Bogen Communications International Reports Third Quarter Results; Modest Net Loss, Positive Cash Flow; Continued Growth in Unified Messaging.

Business Editors

RAMSEY, N.J.--(BUSINESS WIRE)--Nov. 13, 2001

Bogen Communications International, Inc., (NASDAQ: BOGN) ("Bogen") today announced results for the third quarter and nine months ended September 30, 2001. The slippage in sales compared to the second quarter of this year and the third quarter of 2000, combined with charges relating to restructuring and the termination of certain strategic initiatives resulted in a modest net loss for the period. The Company remained cash flow positive both for the quarter and year-to-date.

Sales

Compared to last year, third quarter net sales declined 10.1% to $15,213,000 from $16,929,000.

U.S. sales for the third quarter declined 7.6% compared to last

year's third quarter, but rose 2.5% compared to the second quarter

of this year.

-- Telco product (PBX peripherals) sales were down by 6.7% versus last year's
third quarter. Third quarter Telco sales were 17.6% ahead of this year's second
quarter.

-- Commercial Audio product sales were down 14.9% from last year's third
quarter, and were down nearly 10% from sales in the second quarter of this
year.

-- Engineered Systems sales declined by 9.9% when compared to last year's third
quarter. As compared to this year's second quarter, Engineered Systems sales
were ahead by 7.6%.

-- Pro Audio product sales rose 13.3% versus last year's third quarter but were
down 20.3% versus the current year's second quarter.

Compared to last year, European third quarter revenues declined by 16.3% in deutsche marks (16.9% in U.S. dollars). The revenue decline is attributable to the deepening slowdown in the European telecommunications market, affecting both capital spending by the carriers, which in turn has held down Speech Design's sales of Unified Messaging products and services, and end-user demand for new telephone switches and peripherals, which has severely reduced sales of voicemail products. When compared to this year's second quarter, revenues were down 20.6% in deutsche marks (18.0% in U.S. dollars).

-- Unified Messaging revenues were up over 160% from the third

quarter of 2000.

-- Voicemail revenues were off 27.9% year-over-year, as both

domestic (within Germany) and export (outside of Germany)

sales continued to decline sharply.

Gross Margin

The gross margin for the third quarter of 2001 was 47.5%, decreased from last year's third quarter gross margin of 50.1%. The gross margin in Bogen's domestic business was approximately flat at 44.5% of sales, as compared to 44.6% in the third quarter of last year. In Europe, Speech Design's gross margins decreased from 64.4% in the third quarter of 2000, to 56.1% in the third quarter of 2001. The decrease is primarily due to increased material costs and the absorption of fixed costs relative to sales volume.

Operating and Other Expenses

Third quarter operating expenses increased 13.4%, or $859,000, from the immediately preceding quarter. This increase was largely driven by a $175,000 restructuring charge taken in regard to significant personnel reductions at Speech Design Carrier Systems, and a charge of approximately $550,000 relating to unsuccessful efforts to separate Speech Design and float it on a public exchange. Because of these charges, operating expenses increased from 40.6% of sales in the year's second quarter to 47.8% of sales in the third quarter. R&D expense totaled $1,065,000 or 7.0% of sales in the third quarter versus $832,000 or 5.3% of sales in the second quarter, due to a portion of the restructuring charge and the accounting for certain development costs for an OEM customer. Selling, general and administrative expenses ("SG&A") increased slightly from those of last year's third quarter, with the savings associated with the cost reductions announced and implemented earlier this year being offset by the termination of the Company's strategic alternatives efforts and the Speech Design Carrier Systems restructuring.

Operating expenses in Bogen's domestic businesses were increased $256,000 versus the third quarter of last year, and $524,000 versus the second quarter of this year. These increases are entirely a function of the $550,000 charge taken in regard to the terminated efforts to separate Speech Design. Excluding the charge mentioned above, Bogen's domestic businesses operating expenses decreased when compared to the third quarter of last year and the second quarter of 2001. Operating expenses at Speech Design were up $347,000 versus the third quarter of last year, and up $335,000 versus the second quarter of this year. The increases are largely attributable to increased investment in the development and marketing of Unified Messaging products and the $175,000 restructuring charge taken at Speech Design Carrier Systems to reverse the earlier infrastructure build-up.

Net Income

The Company reported a net loss of $232,000 or $.02 per diluted share for the current third quarter as compared to net income of $1,130,000 or $.11 per diluted share in the comparable period of the prior year.

Summary Results for the First Nine Months

Sales year-to-date were $44,851,000, a decline of 10.8% as compared to the same point last year. Year-to-date net income was $228,000 or $.02 per diluted share for the first half nine months of 2001. One year earlier, net income was $2,304,000 or $.25 per diluted share.

Comments by Jonathan Guss and Michael P. Fleischer 

Jonathan Guss, Bogen's CEO, reviewed the European business, noting, "The slowdown in Europe's telecommunications industry has appeared to intensify over the last few months. Speech Design's Unified Messaging business has felt an impact, as major carriers have elected to either reduce their capital expenditures or stretch out the time period over which investments are made. In response, Speech Design Carrier Systems cut costs sharply in September. Revenues continued to grow versus the same quarter last year, however, reflecting Speech Design Carrier System's leadership presence in European Unified Messaging. The nature of individual sales in this market is that they are relatively large and few in number. We therefore expect some volatility in quarterly revenues depending on the timing of significant orders."

Mr. Guss continued, "The economic slowdown in the European telecom sector has affected Speech Design's voicemail business too. New telephone switch sales are off significantly, and we see no prospect that they will recover any time soon. The impact on voicemail sales has been dramatic since the bulk of our volume in this area is directly tied to new PBX sales. We therefore expect that portion of our business to remain slow for at least the rest of this year. Speech Design is continuing its effort to reduce its dependence on new switch installations by trying to sell directly to small and mid-size businesses that bought a switch, without voicemail capability, sometime in the last few years. Penetrating this `aftermarket' remains one of the voicemail business's highest priorities. In parallel with these efforts we have just this week implemented a restructuring in the core voicemail business to make us more efficient and appropriately scaled for current demand. The charge for this restructuring will affect our financial results in the fourth quarter of this year, and is estimated to total approximately $200,000."

Michael P. Fleischer, Bogen's President, commented, "In the U.S., we continue to see a slow recovery from the weakness of the first quarter. Revenues were down 24% from the prior year in Q1, 11% in Q2, and 7.6% in this quarter. In listening to our distribution customers and end users, however, we get a mixed picture on economic expectations in the quarters ahead. Based on this uncertainty, we plan to continue to concentrate primarily on cost control, although we are selectively planning several product launches and marketing initiatives as well. If the recovery trend continues, we believe we will benefit. If there is another dip in demand, we believe our conservative approach to spending will provide a shield.

"As we look at the specifics of the individual lines which comprise our U.S. operations, we see that all have been hurt by macro-economic circumstances. Nevertheless, we believe that each of our lines is well positioned, competitive, and efficient. This assessment applies equally to Telco, Commercial and Pro Audio, and Engineered Systems. Each faces individual challenges to maintain or enhance its competitive position and we are continually implementing and updating our plans for meeting these challenges. Taken as a group, our U.S. businesses represent a coherent platform for cash generation."

Mr. Guss concluded by stating, "Bogen continues to be affected by trends in the economy at large, and to a fair degree our prospects for future improvement are related to general recoveries both here and in Europe. Speech Design in particular is challenged by the current recession, especially on the voicemail side, to seek non-traditional sources of revenue and closely manage costs. On a more positive note, the U.S. business has been largely successful in rescaling its infrastructure to a level more appropriate to the current level of demand.

"We have previously announced that Bogen's board of directors is examining a variety of alternatives to maximize shareholder value, including a possible separation of the European business. The same negative trends in the economy that have affected Bogen's financial results, however, have also affected the capital markets and made it impossible at this time for the Company to separate and float Speech Design on a public exchange. As a result we have taken a charge for all the costs incurred up to this point.

"Fortunately the Company's extremely strong balance sheet, combined with its ability to generate positive cash flow even in the current downturn, leaves it in a very flexible position. Bogen is well-placed to provide liquidity to those shareholders seeking it via the previously announced "Dutch Auction" tender for 1,500,000 shares of our Common Stock. The remaining cash reserves, in conjunction with our unutilized acquisition line, also mean that we will have the enviable capability of taking advantage of any attractive acquisition opportunities that we find."

Conference Call

Bogen's management also plans to host a conference call at 12 noon Eastern Time on Tuesday, November 13, 2001 to discuss third quarter results. This conference call will be webcast over www.vcall.com. Listeners may also visit the Company's website: www.bogen.com at the Company Info section, to access the conference call. To listen to the live call please go to one of the websites at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days at the websites.

About Bogen

Bogen Communications International, Inc., based in Ramsey, New Jersey and Munich, Germany, develops, manufactures, and markets telecommunications peripherals, sound processing equipment, and Unified Messaging products and services. Bogen's products are sold to commercial, industrial, professional and institutional customers worldwide.

Except for historical information contained herein, the statements made in this release constitute forward-looking statements that involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including general market conditions, new technological developments, competition, potential acquisitions and divestitures, implementation or termination of strategic initiatives or transactions, the availability of financing alternatives and other risks. Certain of these risks, factors and other considerations are detailed from time to time in Bogen's reports on file at the Securities and Exchange Commission, including Bogen's Form 10-K for the fiscal year ended December 31, 2000 and 10-Q for the quarter ended June 30, 2001. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

       BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
     (In Thousands of Dollars, Except Share and Per Share Amounts)

                                           September 30,  December 31,
                                                 2001          2000
                                           ------------   ------------
                                             (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                     $  15,083     $  12,158
Trade receivables (less allowance for
 doubtful accounts of $596 and $557 at
 September 30, 2001, and December 31, 2000,
 respectively)                                    7,541         7,433

Other receivables                                   707           847

Inventories, net                                 13,076        14,608

Prepaid expenses and other current assets           465         1,063

Deferred income taxes                             1,555         1,591
                                              ---------     ---------
    TOTAL CURRENT ASSETS
                                                 38,427        37,700

Equipment and leasehold improvements, net         4,104         4,299

Goodwill and intangible assets, net              17,849        18,840

Other assets                                        304           273

                                              ---------     ---------
    TOTAL ASSETS                              $  60,684     $  61,112
                                              =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Amounts outstanding under revolving credit
 agreements                                   $     131     $   1,201
Advances and notes payable to related parties       120           124

Current maturities of capital lease
 obligations                                        262           245

Accounts payable                                  2,014         2,684

Accrued expenses                                  3,859         3,428

Income taxes payable                                870           392

                                              ---------     ---------
    TOTAL CURRENT LIABILITIES                     7,256         8,074


Deferred income taxes                               926         1,123

Capital lease obligations                            80           288

Minority interest                                   293            80

Other liabilities                                    37             -

                                              ---------     ---------
    TOTAL LIABILITIES                             8,592         9,565

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

STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value; 1,000,000
 shares authorized; none issued and
 outstanding at September 30, 2001 or
 December 31, 2000                                    -             -

Common stock - $.001par value; 50,000,000
 shares authorized; 10,112,956 shares issued
 and outstanding at September 30, 2001, and
 December 31, 2000                                   10            10
Additional paid-in-capital                       48,732        48,283

Retained earnings (accumulated deficit)           4,546         4,318

Accumulated other comprehensive loss             (1,164)       (1,032)

Treasury stock  at cost- 3,572 shares at
 September 30, 2001, and December 31, 2000          (32)          (32)
                                              ---------     ---------
    TOTAL STOCKHOLDERS' EQUITY                   52,092        51,547
                                              ---------     ---------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 60,684     $  61,112
                                              =========     =========




       BOGEN COMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
     (In Thousands of Dollars, Except Share and Per Share Amounts)
                              (Unaudited)

                         Three Months Ended       Nine Months Ended
                         September  September    September  September
                            30,        30,           30,      30,
                           2001       2000          2001     2000
                        ----------  ----------  ----------  ---------

Net sales                $  15,213   $  16,929  $   44,851  $  50,264
Cost of goods sold           7,990       8,454      23,424     26,208

                        ----------  ----------  ----------  ---------
    Gross profit             7,223       8,475      21,427     24,056


Operating expenses:
    Research and
     development             1,065         530       3,200      2,296
    Selling, general
     and administrative      5,935       5,867      17,114     16,958

    Amortization of
     goodwill and
     intangible assets         274         235         824        714

                        ----------  ----------  ----------  ---------
Income (loss) from
 operations                   (51)       1,843         289      4,088

Other (income) expenses:
    Interest income          (103)       (153)        (370)      (294)

    Interest expense            30          56          89        121

    Other (income)
     expense, net             (19)        (50)         (56)       (29)
                        ----------  ----------  ----------  ---------
Income before income
 taxes                          41       1,990         626      4,290

Provision for income
 taxes                         273         860         398      1,986

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

Net income (loss)        $    (232)  $   1,130  $      228  $   2,304
                        ==========  ==========  ==========  =========

Basic net income (loss)
 per common share        $   (0.02)  $    0.11  $     0.02  $    0.26
                        ==========  ==========  ==========  =========

Diluted net income
 (loss) per common share $   (0.02)  $    0.11  $     0.02  $    0.25
                        ==========  ==========  ==========  =========

Weighted average number
 of common shares
 outstanding-Basic      10,112,956  10,040,409  10,112,956  8,866,714
                        ==========  ==========  ==========  =========

Weighted average number
 of common shares
 outstanding -Diluted   10,112,956  10,170,004  10,112,956  9,381,388
                        ==========  ==========  ==========  =========

Note: Sales, Cost of goods sold, and Selling, general and
administrative expenses reflect the adoption of FASB's Emerging Issues
Task Force (EITF) Issue No. 00-10, "Accounting for Shipping and
Handling Fees and Costs", which requires all companies to report all
amounts billed to a customer related to shipping and handling costs as
sales and report all costs incurred for shipping and handling as cost
of goods sold; Issue No. 00-22, "Accounting for 'Point' and Other
Loyalty Programs", which classifies customer rebates as a reduction of
sales; and Issue No. 00-25, "Accounting for Consideration from a
Vendor to a Retailer in Connection with the Purchase or Promotion of
the Vendor's Products", which classifies such consideration as a
reduction of sales.