SLNK Spectralink Corp (MM)

BOULDER, Colo., Oct. 19, 2005 /PRNewswire-FirstCall/ -- SpectraLink Corp. (NASDAQ:SLNK), the leader in workplace Wi-Fi telephony, today reported revenue of $24.8 million and net income of $3.6 million, delivering earnings of 19 cents per diluted share, for the quarter ended Sept. 30, 2005. This represents growth in earnings per diluted share of 27 percent and revenue growth of 8 percent over the same period a year ago. In 2004, third quarter net income was $2.9 million, or 15 cents per diluted share, on revenue of $23.0 million. (Logo: http://www.newscom.com/cgi-bin/prnh/20050324/LATH060LOGO ) For the nine months ended Sept. 30, 2005, revenue was $67.5 million with net income of $8.4 million resulting in 43 cents earnings per diluted share. For the same period a year ago, revenue was $62.4 million generating $7.0 million in net income and 36 cents earnings per diluted share. "We continue to make excellent strides in advancing our leadership position in Wireless Telephone Systems for the enterprise and strengthen our ability to expand that leadership," said John Elms, SpectraLink president and CEO. "During the quarter we saw renewed energy in our OEM channels, expanded our direct sales force and hired a new chief technology officer. These accomplishments help position us for a solid finish to 2005 and provide the basis for continued market leadership in 2006." David Rosenthal, SpectraLink CFO and executive vice president went on to say, "I was very pleased with our operating margin of over 21 percent, indicating that we are successfully managing our expenses as our revenues grow. In addition, our solid financial performance extended our series to 29 consecutive quarters of positive net income and 27 consecutive quarters of positive cash flow from operations." Earlier this month, SpectraLink announced the appointment of Masood Garahi, the former chairman and CEO of MeshNetworks, as chief technology officer and executive vice president of engineering. Garahi brings more than 25 years of technical leadership to the position (see press release titled, "SpectraLink Appoints Chief Technology Officer"). Webcast Information SpectraLink will hold an audio webcast to discuss third quarter 2005 earnings results, today, Oct. 19, 2005, at 4:30 p.m. Eastern time. You can access the webcast and replay at http://www.spectralink.com/. About SpectraLink SpectraLink, the leader in workplace Wi-Fi telephony, delivers the power of mobile voice and messaging applications to businesses worldwide. Seamlessly integrating with VoIP and traditional telephony platforms, SpectraLink's scalable technology provides instant access to people and business-critical information. SpectraLink handsets free on-premises employees to be more accessible, productive and responsive. For more information, visit http://www.spectralink.com/ or call 1-800-676-5465. This release may contain forward-looking statements that are subject to many risks and uncertainties, including the inability to close several large orders in the sales pipeline; OEM agreements with SpectraLink that impact margins and may not result in increased future sales of SpectraLink's products or services; adverse changes in economic and business conditions affecting SpectraLink's customers; the intensely competitive nature of the wireless communications industry, and a customer preference to buy all telephone communications systems from a single source provider that manufactures and sells PBX or key/hybrid systems; changes in rules and regulations of the FCC; and the anticipated growth of the market for on-premises wireless telephone systems. More information about potential risk factors that could affect our results is available in SpectraLink's filings with the Securities and Exchange Commission on Form 10-K for the year ended December 31, 2004, and subsequent Form 10-Q filings. SPECTRALINK CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 30, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $7,842 $14,625 Investment in marketable securities - current 12,458 11,984 Trade accounts receivable, net of allowance of $362 and $374, respectively 17,188 21,252 Inventory, net of reserves of $477 and $720, respectively 11,545 8,076 Deferred income taxes 1,382 1,473 Prepaids and other 1,673 1,088 Total current assets 52,088 58,498 INVESTMENT IN MARKETABLE SECURITIES, net of current portion 33,605 27,781 PROPERTY AND EQUIPMENT, at cost: Furniture and fixtures 2,753 2,481 Equipment 13,464 10,503 Leasehold improvements 1,204 1,036 17,421 14,020 Less - accumulated depreciation (10,629) (9,436) Net property and equipment 6,792 4,584 DEFERRED INCOME TAXES 152 103 OTHER 495 460 TOTAL ASSETS $93,132 $91,426 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,325 $1,132 Income taxes payable 1,243 1,038 Accrued payroll, commissions and employee benefits 2,890 3,727 Accrued sales, use and property taxes 756 732 Accrued warranty expenses 742 901 Other accrued expenses and liabilities 4,208 3,315 Deferred revenue 8,160 7,144 Total current liabilities 19,324 17,989 LONG-TERM LIABILITIES 130 214 TOTAL LIABILITIES 19,454 18,203 STOCKHOLDERS' EQUITY: Preferred stock, 5,000 shares authorized, none issued and outstanding -- -- Common stock, $0.01 par value, 50,000 shares authorized, 23,689 and 23,407 shares issued, respectively, and 18,956 and 19,138 shares outstanding, respectively 237 234 Additional paid-in capital 80,140 77,356 Retained earnings 30,693 28,030 Treasury stock, 4,732 and 4,270 shares, respectively, at cost (37,392) (32,397) TOTAL STOCKHOLDERS' EQUITY 73,678 73,223 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $93,132 $91,426 SPECTRALINK CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 NET SALES $24,762 $22,968 $67,461 $62,406 COST OF SALES 8,427 8,155 23,358 22,370 Gross profit 16,335 14,813 44,103 40,036 OPERATING EXPENSES: Research and development 2,702 2,268 7,648 6,636 Marketing and selling 6,674 6,193 19,237 17,853 General and administrative 1,708 1,660 4,837 4,470 Total operating expenses 11,084 10,121 31,722 28,959 INCOME FROM OPERATIONS 5,251 4,692 12,381 11,077 INVESTMENT INCOME AND OTHER 349 121 988 384 INCOME BEFORE INCOME TAXES 5,600 4,813 13,369 11,461 INCOME TAX EXPENSE 1,994 1,886 4,946 4,412 NET INCOME $3,606 $2,927 $8,423 $7,049 BASIC EARNINGS PER SHARE $0.19 $0.15 $0.44 $0.37 BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 18,940 19,110 19,070 19,050 DILUTED EARNINGS PER SHARE $0.19 $0.15 $0.43 $0.36 DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 19,190 19,260 19,380 19,590 SPECTRALINK CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30, 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $8,423 $7,049 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,266 1,262 Amortization of premium on investments in marketable securities 103 -- Income tax benefit from the exercise of stock options 475 656 Provision for bad debts 18 83 Provision for excess and obsolete inventory 485 472 Deferred income taxes 92 166 Changes in assets and liabilities: Decrease (increase) in trade accounts receivable 4,045 (219) Increase in inventory (3,953) (3,628) Increase in other assets (621) (314) Increase (decrease) in accounts payable 192 (377) Increase in income taxes payable 204 1,160 (Decrease) increase in accrued liabilities (136) 125 Increase in deferred revenue 1,016 695 Net cash provided by operating activities 11,609 7,130 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (3,474) (1,223) Purchases of investments in marketable securities (6,511) -- Net cash used in investing activities (9,985) (1,223) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments under long-term obligation (25) (25) Proceeds from exercises of common stock options 2,010 3,780 Proceeds from issuances of common stock 363 321 Dividends paid (5,760) (5,723) Purchases of treasury stock (4,995) (3,003) Net cash used in financing activities (8,407) (4,650) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,783) 1,257 CASH AND CASH EQUIVALENTS, beginning of period 14,625 51,861 CASH AND CASH EQUIVALENTS, end of period $7,842 $53,118 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $4,181 $2,625 SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES: Assets acquired under long-term obligation $-- $28 http://www.newscom.com/cgi-bin/prnh/20050324/LATH060LOGO http://photoarchive.ap.org/ DATASOURCE: SpectraLink Corp. CONTACT: Bob Husted, Director of Investor Relations, or David Rosenthal, Chief Financial Officer, both of SpectraLink Corp., +1-303-440-5330 Web site: http://www.spectralink.com/

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