Revenue Up 19% Over Previous Year
Net Income Up 57% Over Previous Year
Outbound Telemarketing Sales Up 81% Over Previous Year
Web Site Sales Up 152% Over Previous Year
SAN JOSE, Calif., Oct. 20 /PRNewswire/ -- Hello Direct, Inc.
(Nasdaq: HELO), the leading developer and direct marketer of telephone
productivity tools, today reported financial results for the third quarter and
nine months ended September 30, 1999. For the eleventh consecutive quarter,
the Company achieved increased net sales and income over the comparable prior
year period.
Net sales for the third quarter were a record $20.2 million, an increase
of 19 percent over net sales of $17.0 million in the same quarter of the prior
year. Net income for the quarter was a record $1 million, or $0.20 per share
(on 5,321,000 diluted shares outstanding), a 57 percent increase over net
income of $664,000, or $0.13 per share (on 5,177,000 diluted shares
outstanding), in the third quarter of 1998.
The Company also reported third quarter operating income of $1.5 million,
a 67 percent increase over operating income of $907,000 in the same quarter
last year.
For the nine months, net sales reached $59.0 million, a 14 percent
increase over net sales of $51.5 million in the same period of the prior year.
Net income for the nine months was $2.8 million, or $0.52 per share (diluted),
an increase of 50 percent over net income of $1.8 million, or $0.36 per share,
in the first nine months of 1998.
"I am extremely pleased with the acceleration of our sales and income
growth," said Alec Glover president and CEO, "especially because it reflects
strong market response to every one of our key strategic initiatives. In
particular, the continued expansion of our Corporate Accounts outbound
telemarketing group has increased our penetration of the call center market.
A greater share of our business coming from corporate accounts is important,
because these customers typically order more frequently, and place larger
orders for our highest margin products. Further development of our Web site,
http://www.hellodirect.com, and traffic-building activities, including assembling a
network of now over 450 affiliates, has helped keep the Internet our fastest
growing channel, and driven our Internet revenue to 12% of total quarterly
revenue, compared to 5% in same quarter last year. Clearly, this momentum
suggests that we are continuing to strengthen our position as the preeminent
online marketplace for telecommunications," he added.
According to Glover, the Company's new proprietary products also
contributed to the Company's higher revenue and income growth rates. "We are
continuing to see strong demand for the new generation of Hello Direct
headsets which we introduced earlier this year. They provide the user greater
comfort and improved performance by incorporating our patented technology, and
most-recently developed and patent-pending design and features. In addition,
the need continues to grow for our patented equipment-interface technology,
including the LineStein analog-to-digital adapter, because of more widespread
use of analog devices, such as headsets, modems and teleconferencing units, in
proprietary digital PBX environments," he said.
The Company's gross margin for the quarter was 55.4 percent, compared with
gross margin of 54.2 percent in the third quarter of 1998. Average order size
reached $299, up from $266 in the same quarter of last year.
Hello Direct also reported that cash and short-term investments as
of September 30, 1999 were $6.7 million, compared with $9.6 million as
of December 31, 1998. Working capital as of September 30, 1999 was
$17.8 million, compared with working capital of $19.2 million at the
close of the year. The decrease in working capital results from stock
repurchases, the purchase of PhoneZone.com, and the purchase of capital
assets. Shareholder equity as of September 30, 1999 was $32.1 million, or
$6.02 per share (diluted).
About Hello Direct, Inc.:
Hello Direct, Inc. ( http://www.hellodirect.com ) is the leading developer and
direct marketer of telephone productivity tools 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 products
and information that provide solutions to its customers' evolving
telecommunications needs.
This release contains forward-looking statements including, but not
limited to, statements regarding continued expansion of the Company's outbound
telemarketing and Internet channels and the continued contribution of new
product introductions. 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, the dependence of
Internet sales on the continued growth in electronic commerce, risks
associated with managing a growing business and the Company's dependence on
key personnel. A description of the risks that could cause actual results to
vary are contained under the caption (Risk Factors) in the Company's reports
on Form 10-K and Form 10-Q on file with the SEC for a discussion of risks and
uncertainties. Hello Direct assumes no obligation to update these
forward-looking statements for subsequent events.
For more information on Hello Direct, Inc. via fax at no cost, dial
800-PRO-INFO (201-432-6555 outside the U.S.), ticker symbol: HELO.
HELLO DIRECT, INC.
Condensed Statements of Operations
For the Three and Nine Months Ended
September 30, 1999 and 1998
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Net sales $20,229,000 $17,016,000 $58,961,000 $51,547,000
Cost of goods sold 9,015,000 7,791,000 26,682,000 23,780,000
Gross profit 11,214,000 9,225,000 32,279,000 27,767,000
Selling, general
and administrative
expenses 9,097,000 7,771,000 26,442,000 23,848,000
Product development
expenses 603,000 547,000 1,867,000 1,449,000
Operating income 1,514,000 907,000 3,970,000 2,470,000
Other income -- net 153,000 198,000 563,000 605,000
Income before
income taxes 1,667,000 1,105,000 4,533,000 3,075,000
Income taxes 622,000 441,000 1,769,000 1,229,000
Net income $1,045,000 $ 664,000 $2,764,000 $1,846,000
Basic per share
amounts:
Net income $0.20 $0.13 $0.54 $0.36
Weighted average
shares
outstanding 5,177,000 5,122,000 5,147,000 5,106,000
Diluted per
share amounts:
Net income $0.20 $0.13 $0.52 $0.36
Weighted average
shares
outstanding 5,321,000 5,177,000 5,322,000 5,199,000
HELLO DIRECT, INC.
Condensed Balance Sheets
September 30, December 31,
ASSETS 1999 1998
Current Assets
Cash and cash equivalents $6,666,000 $5,745,000
Short-term investments -- 3,860,000
Trade accounts receivable,
less allowance for returns
and doubtful accounts 8,009,000 5,491,000
Inventories 5,754,000 6,119,000
Deferred tax assets 912,000 847,000
Other current assets 2,059,000 2,474,000
Total current assets 23,400,000 24,536,000
Notes receivable 3,996,000 4,239,000
Property and equipment, net 8,928,000 6,246,000
Goodwill, net 1,700,000 --
Total assets $38,024,000 $35,021,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $3,543,000 $3,567,000
Accrued expenses 2,014,000 1,736,000
Total current liabilities 5,557,000 5,303,000
Non-current liabilities 413,000 364,000
Total liabilities 5,970,000 5,667,000
Stockholders' equity:
Common stock 5,000 5,000
Additional paid-in capital 29,629,000 28,319,000
Notes receivable from stock sales (742,000) --
Retained earnings 4,485,000 1,721,000
Less treasury stock, at cost (1,323,000) (691,000)
Total stockholders' equity 32,054,000 29,354,000
Total liabilities and
stockholders' equity $38,024,000 $35,021,000
SOURCE Hello Direct
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CONTACT:
Dean -Kip- Witter III, 408-363-6158, Chief
Financial Officer of Hello Direct; or General, Don Markley, or
Analysts, Reid Cox, both of The Financial Relations Board,
415-986-1591
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