VTEL Announces First Quarter Results for Fiscal Year 2000 - Company Financial Information

Edge: Work-Group Computing Report, Nov 29, 1999

VTEL Corporation (Nasdaq:VTEL) Tuesday reported financial results for its first quarter of fiscal year 2000.

For the three-month period ending Oct. 31, 1999, VTEL reported a first fiscal quarter net loss of $5.3 million, or $0.22 per share on 24.3 million fully diluted shares, compared to a net loss of $7.4 million, or $0.32 per share on 23.0 million shares, for the company's first fiscal quarter of 1999. Revenues for the company's first fiscal quarter of 2000 totaled $35.1 million, compared to $36.9 million for the same three-month period in fiscal year 1999.

On November 17, 1999, the company announced that revenues and earnings would fall short of expectations. However, due to management of working capital amounts, the company generated positive cash flow from operations of $360,000.

"While we had hoped for a smoother product transition in terms of impact to top and bottom lines, our first quarter performance does not alter our strategic direction", said Stephen Von Rump, president of VTEL. "Our unique PC architecture and streaming technology, coupled with our solutions focus, are well-positioned to meet our current customers' requirements, as well as launch into new Web-based high-growth markets."

During the first quarter of fiscal 2000, VTEL introduced and started limited shipments of its new line of videoconferencing systems called Galaxy. The company debuted Galaxy in September at the NetWorld Interop ExpoComm 99 show in Atlanta, and again in early November at TeleCon West 99 in Anaheim, Calif. "Galaxy continues to get high marks from those who have seen it in operation," said Von Rump.

In late October, VTEL announced a sizable contract with an Oklahoma school co-op that chose Galaxy for it ease-of-use, scalability and Internet Protocol (IP) capability.

Von Rump said the current product transition would continue to impact VTEL's product mix and margins for the next couple of quarters, but should stabilize during the latter part of fiscal year 2000. He added that VTEL's first quarter results also included an increased investment in several new business areas, the costs of which are being born by the company's core videoconferencing business.

"Funding these new opportunities puts pressure on our core business performance, but over time it will also leverage the assets of our core business into new markets. Over the next few months we will begin to introduce new products into those markets, which we believe will provide new growth potential for VTEL," said Von Rump.

Based in Austin, Texas with offices and resellers in 61 countries, VTEL Corporation is a global leader in high technology visual communications products and services. From Internet visual communications software and services to videoconferencing systems and video-networking solutions, VTEL offers customers the most complete range of products and implementation support. VTEL serves customers in the commercial, education, healthcare, and government markets by combining the power of traditional videoconferencing with the vast reach of the Internet. FMI: VTEL Website: http://www.vtel.com.

                       VTEL Corporation
        CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                          (Unaudited)
       (Amounts in thousands, except per share amounts)

                                                  For the
                                             Three Months Ended

                                          October 31,  October 31,
                                              1999         1998
Revenues:
 Products                                   $ 24,375     $ 25,888
 Services and other                           10,691       11,052
                                            --------     --------
                                              35,066       36,940
                                            --------     --------
Cost of sales:
 Products                                     14,518       13,280
 Services and other                            7,424        7,348
                                            --------     --------
                                              21,942       20,628
                                            --------     --------
 Gross margin                                 13,124       16,312
                                            --------     --------

Selling, general and administrative           14,025       18,503
Research and development                       3,768        5,236
Amortization of intangible assets                364          252
                                            --------     --------
 Total operating expenses                     18,157       23,991
                                            --------     --------

 Income (loss) from operations                (5,033)      (7,679)
                                            --------     --------

Other income (expense):
 Interest income                                  80          288
 Other                                          (391)         (48)
                                            --------     --------
                                                (311)         240
                                            --------     --------
Net loss before provision
 for income taxes                             (5,344)      (7,439)
Provision for income taxes                        --           --
                                            --------     --------
 Net loss from operations                   $ (5,344)    $ (7,439)
                                            ========     ========

Net income per share - basic and diluted    $  (0.22)    $  (0.32)
                                            ========     ========
Weighted avg. shares outstanding -
basic and diluted                             24,298       23,085
                                            ========     ========

                       VTEL Corporation
             CONDENSED CONSOLIDATED BALANCE SHEET
                    (Dollars in thousands)
                                           October 31,   July 31,
                                               1999         1999
                                            (Unaudited)
ASSETS
Current assets:
Cash and equivalents                        $  11,276    $   7,805
Short-term investments                          1,370        4,308
Accounts receivable, net                       29,536       38,291
Inventories                                    16,000       15,553
Prepaid expenses and other current assets       2,185        2,320
                                            ---------    ---------
    Total current assets                       60,367       68,277

Property and equipment, net                    28,534       29,704
Intangible assets, net                         15,657       15,841
Capitalized software                            9,033        7,351
Other assets                                    2,474        2,918
                                            ---------    ---------
                                            $ 116,065    $ 124,091
                                            =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                            $  14,492    $  18,375
Borrowings under revolving line of credit      14,000           --
Accrued compensation and benefits               3,681        4,916
Other accrued liabilities                       3,825        3,555
Notes payable current portion                   2,093        2,234
Deferred revenue                               10,668       11,062
                                            ---------    ---------
    Total current liabilities                  48,759       40,142
                                            ---------    ---------
Long-term liabilities:
Borrowings under revolving line of credit          --       11,200
Notes payable                                     250          554
Other long-term obligations                     4,191        4,176
                                            ---------    ---------
    Total long-term liabilities                 4,441       15,930
                                            ---------    ---------

Stockholders' equity:
Preferred stock                                    --           --
Common stock                                      243          244
Additional paid-in capital                    260,181      260,057
Accumulated deficit                          (197,050)    (191,665)
Unearned compensation                            (310)        (385)
Stock subscriptions receivable                   (150)        (150)
Accumulated other comprehensive loss              (49)         (82)
                                            ---------    ---------
    Total stockholders' equity                 62,865       68,019
                                            ---------    ---------
                                            $ 116,065    $ 124,091
                                            =========    =========