Comdial Announces Third Quarter Results
October 28, 1998
CHARLOTTESVILLE, Va.--(BUSINESS WIRE) via NewsEdge
Corporation -- Comdial Corporation (Nasdaq: CMDL)
today announced results for the third quarter and nine
months ended September 27, 1998.
Net Income and Net Sales
Net income for the third quarter, exclusive of tax
benefits and special charges, was $2.3 million or $0.26
per share compared with $2.0 million or $0.23 per share
reported in the year-ago period. Net income for the first
nine months, also exclusive of tax benefits and special
charges, was $5.6 million or $0.64 per share. This is a
gain of 57 percent over the $3.6 million and $0.42 per
share reported in 1997.
Net sales for the quarter were $32 million, compared with
$31.1 million reported for the third quarter of 1997. For
the first nine months, net sales were $92.6 million, an
increase of 6 percent over the $87.3 million achieved
during the same period in 1997.
Special Items
There are four special items included in the third quarter
financial reports. First, Comdial claimed a tax benefit of
$11.7 million. Additionally, Comdial elected to take three
separate charges with an aggregate value of $2.1 million
or $0.24 per share. These write-offs include excess
inventory of $700,000 associated with the PATI product,
$891,000 in goodwill associated with the 1996 acquisition
of Aurora Systems, Inc. and $529,000 for in-process
research and development associated with the July 1998
acquisition of Array Telecom.
Statement of Comdial President and CEO, William G.
Mustain
Comdial Chairman, President and Chief Executive Officer
William G. Mustain said, "We continue to track on plan
with our earnings performance. Sales for the quarter
were less than expected, which we attribute largely to
delays in receiving anticipated orders from large end
user-level customers and from original equipment
manufacturing customers." Mustain added, "This business
should return to expected levels in the fourth quarter."
Gross Margin
Gross margin for the third quarter, excluding the
non-recurring charge of $700,000 for excess inventory,
was 44 percent. This is a significant increase from the 40
percent gross margin reported for the third quarter of
1997, and reflected a favorable product mix and cost
savings for certain electrical components and raw circuit
boards. Gross margin for the first nine months of 1998,
also excluding the non-recurring charge of $700,000 for
excess inventory, was 41 percent compared with 40
percent for same period in 1997.
Operating & Other Expenses
Selling, general, and administrative (SG&A) expenses for
the third quarter increased by $1.4 million or 19 percent
compared with third quarter of 1997. The increase is
primarily employment-related, as the Company seeks to
expand its sales and marketing organizations to support
future growth.
Interest expense for the third quarter of 1998 declined
26 percent to $321,000 as a result of lower debt. For
the nine months, interest expense was $869,000, a
decline of $443,000 or 34 percent.
Income Tax Expense
In the third quarter, income tax expense was $45,000.
This is a decrease of $73,000 from the third quarter of
1997. Tax expense declined primarily due to the
recognition of tax refunds for year 1997. Comdial
recognized tax benefits for the quarter of $11.7 million or
$1.32 per share. The increase of $11.7 million from the
third quarter of 1997 is primarily due to the reevaluation
of the Company's income tax asset valuation in light of
the diminished likelihood of incurring net operating loss
limitations as defined by the tax code. Going forward,
Comdial will record tax expenses as if it were a full
taxpayer.
Comdial Corporation
Comdial is a provider of integrated communications
solutions for small and mid-size organizations. The
company's broad product line includes digital switches,
wired and wireless business telephones, call center
hardware and software, voice processing systems, and
Internet Protocol telephony gateways. For more
information, please visit our web site at
comdial.com. Financial releases and investor
information are also available via fax by calling
1-800-COMDIAL.
This release contains forward-looking statements that
are subject to risks and uncertainties, including, but not
limited to, the impact of competitive products, product
demand and market acceptance risks, reliance on key
strategic alliances, fluctuations in operating results,
delays in development of highly complex products, and
other risks detailed from time to time in the Company's
filings with the Securities and Exchange Commission.
These risks could cause the Company's actual results for
1998 and beyond to differ materially from those
expressed in any forward looking statement made by, or
on behalf of, the Company.
Comdial Corporation
Consolidated Condensed Statements of Operations - Unaudited
Three Months Nine Months
Ended: Ended:
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
(In thousands 1998 1997 1998 1997
except per
share amounts)
Net sales $32,031 $31,091 $92,629 $87,325
Cost of goods sold 18,644 18,569 55,139 51,993
Gross profit 13,387 12,522 37,490 35,332
Operating expenses
Selling, general and
administrative 8,582 7,210 23,742 21,853
Engineering, research
and development 1,878 1,782 4,922 5,068
In-process research
and development
(Array) 529 - 529 -
Goodwill amortization
expense 1,678 855 3,024 2,751
Operating income 720 2,675 5,273 5,660
Interest expense 321 436 869 1,312
Miscellaneous expense 212 119 406 422
Income before income
taxes 187 2,120 3,998 3,926
Income tax expense 45 118 489 330
Net income before tax
benefit 142 2,002 3,509 3,596
Income tax benefit 11,712 - 12,042 219
Net income applicable
to common stock $11,854 $2,002 $15,551 $3,815
Earnings per common
share and common
equivalent share:
Income before tax
benefit $0.02 $0.23 $0.40 $0.42
Income tax benefit 1.32 - 1.36 0.02
Net income per common
share: Basic $1.34 $0.23 $1.76 $0.44
Weighted average common
shares outstanding:
Basic 8,846 8,672 8,814 8,657
Special charges:
Excess inventory $700
Goodwill and other
costs related to the
Aurora acquisition 891
In-process research
and development related
to the Array Telecom
Inc. acquisition 529
Consolidated Condensed Balance Sheets
Period Ending
Sept. 27, Dec. 31,
(In thousands) 1998 1997
Assets
Cash and cash equivalents $734 $5,673
Accounts receivable - net 16,978 11,278
Inventory 20,202 18,487
Deferred tax asset - net 3,781 -
Other current assets 1,628 1,669
Total current assets 43,323 37,107
Property - net 17,021 16,334
Goodwill 14,784 13,142
Deferred tax asset - net 16,439 8,164
Other assets 8,107 4,517
Total assets $99,674 $79,264
Liabilities and
Stockholders' Equity
Accounts payable $10,676 $9,229
Other accrued liabilities 7,912 7,501
Current maturities on debt 11,473 3,701
Total current liabilities 30,061 20,431
Long-term debt 4,111 9,922
Deferred tax liability 2,720 2,705
Other long-term liabilities 1,460 1,371
Total liabilities 38,352 34,429
Stockholders' equity 61,322 44,835
Total liabilities and
stockholders' equity $99,674 $79,264
EBITDA
Nine Months Ended:
Sept. 27, Sept. 28,
(In thousands) 1998 1997
Net income applicable to
common stock $15,551 $3,815
Taxes (11,553) 111
Interest expense 869 1,312
Depreciation expense 2,128 2,073
Goodwill amortization expense 3,024 2,751
Amortization expense 1,561 1,886
Total $11,580 $11,948
CONTACT: Comdial Corp., Charlottesville | Dick Bucci,
804/978-2525 | dbucci@comdial.com
[Copyright 1998, Business Wire] |
