Brooktrout Announces Second Quarter 2005 Results

Brooktrout Announces Second Quarter 2005 Results 


NEEDHAM, Mass., July 26  /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 second quarter of 2005 was $18,654,000 compared with $19,193,000 for
the second quarter of 2004. The Company's net income for the second quarter of
2005 was $473,000, or $0.04 per diluted share, compared to a net loss of
$2,927,000, or $(0.22) per diluted share, for the same period in 2004. The net
loss in the second quarter of 2004 included a charge for in- process research
and development of $2,490,000, or $(0.19) per diluted share, associated with
the company's acquisition of SnowShore Networks, Inc. in April 2004.

Revenue for the six months ended June 30, 2005 was $36,504,000 compared with
$37,886,000 for the corresponding period of 2004. The company's net loss for
the six months ended June 30, 2005 was $15,000, or  $(0.00) per diluted share,
compared with $2,745,000, or $(0.21) per diluted share, for the same period of
2004. The net loss for the six months ended June 30, 2004 included a charge of
$2,490,000 for in-process research and development as mentioned above.

"In the second quarter, our fax business grew 12% year-over-year, and our VoIP
business posted record revenues despite one large order that was in our backlog
but did not ship this quarter," said Eric Giler, President. "The second quarter
was up sequentially, and we saw building customer interest in our new product
introductions and partner initiatives in VoIP, fax over IP, and a new
generation of enabling technology for speech recognition applications. We
believe our investment in these areas is paying off, and the positive momentum
we are seeing should increasingly offset the maturing we are experiencing in
more traditional TDM products."

Business Outlook

Giler continued with the following outlook for the third quarter of 2005, "We
expect sequential growth to continue in the third quarter with revenue in the
third quarter 2005 of approximately $20.0 million. Given our revenue guidance,
we would anticipate gross margins to be similar to those realized in the last
several quarters, or between 68% and 70%. However, gross margins can fluctuate
as a result of shifts in product mix, changes in product sales volume and
pricing, as well as variability in component costs. We anticipate that total
operating expenses for the third quarter will be between $12.3 million to $12.7
million. We expect net income to be approximately $0.8 million to $1.1 million
for the third quarter of 2005."

Conference Call Details

As previously announced, Brooktrout's management will host a conference call at
5:00 p.m. ET today, July 26, 2005, to discuss these quarterly 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 website for five business days following the
presentation and will be archived in the Multimedia section of the website
thereafter. Following the live broadcast, a telephone replay will also be
available at 1-973-341-3080, passcode #6262940 until midnight ET on Wednesday,
July 27, 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 future product acceptance, revenue, 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 telecommunications 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 telecommunications 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, 2004, filed with the
Securities and Exchange Commission on March 16, 2005, and Quarterly Report on
Form 10-Q for the quarter ended March 31, 2005 filed with the Securities and
Exchange Commission on May 10, 2005. 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(TM)
-- 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, Inc. 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.

  BROOKTROUT, INC.
  CONSOLIDATED STATEMENTS OF OPERATIONS
  (unaudited, in thousands, except per share data)


                            Three Months Ended         Six Months Ended
                                  June 30,                  June 30,
                             2005         2004         2005         2004

  Revenue                  $18,654      $19,193      $36,504      $37,886
  Costs and expenses:
    Cost of product sold     5,895        6,306       11,378       12,274
    Research and development 4,265        4,847        9,129        9,332
    In-process research
     and development            --        2,490           --        2,490
    Selling, general
     and administrative      8,452        8,711       16,961       16,829
      Total costs and
       expenses             18,612       22,354       37,468       40,925

  Operating income (loss)       42       (3,161)        (964)      (3,039)
  Other income, net            325          117          645          299

  Income (loss) before
   income taxes                367       (3,044)        (319)      (2,740)
  Income tax (benefit)
   provision                  (106)        (117)        (304)           5

  Net income (loss)           $473      $(2,927)        $(15)     $(2,745)


  Income (loss) per
   common share:
    Net income (loss),
     basic and diluted       $0.04       $(0.22)      $(0.00)      $(0.21)
    Weighted average
     shares outstanding,
     basic                  12,709       13,020       12,737       12,937
    Weighted average shares
     outstanding,
     diluted                13,428       13,020       12,737       12,937



  BROOKTROUT, INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS
  (unaudited, in thousands)


                                                  June 30,      December 31,
                                                     2005           2004
                       Assets
  Current assets:
    Cash and cash equivalents                      $14,721        $18,452
    Marketable debt securities                      36,269         34,250
    Accounts receivable, less allowances for
     doubtful accounts and sales returns of
     $749 at June 30, 2005 and $1,048 at
     December 31, 2004                               9,284         10,346
    Inventory                                        5,413          4,118
    Deferred tax assets and other current assets     5,199          6,192

      Total current assets                          70,886         73,358

  Equipment and furniture, less
   accumulated depreciation                          2,545          2,477
  Intangible assets, less accumulated amortization   4,979          5,658
  Deferred tax assets and other non current assets,
   less accumulated amortization                    18,202         17,584

      Total assets                                 $96,612        $99,077

            Liabilities and Stockholders' Equity

  Current and long-term liabilities                $16,351        $17,387

  Stockholders' equity                              80,261         81,690

  Total liabilities and stockholders' equity       $96,612        $99,077

  CONTACT:
    Bob Leahy                    Erin Reilly
    VP Finance & Operations      Investor Relations
    Brooktrout, Inc.             Brooktrout, Inc.
    [phone]               [phone]


DATASOURCE: Brooktrout, Inc.



CONTACT: Bob Leahy, VP Finance & Operations, [phone], or Erin

Reilly, Investor Relations, [phone] both of Brooktrout, Inc. 



Web site:  http://www.brooktrout.com/

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