EXHIBIT 99.1
WeSimplify Networks.™ | ||||
News Release | [LOGO] Inet. | Inet Technologies, Inc. 1500 North Greenville Avenue Richardson TX 75081 Phone: 469-330-4000 Fax: 469-330-4001 | ||
FOR MORE INFORMATION, CONTACT: Ms. Kelly Love, CFA Director of Investor Relations Inet Technologies, Inc. (469) 330-4171 |
INET TECHNOLOGIES REPORTS SOLID SECOND QUARTER PERFORMANCE
Milestones Include First GPRS and Spectra2 Revenues and First Beamer Order
Richardson, Texas – July 24, 2003 – Inet Technologies, Inc. (NASDAQ: INTI),a leading global provider of communications software solutions that enable carriers to more strategically operate their businesses, today reported financial results for its second quarter ended June 30, 2003.
Revenues for the three months ended June 30, 2003 were $25.5 million versus revenues of $25.0 million in the first quarter of 2003 and $26.2 million in the second quarter of 2002. The Company reported net income of $2.3 million, or $0.06 per diluted share, for the second quarter of 2003, compared to net income of $3.3 million, or $0.08 per diluted share, for the first quarter of 2003 and net income of $1.3 million, or $0.03 per diluted share, for the second quarter of 2002.
“Our team has done an outstanding job of improving profitability given a consistent level of revenues over the last two years,” said Elie Akilian, president and chief executive officer of Inet. “In addition to our solid financial results, we made great strides towards our stated goals and objectives, including the completion of our initial GPRS installations as well as booking the first order for our new Beamer product. Our commitment to research and development over the last two years is beginning to pay off in the form of customer orders for our new products. We will continue to invest heavily in research and development to maintain our technology advantage, which has been key to our success through the years. Armed with a strong product offering, I feel good about the future growth opportunities for Inet.”
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For the six months ended June 30, 2003, revenues were $50.5 million versus revenues of $53.7 million for the six months ended June 30, 2002. Net income for the six months ended June 30, 2003 was $5.5 million, or $0.14 per diluted share, compared to net income of $4.1 million, or $0.09 per diluted share, for the six months ended June 30, 2002.
“We are proud of our continued financial success,” said Jeff Kupp, chief financial officer of Inet. “Our financial position is strong, and we continue to maintain or improve key operating metrics. Order activity for the second quarter was solid, resulting in a book-to-bill ratio slightly greater than one. Based on our solid financial position and our strong suite of product offerings, we believe we are well positioned to capitalize on a number of good opportunities with both new and existing customers.”
During the second quarter of 2003, the Company had one international customer – a mobile operator in Europe – that accounted for approximately 19 percent of total revenues. Revenues from the top 10 customers in the second quarter represented approximately 60 percent of total revenues. The Company expects to continue to have one to three 10 percent customers in most quarters and for the top 10 customers in each quarter to generate between 50 and 80 percent of total revenues.
New Products
During the second quarter of 2003, the Company announced the release of its Spectra2 version 3.0. Spectra2 is Inet’s diagnostics solution that addresses the capacity and conformance testing as well as the analysis of call signaling, media carriage and media conversion functions associated with next-generation VoIP networks and related network equipment. Spectra2 v3.0 offers carriers and equipment manufacturers integrated media testing, the ability to perform voice quality analysis using PESQ (Perceptual Evaluation of Speech Quality, ITU-T P.862) and a broad range of conformance test suites while maintaining a very user-friendly interface. The integrated monitoring, testing and generation capabilities allow users to test VoIP applications with correlated signaling and media. In addition, the comprehensive set of more than 500 conformance test cases for H.323, MGCP and SIP are aligned with the leading standards organizations in VoIP development and should prove to reduce development efforts associated with building conformance, regression and validation tests.
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“The initial feedback we have received on Spectra2 v3.0 has been outstanding,” said Mr. Akilian. “The product was officially released in late May, and we took our initial orders and recognized related revenue in the second quarter. We are seeing good demand for all of our products – including our GPRS offering and our new Unified Assurance solutions. We believe that the timing of our new products is right on and will position us to be a leader in the areas of mobile data and voice-over-packet testing. I am encouraged by the size and quality of our sales pipeline as well as the positive signs we are seeing from our customers.”
“We have now had a few consecutive quarters where our visibility into the next quarter has been good,” continued Mr. Kupp. “Based on our visibility, we expect our overall gross margins percentage in the third quarter to be in the mid-60’s range, which is in line with our long-term expectations, and we expect operating expenses in the low- to mid-$13 million range.”
About Inet Technologies, Inc.
Founded in 1989, Inet Technologies is a leading global provider of communications software solutions that enable carriers to more strategically operate their businesses. Inet’s Unified Assurance solutions – which include products that address customer, service and network assurance – convert network signaling, service and other infrastructure-level information into valuable and actionable intelligence that carriers use to ensure the health of their revenue-generating infrastructure. These real-time powered solutions help carriers realize organizational efficiencies in managing their operations as well as improve the acquisition and retention rates for targeted, high-value customers. Inet’s diagnostics solutions allow communications carriers and equipment manufacturers to quickly and cost-effectively design, deploy and maintain current- and next-generation networks and network elements. Inet is headquartered in Richardson, Texas and has approximately 475 employees worldwide. Inet is an ISO 9001 registered company. For more information, visit Inet on the Web atwww.inet.com.
Inet Technologies, Unified Assurance, Beamer and Spectra2 are trademarks of Inet Technologies, Inc. All other trademarks or registered trademarks belong to their respective owners.
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This release contains forward-looking statements, including statements regarding the ability of our customers to achieve the anticipated benefits of our products, our business prospects, our anticipated 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 the effects of a further general economic slowdown, any further slowdown in telecommunications spending, any reversal or slowdown in the pace of privatization, deregulation and restructuring of telecommunications markets worldwide, unforeseen changes in anticipated expenses or revenues, challenges associated with operating internationally, delays in implementation of our products, product defects, product development and introduction delays, 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2003.
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INET TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
June 30, 2003 | December 31, 2002 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 162,312 | $ | 189,076 | ||||
Trade accounts receivable, net of allowance for doubtful accounts of $507 at June 30, 2003 and $484 at December 31, 2002 | 13,660 | 10,211 | ||||||
Unbilled receivables | 352 | 155 | ||||||
Inventories | 6,769 | 7,458 | ||||||
Deferred income taxes | 850 | 850 | ||||||
Other current assets | 5,846 | 4,909 | ||||||
Total current assets | 189,789 | 212,659 | ||||||
Property and equipment, net | 13,392 | 15,215 | ||||||
Other assets | 583 | 300 | ||||||
Total assets | $ | 203,764 | $ | 228,174 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,716 | $ | 1,078 | ||||
Accrued compensation and benefits | 2,961 | 4,113 | ||||||
Deferred revenues | 23,056 | 18,323 | ||||||
Income taxes payable | 2,486 | 1,953 | ||||||
Other accrued liabilities | 3,129 | 4,733 | ||||||
Total current liabilities | 34,348 | 30,200 | ||||||
Deferred income taxes | 18 | 18 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $.001 par value: | ||||||||
Authorized shares—25,000,000 | ||||||||
Issued shares—None | — | — | ||||||
Common stock, $.001 par value: | ||||||||
Authorized shares—175,000,000 | ||||||||
Issued shares—47,159,643 at June 30, 2003 and 47,157,543 at December 31, 2002 | 47 | 47 | ||||||
Additional paid-in capital | 75,413 | 75,075 | ||||||
Unearned compensation | (345 | ) | (407 | ) | ||||
Retained earnings | 128,767 | 123,241 | ||||||
Treasury stock, 8,723,435 common shares at June 30, 2003 and no common shares at December 31, 2002, at cost | (34,484 | ) | — | |||||
Total stockholders’ equity | 169,398 | 197,956 | ||||||
Total liabilities and stockholders’ equity | $ | 203,764 | $ | 228,174 | ||||
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INET TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||
Revenues: | ||||||||||||||
Product and license fees | $ | 17,770 | $ | 19,233 | $ | 35,288 | $ | 40,236 | ||||||
Services | 7,702 | 6,987 | 15,226 | 13,479 | ||||||||||
Total revenues | 25,472 | 26,220 | 50,514 | 53,715 | ||||||||||
Cost of revenues: | ||||||||||||||
Product and license fees | 6,336 | 7,971 | 9,238 | 14,203 | ||||||||||
Services | 3,303 | 3,307 | 7,470 | 6,465 | ||||||||||
Total cost of revenues | 9,639 | 11,278 | 16,708 | 20,668 | ||||||||||
Gross profit | 15,833 | 14,942 | 33,806 | 33,047 | ||||||||||
Operating expenses: | ||||||||||||||
Research and development | 7,257 | 7,294 | 14,942 | 15,750 | ||||||||||
Sales and marketing | 3,608 | 4,757 | 7,123 | 8,864 | ||||||||||
General and administrative | 2,061 | 2,118 | 4,480 | 4,138 | ||||||||||
12,926 | 14,169 | 26,545 | 28,752 | |||||||||||
Income from operations | 2,907 | 773 | 7,261 | 4,295 | ||||||||||
Other income (expense): | ||||||||||||||
Interest income | 372 | 665 | 798 | 1,355 | ||||||||||
Other income (expense) | (125 | ) | 414 | (109 | ) | 234 | ||||||||
247 | 1,079 | 689 | 1,589 | |||||||||||
Income before provision for income taxes | 3,154 | 1,852 | 7,950 | 5,884 | ||||||||||
Provision for income taxes | 883 | 527 | 2,424 | 1,819 | ||||||||||
Net income | $ | 2,271 | $ | 1,325 | $ | 5,526 | $ | 4,065 | ||||||
Earnings per common share: | ||||||||||||||
Basic | $ | 0.06 | $ | 0.03 | $ | 0.14 | $ | 0.09 | ||||||
Diluted | $ | 0.06 | $ | 0.03 | $ | 0.14 | $ | 0.09 | ||||||
Weighted-average shares outstanding: | ||||||||||||||
Basic | 38,400 | 46,888 | 39,392 | 46,863 | ||||||||||
Diluted | 38,689 | 47,092 | 39,609 | 47,146 | ||||||||||
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INET TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six months ended June 30, | ||||||||
2003 | 2002 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 5,526 | $ | 4,065 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 3,577 | 3,548 | ||||||
Stock Compensation | 171 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in trade accounts receivable | (3,449 | ) | 145 | |||||
(Increase) decrease in unbilled receivables | (197 | ) | 623 | |||||
Decrease in income taxes receivable | — | 532 | ||||||
Decrease in inventories | 689 | 3,759 | ||||||
(Increase) decrease in other assets | (1,220 | ) | 1,198 | |||||
Increase (decrease) in accounts payable | 1,638 | (399 | ) | |||||
Increase in taxes payable | 714 | 626 | ||||||
Increase (decrease) in accrued compensation and benefits | (1,152 | ) | 1,264 | |||||
Increase in deferred revenues | 4,733 | 430 | ||||||
Increase (decrease) in other accrued liabilities | (1,104 | ) | 695 | |||||
Net cash provided by operating activities | 9,926 | 16,486 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (2,254 | ) | (1,314 | ) | ||||
Net cash used in investing activities | (2,254 | ) | (1,314 | ) | ||||
Cash flows from financing activities: | ||||||||
Repurchase of common stock | (35,553 | ) | — | |||||
Proceeds from issuance of common stock upon exercise of stock options and purchases under employee stock purchase plan | 1,117 | 961 | ||||||
Net cash provided by (used in) financing activities | (34,436 | ) | 961 | |||||
Net (decrease) increase in cash and cash equivalents | (26,764 | ) | 16,133 | |||||
Cash and cash equivalents at beginning of period | 189,076 | 154,889 | ||||||
Cash and cash equivalents at end of period | $ | 162,312 | $ | 171,022 | ||||
Supplemental disclosure: | ||||||||
Income taxes paid | $ | 1,582 | $ | 1,726 | ||||
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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 June 30, 2003; March 31, 2003; December 31, 2002; September 30, 2002 and June 30, 2002, respectively.
6/30/03 | 3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | ||||||||||||||||
Cash (in 000s) | $ | 162,312 | $ | 163,139 | $ | 189,076 | $ | 171,711 | $ | 171,022 | ||||||||||
Days sales outstanding (with unbilled) | 50 | 43 | 38 | 57 | 56 | |||||||||||||||
Inventory (in 000s): | ||||||||||||||||||||
Raw materials | $ | 2,765 | $ | 3,268 | $ | 3,774 | $ | 4,489 | $ | 5,491 | ||||||||||
WIP | 412 | 154 | 445 | 1,212 | 705 | |||||||||||||||
Finished goods | 3,592 | 5,003 | 3,239 | 1,915 | 2,499 | |||||||||||||||
$ | 6,769 | $ | 8,425 | $ | 7,458 | $ | 7,616 | $ | 8,695 | |||||||||||
Inventory turns | 5.7 | 3.4 | 4.6 | 5.2 | 5.2 | |||||||||||||||
Total employees: | 475 | 472 | 470 | 480 | 518 | |||||||||||||||
R&D | 242 | 246 | 247 | 249 | 268 | |||||||||||||||
Support/Integration | 122 | 121 | 121 | 126 | 125 | |||||||||||||||
Sales and marketing | 66 | 61 | 62 | 64 | 79 | |||||||||||||||
General and administrative | 45 | 44 | 40 | 41 | 46 | |||||||||||||||
Margins and operating expenses as a % of total revenues: | ||||||||||||||||||||
Gross margin—total | 62.2 | % | 71.8 | % | 65.3 | % | 56.9 | % | 57.0 | % | ||||||||||
Gross margin—product & license fees | 64.3 | 83.4 | 68.9 | 57.9 | 58.6 | |||||||||||||||
Gross margin—services | 57.1 | 44.6 | 56.4 | 54.3 | 52.7 | |||||||||||||||
Research and development | 28.5 | 30.7 | 28.2 | 30.3 | 27.8 | |||||||||||||||
Sales and marketing | 14.2 | 14.0 | 16.0 | 15.7 | 18.1 | |||||||||||||||
General and administrative | 8.1 | 9.7 | 8.1 | 7.9 | 8.1 | |||||||||||||||
Operating income margin | 11.4 | 17.4 | 13.1 | 2.0 | 3.0 | |||||||||||||||
Net income margin | 8.9 | 13.0 | 10.9 | 3.5 | 5.1 | |||||||||||||||
Operating cash flow (in 000s) | $ | 116 | $ | 9,810 | $ | 18,099 | $ | 288 | $ | 5,371 | ||||||||||
Capital expenditures (in 000s) | $ | 1,322 | $ | 932 | $ | 735 | $ | 241 | $ | 763 | ||||||||||
Common stock outstanding (in 000s) | 38,436 | 38,362 | 47,158 | 47,073 | 46,894 | |||||||||||||||
Revenues from international markets: | 72 | % | 81 | % | 71 | % | 66 | % | 74 | % | ||||||||||
EMEA | 61 | % | 71 | % | 63 | % | 59 | % | 56 | % | ||||||||||
Asia/Pacific | 9 | % | 8 | % | 5 | % | 5 | % | 11 | % | ||||||||||
Other | 3 | % | 2 | % | 3 | % | 2 | % | 7 | % | ||||||||||
Top 10 customers as % of total revenues | 60 | % | 69 | % | 71 | % | 67 | % | 60 | % |
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