Hauppauge Digital Inc. (NASDAQ: HAUP), a leading developer of analog and digital TV receiver products for the personal computer market, reported financial results for the second fiscal quarter and six-month period ended March 31, 2010.

SECOND QUARTER RESULTS

Net sales were $13.8 million for the second quarter of fiscal 2010, an increase of approximately 8.75% from the $12.7 million reported for the previous year’s second fiscal quarter.

The Company incurred a net loss of $902,873 for the second quarter of fiscal 2010 compared to a net loss of $1,932,070 for the second quarter of fiscal 2009. Net loss per share for the second quarter of fiscal 2010 was $0.09 on a basic and diluted basis, compared to a net loss per share of $0.19 on a basic and diluted basis for the second quarter of fiscal 2009.

SIX-MONTH RESULTS

Net sales were $31.7 million for the six months ended March 31, 2010, an increase of approximately 5.67% from the $30.0 million reported for the six months ended March 31, 2009.

The Company incurred a net loss of $1,237,424 for the six months ended March 31, 2010 compared to a net loss of $3,704,383 for the six months ended March 31, 2009. Net loss per share for the six months ended March 31, 2010 was $0.12 on a basic and diluted basis, compared to a net loss per share of $0.37 on a basic and diluted basis for the six months ended March 31, 2009.

DISCUSSION OF RESULTS

Ken Plotkin, Hauppauge’s Chief Executive Officer stated “net of changes in our sales reserve, we saw a sales increase of approximately 18% compared with the 2009 second fiscal quarter. Our loss from operations excluding non-cash expenses for the first six months of the fiscal year has narrowed to approximately $206,000.

Our PCTV product line, acquired from Avid Technology, Inc and certain of its affiliates in December 2008, has established itself as our premium TV tuner product line and has helped drive an improvement in gross profit percentage for the first six months of the fiscal year from 18.5% to 28.6%. While the value of the Euro was favorable to the Company during the first six months of our current fiscal year, based on the financial uncertainties in the European Union, we do not expect a replication of the favorable exchange rate for the remainder of 2010.

To support our sales and gross profit growth, we continue to invest in research and development at our three R&D centers. We have recently introduced our WinTV Extend software, which brings live TV to portable devices such as the iPhone and iPad. Under development are new high definition TV tuners for the European, North American and Australian markets. In addition, the Company is getting ready to launch a TV tuner for the new mobile digital TV standard in the United States, ATSC M/H.

We are quite excited about these new programs and the opportunities which we see going forward.”

ABOUT HAUPPAUGE DIGITAL

Hauppauge Digital Inc. is a leading developer of analog and digital TV receiver products for the personal computer market. Through its Hauppauge Computer Works, Inc. and Hauppauge Digital Europe SARL subsidiaries, the Company designs and develops analog and digital TV receivers that allow PC users to watch television on their PC screen in a resizable window and enable the recording of TV shows to a hard disk, digital video editing, video conferencing, receiving of digital TV transmissions, and the display of digital media stored on a computer to a TV set via a home network. The Company is headquartered in Hauppauge, New York, with administrative offices in Luxembourg, Ireland and Singapore, sales offices in Germany, London, Paris, The Netherlands, Sweden, Italy, Spain, Singapore, Taiwan, and California and research and development centers in Hauppauge, New York, Taipei, Taiwan and Braunschweig, Germany. The Company’s Internet web site can be found at http://www.hauppauge.com.

This news release contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this news release may not occur. Generally, these statements relate to the Company’s business plans or strategies, projected or anticipated benefits or other consequences of the Company’s plans or strategies, financing plans, projected or anticipated benefits from acquisitions that the Company may make, or projections involving anticipated revenues, earnings or other aspects of the Company’s operating results or financial position, and the outcome of any contingencies. Any such forward-looking statements are based on current expectations, estimates and projections of management. The Company intends for these forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements. Words such as "may," "will," "expect," "believe," "anticipate," "project," "plan," "intend," "estimate," and "continue," and their opposites and similar expressions are intended to identify forward-looking statements. The Company cautions you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projections upon which the statements are based. Factors that could cause actual results to differ materially from those set forth or implied by any forward-looking statement include, but are not limited to, the mix of products sold and the profit margins thereon, order cancellation or a reduction in orders from customers, competitive product offerings and pricing actions, the availability and pricing of key raw materials, dependence on key members of management, successful integration of acquisitions, economic conditions in the United States and abroad, as well as other risks and uncertainties discussed in the Company’s reports filed with the Securities and Exchange Commission, including, but not limited to, the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009, the Company’s Form 10-Q for the three months ended December 31, 2009 and the Company’s Form 10-Q for the three months ended March 31, 2010.

Any one or more of these uncertainties, risks and other influences could materially affect the Company’s results of operations and whether forward-looking statements made by the Company ultimately prove to be accurate. The Company’s actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

   
HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended March 31,

2010

2009
 
Net sales $13,847,079 $12,733,429
Cost of sales 9,981,288   9,769,150
Gross profit 3,865,791 2,964,279
 
Selling, general and administrative expenses 3,777,737 3,861,671
Research and development expenses 1,005,101   1,267,848
Loss from operations (917,047)   (2,165,240)
     
Other income (expense):
Interest income 1,435 5,156
Interest expense - (28,646)
Foreign currency gain 61,875   296,675
Total other income 63,310   273,185
Loss before tax provision (853,737) (1,892,055)
Tax provision 49,136   40,015
Net loss ($902,873)   ($1,932,070)
 
 
Net loss per share:
Basic and diluted ($0.09) ($0.19)
 
Weighted average shares-basic and diluted 10,065,344 10,043,876
   
HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
 

 

Six months ended March 31,

2010

2009
 
Net sales $ 31,725,437 $ 30,022,109
Cost of sales   22,637,249       24,459,569  
Gross profit 9,088,188 5,562,540
 
Selling, general and administrative expenses 8,110,260 7,700,567
Research and development expenses   2,175,172       2,113,490  
Loss from operations   (1,197,244 )     (4,251,517 )
     
Other income (expense):
Interest income 2,894 9,625
Interest expense (4,347 ) (28,646 )
Foreign currency gain   61,635       643,677  
Total other income   60,182       624,656  
Loss before tax provision (1,137,062 ) (3,626,861 )
Tax provision   100,362       77,522  
Net loss $ (1,237,424 )   $ (3,704,383 )
 
 
Net loss per share:
Basic and diluted ($0.12 ) ($0.37 )
 
 
Weighted average shares-basic and diluted 10,062,545 10,039,474
   
HAUPPAUGE DIGITAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
March 31, 2010 September 30, 2009
(unaudited)    
Assets:
Cash and cash equivalents $8,712,496 $8,368,342
Trade receivables, net of various allowances 7,335,968 9,770,584
Other non trade receivables 4,263,465 4,116,392
Inventories 9,961,418 8,616,800
Deferred tax asset-current 1,297,574 1,297,574
Prepaid expenses and other current assets 1,145,158   928,680
Total current assets 32,716,079 33,098,372
 
Intangible assets, net 4,318,684 4,696,102
Property, plant and equipment, net 641,754 757,488
Security deposits and other non current assets 108,070 108,088
Deferred tax asset-non current 887,611   887,611
Total assets $38,672,198   $39,547,661
     
 
Liabilities and Stockholders’ Equity:
 
Current Liabilities:
Accounts payable $12,392,648 $12,478,625
Accrued expenses fees 5,681,983 5,753,546
Accrued expenses 9,716,484 8,131,263
Note Payable 0 625,045
Income taxes payable 209,332   224,316
Total current liabilities 28,000,447 27,212,795
 
Stockholders' Equity:
Common stock, $.01 par value; 25,000,000 shares authorized,
10,825,296 and 10,814,042 issued, respectively 108,253 108,140
Additional paid-in capital 17,498,372 17,276,651
Retained earnings (deficit) (441,750) 795,674
Accumulated other comprehensive loss (4,088,787) (3,441,262)
Treasury Stock, at cost, 759,579 shares (2,404,337)   (2,404,337)
Total stockholders' equity 10,671,751   12,334,866
Total liabilities and stockholders' equity $38,672,198   $39,547,661

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