Perle Systems Reports Second Quarter Fiscal 2003 Financial Results; Increased Operating Profit for the Second Quarter

Business Wire, Jan 30, 2003

Business Editors

TORONTO--(BUSINESS WIRE)--Jan. 30, 2003

Perle Systems Limited (OTCBB: PERL) (TSE: PL), a leading provider of networking products for Internet Protocol ("IP") and e-business access, today reported unaudited financial results for the second quarter fiscal 2003 ended November 30, 2002.

Financial Highlights

Based on US GAAP, the Company's revenue for the second quarter of fiscal 2003 totaled $6.5 million, compared to revenue of $7.8 million in the second quarter of fiscal 2002.

Net operating profit for the quarter was approximately $102,000 compared to a net operating loss of $724,000 in the same period last year. Cash earnings per share was $0.01 for the quarter compared to a cash loss per share of $0.08 in the same period last year.

Net operating earnings/(loss) and cash earnings/(loss) per share figures exclude writedown of goodwill, depreciation of capital assets and intangibles and one time costs.

The Company undertook an independent valuation and audit of its Goodwill and Intangible Assets at November 30, 2002 and determined that there was a non-cash impairment of $750,000 in respect of the goodwill and $50,000 in respect of the intangible assets. A further review will be undertaken in 12 months.

Net loss for the quarter was approximately $1,100,000, which includes the writedown of goodwill of $750,000, compared to a net loss of approximately $780,000, which includes no writedown of goodwill, in the same period of last year. Disciplined cost controls and a sustained level of gross margin, offset the lower sales, resulting in a reduced net loss on an operating basis. Loss per share was $0.11, of which $0.08 loss per share is from writedown of goodwill, compared to a loss per share of $0.08 in the same period last year.

For the six months to November 30, 2002, the net loss was approximately $2.0 million compared to $1.7 million in the same period last year. The loss per share was $0.21 compared to $0.18 in the same period last year.

Chief Executive Officer's comments:

"Through disciplined cost and production controls we delivered increased operating profit for the quarter, one of our key objectives for 2003. Our focus for this fiscal year is to grow sales," stated Joe Perle, President and Chief Executive Officer.

"In this regard we have accelerated the output of our research and development programs, with product releases in the areas of security and remote manageability such as IKE for VPN on the Perle router line and Port Buffering on the CS9000 line which now offers customers the largest port buffers in the industry. We have also stepped up our aggressive marketing campaigns and continued improving our sales and distribution channels, in North America and Europe. Several new high potential VAR's have joined the Perle channel, with the goal of driving increasing demand for Perle products."

Chief Financial Officer's comments:

"Following the conclusion of our new credit agreement with our major lender last quarter, we continue to focus on building cash flow through the fundamentals of increasing sales, improving margins and driving operating efficiencies from within the business, while containing costs," stated Derrick Barnett, Vice President, Finance and Chief Financial Officer. "We have made significant progress in all of these areas and I am confident that there is ample room for further productivity improvements allowing us to support sales growth without proportional increase in costs."

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/console servers, emulation adapters, multi-port serial cards, multi-modem cards, print servers and network controllers. Perle distinguishes itself by its ownership of extensive networking technology, depth of experience in major network connectivity environments and long-term channel relationships in major world markets. Perle Systems has offices and representative offices in 12 countries in North America, The United Kingdom, Europe and Asia and sells its products through distribution channels worldwide. Its stock is traded on the OTCBB (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.

Forward-looking statements in this release, including statements relating to the Company's future growth prospects, future profits, anticipated revenue and earnings results revenue and earnings guidance for fiscal 2002, and the success of the Company's growth and restructuring initiatives 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 maintain compliance with the covenants contained in its credit agreement, to meet its sales forecasts while maintaining control over its costs, to continue to operate as a going concern, the Company's ability to manage growth, the implementation of the Company's restructuring plan, the impact of FASB 141 and FASB 142 on the Company's results of operations and financial condition, 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.