Financial: Periphonics Reports Third Quarter Financial Results - Company Financial Information

EDGE, On & About AT&T, March 22, 1999

Periphonics Corporation (NASDAQ:PERI), a leading worldwide provider of products and professional services for call processing solutions used in Computer Telephony Integration (CTI) and Telecom Enhanced Network Services, Wednesday reported revenues for the company's fiscal 1999 third quarter. Total revenues for the quarter were $32.0 million compared with $33.6 million in the third quarter of fiscal 1998.

Net income for the quarter was $1.3 million, or $0.10 per diluted share, compared with $2.4 million, or $0.17 per diluted share, in the prior year period. System revenues for the third quarter were $23.3 million compared with $25.9 million in the same period last year. Maintenance revenues were $8.8 million compared with $7.8 million in the prior year period. Gross profit for the third quarter was $16.1 million or 50.4 percent of total revenues, compared with $17.1 million or 50.9 percent of total revenues in the prior year period. Peter Cohen, Periphonics Chairman and President, said, "As we noted in our press release regarding preliminary results, revenue for the third quarter was below anticipated levels due largely to delays in closing a number of sizable customer orders. Additionally, during the third quarter, we closed fewer large orders - those in excess of $1 million in revenue - than is typical for us. As we start the current fourth quarter, we are making good progress toward closing many of the delayed orders. We are also working on significantly more large-order opportunities than usual for a given quarter. We believe this, combined with continued worldwide growth in the markets that we serve and increasing demand for our newest products and features, will enable us to achieve improved revenue and profit growth in the fourth quarter and going forward into fiscal 2000." Total revenues for the first nine months of fiscal 1999 increased 15.7 percent to $98.1 million compared with $84.8 million in the first nine months of fiscal 1998. Net income for the nine-month period increased 20.4 percent to $4.0 million, or $0.29 per diluted share, compared with $3.4 million, or $0.24 per diluted share, in the year-ago period. System revenues for the first nine months of fiscal 1999 increased 16.0 percent to $73.1 million compared with $63.0 million in the first nine months of fiscal 1998. Maintenance revenues for the nine-month period increased 14.9 percent to $25.0 million compared with $21.8 million in the prior year period. Gross profit for the first nine months of fiscal 1999 increased 18.3 percent to $48.9 million or 49.8 percent of total revenues, compared with $41.3 million or 48.7 percent in the first nine months of fiscal 1998. Domestic (USA) system revenues for the third quarter were $12.9 million compared with $18.1 million in the prior year period. Domestic maintenance revenues were $6.6 million compared with $6.4 million in the third quarter of fiscal 1998. Domestic system revenues for the first nine months of fiscal 1999 were $44.0 million compared with $40.9 million in the same period last year. Domestic maintenance revenues for the nine-month period increased 9.9 percent to $19.9 million compared with $18.1 million in the same period last year. Total international revenues for the third quarter rose 36.6 percent to $12.5 million compared with $9.2 million in the prior year period. International revenues accounted for 39.1 percent of total revenues. Total revenues from Europe, the Middle East and Africa increased 77.4 percent to $7.3 million compared with $4.1 million in the prior year period. Total revenues from the Pacific Rim increased 10.7 percent to $2.5 million compared with $2.2 million while total revenues from the Americas (excluding the USA) were approximately flat at $2.8 million compared with last year's third quarter. Total international revenues for the first nine months of fiscal 1999 increased 32.4 percent to $34.3 million compared with $25.9 million in the same period last year. Total revenues from Europe, the Middle East and Africa increased 119.6 percent to $20.3 million in the nine-month period compared with $9.3 million in the same period a year ago. Revenues from the Pacific Rim were $6.0 million compared with $8.4 million and revenues from the Americas (excluding the USA) were $7.9 million compared with $8.3 million. System revenues from the company's newest products and features, including Large Vocabulary Speech Recognition (LVR), CallSPONSOR call center CTI application suite, Periphonics Calling Card Platform (PCCP) and the PeriWeb Internet interface feature, were $5.6 million in the third quarter, representing 24.1 percent of total system revenues, compared with $4.9 million, which represented 18.9 percent of total system revenues, in the same period last year. For the first nine months of fiscal 1999, system revenues from these products and features grew 58.1 percent to $16.4 million (representing 22.5 percent of total system revenues) compared with $10.4 million (representing 16.5 percent of total system revenues) in the same period in fiscal 1998. During the second quarter, the Company repurchased 60,000 shares of its common stock as part of its stock repurchase program announced in August, 1998. Average price per share was approximately $11.00 with a total cost of approximately $660,000. Since the beginning of the current fiscal fourth quarter, the company has repurchased 250,000 shares at an average price per share of $7.74. To date, the Company has purchased approximately 810,000 shares at an average price per share of $7.53 for a total cost of approximately $6.1 million. The Company currently has approximately 490,000 shares remaining of its original authorization to repurchase a total of 1.3 million shares. The company has funded its stock repurchase program with free cash flow from operations and cash reserves. During the third quarter, the company's cash, cash equivalents and short-term investments increased by approximately $2.8 million, before stock repurchases. At February 28, 1999, the company's cash, cash equivalents and short-term investments were $23.6 million. The company plans to repurchase shares periodically based on its belief that its strong position in a growing worldwide marketplace offers significant potential for profitable long-term growth and share-price appreciation. The company views the repurchase program as part of its overall effort to enhance shareholder value.