Financial: Coherent Communications Systems Corporation Reports Another Record Quarter Of Sales And Earnings

Financial: Coherent Communications Systems Corporation Reports Another Record Quarter Of Sales And Earnings

Coherent Communications Systems Corporation

(Amounts are in Thousands Except Earnings Per Share)

Condensed Statement of Operations

Three Months Ended Six Months Ended

June 30 June 30

(Unaudited) (Unaudited)

6/30/98 6/30/97 6/30/98 6/30/97

REVENUES $20,002 $17,768 $39,269 $33,775

GROSS PROFIT $12,441 $11,209 $24,373 $21,717

PRE-TAX INCOME $5,644 $4,891 $11,258 $9,430

NET INCOME $3,895 $3,130 $7,600 $6,035

EARNINGS PER SHARE $0.25 $0.20 $0.48 $0.39

AVERAGE SHARES OUTSTANDING 15,857 15,520 15,816 15,515

Condensed Balance Sheet

6/30/98 12/31/97

(Unaudited)

Cash & Short Term Investments $31,115 $26,180

Accounts Receivable, Inventory and

Other Current Assets 21,137 19,987

Current Assets 52,252 46,167

Property, Plant, Equipment

and Other Assets 10,617 9,300

Total Assets 62,869 55,467

Current Liabilities 6,667 7,811

Long Term Liabilities 242 242

Shareholders’ Equity 55,960 47,414

Total Liabilities and Stockholders’ Equity $62,869 $55,467

Coherent Communications Systems Corporation (NASDAQ:CCSC) Monday reported a growth in net earnings of 24% on a revenue growth of 13% combined with exceptionally strong sales orders late in the quarter and a record backlog of orders shippable over the remainder of the year. Coherent Communications Systems Corporation Monday reported that revenues for the second quarter ended June 30, 1998 were $20.002 million or 13% greater than the $17.768 million reported for the same quarter last year. Net income increased 24% to $3.895 million or $0.25 per share from $3.130 million or $0.20 per share. For the six months ended June 30, 1998, revenues were $39.269 million and net income was $7.600 million or $.58 per share, an increase of 16% and 26% respectively over a comparable period last year. Daniel L. McGinnis, Chief Executive Officer, said “Our Company’s equipment sales have always been subject to occasional volume fluctuations. However, this quarter has seen phenomenal selling results. In the last days of the quarter following a successful mid-June product launch, sales of the Company’s new EC-Duo 8000 wireless echo canceller with noise reduction have exceeded $17 million, leaving our backlog of orders at a record high of more than $21 million.” All of the Company’s regions contributed to the quarter’s revenues, with Europe at 58%, North America at 23%, Asia at 15% and Latin America at 4% of total sales. Sales were somewhat lower in North America and in Asia when compared to the prior year’s quarter, while shipments increased strongly to Europe and showed the greatest percentage increase in Latin America. In mid-June, the Company began offering for sale the EC-Duo 8000, the newest echo canceller for wireless networks. In addition to Coherent’s standard ultra-fast convergence hybrid echo cancellation and acoustic echo cancellation, the EC-Duo 8000 will support optional software driven features, such as level control, far end echo cancellation and the latest feature – noise reduction. With the addition of noise reduction to its software features portfolio, Coherent has moved the voice quality of cellular telephones substantially towards that provided by the wired handset. This is a powerful new tool for cellular operators looking to reduce customer churn. During the quarter, the Company completed the sale of its Voicecrafter product line to BIAMP in Portland, Oregon with a negligible affect on earnings. Also during the quarter, the Company announced the signing of a Memorandum of Understanding with Hung Chang Company, Ltd. of Seoul, Korea for the local manufacture and support of echo cancellation equipment in Korea. Hung Chang will support Coherent’s customers in Korea and is expected to begin manufacturing in Korea by 1999. In February, Coherent and Tellabs announced that a definitive agreement had been reached under which Tellabs would exchange 0.72 shares of its stock for each share of Coherent stock. During the Hart-Scott-Rodino review, the Justice Department requested additional information from both companies. Coherent and Tellabs have fully complied with this second request for information. Both companies remain fully committed to completing the merger. Coherent Communications Systems Corporation is a worldwide leader in state of the art voice enhancement technology, spanning echo cancellation platforms and associated network software. The Company’s products are used globally by major wireless and wireline telecommunications companies and network operators, including AT&T Wireless, BT, Cable & Wireless, Cellular One, Cisco Systems, Deutsche Telekom, France Telecom, KDD, Mercury, Nokia, NORTEL, Telia, and Telmex, among the extensive list. Coherent is a fully accredited ISO 9001 company, dedicated to maintaining the highest quality standards. The Company’s headquarters are in Ashburn, Virginia, USA. FMI: http://www.coherent.com

Earnings per share calculations for each of the quarters are based on the weighted average number of shares outstanding in each period.

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