EXHIBIT 99.1
INTER-TEL ANNOUNCES SECOND QUARTER 2003 RESULTS
AND 100% INCREASE OF QUARTERLY DIVIDEND TO $0.06 PER SHARE
SECOND QUARTER SALES OF $95.1 MILLION AND EPS OF $0.28
TEMPE, ARIZONA . . . JULY 21, 2003 . . . INTER-TEL, INCORPORATED (NASDAQ: INTL)
today announced operating results for the second quarter and six months ended
June 30, 2003. Net sales for the second quarter of 2003 were $95.1 million,
compared to net sales of $95.9 million for the second quarter of 2002. Net sales
for the six months ended June 30, 2003 were $179.3 million, compared to net
sales of $186.0 million for the same period in 2002.
For the quarter ended June 30, 2003, the Company reported net income of $7.3
million ($0.28 per diluted share), an increase of 3.3% compared to net income of
$7.0 million ($0.28 per diluted share). Net income for the six months ended June
30, 2003 was $11.9 million ($0.46 per diluted common share), compared to net
income of $22.4 million ($0.88 per diluted common share) for the same period in
2002, including an arbitration settlement(i). Excluding the arbitration
settlement in 2002, net income for the second quarter of 2002 was $6.9 million
($0.27 per share), and $12.9 million ($0.51 per diluted share) for the six
months ended June 30, 2002.
"We are pleased with Inter-Tel's performance and cash generation during the
second quarter of 2003, especially during this period of continued difficult
economic conditions," noted Steven G. Mihaylo, Inter-Tel's Chairman and CEO.
"Inter-Tel's second quarter gross margin increased to 52.8% compared to 50.5% in
the second quarter of 2002. This increase reflected the strength of recurring
revenues from our existing customer base, cost reductions achieved through
process improvements and increases in sales of our software as a component of
our system shipments and installations."
Mr. Mihaylo added, "Inter-Tel's cash and short-term investment balances at June
30, 2003 exceeded $137 million. This quarter again reflected continued cash
generated from operations, with effective management of our inventory and
accounts receivable levels. For the quarter ended June 30, 2003, days sales
outstanding were approximately 41 days and inventory turns were approximately 14
times, reflecting our continuous improvement efforts."
Inter-Tel's board of directors also announced today the increase by 100% of
Inter-Tel's quarterly dividend from $0.03 per share per quarter (or, an
aggregate of $0.12 per share per year) to $0.06 per share per quarter (or, an
aggregate of $0.24 per share per year). "We believe the increase to Inter-Tel's
dividend is appropriate given our consistent record of generating cash from
operations, said Mr. Mihaylo. "We view this dividend increase as one way to
reward our shareholders." The increase will be effective beginning the dividend
payment made in October 2003 for shareholders of record at September 30, 2003,
and will continue in effect unless canceled or revised by the board of
directors.
You may access our quarterly earnings results conference call, which is
scheduled for July 21, 2003 at 5:30 p.m. (EDT) via the Internet at
http://www.inter-tel.com. Select "News & Events" from the top navigation bar. A
link to the webcast will be displayed within the "News & Events" section. A
replay of the conference call will be available on the Internet until July 21,
2004 at 11:59 p.m. (EDT).
ABOUT INTER-TEL, INCORPORATED
Inter-Tel (Nasdaq: INTL - news) is an Arizona-based corporation. Focused on the
small- to medium-sized enterprise, Inter-Tel offers value-driven communications
products; applications utilizing networks and server-based communications
-1-
software; and a wide range of managed services that focus on voice & data
network design and traffic provisioning, custom application development, and
financial solutions packages that respond to business communications needs. An
industry-leading provider, Inter-Tel employs over 1,700 people, and services
business customers through a network of more than 50 direct sales offices and
over 350 authorized dealers in the United States, United Kingdom and Asia. More
information is available at www.inter-tel.com.
- ----------
(i) Inter-Tel received a gross cash award of $20 million in February 2002 in
settlement of a binding arbitration claim. Income taxes, attorney's fees,
expert witness costs, arbitration costs and additional costs and expenses,
were estimated at $10.6 million in the first quarter of 2002. During the
second quarter of 2002, actual after-tax costs incurred in connection with
the settlement were $129,000 less than estimated at the time of the
settlement. Accordingly, net income from this arbitration totaled
approximately $9.5 million ($0.37 per diluted share) in the first six
months of 2002, $129,000 higher than previously reported in the first
quarter results.
-2-
INTER-TEL, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months
(in thousands, except per share amounts) Ended June 30, Q2 2002
----------------------- Excluding Q2 2002
2003 2002 Litigation LITIGATION
---------- ---------- ---------- ----------
NET SALES $ 95,102 $ 95,948 $ 95,948
Cost of sales 44,852 47,473 47,473
---------- ---------- ---------- ----------
GROSS PROFIT 50,250 48,475 48,475 --
---------- ---------- ---------- ----------
Research & development 5,426 4,538 4,538
Selling, general and administrative 33,001 32,866 32,866
Amortization 486 269 269
Nonrecurring charge -- -- --
---------- ---------- ---------- ----------
38,913 37,673 37,673 --
---------- ---------- ---------- ----------
OPERATING INCOME 11,337 10,802 10,802 --
Litigation settlement (net of costs except for taxes) -- 214 -- 214
Interest and other income 432 513 513 --
Write-down of investment in Inter-Tel.NET/Vianet -- (600) (600) --
Foreign currency transaction gains (losses) 26 284 284 --
Interest expense (71) (46) (46) --
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 11,724 11,167 10,953 214
INCOME TAXES 4,455 4,132 4,047 85
---------- ---------- ---------- ----------
NET INCOME $ 7,269 $ 7,035 $ 6,906 $ 129
========== ========== ========== ==========
NET INCOME PER SHARE--BASIC $ 0.29 $ 0.29 $ 0.28 $ 0.01
========== ========== ========== ==========
NET INCOME PER SHARE--DILUTED $ 0.28 $ 0.28 $ 0.27 $ 0.01
========== ========== ========== ==========
Average number of common
shares outstanding -- Basic 24,947 24,270 24,270 24,270
========== ========== ========== ==========
Average number of common
shares outstanding -- Diluted 25,970 25,562 25,562 25,562
========== ========== ========== ==========
-3-
INTER-TEL, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months 2002 YTD
(in thousands, except per share amounts) Ended June 30, Excluding 2002
---------- ---------- ---------- ----------
2003 2002 Litigation LITIGATION
---------- ---------- ---------- ----------
NET SALES $ 179,271 $ 186,017 $ 186,017 $ 0
Cost of sales 84,947 92,489 92,489 --
---------- ---------- ---------- ----------
GROSS PROFIT 94,324 93,528 93,528 --
---------- ---------- ---------- ----------
Research & development 10,660 8,855 8,855 --
Selling, general and administrative 64,247 63,523 63,523 --
Amortization 914 526 526
Nonrecurring charge -- -- --
---------- ---------- ---------- ----------
75,821 72,904 72,904 --
---------- ---------- ---------- ----------
OPERATING INCOME 18,503 20,624 20,624 --
Litigation settlement (net of costs except for taxes) -- 15,516 -- 15,516
Interest and other, net 875 953 953 --
Write-down of investment in Inter-Tel.NET/Vianet -- (1,200) (1,200) --
Foreign currency transaction gains (losses) (14) 200 200 --
Interest expense (103) (80) (80) --
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 19,261 36,013 20,497 15,516
INCOME TAXES 7,320 13,583 7,559 6,024
---------- ---------- ---------- ----------
NET INCOME $ 11,941 $ 22,430 $ 12,938 $ 9,492
========== ========== ========== ==========
NET INCOME PER SHARE--BASIC $ 0.48 $ 0.93 $ 0.53 $ 0.39
========== ========== ========== ==========
NET INCOME PER SHARE--DILUTED $ 0.46 $ 0.88 $ 0.51 $ 0.37
========== ========== ========== ==========
Average number of common
shares outstanding -- Basic 24,934 24,225 24,225 24,225
========== ========== ========== ==========
Average number of common
shares outstanding -- Diluted 26,004 25,556 25,556 25,556
========== ========== ========== ==========
OTHER SELECTED FINANCIAL DATA
(in millions, except DSO and June 30, March 31, December 31,
Inventory turn amounts) 2003 2003 2002
---------- ---------- ----------
Cash and short-term investments $ 137.0 $ 131.6 $ 125.8
Accounts receivable - net 42.5 37.7 42.6
Inventory 12.8 11.4 11.3
DSO (based on 90 days sales) 40.2 40.3 38.8
DSO (based on trailing 12 mo. sales) 40.8 36.1 40.2
June 30, March 31, June 30,
2003 2003 2002
---------- ---------- ----------
Depreciation and amortization:
For the six months ended June 30, respectively $ 4.6 $ 4.3
For the quarter ended 2.3 2.3 2.2
Capital Expenditures:
For the six months ended June 30, respectively 2.1 2.8
For the quarter ended 1.2 0.8 1.3
-4-