Kanata, Ontario--Oct. 28, 1997--Mitel Corporation had record salesand earnings of $205.0 million and $23.3 million, or $0.21 per share, respectively, for the second quarter ended September 26, 1997.
In the same quarter last year, sales were $167.5 million and earnings were $16.5 million, or $0.15 per share. Year-to-date sales and earnings were, respectively, $387.0 million and $41.5 million, or$0.37 per share; up significantly from sales of $323.4 million and earnings of $27.2 million, or $0.24 per share, recorded during the first half of last year.
Second quarter sales reflected a growth rate of 22 percent over the preceding year. Semiconductor sales of $73 million were up 44 percent over last year's second quarter, mainly as a result of increased shipments of integrated and hybrid circuits. Business Communications Systems (BCS) sales of $132 million grew by 13 percentfrom the second quarter of last year, chiefly as a result of higher volumes of SX-2000 and SX-200 systems. At the end of the second quarter, the company's total order backlog was $143.5 million, up from $135.1 million at the end of Fscal 1997.
Second quarter net income of $23.3 million, or $0.21 per share, included the benefit from an accrual for investment tax credits (ITCs) amounting to $5.00,or $0.05 per share, related to ITCs expected to be realized in the foreseeable future. Last year's second quarter net income of $16.5 million, or $0.15 per share, included a gain of $3.6 million, or $0.03 per share, related to the sale of an investment. The earnings improvement from operations reflected the higher sales volumes in both BCS and smiconductors andlower expenses as a percentage of sales resulting from recent management actions taken to focus operations and improve the sales channels.
Gross margin, as a percentage of sales, declined by one percentage point to 50 percent in the second quarter of Fiscal 1998 from the same quarter last year, mainly as a result of reduced marginsin PBX products, partially offset by a favorable product mix in semiconductors.
Cash and short-term investments totaled $119.9 million at September 26, 1997, compared with $143.3 million at the end of Fiscal 1997. Mitel acquired certain assets of Gandalf Technologies Inc.,principally its remote access business, for cash consideration of $21.6 million in the second quarter of this fiscal year. Cash flow from operations before working capital changes was $51.8 million during the first half of Fiscal 1998, up from $40.2 million during the same period last year.
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