BRKT Brooktrout (MM)

Brooktrout Announces Fourth Quarter and Year End 2004 Results NEEDHAM, Mass., Feb. 17 /PRNewswire-FirstCall/ -- Brooktrout, Inc. (NASDAQ:BRKT), a leading provider of innovative hardware and software platforms that enable applications for the New Network(TM), today reported that revenue for the fourth quarter of 2004 was $22,018,000 compared to $22,286,000 for the fourth quarter of 2003. The company's net income for the fourth quarter of 2004 was $863,000, or $0.06 per diluted share, compared to net income of $2,003,000, or $0.15 per diluted share, for the same period in 2003. These results are consistent with the company's previous revenue and net income guidance provided on October 20, 2004. Revenue for the year ended December 31, 2004 was $80,273,000 compared to $74,656,000 for the same period in 2003. The company's net loss for the year ended December 31, 2004 was $1,457,000, or $(0.11) per diluted share, which included a one-time in-process research and development charge related to the acquisition of SnowShore Networks on April 5, 2004 of $2,490,000 or ($0.19) per diluted share. For the year ended December 31, 2003, net income was $555,000, or $0.04 per diluted share. "In 2004 we made excellent progress growing our business and creating an exciting foundation for continued success. We introduced several key new products, formed important strategic partnerships, and made a significant acquisition," said Eric Giler, president of Brooktrout. "Our financial accomplishments were outstanding as revenue grew sequentially on a quarter to quarter basis and we achieved record-setting gross margins. We generated strong cash flow and were profitable for 2004, excluding the one-time in- process research and development expenses associated with the acquisition of SnowShore." Business Outlook Giler continued with the following outlook for the first quarter of 2005, "We anticipate revenue growth of approximately 15% for 2005, and we believe that as the year progresses we will see an acceleration from the current pace due to the growing opportunity in Voice over IP, which we believe is still very early in its adoption by customers. In the first calendar quarter, the historical seasonal pattern is for enterprises to finalize their capital spending and OEMs to firm their R&D plans for the new year before starting to ramp their purchases. Our expectation is, therefore, that the first quarter of 2005 will be similar to historical first quarters and be between $19.5 million and $21 million, or down compared to the fourth quarter of 2004 but up compared to the first quarter of last year. Given our revenue guidance range and our current assumptions for a continuation of the current mix of products, we would anticipate first quarter 2005 gross margin to be similar to the fourth quarter ended December 31, 2004, or between 68% and 70%. However, gross margin can fluctuate as a result of shifts in product mix, changes in product sales volume, pricing and variability of component costs. We anticipate that total operating expenses for the first quarter will be between $13.0 million and $13.5 million. We expect net income to be $0.3 million to $0.8 million for the first quarter of 2005." Conference Call Details As previously announced, Brooktrout's management will host a conference call at 5:00 p.m. ET today, February 17, 2005, to discuss these quarterly and annual results, along with business highlights and outlook. The conference call will be simultaneously broadcast live over the Internet. Anyone interested in listening to this teleconference can do so by logging onto the Brooktrout, Inc. website at http://www.brooktrout.com/investor. For those who cannot access the live broadcast, a replay will be available on the overview page of the web site for five business days following the presentation and will be archived in the Multimedia section thereafter. Following the live broadcast, a telephone replay will also be available at 1-973-341-3080, passcode #5691177 until midnight ET on Friday, February 18, 2005. Note to Investors Statements in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the statements set forth above under "Business Outlook," in particular those relating to revenues, revenue growth, gross margins, operating expenses and net income. Readers should not place undue reliance on forward-looking statements because they involve known and unknown risks and uncertainties, which may cause actual events or our actual results, performance, and achievements to differ materially from what are expressed or implied by such forward-looking statements. In particular, there is a risk that interest from potential customers for our solutions will not result in sales of our products when projected or at all. Other risks and uncertainties include, among other things, the adverse market conditions in the telecommunication and Internet industries and the impact of such market conditions on our customer's business and financial strength, the uncertainties relating to global events, the ability to keep pace with the evolution of the telecommunications hardware and software market, the impact of competition on our business, the impact of changes to regulations affecting the telecommunication and Internet industries, the market price of our stock prevailing from time to time, the nature of other investment opportunities presented to us from time to time, our cash flows from operations and general economic conditions. Additional information concerning these and other risk factors is contained in the "Factors That May Affect Future Results" section of Brooktrout, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission on March 9, 2004, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 filed with the Securities and Exchange Commission on November 9, 2004. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. About Brooktrout Brooktrout, Inc., headquartered in Needham, MA, delivers communications hardware and software products that enable applications for the New Network - a Network born through the marriage of the telephone and data networks. Brooktrout, Inc.'s mission is to collaborate with its partners so they can bring innovative solutions to market quickly, increase business and expand into new markets. Brooktrout believes that a solid focus on customers, significant first-to-market products and key acquisitions are making it a partner of choice for today's hottest communications service and enterprise application providers. Brooktrout is traded publicly on NASDAQ under the symbol BRKT. For more information, visit http://www.brooktrout.com/investor. Brooktrout and the New Network are trademarks or registered trademarks of Brooktrout, Inc. All other trademarks are the property of their respective owners. CONTACT: Bob Leahy Erin Reilly VP Finance & Operations Investor Relations Brooktrout, Inc. Brooktrout, Inc. (781) 433-9426 (781) 292-9378 BROOKTROUT, INC. CONSOLIDATED STATEMENT OF OPERATIONS (unaudited, in thousands, except per share data) Quarter Ended Year Ended December 31, December 31, 2004 2003 2004 2003 Revenue $22,018 $22,286 $80,273 $74,656 Costs and expenses: Cost of product sold 6,374 7,100 24,993 26,380 Research and development 4,378 4,624 18,083 18,492 In-process research and development - - 2,490 - Selling, general and administrative 10,182 7,546 36,152 29,883 Total costs and expenses 20,934 19,270 81,718 74,755 Operating income (loss) 1,084 3,016 (1,445) (99) Other income, net: Interest income, net and other 340 203 849 820 Gain on investment - - - 499 Total other income, net 340 203 849 1,319 Income (loss) before income taxes 1,424 3,219 (596) 1,220 Income tax provision 561 1,216 861 665 Net income (loss) $863 $2,003 $(1,457) $555 Net income (loss) per common share: Basic $0.07 $0.16 $(0.11) $0.04 Diluted 0.06 0.15 (0.11) 0.04 Weighted average shares outstanding: Basic 12,834 12,516 12,927 12,353 Diluted 13,734 13,738 12,927 12,882 BROOKTROUT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) December 31, December 31, 2004 2003 ASSETS Current assets: Cash, cash equivalents, and marketable debt securities $52,702 $55,950 Accounts receivable (less allowance for doubtful accounts and sales returns of $1,048 in 2004 and $843 in 2003) 10,346 10,232 Inventory 4,118 4,465 Deferred taxes and other current assets 6,192 6,705 Total current assets 73,358 77,352 Equipment and furniture, less accumulated depreciation and amortization 2,477 2,245 Intangible assets, less accumulated amortization 5,658 5,909 Deferred taxes and other non current assets 17,584 11,161 Total assets $99,077 $96,667 LIABILITIES AND STOCKHOLDERS' EQUITY Current and long term liabilities $17,387 $15,013 Stockholders' equity 81,690 81,654 Total liabilities and stockholders' equity $99,077 $96,667 DATASOURCE: Brooktrout, Inc. CONTACT: Bob Leahy, VP Finance & Operations, +1-781-433-9426, or Erin Reilly, Investor Relations, +1-781-292-9378, both of Brooktrout, Inc. Web site: http://www.brooktrout.com/

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