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization, non-cash stock-based compensation, foreign currency gains or losses and certain other income or expense items. Management uses Adjusted EBITDA for establishing internal budgets, goals and certain performance bonuses. Internal financial reports, including those provided to the Board of Directors, focus on Adjusted EBITDA. Since Adjusted EBITDA is not necessarily an indicator of overall cash flows of Cyalume, management reviews capital budgets and cash flow forecasts in parallel with Adjusted EBITDA analysis. Because Adjusted EBITDA eliminates interest expense, income taxes and depreciation, amortization, non-cash stock-based compensation, foreign currency gains or losses and one-time income or expense items, Cyalume considers this financial measure an important indicator of Cyalume's liquidity, operational strength and performance. Investors may find Adjusted EBITDA useful as it illustrates underlying operating trends in Cyalume's business. In addition, components of Adjusted EBITDA are a key component in the determination of Cyalume's compliance with certain covenants under its credit agreements. Adjusted EBITDA is not a measure of financial performance under GAAP. Adjusted EBITDA should not be considered in isolation, or as a substitute for net income, cash flows, or other consolidated income or cash flow data presented in accordance with GAAP or as a measure of our liquidity or financial condition. Because Adjusted EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as discussed may not be comparable to other similarly titled measures of other companies.

The following table sets forth a reconciliation of Adjusted EBITDA to net loss for the periods presented.



                    Cyalume Technologies Holdings, Inc.
               Reconciliation of Net Income to Adjusted EBITDA
                               (in thousands)


                                               For the Three  For the Three
                                                Months Ended   Months Ended
                                                  June 30,       June 30,
                                                    2015           2014
                                               -------------  -------------

Net Income                                     $       2,053  $       3,272

Adjustments to arrive at EBITDA:
  Interest expense, net                                  894            641
  Provision for (benefit from) income taxes               34            101
  Depreciation                                           310            376
  Amortization                                           238            497

                                               -------------  -------------

EBITDA                                                 3,529          4,887

Adjustments to arrive at Adjusted EBITDA:
Stock based compensation                                 113             54
Foreign currency loss (gain)                              21            (11)
Gain on legal settlement reduction                    (1,381)             0
Change in warrant liability fair value                   (15)        (4,095)
                                               -------------  -------------
Adjusted EBITDA                                $       2,267  $         835
                                               =============  =============


Net income (loss) excluding "other non-operating income" (a Non-GAAP Financial Measure)

Cyalume believes the Non-GAAP Financial Measure of Net Income (Loss) excluding "other non-operating income" to be meaningful as it serves to exclude two significant non-cash, non-operating line items which may otherwise obscure financial results from actual Company operations.

The following table sets forth a reconciliation of net income (loss) excluding "other non-operating income" to net income for the periods presented.



                    Cyalume Technologies Holdings, Inc.
   Reconciliation of Net Income to Net Income (Loss) excluding "other non-
                              operating income"
                               (in thousands)


                                           For the Three     For the Three
                                           Months Ended      Months Ended
                                             June 30,          June 30,
                                               2015              2014
                                         ----------------  ----------------

Net Income                               $          2,053  $          3,272

Legal Settlement                                   (1,381)                0
Change in warrant liability fair value                (15)           (4,095)
                                         ----------------  ----------------
Net income (loss) excluding "other non-
 operating income"                       $            657  $           (823)
                                         ================  ================


Contact:
Cyalume Technologies Holdings, Inc.
Michael Bielonko
Chief Financial Officer
(413) 858-2516
www.cyalume.com

Investor Relations Counsel:
The Equity Group Inc.
Lena Cati
(212) 836-9611
lcati@equityny.com
www.theequitygroup.com

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