Teltrend Reports Increased Second Quarter Earnings.Business Editors ST. CHARLES, Ill.--(BUSINESS WIRE)--Feb. 8, 2000 Teltrend Inc. (Nasdaq: TLTN) today announced results for its second quarter ended January 29, 2000. Earnings for the quarter were $0.29 per 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. share versus $0.18 for the second quarter of last year. This year's second quarter earnings per share includes $0.05 related to the sale of Teltrend's UK-based router router Portable electric power tool used in carpentry and furniture making that consists of an electric motor, a base, two handle knobs, and bits (cutting tools). A router can cut fancy edges for shelving, grooves for storm windows and weather stripping, circles and ovals business in the fourth quarter of last year. Without this gain, earnings this quarter were $0.24 per diluted share, up 33% from last year's second quarter. Sales for the quarter were $23.5 million compared to $24.4 million for the second quarter last year. The lower year-to-year quarterly sales is primarily attributable to the previously mentioned sale of Teltrend's UK-based router business. Sales of Teltrend High-Capacity Products increased 22% from $12.6 million in the second quarter of last year to $15.3 million this year. Channelized Refers to an architecture that transmits data in channels. It often refers to the 64 Kbps channels in T1 lines, which were originally developed to handle digitized voice streams (TDM). See TDM. Products and Conversion Products sales were lower, but the strong High-Capacity Products performance resulted in a 6% year-to-year sales increase in the US segment of Teltrend's business. US sales for the quarter were $21.5 million versus $20.3 million for the second quarter of last year. Earnings for the six months, exclusive of the second quarter $0.05 adjustment relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. sale of the router business, were $0.66 per diluted share, a 12% increase over the first half of fiscal 1999. Including the $0.05 adjustment, income for the six months was $0.71 per diluted share. Sales for the six months totaled $49.5 million, compared to $54.6 million in the prior year. The decrease was primarily due to the sale of the Packet Switched Business and to the first quarter of fiscal 1999 having 14 weeks compared to 13 weeks in fiscal 2000. The Company's cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has increased from $27.8 million at the end of this year's first quarter to $29.8 million at end of this year's second quarter. &uot;Overall we're pleased with the results of our second quarter&uot;, said Howard L. Kirby, Jr., Teltrend Chairman 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. . &uot;Year-to-year growth in our core High-Capacity Products area was strong. And I'm pleased to report steady progress in HDSL See DSL. HDSL - High bit-rate Digital Subscriber Line , particularly with the new 2-wire HDSL technology. Our quarterly sales in HDSL are still small, at just over $1.0 million, but that's up 150% from last year's second quarter. &uot;And customers remain very interested in our new ASTS ASTS American Society of Transplant Surgeons ASTS Aeromedical Staging Squadron ASTS Asbestos in Schools Tracking System ASTS Advanced Surveillance & Tracking System ASTS Advance Supplement Testing Systems, Inc. (TM) system. We regard the Teltrend ASTS system as the best choice for deployment of High-Capacity services, irrespective of irrespective of prep. Without consideration of; regardless of. irrespective of preposition despite whether these services are provided by RBOC (Regional Bell Operating Company) The Bell telephone companies that were spun off of AT&T by court order in 1984 (the Divestiture). Also known as the "Baby Bells," the initial seven RBOCs were Nynex, Bell Atlantic, BellSouth, Southwestern Bell, US West, , Independent Telco, or CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) , and irrespective of whether provided via fiber optic, HDSL, HDSL2 or repeatered T1 technology. &uot;Teltrend's ASTS system is a compact, economical system that replaces five previous equipments: T1 distribution system, M13 multiplexer See multiplexor and multiplexing. multiplexer - multiplexor , performance monitoring unit, digital test access unit, and protection switch. And very importantly, ASTS plug-ins are plug-compatible with the existing Telco STS (Synchronous Transport Signal) The electrical equivalent of the SONET optical signal. In SDH, the European counterpart of SONET, STS is known as STM (Synchronous Transport Module). infrastructure. &uot;Additionally, Teltrend HDSL2 units are interoperable The ability for one system to communicate or work with another. See interoperability. with other standards-compliant HDSL2 units like those produced by PairGain Technologies, Inc. Teltrend is working closely with PairGain to become a competitive supplier of full-functionality HDSL2 plug-in units for the PairGain enhanced WBS-3190 system. Teltrend is committed to being a provider of plug-in HDSL2, HDSL4, and repeatered T1 units for competitive, open-architecture, systems like the PairGain WBS-3190, as well as being a system level supplier to this market with our ASTS system. &uot;By the way, any vendor can choose to offer plug-ins and/or systems using the OSTS OSTS On-Site Sewage Treatment Systems OSTS Oil Shale and Tar Sands OSTS Old School Texas Surfing (Counter-Strike clan) OSTS Ofice of Storage and Transporation Systems open architecture used in Teltrend's ASTS system. The OSTS specifications used on the ASTS are available free of charge. You can view them on our Teltrend web-site. Teltrend believes strongly in the OSTS open architecture, and we believe the concept is being increasingly embraced by RBOCs, CLECs, and other service providers.&uot; Mr. Kirby continued, &uot;In our Channelized products area, ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. and DLC (1) (Data Link Control) See data link and OSI. (2) (Data Link Control) The data link layer protocol (layer 2) that is used in IBM's SNA networking. See SNA, data link protocol and Microsoft DLC. sales were up 38% and 48% respectively year-to-year, but this was offset by declines in our VF products and in DDS (1) (Digital Data Storage) See DAT. (2) (Data Dictionary System) See QuickBuild and OpenDDS. (3) (Dataphone Digital S products. We believe the DDS decline, due mainly to a change-over in DDS deployment technology, will be reversed later this year by start-up of sales of Teltrend's new FastPort(TM) product. This product, which allows the provisioning of long telephone lines for DDS service without the need for costly removal of load coils A device placed into a telephone circuit between the end office and the subscriber to step up the voltage and compensate for signal loss due to bridged taps. The load coil is an inductive device that acts as a high-frequency choke and must be removed if the line is converted to high-speed , or the addition of costly repeaters, is under test at all of the RBOCs, and we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about its future. DDS is the service of choice for full-period connection of medium-speed dedicated networks like those employed for lottery networks, and we believe this is going to be a good market for us for a long time to come. &uot;On the subject of our upcoming merger, Teltrend and Westell Technologies announced last week that the waiting period for our proposed merger under the US antitrust laws antitrust laws n. acts adopted by Congress to outlaw or restrict business practices considered to be monopolistic or which restrain interstate commerce. The Sherman Antitrust Act of 1890 declared illegal "every contract, combination.... had expired. We plan to distribute a proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. next week for our respective stockholder meetings regarding the merger, which we expect will be held on March 16.&uot; Certain of Mr. Kirby's statement in the previous paragraphs are forward looking. These statements, identified by the use of phrases such as &uot;interest&uot;, &uot;we regard&uot;, &uot;we remain optimistic&uot;, &uot;we believe&uot;, and &uot;we plan&uot; are based on current expectations and involve risks and uncertainties. Consequently, actual results could differ materially from the Company's expectations expressed in the preceding paragraphs. The various factors that could cause actual results to differ from the expectations include, but are not limited to: competition from other, and in certain cases more established, manufacturers of similar products; pricing pressure and other ramifications ramifications npl → Auswirkungen pl of the consolidation of some of the Company's major customers; the inability to achieve market acceptance of new products or products under development for a variety of reasons, including their cost or the actual or perceived need for such products in the marketplace; the failure of the Company's new products to pass the rigorous testing and qualification process imposed by the Company's customers; the rapid pace with which changes in technology industry standards and customer requirements occur within the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. business, and the adverse effect such changes and the introduction of new products involving new technologies could have on the Company's ability to sell its new and existing products. Teltrend Inc., established in 1979 with over 500 employees worldwide, is headquartered in suburban Chicago. Teltrend designs, manufactures and markets a broad range of telecommunications and data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. products used by businesses and telephone companies to provide voice and data services. Teltrend's unique local telephone loop solutions, developed for HDSL, HDSL2, Fiber Optic, T1, ISDN, DDS, and DLC applications, allow telephone companies to provide new and better services to their customers without the need for costly infrastructure replacement. The Company's products are sold to the Regional Bell Operating Companies The Regional Bell Operating Companies (RBOC) are the result of the U.S. Department of Justice antitrust suit against American Telephone & Telegraph. History , GTE GTE General Telephone & Electronics GTE Génie Thermique et Énergie (French) GTE Gas Turbine Engine GTE Global Tropospheric Experiment GTE Geothermal Energy GTE Gas Turbine Efficiency plc (Sweden & USA) , Sprint, and other U.S. and International telephone companies as well as original equipment manufacturers such as Lucent, Nortel, and Cisco. ASTS(TM) and FastPort(TM) are trademarks of Teltrend Inc.
FINANCIAL TABLES TO FOLLOW
TELTREND INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
UNAUDITED
(In thousands, except net income per share data)
For the Quarter Ended For the Six Months Ended
--------------------- ------------------------
January 29, January 30, January 29, January 30,
----------- ----------- ----------- -----------
2000 1999 2000 1999
----------- ----------- ----------- -----------
Net sales $23,477 $24,436 $49,466 $54,634
Cost of sales 13,528 13,234 27,456 29,505
-------- -------- -------- --------
Gross profit 9,949 11,202 22,010 25,129
Operating expenses 8,158 9,437 16,727 19,665
Gain on disposal of
product line (495) -- (495) --
-------- -------- -------- --------
Income from operations 2,286 1,765 5,778 5,464
Other income (expense):
Interest income 412 277 754 626
Other - net 47 (247) (9) (199)
-------- -------- -------- --------
459 30 745 427
-------- -------- -------- --------
Income before income
taxes 2,745 1,795 6,523 5,891
Provision for income
taxes 950 685 2,260 2,251
-------- -------- -------- --------
Net income $1,795 $1,110 $4,263 $3,640
======== ======== ======== ========
Basic income per share
of common stock $.31 $ 0.19 $ 0.74 $ 0.60
======== ======== ======== ========
Basic average common
shares outstanding 5,790 5,958 5,788 6,064
======== ======== ======== ========
Diluted income per
share of common stock $0.29 $ 0.18 $0.71 $0.59
======== ======== ======== ========
Diluted average common
shares outstanding 6,125 6,160 6,030 6,143
======== ======== ======== ========
TELTREND INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
UNAUDITED
(In Thousands)
January 29, July 31,
ASSETS 2000 1999
-----------------------------------------------------
Current Assets
Cash and cash equivalents $21,054 $25,915
Marketable securities 8,768 --
Trade accounts receivable,
less allowance 12,834 13,758
Inventories 10,871 9,466
Deferred income taxes 2,267 2,267
Prepaid expenses
and other current assets 2,056 3,301
------ ------
57,850 54,707
Property, plant and
equipment, net 9,590 9,877
Deferred income taxes 329 329
Intangible assets, net 1,383 1,479
Other assets, net 602 591
------ ------
Total Assets $ 69,754 $ 66,983
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LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------
Current Liabilities
Accounts payable $ 5,002 $ 4,774
Accrued expenses 8,831 10,970
------ ------
13,833 15,744
Stockholders' equity 55,921 51,239
------ ------
Total Liabilities and
Stockholders' Equity $69,754 $66,983
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