Teltrend Reports Third Quarter Results Improved Sales and Earnings.ST. CHARLES Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by , Ill.--(BUSINESS WIRE)--May 26, 1999-- Teltrend Inc. (Nasdaq: TLTN) today announced results for its third quarter ended May 1, 1999. These results include a provision for loss relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's previously announced decision to sell its networking product line. Teltrend achieved net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $26.4 million for the third quarter of fiscal 1999, compared to $24.4 million for the preceding quarter and $25.3 million for the prior year's third quarter. Income for the third quarter of fiscal 1999 was $1.9 million, or $0.32 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, exclusive of the $1.3 million ($0.9 million net of tax) provision for loss on the impending im·pend intr.v. im·pend·ed, im·pend·ing, im·pends 1. To be about to occur: Her retirement is impending. 2. sale of the Company's networking product line. Prior year third quarter net income was $1.7 million, or $0.27 per diluted share. Teltrend also reported third quarter sales results by strategic market units. Sales of the Company's High Capacity Products for the third quarter of fiscal 1999 were $14.0 million, compared to $12.6 million in the second quarter and $13.1 million for last year's third quarter. Third quarter 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 sales were $8.4 million, compared to $7.7 million in the second quarter and $8.8 million for the third quarter of fiscal 1998. Third quarter Circuit Switched Product sales were $2.6 million compared to $3.2 million in the second quarter and $2.0 million for the third quarter of last year. Finally, third quarter Packet Switched Product sales were $1.4 million compared to $0.9 million for the second quarter and $1.4 million for last year's third quarter. For the nine months year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , sales totaled $81.0 million, compared with $69.8 million for last year's nine months. Exclusive of the $1.3 million provision for loss on the impending sale of the Company's networking product line, income for the first nine months totaled $5.5 million, or $0.91 per diluted share. For the first nine months of the prior year, exclusive of a first quarter purchased in-process research and development charge of $4.0 million, income totaled $4.1 million, or $0.63 per diluted share. Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. L. Kirby, Jr., 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. and Chairman stated, "Our third quarter earnings met our expectations and sales were up 10% quarter to quarter. For the first nine months of this year, sales are up 16% year-to-year. The first nine months of last year included approximately seven and a half months revenue attributable to the Company's UK based subsidiary. "Our financial progress during the third quarter was based on success with our core High Capacity Products - particularly those employing advanced T1 performance monitoring - and on success with our DCAC DCAC Digital Cinema Auto Calibration (Sony) DCAC Define and Control Airplane Configuration DCAC District of Columbia Aquatics Club DCAC Defense Communications Agency Circular DCAC District of Columbia Aquatic Club 4570 "cross connect on a card" product. "The week of June 7, at SuperComm in Atlanta, we will be showing four new products which we expect will fuel much of our growth during our next fiscal year which starts this August. "At SuperComm we will be showing our new 2-wire HDSL See DSL. HDSL - High bit-rate Digital Subscriber Line product. We are offering both a commodity HDSL2 product and an intelligent, or enhanced, HDSL2 product. Teltrend intends to use these new products to compete vigorously in this exciting new 2-wire HDSL market. We believe many customers will prefer our enhanced product because of the inherent cost savings, but the commodity product allows us to offer a full range of products to our customers. "Both Teltrend HDSL2 product lines are end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. interoperable The ability for one system to communicate or work with another. See interoperability. with PairGain and ADC (1) See A/D converter. (2) (Apple Display Connector) A peripheral connector from Apple that combines digital video display, USB and power in one cable. HDSL2 products and both Teltrend product lines can be used in our next-generation high capacity distribution system we call 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). You're going to be hearing a lot about this system. It's backward compatible Refers to hardware or software that is compatible with earlier versions of the product. Also called "downward compatible." Contrast with forward compatible. backward compatible - backward compatibility with existing T1 and HDSL 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). plug-ins. And it offers integrated test access, protection switching, and optional high speed interfaces - and a host of other features, including a completely open architecture called 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 . All these features are designed to save our customers money. "In addition to our new HDSL2 and ASTS(TM) products we're also going to be showing a new self-contained fiber optic transmission system called the CellPak(TM)550. Initial delivery of trial units of this system have just been made to the 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, for which this system was developed. And we expect to be selling this system to other telcos in the near future. "Last, but certainly not least, we will be showing FastPort(TM), an exciting new Teltrend product developed to allow provisioning of DDS (1) (Digital Data Storage) See DAT. (2) (Data Dictionary System) See QuickBuild and OpenDDS. (3) (Dataphone Digital S over long lines In communications, circuits that are capable of handling transmissions over long distances. without the need to remove 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 add a repeater (1) A communications device that amplifies (analog) or regenerates (digital) the data signal in order to extend the transmission distance. Available for both electronic and optical signals, repeaters are used extensively in long distance transmission. . There's considerable excitement among our customers over this product - and we hope to be in field trials with it in July." Mr. Kirby continued, "Our cash performance continues to be very good. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite having purchased approximately $10 million of our stock, our cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. have remained high. We've said in the past that we intend to use our cash both to buy back our stock and to make accretive and strategic acquisitions. I personally am working hard on the acquisition front which I see as a real opportunity to add to the Company's growth." Mr. Kirby's statements above concerning new product offerings and potential acquisitions, and the Company's expectations for continued success and future growth, contain 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. which are identified by the use of the following terms or phrases: "we expect to fuel", "intends", "we believe" and "we expect to be selling". These forward-looking statements are based on current expectations and involve risks and uncertainties. Consequently, the Company's actual results could differ materially from the Company's current expectations. The various factors that could cause the Company's actual results to differ from its positive expectations include, but are not limited to: competition from other, and in certain cases more established, manufacturers of similar products; 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; continued pricing pressure from customers upon whom the Company depends for a significant amount of its revenue; the inability of the Company's new products to pass the rigorous testing and qualification process imposed by the Company's customers; and 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 T1, HDSL, Fiber Optic, ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. , DDS, 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. 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. ASTS(TM), CellPak(TM)550 and FastPort(TM) are trademarks of Teltrend Inc.
TELTREND INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(In thousands, except net income per share data)
For the Quarter Ended
May 1, April 25,
1999 1998
---------- ---------
Net sales $26,403 $25,271
Cost of sales 14,804 13,411
---------- ----------
Gross profit 11,599 11,860
Operating expenses 8,766 9,101
Provision for loss on disposal of
product line 1,300 --
In-process research & development -- --
---------- ----------
Income from operations 1,533 2,759
Other income (expense):
Interest income 249 312
Other - net (73) (137)
---------- ----------
176 175
---------- ----------
Income before income taxes 1,709 2,934
Provision for income taxes 709 1,197
---------- ----------
Net income $ 1,000 $ 1,737
========== ==========
Basic income per share of common stock $ 0.17 $ 0.27
========== ==========
Basic average common shares outstanding 5,895 6,445
========== ==========
Diluted income per share of common stock $ 0.17 $ 0.27
========== ==========
Diluted average common shares outstanding 6,022 6,504
========== ==========
For the Nine Months Ended
May 1, April 25,
1999 1998
---------- ----------
Net sales $81,037 $69,765
Cost of sales 44,309 38,150
---------- ----------
Gross profit 36,728 31,615
Operating expenses 28,431 25,058
Provision for loss on disposal of
product line 1,300 --
In-process research & development -- 3,995
---------- ----------
Income from operations 6,997 2,562
Other income (expense):
Interest income 875 1,009
Other - net (272) (627)
---------- ----------
603 382
---------- ----------
Income before income taxes 7,600 2,944
Provision for income taxes 2,960 2,856
---------- ----------
Net income $ 4,640 $ 88
========== ==========
Basic income per share of common stock $ 0.77 $ 0.01
========== ==========
Basic average common shares outstanding 6,009 6,440
========== ==========
Diluted income per share of common stock $ 0.76 $ 0.01
========== ==========
Diluted average common shares outstanding 6,100 6,500
========== ==========
TELTREND INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(In Thousands)
May 1, July 25,
ASSETS 1999 1998
----------------------------------------------------------------------
Current Assets
Cash and cash equivalents $14,164 $22,994
Marketable securities 8,799 1,951
Trade accounts receivable,
less allowance 13,447 12,899
Inventories 11,383 10,656
Deferred income taxes 1,636 1,474
Prepaid expenses and other
current assets 4,545 4,367
-------- --------
53,974 54,341
Property, plant and equipment,
net 10,626 10,728
Deferred income taxes 1,653 1,705
Intangible assets, net 4,489 4,830
Other assets, net 217 166
-------- --------
Total Assets $70,959 $71,770
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------------
Current Liabilities
Accounts payable $ 5,962 $ 6,194
Accrued expenses 12,322 9,789
-------- --------
18,284 15,983
Other noncurrent liabilities 2,270 2,483
Stockholders' equity 50,405 53,304
-------- --------
Total Liabilities and
Stockholders' Equity $70,959 $71,770
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