EX-99.1 2 a4874989ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Telular Corporation Announces Quarterly Results for Second Quarter of Fiscal Year 2005 VERNON HILLS, Ill.--(BUSINESS WIRE)--April 28, 2005--Telular Corporation (Nasdaq:WRLS): Second Quarter Summary -- Total revenue declined 47% from same quarter last year and 4% from the first quarter -- $0.5 million one-time charge for separation pay -- $0.8 million special charge to write down inventory to market value -- CEO resigned in February Telular Corporation reported revenue of $13.1 million for its second quarter ended March 31, 2005, compared to $24.6 million for the same period last year. The Company reported a second-quarter net loss of $2.9 million, or $0.22 per share, compared to net income of $0.8 million, or $0.06 per share, for the second quarter of fiscal year 2004. The current year results include a special charge to cost of sales of $0.8 million for a write down of certain inventory to market value, as well as, a one-time charge of $0.5 million for CEO separation pay. The Company's former CEO resigned in February 2005. "The reduction in shipments as compared to the prior year resulted from lower shipments to certain customers that were experiencing lower-than-expected end user sales," said John E. Berndt, chairman and interim president and chief executive officer. "Recent reports suggest that end-user sales are increasing at many of these accounts," added Berndt. For the first six months of its fiscal year 2005, the Company reported revenue of $26.7 million, compared to $40.9 million last year for the same period. The Company reported a net loss of $3.9 million, or $0.29 per share, for the six-month period this year, compared to a net loss of $0.7 million, or $0.05 per share, for the same period last year. Operating Details Fixed Wireless sales of $9.3 million decreased $12.1 million during the second quarter compared to the same period last year due primarily to lower shipments to El Salvador, Mexico and Venezuela, while Wireless Alarm revenues of $3.8 million increased $0.6 million over the same period last year. For the first six months of fiscal year 2005, Fixed Wireless sales of $19.1 million decreased $15.2 million compared to the same period last year, while Wireless Alarm revenues of $7.7 million increased $1.0 million over the same period last year. "Our Wireless Alarm business continues to generate strong results with higher sales, improved margins and lower operating expenses," said Berndt. The Company's gross margin in the second quarter of 21% is 7 percentage points less than the same period last year. The decrease in margin is primarily the result of a special charge of $0.8 million to write down certain inventories to market value. "We increased our inventory reserves during the second quarter based on new information from the market that indicates that in a few cases inventory is valued above market value or the quantity on hand exceeds market requirements," explained Berndt. Excluding the special charge, gross margin for the second quarter was unchanged at 28% from the same period last year. For the first six months of fiscal year 2005, gross margin of 25% is 1 percentage point less than the same period last year. Operating expenses during the second quarter of $5.8 million were at a comparable level to the prior year, despite the current year including a one-time charge of $0.5 million for separation pay to the former CEO. Excluding the one-time charge, operating expenses were 11% less than last year due to lower revenue. Through the first six months of fiscal year 2005, operating expenses of $10.8 million are $1 million or 9% less than last year for the same reason. Through the first six months of fiscal year 2005, the Company used $5.1 million of cash from operations, compared to $4.9 million of cash used for operations during the same period of last year. At March 31, 2005, the Company had $17.3 million in cash and $33.7 million of working capital, compared to $19.8 million in cash and $35.8 million of working capital at the same time last year. Investor Conference Call Telular's quarterly conference call will be held today, April 28, 2005 at 10:00 A.M. CDT. To participate on the teleconference from the United States and Canada dial 1-800-839-6489 at least 15 minutes prior to the start of the call. International attendees may gain access by dialing +1-706-634-2227. For all callers the conference code is 5585297. You may also monitor the call via webcast at http://audioevent.mshow.com/229489. CEO Search The Company has engaged an executive search firm and is conducting a national search for a new CEO. In the meantime, Mr. John E. Berndt, Chairman of the Board, is serving as the Company's interim President and CEO. About Telular Telular Corporation is a leader in the design and manufacturing of wireless products. Telular's proprietary telecommunications interface technology enables standard phones, fax machines, computer modems or monitored alarm systems to utilize available cellular wireless service for either primary or back-up telecommunications. Their product lines incorporate the world's leading cellular standards (CDMA, GSM, TDMA, AMPS) and are marketed worldwide. Headquartered in Vernon Hills, Illinois, Telular has regional sales offices in Atlanta, Miami, London, Singapore, Mexico City, Beijing and Johannesburg. For further company information, visit Telular at http://www.telular.com. Please be advised that some of the information in this release presents the Company's intentions, beliefs, judgments and expectations of the future and are forward-looking statements. It is important to note that the Company's actual results could differ materially from these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's report on Form 10-K for the fiscal year ended September 30, 2004. Copies of these filings may be obtained by contacting the Company or the SEC. Financial Tables Follow... TELULAR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF CASH FLOWS (Dollars in thousands, except share data) BALANCE SHEETS March 31, September 30, 2005 2004 -------------- -------------- ASSETS (Unaudited) Cash and cash equivalents $ 17,272 $ 22,677 Trade receivables, net of allowance for doubtful accounts of $202 and $192 at March 31, 2005 and September 30, 2004, respectively 13,498 12,844 Inventories, net 10,491 10,636 Prepaid expenses and other current assets 501 222 -------------- -------------- Total current assets 41,762 46,379 Property and equipment, net 2,792 3,130 Other assets 4,558 4,857 -------------- -------------- Total assets $ 49,112 $ 54,366 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 8,093 $ 9,565 Total stockholders' equity (a) 41,019 44,801 -------------- -------------- Total liabilities and stockholders' equity $ 49,112 $ 54,366 ============== ============== (a) At March 31, 2005, 13,295,278 shares were outstanding CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS Six Months Ended March 31, 2005 2004 -------------- -------------- (Unaudited) (Unaudited) Net cash used in operating activities $(5,128) $(4,935) Net cash used in investing activities (359) (695) -------------- -------------- Subtotal net cash used in before financing activities $(5,487) $(5,630) Net cash provided by financing activities 82 1,594 -------------- -------------- Net decrease in cash and cash equivalents $(5,405) $(4,036) ============== ============== TELULAR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share data) Unaudited Three Months Ended March 31, 2005 2004 -------------- -------------- Revenues Net product sales $10,840 $22,668 Service revenue 2,243 1,926 -------------- -------------- Total revenue 13,083 24,594 Cost of sales Net product cost of sales 9,041 16,682 Service cost of sales 1,263 1,145 -------------- -------------- Total cost of sales 10,304 17,827 Gross margin 2,779 6,767 Engineering and development expenses 1,661 1,721 Selling and marketing expenses 2,469 2,730 General and administrative expenses 1,651 1,520 -------------- -------------- Income (loss) from operations (3,002) 796 Other income, net 62 2 -------------- -------------- Income (loss) before income taxes (2,940) 798 Income taxes, net of tax benefit - - -------------- -------------- Net income (loss) $(2,940) $798 ============== ============== Net income (loss) per common share: Basic $(0.22) $0.06 Diluted $(0.22) $0.06 Weighted average number of common shares outstanding: Basic 13,293,338 13,087,478 Diluted 13,293,338 13,990,119 TELULAR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share data) Unaudited Six Months Ended March 31, 2005 2004 -------------- -------------- Revenues Net product sales $22,293 $37,129 Service revenue 4,443 3,813 -------------- -------------- Total revenue 26,736 40,942 Cost of sales Net product cost of sales 17,433 27,721 Service cost of sales 2,515 2,397 -------------- -------------- Total cost of sales 19,948 30,118 Gross margin 6,788 10,824 Engineering and development expenses 3,321 3,680 Selling and marketing expenses 4,605 5,131 General and administrative expenses 2,841 2,713 -------------- -------------- Loss from operations (3,979) (700) Other income, net 107 15 -------------- -------------- Loss before income taxes (3,872) (685) Income taxes, net of tax benefit - - -------------- -------------- Net loss $(3,872) $(685) ============== ============== Net loss per common share: Basic $(0.29) $(0.05) Diluted $(0.29) $(0.05) Weighted average number of common shares outstanding: Basic 13,285,909 13,020,954 Diluted 13,285,909 13,020,954 CONTACT: Telular Corporation Jeffrey L. Herrmann, 847-247-9400 Fax: 847-247-0021 E-mail: jherrmann@telular.com