Microtel International, Inc. Announces Fifth Consecutive Profitable Quarter for Second Quarter of Fiscal Year 2001.Business Editors RANCHO CUCAMONGA Rancho Cucamonga (răn`chō k  'kəmäng`gə), city (1990 pop. 101,409), San Bernardino co., S Calif. , Calif.--(BUSINESS WIRE)--Aug. 14, 2001Gross Profit Improves to 47.3% from 40.9% in Second Quarter 2000 Microtel International (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :MCTL MCTL Military Critical Technologies List MCTL Marine Corps Task List MCTL Multi-Conductor Transmission Line ), an international provider of telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment and electronic components, today announced its financial results for the second quarter of fiscal year 2001, its fifth consecutive quarter of profit. The Company posted net income of $54,000 for the second quarter ending June 30, 2001 as compared to net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $301,000 for the second quarter of 2000. The second quarter of 2001 included approximately $312,000 of legal and accounting expenses associated with non-routine filings with the Securities and Exchange Commission. Excluding such expenses, net income for the second quarter would have been $366,000, which would have been a 21.6% increase over the same period in 2000. Microtel expects the last of such legal and accounting expenses to be incurred in the third quarter and these expenses are expected to be about half of the amount posted in the second quarter. Revenue for the second quarter of 2001 rose 3.7% to $7,083,000, compared to $6,828,000 from continuing operations in the second quarter of 2000. Earnings per share for the second quarter of 2001 was less than one cent, basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , as compared to $0.01, basic and diluted, from continuing operations in the second quarter of 2000. Excluding the $312,000 of expenses incurred for non-routine SEC filings, earnings per share for the second quarter of 2001 would have worked out to $0.02 per share, basic and diluted. Revenue for the first six months of 2001 rose 14.7% to $14,548,000, compared to $12,688,000 from continuing operations for the first half of 2000. After taking into account approximately $452,000 in legal and accounting expenses for non-routine SEC filings, net income for the first six months of 2001 came to $161,000 as compared to net income from continuing operations of $230,000 in the first six months of 2000. Excluding the non-recurring expenses net income for the first six months of 2001 would have been $613,000, an increase of 166.5%. Earnings per share for the first six months of 2001 worked out to $0.01, basic and diluted, after reaching $0.01 per share, basic and diluted, from continuing operations for the first six months of 2000. Excluding the approximately $452,000 of expenses incurred for non-routine SEC filings, earnings per share for the first half of 2001 would have worked out to $0.03 per share, basic and diluted. Second Quarter Business Highlights: -- XCEL Power Systems Ltd. subsidiary announced two major contracts totaling $1,700,000 in revenue -- CXR Telcom Corporation subsidiary introduced an asynchronous transfer mode (ATM) transmission test instrument and added frame error insertion capabilities to its flagship product -- XCEL Japan Ltd. subsidiary won a contract for $400,000 in revenue for a new product -- Microtel International unveiled its new Web site, available at www.microtelinternational.com and distributed its first ever full color, graphical annual report Randolph D. Foote, Microtel's CFO See Chief Financial Officer. , said, "We are pleased to report strong revenue growth in the first six months of 2001, especially in light of these challenging times in the telecom industry. Our gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. improved considerably in the second quarter to 47.3%, as compared to 40.9% in the second quarter of 2000. Working capital increased to $3,288,000 as of June 30, 2001, from $2,780,000 as of Dec. 31, 2000. The Company continues to achieve positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses . Microtel's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , including non-routine SEC filing expenses paid in the six months ended June 30, 2001 totaled $733,000." Graham Jefferies, Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. Telecom Group, stated, "We believe our Telecom Group is substantially outperforming our peers in the telecom industry. Our telecom revenue for the first half is up 11% over the first six months of the previous year. While revenue from our T-Com acquisition is the principle contributing factor, the fact is, our base business without T-Com revenue is equal to that of the previous year when many of our peers in the telecom industry are reporting decreases in sales of 20% or more." Jefferies continued, stating, "The main thrust of our test equipment sales is field test equipment, as it addresses the 'last mile,' particularly for our Regional Bell Operating Company The Regional Bell Operating Companies (RBOC) are the result of the U.S. Department of Justice antitrust suit against American Telephone & Telegraph. History customers. Sales of field test equipment have held up better than central office equipment sales, and far better than sales to telecom equipment manufacturers. New options for our test equipment, such as Frame Error Insertion insertion n. the addition of language at a place within an existing typed or written document, which is always suspect unless initialled by all parties. and DSO See CSO. Tone Injection functions, also contributed to our strong sales performance. Our transmission product line is experiencing the benefits of sales of our new Internet See Web 2.0 and Internet2. Protocol management system and our new high speed multi rate MSDSL MSDSL Multi-Rate Symmetric Digital Subscriber Line (UUNET) modems, among other products, all of which are contributing to our steady transmission sales performance." Carmine carmine /car·mine/ (kahr´min) a red coloring matter used as a histologic stain. indigo carmine indigotindisulfonate sodium. car·mine n. T. Oliva oliva /oli·va/ (o-li´vah) pl. oli´vae [L.] olive (2). o·li·va n. pl. o·li·vae See olivary body. , Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated, "Our Electronic Components business, which serves the aerospace market, among others, is providing a steadying influence for our performance in the face of the turmoil in the telecommunications market. Our general diversity in telecom products, which includes both test equipment and transmission products, together with a customer base in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. as well as Europe and Asia, are helping our performance." "In the first six months we continued to grow our top-line in an adverse economic climate that has seen many companies with significant sales to the telecommunications industry lose ground," said Oliva, commenting on the results. "We have also managed not to be squeezed by industry pricing pressures and have in fact increased our gross margins more than five percentage points to 47.3% for the quarter. As a result of this continued revenue and margin strength, Microtel has achieved its fifth consecutive profitable quarter." About Microtel International Microtel International, Inc. is an international telecommunications equipment and electronic components company comprising three wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. -- CXR CXR abbr. chest x-ray CXR, n chest x-ray; an image of the thoracic cavity, produced by an irradiation scan of the upper torso. Telcom Corporation in Fremont, CA and CXR, S.A. in Paris, France -- which comprise the Telecommunications Group, and XET XET Xbox Elite Team (Belgian video gaming group) XET Xerox Ethernet Tunnel Corporation in Rancho Cucamonga, CA, which together with its international subsidiaries, comprise the Electronic Components Group. CXR Telcom Corporation and CXR, S.A. design, manufacture and market field and central office electronic telecommunications test instruments, voice, data and video transmission and network access equipment. XET Corporation and its subsidiaries design, manufacture and market electronic components, including digital switches and power supplies. The Company operates out of facilities in the U.S., France, England and Japan. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 With the exception of historical information, the matters discussed in this news release are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act of 1995. The Company's business strategy and future plans of operations are subject to a number of risks and uncertainties and the actual future results of Microtel could differ from those statements. Factors that could cause or contribute to such differences include, but are not limited to, the projected growth in the telecommunications and electronic components markets, the ability of Microtel to expand its presence in these markets, trends in Microtel's financial condition and results of its operations, Microtel's ability to distinguish itself from its current and future competitors, the continued demand for Microtel's products, worldwide economic conditions, changes in governmental regulations and policies, the emergence of competitive products and services and unforeseen technical issues and those factors contained in the "Risk Factors" Section of the Company's Amendment No. 2 to its Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended Dec. 31, 2000 and the Company's Form 10-Q Form 10-Q See 10-Q. for the quarterly period ended March 31, 2001.
Microtel International, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
(in thousands except per share amounts)
Net sales $ 7,083 $ 6,828 $ 14,548 $ 12,688
Cost of sales 3,732 4,032 8,082 7,566
Gross profit 3,351 2,796 6,466 5,122
Operating expenses:
Selling, general
and administrative 2,905 2,248 5,486 4,395
Engineering and
product development 303 253 662 496
Income from operations 143 295 318 231
Other income (expense)
Interest expense (105) (98) (198) (195)
Other 22 108 50 205
Income from continuing
operations before income
taxes 60 305 170 241
Income tax expense 6 4 9 11
Income from continuing
operations 54 301 161 230
Discontinued operations:
Loss from operations
of discontinued
segment -- (95) -- (151)
Net income 54 206 161 79
Earnings (loss) per share:
Continuing operations
Basic $ 0.00 $ 0.02 $ 0.01 $ 0.01
Diluted $ 0.00 $ 0.02 $ 0.01 $ 0.01
Discontinued operations
Basic $ -- $ (0.01) $ -- $ (0.01)
Diluted $ -- $ (0.01) $ -- $ (0.01)
Net Income
Basic $ 0.00 $ 0.01 $ 0.01 $ 0.00
Diluted $ 0.00 $ 0.01 $ 0.01 $ 0.00
Microtel International, Inc. and Subsidiaries
Balance Sheet
(Unaudited)
June 30 December 31,
2000 2000
(amounts in thousands)
Current assets:
Cash and equivalents $ 532 $ 756
Accounts receivable 7,327 7,440
Current portion of notes receivable 80 130
Inventories 6,931 6,298
Prepaid expenses and other 604 750
Net assets of discontinued operations -- --
Total current assets 15,474 15,374
Property, plant and equipment, net 728 809
Goodwill, net 2,622 2,737
Investment in in affiliates -- --
Other assets 490 564
$ 19,314 $ 19,484
Liabilities and stockholders' equity:
Current liabilities:
Notes payable $ 3,196 $ 3,661
Current portion of long-term debt 658 614
Accounts payable 5,136 5,222
Accrued expenses 3,196 3,097
Total current liabilities 12,186 12,594
Long term debt, less current portion 805 282
Other liabilities 413 542
Total liabilities 13,404 13,418
Convertible redeemable preferred stock 264 259
Stockholders' equity
Preferred stock 938 938
Common stock 68 68
Additional paid in capital 24,317 24,307
Accumulated deficit (18,620) (18,775)
Accumulated comprehensive
income (loss) (1,057) (731)
Total stockholders' equity 5,646 5,807
19,314 19,484
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