Perle Systems Reports Second Quarter Fiscal 2001 Financial Results; Perle Delivers Operating Profit and Builds Foundation for Growth

Business Wire, Dec 21, 2000

Business/Technology Editors

TORONTO--(BUSINESS WIRE)--Dec. 21, 2000

Perle Systems Limited (NASDAQ: PERL; TSE: PL), a leading provider of networking products for IP and e-business access, today reported unaudited second quarter financial results for the period ended November 30, 2000.

Financial Highlights

On a US GAAP basis, revenue for the second quarter was US$9.9 million compared to revenue of US$8.2 million in the first quarter, an increase of 21%, and US$13.2 million for the second quarter of fiscal 2000. Net operating income (excluding acquisition-related amortization and one time costs) was US$818,450 compared to an operating loss of US$355,585 in the first quarter and operating income of US$981,922 for the second quarter of fiscal 2000. Net after tax income, was approximately break-even at US$6,696 for the second quarter compared to a loss of US$1.2 million or $0.13 per share in the first quarter and a profit of US$526,589 or US$0.07 per share for the second quarter of fiscal 2000. Cash EPS (EPS excluding acquisition-related amortization and one time costs), was US$0.09 for the quarter compared to a loss of US$0.04 in the first quarter and earnings of US$0.13 for the second quarter of fiscal 2000.

For the six months ended November 30, 2000, revenue was US$18.1 million compared to revenue of US$25.5 million for the same period last year. The net after-tax loss was US$1.1 million or US$0.12 per share compared to a profit of US$896,009 or US$0.12 per share for the same period in the prior year. Cash EPS for the six months was US$0.05 compared to US$0.22 for the same period last year.

Milestones and Growth Initiatives

"We have successfully returned to operating profitability," remarked Joe Perle, President and Chief Executive Officer. "Our results for Q1 and Q2 of fiscal 2001 reflect the benefits of the major restructuring of our business undertaken at the end of fiscal 2000. This strategy resulted in a positive trend in operating profit from an operating loss, immediately following the restructuring, of US$6.5 million in Q4 of fiscal 2000, to an operating loss of US$355,585 in Q1 of fiscal 2001 to an operating profit of US$818,450 in the current quarter. The first six months of this year have laid a solid foundation for the future and we expect to capitalize on our current momentum to realize greater revenue and operating profit in the next six-month period of fiscal 2001."

"A solid 66% of our second quarter revenue came from open system network connectivity products," continued Perle. "We have devoted significant resources to product development this year, and I look forward to announcing and delivering new routing products and features including wireless connectivity, enhancements to our Virtual Private Networking (VPN) interfaces, and Voice over IP (VoIP) technologies intended to fuel additional sales growth in the rapidly growing open systems market."

Perle's Vice President, Finance and Chief Financial Officer, Derrick Barnett commented: "In the second quarter we continued to concentrate on the fundamentals of our business, building a business model that allowed us to deliver sales increases with an appropriate level of expenses. This has resulted in increased operating profit and cash flow. I am pleased with the continued strength of our gross margin, which has run higher than our fiscal 2001 goals, due to the success of our newer, higher margin Open Systems products. Our move last year to a two-tier distribution system with stable channel partners has resulted in strong cash collections on accounts receivable. Demand for Perle products has allowed us to reduce inventory levels from prior quarters. I look for the continuation of these trends to further increase profitability and cash flow."

Company Profile

Perle Systems is a leading developer, manufacturer and vendor of award-winning networking products. These products are used to connect remote users reliably and securely to central servers for a wide variety of e-business and general business applications. Perle specializes in Internet Protocol (IP) connectivity applications, with an increasing focus on mid-size IP routing solutions. Product lines include routers, remote access servers, serial servers, and multi-port serial cards and network controllers. Perle distinguishes itself by its ownership of extensive networking technology, depth of experience in major network connectivity environments and channel relationships in major world markets. Perle Systems has offices in 11 countries and sells its products through distribution channels worldwide. Its stock is traded on the Nasdaq Stock Market (symbol PERL) and the Toronto Stock Exchange (symbol PL). For more information about Perle and its products, access the Company's Web site at http://www.perle.com.

The Company's quarterly results vary depending on many factors including, but not limited to, fluctuations in sales levels. These quarterly results are not necessarily indicative of those in the future. Forward-looking statements in this release, including statements relating to the Company's future growth prospects, expectations of future profits and anticipated benefits resulting from the Company's acquisitions, are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, risks relating to the company's ability to increase its sales while maintaining control over its costs, risks associated with the integration of acquisitions and the Company's ability to manage growth, continued acceptance of the Company's products, increased levels of competition for the Company, new products and technological changes, the Company's dependence upon third party suppliers intellectual property rights and other risks detailed from time to time in the Company's periodic reports filed with the United States Securities and Exchange Commission.