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Vodavi Announces 2006 First Quarter Financial Results; Board Approves New Stock Repurchase Program
[May 02, 2006]

Vodavi Announces 2006 First Quarter Financial Results; Board Approves New Stock Repurchase Program


PHOENIX --(Business Wire)-- May 2, 2006 -- Vodavi Technology Inc. (Nasdaq: VTEK), a provider of business telecommunications solutions, today announced results for its first quarter ended March 31, 2006.

For the first quarter of 2006, the company reported revenue of $10.0 million compared with revenue of $9.9 million in the first quarter of 2005. Net income totaled $204,000, or $0.05 per diluted share, in the most recent quarter compared with net income of $195,000, or $0.05 per diluted share, in the comparable period of 2005.



The company ended the first quarter of 2006 with a cash balance of $7.0 million and working capital of $12.5 million compared with $6.5 million and $12.2 million at Dec. 31, 2005, respectively. The company generated cash flows from operations of $570,000 during the first quarter of 2006 compared with $168,000 during the same period of 2005.

Gregory K. Roeper, chief executive officer, stated "The business development efforts and related expenses in the first quarter of 2006 will be critically important to our future revenue growth. During the first quarter we announced new business relationships with the Real Estate Division of Cendant, CompUSA and Covad. We have high expectations for these new initiatives and are now investing in personnel and marketing to enable us to capitalize upon these opportunities beginning in the second half of 2006."


For a more detailed discussion of the company's financial results, please refer to the company's Form 10-Q for the quarterly period ended March 31, 2006, filed with the Securities and Exchange Commission.

Stock Repurchase Program

The company also announced today that its board of directors authorized a stock repurchase program under which the company may purchase from time to time in the open market or through privately negotiated transactions up to $1.0 million of its common stock through March 31, 2007. Under the previous stock repurchase plan, which was announced in April 2005 and expired on March 31, 2006, the company purchased a total of 40,097 shares of its common stock for approximately $209,000.

Teleconference Information

The company has scheduled a teleconference to discuss its results on Tuesday, May 2, 2006, at 5 p.m. Eastern time. To participate in the teleconference, please dial 800-834-7251 at least 10 minutes prior to the start of the call. International participants should dial 706-645-9262. Please refer to Conference ID: 8548456.

A replay of the teleconference will be available beginning May 2, 2006, at approximately 7 p.m. Eastern time through June 2, 2006. To listen to the replay by phone, dial 800-642-1687. If calling internationally, please call 706-645-9291. Please refer to Conference ID: 8548456.

About Vodavi

Vodavi Technology Inc. is an advanced telephony solutions provider delivering innovative business communications solutions that help small to large enterprises increase productivity and reduce costs. Vodavi's full range of telephony solutions include traditional telephone systems, Voice-over-IP (VoIP) technology and converged telephony solutions that allow enterprises to deploy traditional digital or VoIP communications simultaneously, providing a flexible and cost-effective migration path to new technology. The company is headquartered in Phoenix. For more information on Vodavi, visit www.vodavi.com.

This press release contains forward-looking statements, including statements regarding the company's business strategies, the company's business, and the industry in which the company operates as well as expectations regarding revenue and income levels, and the market acceptance of new product introductions. These forward-looking statements are based primarily on the company's current expectations and are subject to a number of risks and uncertainties, some of which are out of the company's control.

Actual results could differ materially from the forward-looking statements as a result of numerous factors, including those set forth in the company's Form 10-K filed with the Securities and Exchange Commission.

            VODAVI TECHNOLOGY INC.
   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        In thousands except per share amounts
                          Three Months Ended
                            March 31,
                          ------------------
                           2006  2005
                          -------- --------
REVENUE, net                    $10,005  $9,866
COST OF GOODS SOLD                  6,553   6,392
                          -------- --------
GROSS MARGIN                     3,452   3,474
                          -------- --------
OPERATING EXPENSES:
 Engineering and product development          478    518
 Selling, general and administrative         2,699   2,654
                          -------- --------
                           3,177   3,172
                          -------- --------
OPERATING INCOME                    275    302
INTEREST INCOME                     54    12
                          -------- --------
INCOME BEFORE INCOME TAXES               329    314
INCOME TAX PROVISION                  125    119
                          -------- --------
NET INCOME                       $204   $195
                          ======== ========
EARNINGS PER COMMON SHARE:
 Diluted                       $0.05   $0.05
                          ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
 Diluted                       4,116   4,144
                          ======== ========
            VODAVI TECHNOLOGY INC.
      UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
              In thousands
                         UNAUDITED AUDITED
                         March 31, Dec. 31,
                           2006   2005
                         --------- ---------
CURRENT ASSETS:
 Cash                        $7,022  $6,538
 Accounts receivable, net              5,674   7,126
 Inventory                      3,985   3,543
 Deferred income taxes                 446    446
 Prepaids and other current assets           659    508
                         --------- ---------
  Total current assets              17,786  18,161
PROPERTY AND EQUIPMENT, net              1,173   1,228
DEFERRED INCOME TAXES                  168    168
OTHER LONG-TERM ASSETS                  57    45
                         --------- ---------
                          $19,184  $19,602
                         ========= =========
CURRENT LIABILITIES:
 Trade accounts payable                $638   $451
 Accrued liabilities                  910    944
 Accrued rebates                    331    453
 Trade accounts payable to stockholder        3,446   4,097
                         --------- ---------
  Total current liabilities            5,325   5,945
DEFERRED INCOME TAXES                   -     -
STOCKHOLDERS' EQUITY
 Preferred Stock                     -     -
 Common Stock, $.001 par, 3,857,349 and 
 3,850,974 shares issued, respectively         4     4
 Additional paid-in capital             11,836  11,814
 Retained Earnings                  2,431   2,227
 Treasury stock, 80,999 and 76,741 shares 
 at cost, respectively                (412)   (388)
                         --------- ---------
                          13,859  13,657
                         --------- ---------
                          $19,184  $19,602
                         ========= =========


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