-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F/Be2rhbe31qRItJy1ccQdaP3+RW6eRgP2sT2S6PhJ7mZOXgzFbcXwTi/dzMVwGq 5g35JtoJOO4jE3jazuZM7A== 0000950153-04-000415.txt : 20040218 0000950153-04-000415.hdr.sgml : 20040218 20040217213219 ACCESSION NUMBER: 0000950153-04-000415 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040217 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTER TEL INC CENTRAL INDEX KEY: 0000350066 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 860220994 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10211 FILM NUMBER: 04611675 BUSINESS ADDRESS: STREET 1: 1615 S. 52ND STREET STREET 2: . CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: 480-449-8900 MAIL ADDRESS: STREET 1: 1615 S. 52ND STREET STREET 2: . CITY: TEMPE STATE: AZ ZIP: 85281 8-K 1 p68810e8vk.htm 8-K e8vk
Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 17, 2004

INTER-TEL, INCORPORATED

(Exact Name of Registrant as specified in charter)

Commission File Number 0-10211

     
Arizona   86-0220994
(State or other jurisdiction of incorporation)   I.R.S. Employer Identification Number
     
1615 S. 52ND STREET    
Tempe, Arizona   85281
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (480) 449-8900

 


Item 7. Financial Statements and Exhibits
Item 12. Results of Operations and Financial Condition.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1


Table of Contents

Item 7. Financial Statements and Exhibits

  (c)   Exhibits

     
Exhibit    
Number   Description

 
99.1   Press release dated February 17, 2004 announcing results for the fourth fiscal quarter and year ended December 31, 2003, and comparing such results with the results for the fourth quarter and year ended December 31, 2002, including the use of non-GAAP financial information.

Item 12. Results of Operations and Financial Condition.

     On February 17, 2004, Inter-Tel, Incorporated (the “Company”) issued a press release announcing pro-forma results for the fourth fiscal quarter and year ended December 31, 2003 and comparing such results with the results for the fourth quarter and year ended December 31, 2002. Pursuant to General Instruction B.6 of Form 8-K, this exhibit is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, but is instead furnished as required by that instruction.

The press release is furnished as Exhibit 99.1 hereto.

Use of Non-GAAP Financial Information

In May 2001, Inter-Tel entered into an agreement to submit to binding arbitration a lawsuit we filed in 1996. The arbitration was completed in January 2002 and, as a result of the arbitration, Inter-Tel received a one-time gross cash award of $20 million in February 2002. Direct costs for attorney’s fees, expert witness costs, arbitration costs and additional payments and expenses, totaled approximately $4.5 million in 2002, excluding income taxes, for a net award of approximately $15.5 million. The estimated net proceeds from this arbitration settlement were approximately $9.5 million after taxes, or $0.37 per diluted share for the year ended December 31, 2002.

This one-time litigation settlement was a non-recurring, non-operating item included in our GAAP results. Our management believes that the presentation of our results on a non-GAAP basis to exclude proceeds we received from the litigation settlement provides investors a more meaningful basis of evaluating our performance for the fourth fiscal quarter and year ended December 31, 2003, and for comparing our results with prior and subsequent periods.

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Table of Contents

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    INTER-TEL, INCORPORATED
         
Dated: February 17, 2004   By:   /s/ Kurt R. Kneip
       
        Kurt R. Kneip
Chief Financial Officer

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Table of Contents

EXHIBIT INDEX

     
Exhibit    
Number    

   
99.1   Press release dated February 17, 2004 announcing results for the fourth fiscal quarter and year ended December 31, 2003, and comparing such results with the results for the fourth quarter and year ended December 31, 2002, including the use of non-GAAP financial information.

-4- EX-99.1 3 p68810exv99w1.htm EXHIBIT 99.1 exv99w1

 

EXHIBIT 99.1

     
For Release   February 17, 2004
Release Number   INTL 04-01
Contact   Steven G. Mihaylo, Chairman, President and CEO (775) 954-1211 Norman Stout, Executive Vice President and CAO (480) 449-8900 Craig W. Rauchle, Executive Vice President and COO (775) 954-1200 Jeffrey T. Ford, Sr. Vice President and CTO (480) 961-9000 Kurt R. Kneip, Sr. Vice President and CFO (480) 449-8900

INTER-TEL ANNOUNCES 2003 FOURTH QUARTER AND YEAR-END RESULTS
FOURTH QUARTER SALES OF $100.0 MILLION, EPS OF $0.35 AND
RECORD FOURTH QUARTER OPERATING INCOME

Tempe, Arizona . . . February 17, 2004 . . . Inter-Tel, Incorporated (Nasdaq: INTL) today announced operating results for the fourth quarter and year ended December 31, 2003. Net sales for the fourth quarter of 2003 were $100.0 million, an increase of 1.3% compared to net sales of $98.8 million for the fourth quarter of 2002. Net sales for the year ended December 31, 2003 were $373.8 million, compared to net sales of $381.5 million for the same period in 2002.

For the quarter ended December 31, 2003, the Company reported net income of $9.4 million ($0.35 per diluted share), an increase of 8.0% compared to net income of $8.7 million ($0.33 per diluted share) in the fourth quarter of 2002. Net income for the year ended December 31, 2003 was $28.5 million ($1.08 per diluted share), compared to net income of $38.6 million ($1.49 per diluted share) for the same period in 2002, including an arbitration settlement1. Excluding the arbitration settlement in 2002, net income for the year ended December 31, 2002 was $29.1 million ($1.13 per diluted share).

“We are extremely pleased with Inter-Tel’s operating performance and cash generation during the fourth quarter of 2003,” noted Steven G. Mihaylo, Inter-Tel’s Chairman and CEO. “Inter-Tel achieved record operating profit for any quarter in the Company’s history at $14.5 million. In addition, Inter-Tel’s fourth quarter gross margin increased to 53.5% compared to 52.5% in the fourth quarter of 2002. This increase reflected the continued 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. Inter-Tel’s research and development spending also increased 13.6% in the year ended December 31, 2003 compared to 2002 as we focused on the development of SIP presence management and collaboration applications. In the second half of 2003, Inter-Tel released a family of new SIP and IP endpoints including a softphone for 802.11 pocket PCs, and three SIP and multi-protocol display endpoints. In addition, Inter-Tel released Unified Communicator version 2.0, an industry-leading presence management application, and Enterprise Conferencing, a SIP audio and web collaboration application. During the fourth quarter, Inter-Tel also announced new endpoints scheduled for release in early 2004 for two 802.11 wireless phones and a new, advanced color touch-screen IP endpoint.”

Mr. Mihaylo added, “Inter-Tel’s cash and short-term investment balances at December 31, 2003 totaled $174.5 million, an increase of more than $48 million compared to December 31, 2002. This quarter again reflected continued cash generated from operations, with effective management of our inventory and accounts receivable levels. For the year ended December 31, 2003, days sales outstanding were approximately 42 days and inventory turns were approximately 14 times.”

You may access our quarterly earnings results webcast, which is scheduled for February 17, 2004 at 5:30 p.m. (EDT) via the Internet at http://www.inter-tel.com. Select “News & Events” from the top

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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 February 17, 2005.

About Inter-Tel, Incorporated

Inter-Tel (Nasdaq: INTL) offers value-driven communications products; applications utilizing networks and server-based communications software; and a wide range of managed services that include voice and data network design and traffic provisioning, custom application development, and financial solutions packages. An industry-leading provider focused on the communications needs of business enterprises, Inter-Tel employs over 1,800 communications professionals worldwide, and services business customers through a network of approximately 50 company-owned direct sales offices and over 350 authorized providers in the United States, United Kingdom and Japan. More information is available at www.inter-tel.com.


1   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 $10.5 million during 2002. Accordingly, after-tax net income from this arbitration totaled approximately $9.5 million ($0.37 per diluted share) in the year ended December 31, 2002.

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INTER-TEL, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

                   
      Three Months
(in thousands, except per share amounts)   Ended December 31,

 
      2003   2002
     
 
NET SALES
  $ 100,020     $ 98,774  
 
Cost of sales
    46,515       46,879  
 
   
     
 
GROSS PROFIT
    53,505       51,895  
 
   
     
 
 
Research & development
    5,600       5,613  
 
Selling, general and administrative
    32,956       32,568  
 
Amortization
    444       327  
 
   
     
 
 
    39,000       38,508  
 
   
     
 
OPERATING INCOME
    14,505       13,387  
 
Interest and other income
    581       572  
 
Foreign currency transaction gains
    27       57  
 
Interest expense
    (18 )     (42 )
 
   
     
 
INCOME BEFORE INCOME TAXES
    15,095       13,974  
INCOME TAXES
    5,736       5,310  
 
   
     
 
NET INCOME
  $ 9,359     $ 8,664  
 
   
     
 
NET INCOME PER SHARE—BASIC
  $ 0.37     $ 0.35  
 
   
     
 
NET INCOME PER SHARE—DILUTED
  $ 0.35     $ 0.33  
 
   
     
 
Average number of common shares outstanding — Basic
    25,338       24,783  
 
   
     
 
Average number of common shares outstanding — Diluted
    27,020       26,307  
 
   
     
 
Selected accounts as percentage of net sales:
               
Gross profit (margin)
    53.5 %     52.5 %
Research and development
    5.6 %     5.7 %
Selling general and administrative
    32.9 %     33.0 %
Operating Income
    14.5 %     13.6 %
Net Income
    9.4 %     8.8 %

 


 

INTER-TEL, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

                                   
      Year   12/31/2002   Year ended
(in thousands, except per share amounts)   Ended December 31,   Excluding   12/31/2002
    2003   2002   0   0
     
 
 
 
NET SALES
  $ 373,836     $ 381,456     $ 381,456     $ 0  
 
Cost of sales
    176,763       186,983       186,983        
 
   
     
     
     
 
GROSS PROFIT
    197,073       194,473       194,473        
 
   
     
     
     
 
 
Research & development
    21,978       19,340       19,340        
 
Selling, general and administrative
    128,964       128,284       128,284        
 
Amortization
    1,803       1,122       1,122  
 
   
     
     
     
 
 
    152,745       148,746       148,746        
 
   
     
     
     
 
OPERATING INCOME
    44,328       45,727       45,727        
 
Litigation settlement (net of costs except for taxes)
          15,516             15,516  
 
Interest and other, net
    1,807       1,936       1,936        
 
Write-down of investment in Inter-Tel.NET/Vianet
          (1,200 )     (1,200 )      
 
Foreign currency transaction gains (losses)
    18       330       330        
 
Interest expense
    (155 )     (156 )     (156 )      
 
   
     
     
     
 
INCOME BEFORE INCOME TAXES
    45,998       62,153       46,637       15,516  
INCOME TAXES
    17,480       23,516       17,492       6,024  
 
   
     
     
     
 
NET INCOME
  $ 28,518     $ 38,637     $ 29,145     $ 9,492  
 
   
     
     
     
 
NET INCOME PER SHARE—BASIC
  $ 1.14     $ 1.58     $ 1.19     $ 0.39  
 
   
     
     
     
 
NET INCOME PER SHARE—DILUTED
  $ 1.08     $ 1.49     $ 1.13     $ 0.37  
 
   
     
     
     
 
Average number of common shares outstanding — Basic
    25,078       24,444       24,444       24,444  
 
   
     
     
     
 
Average number of common shares outstanding — Diluted
    26,473       25,864       25,864       25,864  
 
   
     
     
     
 

OTHER SELECTED FINANCIAL DATA

                 
(in millions, except DSO and   December 31,   December 31,
Inventory turn amounts)   2003   2002

 
 
Cash and short-term investments
  $ 174.5     $ 125.8  
Accounts receivable — net
    43.4       42.6  
Inventory
    14.6       11.3  
DSO (based on 90 days sales)
    39.1       38.8  
DSO (based on trailing 12 mo. sales)
    41.8       40.2  
Inventory turns
    14.1       10.6  
Current net investment in sales-leases
    15.5       13.3  
Long-term net investment in sales-leases
    32.5       24.7  
                   
      December 31,   December 31,
      2003   2002
     
 
Depreciation and amortization (in SG&A and R&D):
               
 
For the year ended December 31
  $ 9.1     $ 8.7  
 
For the quarter ended December 31
    2.3       2.2  
Capital Expenditures:
               
 
For the year ended December 31
    7.0       7.6  
 
For the quarter ended December 31
    1.8       2.4  

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