Net Income Advances 56 Percent From Year Ago
SAN JOSE, Calif., July 14 /PRNewswire/ -- Hello Direct, Inc.
(Nasdaq: HELO), the leading developer and direct marketer of desktop telephony
productivity tools, today reported financial results for the second quarter
and six months ended June 30, 1998.
Net sales for the quarter were $16.6 million, up 8.5 percent over net
sales of $15.3 million in the second quarter of the prior year. Net income
was $579,000, or $0.11 per share (on 5,242,000 diluted shares outstanding), an
increase of 56 percent over net income of $370,000, or $0.07 per share (on
5,110,000 diluted shares outstanding), for the same quarter a year ago.
The Company also reported operating income of $761,000, representing a
58 percent increase over operating income of $482,000 for the second quarter
of last year.
For the six month period, net sales were $34.5 million, up 10.5 percent
over net sales of $31.3 million during that period a year ago. Net income was
$1.2 million, or $0.23 per share (on 5,211,000 diluted shares outstanding), an
increase of 76 percent over net income of $670,000, or 0.13 per share (on
5,089,000 diluted shares outstanding), for the six-month period a year ago.
"We continue to successfully implement the profit-focused strategic growth
plan we first adopted in fall, 1997, and we are pleased with our progress to
this point," said Alec Glover, Hello Direct's President and CEO. "As
discussed previously, the somewhat slower growth rate we have experienced
year-to-date was anticipated as we transition through particularly the first
two legs of our strategy: installing and training an expanded outbound
telemarketing staff, and streamlining our product line to exclude from our
catalog lower price, lower margin, non-proprietary products. Our outbound
telemarketing efforts are on track, and our product line streamlining has
helped us achieve gross margins in the most recent quarter of 53.9%, compared
to 50.8% in the same period last year."
"We are also pleased with increased demand for our innovative proprietary
products, including LineStein, the recently introduced universal analog-to-
digital adapter. Sales of LineStein significantly exceed our original
forecasts, and this response provides further encouragement to accelerate our
efforts to develop additional universal interface products and technologies,"
said Glover.
"Similarly, our recently announced agreement with Call Direct Enterprises,
Inc., Canada's leading telephone product direct marketer, to be the exclusive
distributor of our proprietary products in Canada strongly validates market
interest in our product development expertise. Beyond incremental sales
volume, this distribution agreement might also prove to be a model for further
international expansion," added Glover.
"Lastly, I am encouraged by our rapidly growing Internet business. For
the first six months of 1998, compared to the same period 1997, the share of
our total net sales coming from the Internet tripled, and the number of
Internet orders more than doubled. Though still relatively small in the
absolute, the Website is our fastest growing revenue channel, and its obvious
growth potential fully justifies our e-commerce development effort," said
Glover.
The Company also reported that cash and short-term investments increased
to $8.2 million, from $7.6 million at March 31, 1998, down from the
$9.0 million at December 31, 1997, primarily as a result of cash invested in
operating activities. Working capital increased to $19.1 million, from
$17.3 million at the year-end.
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 implementation and execution of a new
corporate strategy, including increasing margins in connection with such
strategy, expansion of telemarketing staff, new product development and
introductions, increased sales, international expansion and the growth of
Internet commerce. 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 to
successfully develop new products, the Company's dependence on 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, 1997, which is on file at 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 Six Months Ended
June 30, 1998 and 1997
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Net sales $16,620,000 $15,318,000 $34,530,000 $31,254,000
Cost of goods sold 7,670,000 7,542,000 15,989,000 15,395,000
Gross profit 8,950,000 7,776,000 18,541,000 15,859,000
Selling, general and
administrative
expenses 7,866,000 6,923,000 16,076,000 14,264,000
Product development
expenses 323,000 371,000 902,000 781,000
Operating income 761,000 482,000 1,563,000 814,000
Other income - net 204,000 152,000 407,000 321,000
Income before
income taxes 965,000 634,000 1,970,000 1,135,000
Income taxes 386,000 264,000 788,000 465,000
Net income $579,000 $370,000 $1,182,000 $670,000
Basic per share amounts:
Net income $0.11 $0.07 $0.23 $0.13
Weighted average
shares
outstanding 5,111,000 5,031,000 5,100,000 5,023,000
Diluted per share amounts:
Net income $0.11 $0.07 $0.23 $0.13
Weighted average
shares
outstanding 5,242,000 5,110,000 5,211,000 5,089,000
HELLO DIRECT, INC.
Condensed Balance Sheets
June 30, December 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $1,707,000 $5,135,000
Short-term investments 6,499,000 3,830,000
Trade accounts receivable,
less allowance for returns
and doubtful accounts. 6,524,000 5,752,000
Inventories 6,111,000 5,137,000
Deferred tax assets 677,000 821,000
Other current assets 1,453,000 1,771,000
Total current assets 22,971,000 22,446,000
Notes receivable 4,393,000 4,542,000
Property and equipment, net 4,663,000 4,819,000
Long-term deferred tax assets -- 25,000
Total assets $32,027,000 $31,832,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,669,000 $3,856,000
Accrued expenses 1,176,000 1,319,000
Total current liabilities 3,845,000 5,175,000
Non-current liabilities 200,000 --
Total liabilities 4,045,000 5,175,000
Stockholders' equity:
Common stock 5,000 5,000
Additional paid-in capital 28,188,000 28,045,000
Retained earnings (deficit) 234,000 (948,000)
Less treasury stock, at cost (445,000) (445,000)
Total stockholders' equity 27,982,000 26,657,000
Total liabilities and
stockholders' equity $32,027,000 $31,832,000
SOURCE Hello Direct, Inc.
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Related links:
http://www.hello-direct.com
CONTACT:
Raymond E. Nystrom, Vice President of
Operations and Chief Financial Officer of Hello Direct,
408-363-5075; or general information, Don Markley, or analyst
contact, Jordan Goldstein, 415-986-1591, both of The Financial
Relations Board
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