Quarterly Net Revenue Up 21.7 Percent over Previous Year
Quarterly Net Income Up 40.3 Percent over Previous Year
SAN JOSE, Calif., April 19 /PRNewswire/ -- Hello Direct, Inc.
(Nasdaq: HELO), the leading developer and business-to-business direct marketer
of desktop telephony and equipment interface products, today reported record
financial results for the first quarter ended March 31, 2000. For the
thirteenth consecutive quarter, the Company's sales and net income increased
significantly over the comparable prior-year period.
Net sales for the quarter were a record $23.7 million, an increase of
21.7 percent over net sales of $19.5 million in the first quarter of 1999.
Net income was $1.25 million or $0.23 per share (on 5,541,000 diluted shares
outstanding), an increase of 40.3 percent over net income of $891,000 or $0.17
per share (on 5,361,000 diluted shares outstanding), for the same quarter a
year ago.
The Company also reported quarterly operating income of $1.8 million, a
45.7 percent increase over operating income of $1.3 million in the first
quarter of last year. The Company's gross margin for the quarter was
53.8 percent, down from 54.1 percent in the same period in 1999, but improved
significantly from 47.9 percent in the fourth quarter of 1999. The Company
indicated that the gross margin improvement in the first quarter of the year
was a planned return to historical norms after two one-time promotional
investment activities affected gross margin in the fourth quarter of last
year.
"We are pleased to have been able to deliver another quarter of record
sales and income," said Alec Glover, Hello Direct's president and CEO, "and to
have done so while producing a high rate of growth and returning to the gross
margin levels we have historically achieved. I am especially pleased with the
continued, successful channel evolution of our business towards outbound
telemarketing to corporate accounts, and the Internet. Internet sales for the
first quarter were up 133 percent over the same period in 1999, and
represented 17 percent of first quarter 2000 sales, up from just under
10 percent for the same period a year ago."
Glover cited several significant developments in the Company's Internet
strategy during the quarter. "We continued to build our online affiliate
partnerships, which now exceed 1,300. This includes first quarter alliances
with ShopNow.Com to market small home and office telecom products and our
collaboration with Be Free Inc. to help us manage our E-Business affiliate
program. This aggressive pace of development was accomplished with the
assistance of Ted Haynes, who joined our E-Business team full-time this
quarter as consulting Director of Marketing and Business Development. Ted's
experience as author of The Electronic Commerce Dictionary, and as a
consultant to such companies as E*Trade, Microsoft and Netscape makes him
uniquely suited to help us continue the aggressive development of our
E-Business strategy going forward." Glover noted that outbound corporate
accounts revenue for the quarter grew by 77 percent over the same period in
the previous year, accounting for 51 percent of total sales, versus 35 percent
in the first quarter of 1999.
"As the channels through which we sell continue to evolve, the range of
products that we offer changes as well. During the quarter, we enhanced our
already extensive telecom and communications offerings with DSL-enabling
products from 2Wire Inc., Cygnion's Cybergenie(R) PC Cordless Phone System,
and free Intranet service for small and medium sized businesses that we are
offering in conjunction with Intranets.com. Our own proprietary product
offerings were enhanced by the award of our fourteenth patent, this one for an
optical switching mechanism for our Cordless(TM) XLT telephone headset. With
this full range of products, and the February completion of our installation
of the Primus knowledge base customer support system, we look forward to
continuing to provide our customers with superior products and service."
Hello Direct also reported that cash and cash equivalents as of March 31,
2000, were $4.2 million, compared to $7.3 million as of December 31, 1999.
Working capital as of March 31, 2000, was $18.3 million, compared with
$18.1 million at the close of the previous year. The change in cash and cash
equivalents was primarily the result of capital spending in computer hardware
and software.
"Our efforts were enhanced in no small part by the leadership of Kip
Witter as our Interim Chief Financial Officer. I am pleased to announce that
he accepted a position as our permanent CFO at the beginning of April. With
the continued work of Kip and the rest of the management team, I am confident
that we will continue to build on and extend our excellent first quarter
results throughout the rest of 2000," said Glover.
About Hello Direct, Inc.
Hello Direct, Inc. (Nasdaq: HELO) is the leading developer and
business-to-business direct marketer of desktop telephony and equipment
interface solutions, including headsets, teleconferencing, wireless, and
related desktop products. Through a combination of distinctive catalogs,
outbound telemarketing and Internet sales channels, the Company offers a broad
selection of commercial grade solutions to its customers' evolving
communications needs. For more information on Hello Direct, Inc., please
visit http://www.hellodirect.com , the leading online source of telecommunications
information, products and services.
Safe Harbor Statement
This release contains forward-looking statements. 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 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, 1999, 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. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
For the Three Months Ended
March 31, 2000 and 1999
Three Months Ended
March 31,
2000 1999
Net sales $23,678,000 $19,450,000
Cost of goods sold 10,938,000 8,933,000
Gross profit 12,740,000 10,517,000
Selling, general and administrative
expenses 10,041,000 8,649,000
Product development expenses 862,000 607,000
Operating income 1,837,000 1,261,000
Other income - net 245,000 224,000
Income before income taxes 2,082,000 1,485,000
Provision for income taxes 832,000 594,000
Net income $1,250,000 $891,000
Basic per share amounts:
Net income $0.24 $0.17
Weighted average common shares outstanding 5,241,000 5,158,000
Diluted per share amounts:
Net income $0.23 $0.17
Weighted average common shares outstanding 5,541,000 5,361,000
HELLO DIRECT, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
March 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $4,164,000 $7,292,000
Trade accounts receivable, less
allowance for returns
and doubtful accounts 10,977,000 9,186,000
Inventories 7,613,000 7,753,000
Deferred tax assets 997,000 874,000
Other current assets 1,318,000 1,904,000
Total current assets 25,069,000 27,009,000
Notes receivable 3,826,000 3,912,000
Property and equipment, net 11,774,000 10,055,000
Goodwill, net 1,500,000 1,600,000
Total assets $42,169,000 $42,576,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,194,000 $6,340,000
Accrued expenses 2,603,000 2,553,000
Total current liabilities 6,797,000 8,893,000
Non-current liabilities 631,000 472,000
Total liabilities 7,428,000 9,365,000
Stockholders' equity:
Common stock 5,000 5,000
Additional paid-in capital 29,948,000 29,668,000
Notes receivable from stock sales (742,000) (742,000)
Retained earnings 6,853,000 5,603,000
Less treasury stock, at cost (1,323,000) (1,323,000)
Total stockholders' equity 34,741,000 33,211,000
Total liabilities and stockholders'
equity $42,169,000 $42,576,000
SOURCE Hello Direct, Inc.
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Related links:
http://www.hellodirect.com
CONTACT:
Kip Witter, Chief Financial Officer of Hello
Direct, 408-363-6158; or general, Chris West, or analysts, Janet
Nelson of Financial Relations Board, 415-986-1591
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