CLI Reports Fourth Quarter and 1994 Results: Returns to Profitability for 1994.

SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 21, 1995--Compression Labs, Incorporated (CLI) (NASDAQ/NMS:CLIX) today reported revenues of $38.4 million for the fourth quarter ended December 31, 1994, compared to $42.2 million in revenue reported in the same quarter last year. The Company reported revenue of $157.0 million for the year ended December 31, 1994 compared to $141.3 million in the prior year.

The Company reported net income of $501,000, or $0.03 per share, in the fourth quarter of 1994, compared to net income of $540,000, or $0.04 per share, for the same period in 1993. Net income for the year ended December 31, 1994 was $107,000, or $0.01 per share, compared to a net loss of $3.5 million, or $0.30 per share, for 1993.

John E. Tyson, president, CEO and chairman of CLI, stated that, "1994 was a year of focusing our resources on improving the bottom line, and we made steady progress. Our $3.6 million improvement in net income was driven by both revenue growth of 30 percent and gross margin improvement in our Group Videoconferencing market. Our Broadcast market revenues dropped approximately 9 percent while the industry retooled for the MPEG standard.

"During the fourth quarter, CLI continued to strengthen its management and technical teams in the broadcast market in anticipation of future growth in this area. The Company introduced Magnitude, an MPEG-2-based compressed digital video product family for the delivery of entertainment and information services over telephone, cable and satellite networks. Our newly-introduced Magnitude products have been particularly well received internationally, where we have sold systems in Argentina, India, Namibia, and Taiwan, and the Company is now under contract to deliver MPEG video-on-demand units for a trial in Australia.

"In the videoconferencing market, the Company continued to broaden and strengthen its product lines to bring a full range of videoconferencing products to market; and at the same time we focused on developing solutions for vertical markets, including healthcare and education, where the Company's high-end videoconferencing systems are ideal."

To further penetrate the rapidly growing, small group videoconferencing market where ease of use, affordability and standards-compliance are critical, CLI introduced two new models in its eclipse family of simple-to-use, powerful videoconferencing systems. The new, fully standards-compliant eclipse 8200 and 8300 have been enthusiastically received by analysts and customers.

The Company announced its Radiance(TM) product family early in 1994, accommodating the healthcare and education markets' requirements for high quality video and audio in an easy-to-operate package. CLI now has distance learning customers located in 44 of the 50 states in the U.S., including the State of Georgia which has nearly 200 sites connected in its Georgia Statewide Academic and Medical Systems (GSAMS) network, one of the largest in the world. To continue its value-added contribution to distance learning solutions, CLI announced the Radiance VideoLearning system designed specifically for distance learning and training. In the healthcare market, United Medical Network (UMN) is both reselling and integrating CLI videoconferencing products for the worldwide healthcare market.

As part of its strategy to make desktop videoconferencing more widespread, CLI is working with Intel both to resell Intel's affordable ProShare(TM) Video System 200 and to ensure compatibility between CLI group systems and Intel's desktop offerings. The Company is an active participant in the Personal Conferencing Work Group to ensure that desktop offerings are interoperable. In addition, CLI recently joined with AT&T and its WorldWorx partners to help stimulate the use of videoconferencing through the easy-to-use WorldWorx service.

To expand its presence in targeted markets, CLI added new direct and indirect distribution channels both in the U.S. and internationally during 1994. New distribution partners include Sprint/North Supply, which resells CLI products in a comprehensive, nationwide dealer network program; and MicroAge, Inc., which distributes the Company's products in its nationwide computer reseller network. Internationally, the Company added J S TELECOM, a subsidiary of Bosch Telecom Group, in France; and Dynamic Communications in Australia. The Company also opened offices in Europe, China and Canada.

CLI, "the first name in video communications," is a leading designer and manufacturer of products for digital video communications. Using its core technology, compressed digital video, the Company provides a range of group and desktop videoconferencing products, as well as broadcast products for the entertainment, business television and distance learning markets. With headquarters in San Jose, Calif., CLI has regional sales offices across the United States, international offices in Canada, Europe and the People's Republic of China, and distributors serving more than 50 countries worldwide.

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               COMPRESSION LABS, INCORPORATED
               SUMMARY OF REVENUE AND EARNINGS
              (In thousands, except per share amounts)

                                        Three months ended
                                              Dec. 31,
                                        1994          1993
                                        ------------------
                                            (Unaudited)
Total Revenues                          $38,432    $42,237
Net Income                              $   501    $   540
Net Income Per Share                    $  0.03    $  0.04
Average Shares Outstanding               15,000     14,927

                                        Year ended Dec. 31,
                                        1994           1993
                                        -------------------
Total Revenues                          $156,987   $141,327
Net Income (Loss)                       $    107   $ (3,483)
Net Income (Loss) Per Share             $   0.01   $  (0.30)
Average Shares Outstanding                15,160     11,666

CONTACT: Compression Labs, Inc.

William Berry, 408/922-5511

William Dunk Partners, Inc.

William Dunk, 214/960-9611