Net Income Up 50 Percent in 1998
SAN JOSE, Calif., Jan. 27 /PRNewswire/ -- Hello Direct, Inc.
(Nasdaq: HELO), the leading developer and direct marketer of desktop telephony
productivity tools, today reported financial results for the fourth quarter
and year ended December 31, 1998.
Net sales for the quarter were $17.2 million, an increase of 8.3 percent
over net sales of $15.9 million in the fourth quarter of the prior year. Net
income was $823,000, or $0.16 cents per share (on 5,201,000 diluted shares
outstanding), an increase of 38.1 percent over net income of $596,000, or
$0.12 per share (on 5,163,000 diluted shares outstanding), for the same
quarter a year ago.
The Company also reported a record quarterly operating income of
$1,159,000, a 50.1 percent increase over operating income of $772,000 in the
fourth quarter of last year.
For the year, net sales reached a record $68.7 million, an increase of
7.7 percent over net sales of $63.8 million in 1997. Net income for the year
was $2.7 million, or $0.51 per share (on 5,199,000 diluted shares
outstanding), a 50.3 percent increase over net income of $1.8 million, or
$0.35 per share (on 5,117,000 diluted shares outstanding), in 1997.
"We are very pleased with the results for the quarter and the year as a
whole," said Alec Glover, Hello Direct's President and CEO. "It is clear that
our profit-focused growth plan continues to be successful. In the fourth
quarter sales growth began to recover from the slower rate that resulted from
our strategic decision to drop many lower price, lower profit SKUs at the
start of the year. This decision is expected to result in higher margins and
profits on an ongoing basis, and our sales growth rate should continue to
improve in 1999. Our Web site continued to be our fastest-growing sales
channel, approaching 10 percent of total net revenue and growing at a tripling
rate in the fourth quarter. During the first quarter we will be focusing on
integrating our online commerce operations with PhoneZone.com, the leading Web
buyer's guide and sales channel for telecom products and services that Hello
Direct acquired in early January."
The Company's gross margin for the year increased to 53.8 percent, up from
51.8 percent in 1997. Selling, general and administrative expenses declined
as a percentage of net sales year to year, from 45.8 percent in 1997 to
45.5 percent in 1998.
"Our accelerated product development efforts also continue to provide new
opportunities for growth," said Glover. "Sales of LineStein(TM), our unique
analog-to-digital-adapter introduced last spring, remain strong. This month
we introduced Ultralight(R) EX, Solo(R) II, and Cordless(TM) XLT, our next
generation corded and cordless headsets, which set new standards for comfort,
convenience and sound quality."
Hello Direct also reported that cash and short-term investments as of
December 31, 1998 increased to $9.6 million, up from $9.0 million a year
earlier. Working capital as of December 31, 1998 was $19.2 million, compared
with working capital of $17.3 million at the close of the previous year.
The Company also reported that its acquisition of PhoneZone.com closed on
January 20, 1999. According to Glover, the price of the acquisition was
approximately $2 million, to be paid in a combination of cash and stock.
About Hello Direct, Inc.:
Hello Direct, Inc. (http://www.hello-direct.com) is the leading developer
and direct marketer of telephone productivity tools including headsets,
teleconferencing, wireless and related desktop products. Through its
distinctive catalogs, Website and outbound telemarketing programs, the Company
offers a broad selection of commercial-grade brand name, proprietary and
private label products at competitive prices that provide solutions to its
customers' evolving communication needs.
This release contains forward-looking statements including, but not
limited to, statements regarding the introduction of new headset models, the
acceleration of internal development efforts, the success of the recent
PhoneZone.com acquisition, expansion of telemarketing and Internet sales
efforts, increased revenue growth rates, and the continuing success of the
Company's growth plans for margins and profits. These forward looking
statements involve risks and uncertainties that could cause actual results to
differ, and such differences could be material. Such risks and uncertainties
include, but are not limited to, the following: the uncertainty of the
Company's future operating results, the fact that the market for
telecommunication products is generally characterized by rapidly changing
technology, the Company's need and ability to successfully develop new
products, the Company's dependence on and market acceptance of its current and
newly introduced headset products, the Company's dependence on sole or limited
source suppliers and foreign manufacturing, the highly competitive market for
telecommunications products, risks associated with managing a growing business
and the Company's dependence on key personnel. There can be no assurance that
the Company will be successful in addressing such risks and uncertainties.
Investors are strongly encouraged to review the section entitled "Factors
affecting operating results and market price of stock" in the Company's annual
report on Form 10-K for the year ended December 31, 1997, and quarterly
reports on Form 10-Q on file with the Securities and Exchange Commission for a
discussion of risks and uncertainties that could affect operating results and
the market price of the Company's stock.
HELLO DIRECT, INC.
Condensed Statements of Operations
For the Three and Twelve Months Ended
December 31, 1998 and 1997
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1997 1998 1997
Net sales $17,185,000 $15,865,000 $68,731,000 $63,846,000
Cost of goods sold 7,992,000 7,450,000 31,772,000 30,759,000
Gross profit 9,193,000 8,415,000 36,959,000 33,087,000
Selling, general and
administrative
expenses 7,447,000 7,154,000 31,294,000 29,234,000
Product development
expenses 587,000 489,000 2,036,000 1,592,000
Operating income
(loss) 1,159,000 772,000 3,629,000 2,261,000
Other income - net 211,000 201,000 816,000 699,000
Income before
income taxes 1,370,000 973,000 4,445,000 2,960,000
Income taxes 547,000 377,000 1,776,000 1,184,000
Net income $823,000 $596,000 $2,669,000 $1,776,000
Basic per share
amounts:
Net income $0.16 $0.12 $0.52 $0.35
Weighted average
shares outstanding 5,118,000 5,061,000 5,108,000 5,036,000
Diluted per
share amounts:
Net income $0.16 $0.12 $0.51 $0.35
Weighted average
shares outstanding 5,201,000 5,163,000 5,199,000 5,117,000
HELLO DIRECT, INC.
Condensed Balance Sheets
December 31, December 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $5,745,000 $5,135,000
Short-term investments 3,860,000 3,830,000
Trade accounts receivable,
less allowance for returns
and doubtful accounts 5,491,000 5,752,000
Inventories 6,119,000 5,137,000
Deferred tax assets 847,000 821,000
Other current assets 2,474,000 1,771,000
Total current assets 24,536,000 22,446,000
Notes receivable 4,239,000 4,542,000
Property and equipment, net 6,246,000 4,819,000
Long-term deferred tax assets -- 25,000
Total assets $35,021,000 $31,832,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,567,000 $3,856,000
Accrued expenses 1,736,000 1,319,000
Total current liabilities 5,303,000 5,175,000
Non-current liabilities 364,000 --
Total liabilities 5,667,000 5,175,000
Stockholders' equity:
Common stock 5,000 5,000
Additional paid-in capital 28,319,000 28,045,000
Retained earnings (deficit) 1,721,000 (948,000)
Less treasury stock, at cost (691,000) (445,000)
Total stockholders' equity 29,354,000 26,657,000
Total liabilities and
stockholders' equity $35,021,000 $31,832,000
SOURCE Hello Direct, Inc.
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Related links:
http://www.hello-direct.com
CONTACT:
Raymond E. Nystrom, Vice President Operations
& Chief Financial Officer of Hello Direct, 408-363-5075; or
general information, Don Markley, or analyst contact, Reid Cox,
of Financial Relations Board, 415-986-1591
NOTE TO EDITORS: For more information on Hello Direct, Inc. via
fax at no cost, dial 800-PRO-INFO (908-544-2850 outside the
U.S.), ticker symbol: HELO.
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