Ault Reports 30% Sales Growth in Second Quarter of Fiscal 2000; DSL Modems Expected to Generate Robust Growth and Improving Profitability During Second Half - Company Financial Information

Cambridge Telcom Report, Dec 27, 1999

Ault Incorporated (Nasdaq NMS: AULT) Monday reported sales of $14,387,000 for the second quarter of fiscal 2000 ended November 28, an increase of 30% from $11,046,000 in the year-earlier period. The second quarter increase followed year-over-year sales growth of 19% in this year's first three months. Reflecting the impact of growth-related investments, net income declined to $313,000 or $.07 per diluted share, from $463,000 or $.11 per diluted share in the second quarter of fiscal 1999.

For the first half of fiscal 2000, net sales increased 25% to $27,921,000, from $22,383,000 last year. First half earnings totaled $523,000 or $.11 per diluted share, compared to $938,000 or $.22 per diluted share in the comparable period of fiscal 1999.

Frederick M. Green, president and chief executive officer, commented that the Company's strong sales growth in this year's first and second quarters has been fueled by significantly higher business volumes with OEMs of high-speed ADSL modems. Orders from five major manufacturers of ADSL equipment have more than offset the previously reported slowdown with one cable modem customer.

Green added that ADSL business volumes are expected to continue strengthening in this year's second half and that the Company's cable modem business is also forecasted to resume growing in the third quarter due to the outlook for improved orders from current and new customers. Total DSL modem-related sales (ADSL and cable) in the third quarter are currently forecasted to be at or near the record level posted in the third quarter of fiscal 1999.

High levels of investments in growth-related infrastructure have restrained earnings growth throughout the first half of fiscal 2000. These investments have supported a significant increase in the Company's worldwide product development team, the opening of a sales office in the People's Republic of China (PRC) and the establishment of a low-volume power supply operation through a strategic acquisition. The year-over-year growth in total operating expenses is expected to start slowing in the third quarter.

The Company believes the third quarter of fiscal 2000 should be its strongest period of the year thus far in terms of both sales and earnings growth. In addition to the strength of its DSL modem business, the Company believes its third quarter performance will benefit from growing sales in the wireless communications and medical markets. Sales activity generated by the European, PRC and Korean sales offices are also expected to contribute to the positive second half outlook.

Ault is the largest independent manufacturer of external power conversion products based in North America. The Company is a leading supplier to original equipment manufacturers of communications covergence infrastructure including DSL modems, wireless and wireline telecommunications infrastructure, medical equipment and networking hardware.

Statements of Income (unaudited)
(in Thousands, except amounts per share)

                       Second Quarter Ended      Six Months Ended
                      Nov. 28    Nov. 29       Nov. 28     Nov. 29
                         1999       1998          1999        1998

Net Sales             $14,387    $11,046       $27,921     $22,383

Cost of Goods Sold     10,683      7,995        20,642      16,270
                       ------      -----        ------      ------

   Gross Profit         3,704      3,051         7,279       6,113
                        -----      -----         -----       -----

Operating Expenses
   Marketing            1,308      1,046         2,509       2,081
   Design Engineering     782        511         1,603         996
   General and
Administrative          1,128        956         2,368       1,863
                        -----        ---         -----       -----
                        3,218      2,513         6,480       4,940
                        -----      -----         -----       -----

   Operating Income       486        538           799       1,173

Other Income (Expense)
Other                     (9)        142            21         254
Interest Expense         (58)       (24)         (109)        (53)
                         ----       ----         -----        ----

Income Before Taxes       419        656           711       1,374
Income Taxes              106        193           188         436
                          ---        ---           ---         ---

Net Income               $313       $463          $523        $938
                        -----       ----         -----        ----

Earnings Per Common and
Equivalent Shares
Outstanding
Basic                                            $0.12       $0.22
Diluted                 $0.07      $0.11         $0.11       $0.22
                        ------     ------        ------      -----

Common and Equivalent
Shares Outstanding
Basic                                            4,392
Diluted                 4,627      4,334         4,619       4,334
                        -----      -----         -----       -----