EMRISE Corp., a multinational manufacturer of proprietary electronic devices and communications equipment for aerospace, defense, industrial and communications applications, announced that it has completed the acquisition of Eatontown, NJ-based Advanced Control Components Inc. (ACC). ACC is a supplier of high performance RF and microwave devices and subsystems that for more than 26 years has been serving the military, aerospace, commercial and instrumentation markets.

Chairman, President and Chief Executive Officer Carmine T. Oliva called ACC the most important acquisition in the history of the company and a key strategic step in positioning EMRISE for rapid expansion of its business. ACC provides EMRISE with the geographic presence, resources and new products to grow domestically and internationally and to increase sales to United States military and other government and commercial organizations.

“In addition to strengthening our organic operations, this acquisition adds significantly to our optimism about the future success of EMRISE,” Oliva said. “We believe the addition of ACC will substantially strengthen our future operating results and overall financial condition. In the 12 months following closing, we expect ACC to add $17 to $18 M in revenues, increase overall gross margins and make a major contribution to consolidated net income and earnings per share. We expect ACC’s profit contribution to begin with a small positive impact during the third quarter of 2008 and more material net income contributions beginning in the fourth quarter of 2008 and going forward.”

Approximately 30 percent of the purchase price is contingent upon ACC achieving certain operating income objectives during the first 24 months after closing, Oliva noted. “We believe this will ensure that we and Charles Brand, the former majority owner and ongoing president of ACC, are strategically aligned to achieve maximum benefits for EMRISE and its shareholders. Additionally, with the federal net operating loss carry forwards that EMRISE has available, we expect to shelter a large portion of ACC’s earnings from federal taxation for the foreseeable future. As a result, we expect the acquisition will help generate stronger overall cash flow and be highly accretive to earnings.”

Under the terms of the stock purchase agreement, the all-cash purchase price for ACC of up to $18 M is subject to the achievement of certain operating income performance criteria and certain post-closing working capital and balance sheet adjustments, which could increase or decrease the total purchase price. The agreement provided for a $13 M cash payment at closing, a two-year, $2 M conditional note contingent on ACC achieving certain operating income objectives during the first 24 months after closing and a $3 M earn-out contingent upon ACC attaining additional operating income objectives during that same period.