BOULDER, Colo., Feb. 7, 2007 /PRNewswire-FirstCall/ -- SpectraLink
Corp. (NASDAQ:SLNK), the leader in workplace wireless telephony,
today reported consolidated revenue of $37.5 million for the
quarter ended Dec. 31, 2006. This represents a decline of 7 percent
compared with consolidated pro forma revenue for the prior-year
fourth quarter. Pro forma results assume the acquisition of KIRK
telecom A/S occurred on Jan. 1, 2005. The revenue shortfall was
primarily attributable to a decline in domestic and international
OEM sales. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050324/LATH060LOGO) Gross
margin for the fourth quarter was $20.2 million compared to $24.4
million pro forma results for the fourth quarter of 2005. Gross
margin for the quarter was 53.8 percent, compared to 60.7 percent
for the previous year's pro forma results. GAAP net income for the
fourth quarter of 2006 was $573 thousand or 3 cents per diluted
share compared to pro forma income of $4.9 million or 25 cents pro
forma per diluted share for the same period in 2005. Non-GAAP net
income for the fourth quarter of 2006, which excludes amortization
of intangibles of $1.5 million, share-based compensation expense of
$729 thousand and a KIRK scantel A/S inventory write-off of $304
thousand, was $3.0 million, or 15 cents per diluted share, compared
to non-GAAP pro forma income of $4.5 million, or 23 cents per
diluted share for the fourth quarter of 2005. For the year ended
Dec. 31, 2006, revenue was $144.8 million with GAAP net loss of $39
thousand or 0 cents per diluted share. For the same period a year
ago, pro forma revenue was $137.5 million generating $8.7 million
in net income and 45 cents earnings per diluted share. Calendar
year 2006 non-GAAP net income was $8.3 million resulting in 43
cents per diluted share. For the same period in 2005, non-GAAP pro
forma earnings were $14.0 million, or 72 cents per diluted share.
Details of the reconciliation between GAAP and non-GAAP earnings
are provided in the attached Reconciliation of Non-GAAP Measurement
to GAAP financial table. In a separate announcement, SpectraLink
and Polycom, Inc. (NASDAQ:PLCM) today announced a definitive
agreement whereby Polycom will acquire SpectraLink. See today's
press release titled, "POLYCOM TO ACQUIRE SPECTRALINK CORPORATION
FOR APPROXIMATELY $220 MILLION IN CASH" available on
http://www.spectralink.com/. This joint release provides details of
today's webcast discussing the announcement. Non-GAAP Financial
Measures We provide all information required in accordance with
GAAP, but believe that it is useful to provide non-GAAP earnings
for reasons discussed below. We believe that non-GAAP earnings
provide useful information to investors because it allows investors
to measure and evaluate our performance without considering charges
associated with our acquisition including amortization of
intangible assets and the charge for in-process research and
development related to the acquisition, and FAS 123R expense.
Beginning in the first quarter of 2006, our non-GAAP earnings
exclude the effects of FAS 123R, amortization of intangible assets,
purchased in-process R&D and an inventory write-off to allow
investors to evaluate our current performance in relation to our
historical performance. We believe that it is in the best interest
of our investors to provide this information to analysts and other
users of our financial statements so that they more fully
understand the results of our operations. We use non-GAAP
information internally to help our management more accurately
assess our performance in the current period and in comparison to
prior periods. Our use of non-GAAP earnings is intended to
supplement, and not replace, our presentation of net income (loss)
and other GAAP measures. Like all non-GAAP measures, non-GAAP
earnings are subject to inherent limitations because they do not
include all the expenses that must be included under GAAP. We
compensate for the inherent limitations of non-GAAP measures by not
relying exclusively on non-GAAP measures, but rather by using such
information to supplement GAAP financial measures. About
SpectraLink SpectraLink, the leader in workplace wireless
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 contains forward-looking statements that are subject to
many risks and uncertainties, including the unpredictable growth in
international sales; 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 filing with the Securities and Exchange
Commission on Form 10-K for the year ended Dec. 31, 2005, and
subsequent Form 10-Q filings. SpectraLink Corporation and
Subsidiaries Condensed Consolidated Balance Sheets (In thousands)
(Unaudited) December 31, December 31, 2006 2005 ASSETS Current
Assets: Cash and cash equivalents $15,080 $ 16,703 Cash held in
escrow for acquisition -- 55,148 Investment in marketable
securities 5,639 14,088 Trade accounts receivable, net of allowance
of $206 and $343, respectively 26,095 22,574 Net inventories 18,409
8,940 Deferred income taxes 2,041 1,626 Prepaids and other 1,823
1,201 Total current assets 69,087 120,280 Property and equipment,
net of accumulated depreciation of $14,321 and $11,110,
respectively 14,127 8,422 Intangible assets, net of accumulated
amortization of $5,133 and $272, respectively 33,016 318 Goodwill
26,525 -- Other non-current assets 586 1,772 Total assets $143,341
$130,792 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:
Accounts payable $4,522 $1,478 Accrued payroll, commissions and
employee benefits 6,564 4,500 Other accrued expenses and
liabilities 9,989 6,380 Deferred revenue 10,066 7,503 Current
portion long-term debt 6,000 15,000 Total current liabilities
37,141 34,861 Long-term debt 7,550 18,050 Long-term deferred tax
liabilities 7,930 -- Other long-term liabilities 1,268 900 Total
liabilities 53,889 53,811 Commitments and contingencies
Stockholders' equity: Preferred stock, 5,000 shares authorized,
none issued and outstanding -- -- Common stock, $0.01 par value,
50,000 shares authorized, 24,249 and 23,838 shares issued,
respectively, and 19,517 and 19,106 shares outstanding,
respectively 242 238 Additional paid-in capital 88,191 81,751
Retained earnings 32,344 32,383 Other comprehensive income 6,066 --
Treasury stock, 4,732 shares, at cost (37,391) (37,391) Total
stockholders' equity 89,452 76,981 Total liabilities and
stockholders' equity $143,341 $130,792 SpectraLink Corporation and
Subsidiary Condensed Consolidated Statements of Operations (In
thousands, except per share amounts) (Unaudited) Three Months Ended
Twelve Months Ended December 31, December 31, 2006 2005 2005 2006
2005 2005 Pro Pro Actual forma(1) Actual Actual forma(1) Actual
Sales: Product sales $29,557 $33,463 $23,788 $114,201 $113,868
$74,812 Service sales 7,956 6,843 6,525 30,571 23,671 22,962 Net
sales 37,513 40,306 30,313 144,772 137,539 97,774 Cost of sales:
Cost of product sales 13,276 12,360 7,472 48,022 42,320 22,107 Cost
of services sales 4,073 3,498 3,443 15,609 12,263 12,166 Total cost
of sales 17,349 15,858 10,915 63,631 54,583 34,273 Gross margin
20,164 24,448 19,398 81,141 82,956 63,501 Operating expenses:
Research and development 4,127 5,065 3,631 20,527 16,359 11,279
Marketing and selling 8,711 9,539 8,035 35,249 32,177 27,272
General and administrative 3,894 2,878 1,989 15,174 10,911 6,772
Acquired in-process research and development -- -- -- 2,021 2,021
-- Amortization of intangible assets 1,478 1,117 29 4,863 4,466 83
Total operating expenses 18,210 18,599 13,684 77,834 65,934 45,406
Income from operations: 1,954 5,849 5,714 3,307 17,022 18,095 Other
(expense) income, net Interest (expense) income, net (224) (490)
228 (1,468) (1,701) 1,359 Other (expense) income, net (32) (115)
(226) 56 (146) (369) Total other (expense) income, net (256) (605)
2 (1,412) (1,847) 990 Income before income taxes 1,698 5,244 5,716
1,895 15,175 19,085 Income tax expense (1,125) (374) (2,115)
(1,934) (6,434) (7,061) Net income (loss) $573 $4,870 $3,601 $(39)
$8,741 $12,024 Basic earnings (loss) per share $0.03 $0.26 $0.19
$-- $0.46 $0.63 Basic weighted average shares outstanding 19,440
19,030 19,030 19,370 19,061 19,061 Diluted earnings (loss) per
share $0.03 $0.25 $0.19 $-- $0.45 $0.62 Diluted weighted average
shares 19,570 19,320 19,320 19,370 19,370 19,370 (1) Our pro forma
results assume the acquisition of KIRK telecom occurred on Jan. 1,
2005. SpectraLink Corporation and Subsidiary Condensed Non-GAAP
Consolidated Statements of Operations (In thousands, except per
share amounts) (Unaudited) Three Months Ended Twelve Months ended
December 31, December 31, 2006 2005 2006 2005 (Actual) (Pro
forma)(1) (Actual) (Pro forma)(1) Sales: Product sales $29,557
$33,463 $114,201 $113,868 Service sales 7,956 6,843 30,571 23,671
Net sales 37,513 40,306 144,772 137,539 Cost of sales: Cost of
product sales 12,917 12,360 47,549 42,320 Cost of services sales
4,073 3,498 15,609 12,263 Total cost of sales 16,990 15,858 63,158
54,583 Gross margin 20,523 24,448 81,614 82,956 Operating expenses:
Research and development 3,993 5,065 19,781 16,359 Marketing and
selling 8,568 9,539 34,736 32,177 General and administrative 3,497
2,878 13,287 10,911 Acquired in-process research and development --
-- -- -- Amortization of intangible assets -- -- -- -- Total
operating expenses 16,058 17,482 67,804 59,447 Income from
operations: 4,465 6,966 13,810 23,509 Other (expense) income, net
Interest (expense) income, net (224) (490) (1,468) (1,701) Other
(expense) income, net (32) (115) 56 (146) Total other (expense)
income, net (256) (605) (1,412) (1,847) Non-GAAP earnings before
income taxes 4,209 6,361 12,398 21,662 Income tax expense (1,243)
(1,853) (4,052) (7,690) Non-GAAP earnings after taxes $2,966 $4,508
$8,346 $13,972 Non-GAAP earnings per share - basic $0.15 $0.24
$0.43 $0.73 Basic weighted average shares outstanding 19,440 19,030
19,370 19,061 Non-GAAP earnings per share - diluted $0.15 $0.23
$0.43 $0.72 Diluted weighted average shares 19,570 19,320 19,480
19,370 (1) Our pro forma results assume the acquisition of KIRK
telecom occurred on Jan. 1, 2005. SpectraLink Corporation and
Subsidiaries Reconciliation of Non-GAAP Measurement to GAAP (In
thousands, except per share amounts) (Unaudited) Three months ended
Twelve months ended December 31, December 31, 2006 2005 2006 2005
(Actual) (Pro forma)(1) (Actual) (Pro forma)(1) GAAP income before
income taxes $1,698 $5,244 $1,895 $15,175 Adjustments: Acquired
in-process research and development -- -- 2,021 2,021 Amortization
of intangible assets 1,478 1,117 4,863 4,466 Share-based
compensation expense 729 -- 3,315 -- Scantel inventory write-off
304 -- 304 -- Non-GAAP earnings before income taxes 4,209 6,361
12,398 21,662 Tax expense (1,243) (1,853) (4,052) (7,690) Non-GAAP
earnings after taxes $2,966 $4,508 $8,346 $13,972 Non-GAAP earnings
after taxes per share - diluted $0.15 $0.23 $0.43 $0.72 Weighted
average shares outstanding - diluted 19,570 19,320 19,480 19,370
(1) Our pro forma results assume the acquisition of KIRK telecom
occurred on Jan. 1, 2005. Three Months Ended Twelve Months ended
December 31, December 31, 2006 2005 2006 2005 (Actual) (Pro
forma)(1) (Actual) (Pro forma)(1) Non-GAAP Adjustments: Cost of
sales: FAS 123R stock based compensation $55 $-- $169 $-- Operating
expenses: Research and development FAS 123R stock based
compensation 134 -- 746 -- Marketing and selling FAS 123R stock
based compensation 143 -- 513 -- General and administrative FAS
123R stock based compensation 397 -- 1,887 -- Write-off Scantel
inventory 304 -- 304 -- Acquired in-process research and
development -- -- 2,021 2,021 Amortization of intangible assets
1,478 1,117 4,863 4,466 Total non-GAAP adjustments 2,511 1,117
10,503 6,487 Income tax impact of non-GAAP adjustments (118)
(1,479) (2,118) (1,256) After-tax impact of non-GAAP adjustments
$2,393 $(362) $8,385 $5,231 (1) Our pro forma results assume the
acquisition of KIRK telecom occurred on Jan. 1, 2005. Use of
Non-GAAP Financial Information To supplement our consolidated
financial statements presented on a GAAP basis, SpectraLink uses
non-GAAP measures of operating results, net income (loss) and
earnings (loss) per share, which are adjusted to exclude certain
costs, expenses, gains and losses we believe appropriate to enhance
an overall understanding of our past financial performance and also
our prospects for the future. These adjustments to our GAAP results
are made with the intent of providing investors and other
interested parties a more complete understanding of SpectraLink's
underlying operational results and trends and our marketplace
performance. For example, the non-GAAP results are an indication of
our baseline performance before gains, losses or other charges that
are considered by management to be outside of our core operating
results and are excluded by management for purposes of internal
budgets and making operational decisions. In addition, these
adjusted non-GAAP results are among the primary indicators
management uses as a basis for our planning and forecasting of
future periods. The presentation of this additional information is
not meant to be considered in isolation or as a substitute for net
income or diluted earnings per share prepared in accordance with
generally accepted accounting principles in the United States.
http://www.newscom.com/cgi-bin/prnh/20050324/LATH060LOGO
http://photoarchive.ap.org/ DATASOURCE: SpectraLink Corp. CONTACT:
Bob Husted, Director of Investor Relations, or Ernest Sampias,
Chief Financial Officer, both of SpectraLink Corp., +1-303-440-5330
Web site: http://www.spectralink.com/
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