Exhibit 99.1
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| |
| FOR MORE INFORMATION, CONTACT: |
| Ms. Kelly Love, CFA |
| Director of Investor Relations |
| Inet Technologies, Inc. |
| (469) 330-4171 |
INET TECHNOLOGIES REPORTS FIRST QUARTER 2004 FINANCIAL RESULTS
Company Reports Nine Percent Year-over-Year Increase in Revenues
Richardson, Texas – April 20, 2004 – Inet Technologies, Inc. (NASDAQ: INTI), a leading global provider of communications software products that enable communications carriers to more strategically and profitably operate their businesses, today reported financial results for its first quarter ended March 31, 2004.
Revenues for the three months ended March 31, 2004 were $27.2 million versus revenues of $25.0 million in the first quarter of 2003 and $27.3 million in the fourth quarter of 2003. The Company reported net income of $3.3 million, or $0.08 per diluted share, for the first quarter of 2004, compared to net income of $3.3 million, or $0.08 per diluted share, for the first quarter of 2003 and net income of $3.4 million, or $0.09 per diluted share, for the fourth quarter of 2003.
“The Inet team continues to make progress in executing our strategy,” said Elie Akilian, president and chief executive officer of Inet. “I am encouraged by our continued success in our chosen markets, the interest in our solutions by current and prospective customers and the pace of deployments of emerging technologies around the world. We continue to see strong momentum in the mobile data market, and I believe we are positioned well to take advantage of these opportunities. All of this bodes well for our future.”
“We are pleased to report solid results for the first quarter of 2004, which were in line with the expectations that we outlined in January,” said Jeff Kupp, chief financial officer of Inet. “Our financial position continues to be very strong, which gives us flexibility and strategically positions us as we continue to execute our strategy during 2004.”
Financial Guidance
The Company provided the following financial guidance for its second quarter of 2004 and for the year ending December 31, 2004. The following guidance is based on current expectations. This guidance is forward-looking and actual results may differ materially.
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| Quarter Ending |
| Year Ending |
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Revenues |
| $28.0 to $28.4 million |
| $112 to $117 million |
|
Gross margin |
| 67% to 70% |
| 67% to 71% |
|
Quarterly operating margins |
| 14% to 17% |
| 14% to 22% |
|
EPS |
| $0.08 to $0.09 |
| $0.36 to $0.38 |
|
The wide range in the guidance for quarterly operating margins during 2004 reflects the operating leverage the Company expects to achieve as it begins to grow its revenues throughout 2004. The Company's annual effective tax rate is currently expected to be 29.5 percent for the year ending December 31, 2004. This is based on an expected rate of 31 percent for the remainder of the year and the 24 percent rate experienced in the first quarter. The diluted share count is expected to range from the upper 39 million level to approximately 41 million during the remainder of 2004.
“We are continuing our aggressive pursuit of the mobile data market, which we believe represents a compelling growth opportunity for us,” continued Akilian. “We are encouraged by the continued adoption, rollout and consumer uptake in GPRS networks and services as well as the growing interest from carriers in UMTS. I believe Inet is strategically positioned to take advantage of the emerging opportunities in our industry. Our investment over the past several years continues to pay dividends in the form of the depth of our product offerings and key customer wins. Investing in our future is critical to ensure that we continue to bring the right products to market at the right time.”
-more-
About Inet Technologies, Inc.
Founded in 1989, Inet Technologies is a global provider of communications software products that enable communications carriers to more strategically and profitably operate their businesses. Our Unified AssuranceTM Solution and our Diagnostics products help our customers reduce capital and operating expenditures, improve customer acquisition and retention rates, protect and grow revenues, and more quickly and effectively develop products or services. Using our Unified Assurance Solution products, communications carriers are able to simultaneously manage their voice and data services at the network, service and customer layers to detect network and service problems in real time, enabling proactive identification of specific customers impacted by network or service issues. Our Diagnostics products assist communications carriers and equipment manufacturers in quickly and cost-effectively designing, deploying and maintaining current- and next-generation networks and network elements. Inet is headquartered in Richardson, Texas and has approximately 501 employees worldwide. Inet is an ISO 9001 registered company. For more information, visit Inet on the Web at www.inet.com.
Inet Technologies and Unified Assurance are trademarks of Inet Technologies, Inc. All other trademarks or registered trademarks belong to their respective owners.
This release contains forward-looking statements, including statements regarding our business prospects, our anticipated future financial results and the anticipated results of some of our product and operating strategies. Such forward-looking statements involve risks and uncertainties. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are any general economic slowdown, any slowdown in telecommunications spending, consolidations or bankruptcies involving our current or prospective customers, unforeseen changes in anticipated expenses or revenues, delays in implementation of our products, increased competition, any reduction in demand for our products and solutions and other factors detailed in Inet’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed with the SEC on January 30, 2004.
INET TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
|
| March 31, |
| December 31, |
| ||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 72,898 |
| $ | 118,527 |
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Short-term investments |
| 99,267 |
| 55,034 |
| ||
Trade accounts receivable, net |
| 15,066 |
| 10,870 |
| ||
Unbilled receivables |
| 236 |
| 146 |
| ||
Inventories |
| 8,957 |
| 7,924 |
| ||
Deferred income taxes |
| 1,829 |
| 1,628 |
| ||
Other current assets |
| 6,007 |
| 5,055 |
| ||
Total current assets |
| 204,260 |
| 199,184 |
| ||
Property and equipment, net |
| 10,741 |
| 11,330 |
| ||
Deferred income taxes |
| 201 |
| 217 |
| ||
Other assets |
| 614 |
| 613 |
| ||
Total assets |
| $ | 215,816 |
| $ | 211,344 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
| $ | 2,037 |
| $ | 1,919 |
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Income taxes payable |
| 3,181 |
| 2,408 |
| ||
Accrued compensation and benefits |
| 2,593 |
| 4,115 |
| ||
Deferred revenues |
| 20,977 |
| 21,554 |
| ||
Other accrued liabilities |
| 4,365 |
| 3,724 |
| ||
Total current liabilities |
| 33,153 |
| 33,720 |
| ||
Commitments and contingencies |
|
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Stockholders’ equity: |
|
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Common stock |
| 47 |
| 47 |
| ||
Additional paid-in capital |
| 78,191 |
| 77,866 |
| ||
Unearned compensation |
| (2,423 | ) | (2,610 | ) | ||
Retained earnings |
| 138,208 |
| 134,932 |
| ||
Treasury stock |
| (31,360 | ) | (32,611 | ) | ||
Total stockholders’ equity |
| 182,663 |
| 177,624 |
| ||
Total liabilities and stockholders’ equity |
| $ | 215,816 |
| $ | 211,344 |
|
INET TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
|
| Three months ended |
| ||||
|
| 2004 |
| 2003 |
| ||
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Revenues: |
|
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Product and license fees |
| $ | 19,647 |
| $ | 17,518 |
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Services |
| 7,565 |
| 7,524 |
| ||
Total revenues |
| 27,212 |
| 25,042 |
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Cost of revenues: |
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Product and license fees |
| 5,227 |
| 2,902 |
| ||
Services |
| 3,188 |
| 4,167 |
| ||
Total cost of revenues |
| 8,415 |
| 7,069 |
| ||
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Gross profit |
| 18,797 |
| 17,973 |
| ||
Operating expenses: |
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Research and development |
| 8,126 |
| 7,685 |
| ||
Sales and marketing |
| 4,307 |
| 3,515 |
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General and administrative |
| 2,261 |
| 2,419 |
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|
| 14,694 |
| 13,619 |
| ||
Income from operations |
| 4,103 |
| 4,354 |
| ||
Other income (expense): |
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Interest income |
| 369 |
| 426 |
| ||
Other income (expense) |
| (155 | ) | 16 |
| ||
|
| 214 |
| 442 |
| ||
Income before provision for income taxes |
| 4,317 |
| 4,796 |
| ||
Provision for income taxes |
| 1,041 |
| 1,541 |
| ||
Net income |
| $ | 3,276 |
| $ | 3,255 |
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Earnings per common share: |
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Basic |
| $ | 0.08 |
| $ | 0.08 |
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Diluted |
| $ | 0.08 |
| $ | 0.08 |
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Weighted-average shares outstanding: |
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Basic |
| 39,119 |
| 40,395 |
| ||
Diluted |
| 39,788 |
| 40,563 |
| ||
INET TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
| Three months ended |
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|
| 2004 |
| 2003 |
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Cash flows from operating activities: |
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Net income |
| $ | 3,276 |
| $ | 3,255 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
| 1,449 |
| 1,803 |
| ||
Amortization of purchase discounts on investments |
| (205 | ) | — |
| ||
Stock compensation |
| 187 |
| 141 |
| ||
Deferred income taxes |
| (185 | ) | — |
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Changes in operating assets and liabilities: |
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Increase in trade accounts receivable |
| (4,196 | ) | (1,527 | ) | ||
Increase in unbilled receivables |
| (90 | ) | (25 | ) | ||
Increase in inventories |
| (1,033 | ) | (967 | ) | ||
Increase in other assets |
| (953 | ) | (217 | ) | ||
Increase in accounts payable |
| 118 |
| 395 |
| ||
Increase in taxes payable |
| 1,013 |
| 1,316 |
| ||
Decrease in accrued compensation and benefits |
| (1,522 | ) | (1,302 | ) | ||
Increase (decrease) in deferred revenues |
| (577 | ) | 5,688 |
| ||
Increase in other accrued liabilities |
| 641 |
| 1,250 |
| ||
Net cash provided by (used in) operating activities |
| (2,077 | ) | 9,810 |
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Cash flows from investing activities: |
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Purchases of short-term investments |
| (44,028 | ) | — |
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Purchases of property and equipment |
| (860 | ) | (932 | ) | ||
Net cash used in investing activities |
| (44,888 | ) | (932 | ) | ||
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Cash flows from financing activities: |
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Repurchase of common stock |
| — |
| (35,431 | ) | ||
Proceeds from issuance of common stock upon exercise of stock options and purchases under employee stock purchase plan |
| 1,336 |
| 616 |
| ||
Net cash provided by (used in) financing activities |
| 1,336 |
| (34,815 | ) | ||
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Net decrease in cash and cash equivalents |
| (45,629 | ) | (25,937 | ) | ||
Cash and cash equivalents at beginning of period |
| 118,527 |
| 189,076 |
| ||
Cash and cash equivalents at end of period |
| $ | 72,898 |
| $ | 163,139 |
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Supplemental disclosure: |
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Income taxes paid |
| $ | 48 |
| $ | 155 |
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INET TECHNOLOGIES, INC.
ADDITIONAL FINANCIAL INFORMATION
(Unaudited)
The following table presents additional financial information about Inet Technologies, Inc. for the three months ended March 31, 2004; December 31, 2003; September 30, 2003; June 30, 2003 and March 31, 2003, respectively.
|
| 3/31/04 |
| 12/31/03 |
| 9/30/03 |
| 6/30/03 |
| 3/31/03 |
| |||||
Total revenues (in 000s) |
| $ | 27,212 | (1) | $ | 27,271 |
| $ | 26,034 |
| $ | 25,472 |
| $ | 25,042 |
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Cash (in 000s) |
| $ | 72,898 |
| $ | 118,527 |
| $ | 168,742 |
| $ | 162,312 |
| $ | 163,139 |
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Short-term investments (in 000s) |
| $ | 99,267 |
| $ | 55,034 |
| — |
| — |
| — |
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Days sales outstanding (with unbilled) |
| 51 |
| 37 |
| 27 |
| 50 |
| 43 |
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Inventory (in 000s): |
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Raw materials |
| $ | 3,430 |
| $ | 3,498 |
| $ | 2,856 |
| $ | 2,765 |
| $ | 3,268 |
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WIP |
| 128 |
| 219 |
| 90 |
| 412 |
| 154 |
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Finished goods |
| 5,399 |
| 4,207 |
| 3,669 |
| 3,592 |
| 5,003 |
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| $ | 8,957 |
| $ | 7,924 |
| $ | 6,615 |
| $ | 6,769 |
| $ | 8,425 |
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Inventory turns |
| 3.8 |
| 4.5 |
| 5.1 |
| 5.7 |
| 3.4 |
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Total employees: |
| 501 |
| 483 |
| 479 |
| 475 |
| 472 |
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R&D |
| 254 |
| 245 |
| 243 |
| 242 |
| 246 |
| |||||
Support/Integration |
| 126 |
| 127 |
| 124 |
| 122 |
| 121 |
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Sales and marketing |
| 75 |
| 66 |
| 69 |
| 66 |
| 61 |
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General and administrative |
| 46 |
| 45 |
| 43 |
| 45 |
| 44 |
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Margins and operating expenses as a % of total revenues: |
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Gross margin – total |
| 69.1 | % | 67.2 | % | 67.5 | % | 62.2 | % | 71.8 | % | |||||
Gross margin – product & license fees |
| 73.4 |
| 69.7 |
| 73.9 |
| 64.3 |
| 83.4 |
| |||||
Gross margin – services |
| 57.9 |
| 60.5 |
| 53.0 |
| 57.1 |
| 44.6 |
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Research and development |
| 29.9 |
| 27.3 |
| 28.5 |
| 28.5 |
| 30.7 |
| |||||
Sales and marketing |
| 15.8 |
| 16.6 |
| 14.9 |
| 14.2 |
| 14.0 |
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General and administrative |
| 8.3 |
| 8.2 |
| 9.4 |
| 8.1 |
| 9.7 |
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Operating income margin |
| 15.1 |
| 15.2 |
| 14.7 |
| 11.4 |
| 17.4 |
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Net income margin |
| 12.0 |
| 12.4 |
| 10.7 |
| 8.9 |
| 13.0 |
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Operating cash flow (in 000s) |
| $ | (2,077 | ) | $ | 5,765 |
| $ | 5,642 |
| $ | 116 |
| $ | 9,810 |
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Capital expenditures (in 000s) |
| $ | 860 |
| $ | 1,066 |
| $ | 666 |
| $ | 1,322 |
| $ | 932 |
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Common stock outstanding (in 000s) |
| 39,220 |
| 38,920 |
| 38,722 |
| 38,436 |
| 38,362 |
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Revenues from international markets: |
| 62 | % | 77 | % | 63 | % | 72 | % | 81 | % | |||||
EMEA |
| 55 | % | 70 | % | 53 | % | 61 | % | 71 | % | |||||
Asia/Pacific |
| 5 | % | 6 | % | 8 | % | 9 | % | 8 | % | |||||
Other |
| 2 | % | 1 | % | 2 | % | 3 | % | 2 | % | |||||
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% of total revenues from wireless customers |
| 41 | % | 28 | % | 18 | % | 49 | % | 25 | % | |||||
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Top 10 customers as % of total revenues |
| 73 | % | 66 | % | 71 | % | 60 | % | 69 | % | |||||
(1) During this period, one international fixed-line customer accounted for approximately 18% of total revenues, one international wireless customer accounted for approximately 15% of total revenues, one domestic wireless customer accounted for approximately 11% of total revenues and one domestic fixed-line customer accounted for approximately 11% of total revenues.
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