Interphase Announces First Quarter 2010 Financial Results

http://www.businesswire.com/news/home/20100422006562/en

PLANO, Texas--(Business Wire)--
Interphase Corporation (NASDAQ: INPH), a leading global provider of solutions
for converged communications networks, today reported financial results for its
first quarter ended March 31, 2010.

Revenues for the first quarter of 2010 were $3.8 million compared to $8.4
million for the first quarter of 2009. Revenues in the quarter were primarily
impacted by broadband telecom revenues, which decreased to $3.2 million in the
first quarter of 2010 compared to $8.0 million for the first quarter of 2009.
Professional services revenues decreased to $160,000 for the first quarter of
2010 compared to $249,000 for the first quarter of 2009. Gross margin percentage
for the first quarter of 2010 was 49% compared to 60% for the first quarter of
2009. The decrease in gross margin percentage was primarily due to reduced
utilization of the manufacturing facility and, to a lesser degree, a revenue mix
shift toward lower margin products. The company reported a net loss of $2.4
million, or $(0.34) per share for the first quarter of 2010, compared to a net
income of $707,000, or $0.11 per fully diluted share in the first quarter of
2009. The company has a working capital position of $19.0 million, including
cash and marketable securities of $15.9 million on March 31, 2010.

"Our business in the telecommunications industry continues to be very difficult
to predict or operate within," said Gregory B. Kalush, CEO and President of
Interphase. "We acknowledged that too much of our business has been tied to this
market; so last year we began implementing a multi-tiered strategy to sell our
products and capabilities into new customers within new markets in order to
diversify our company. Our goal is to diversify our business into new and
attractive markets by offering our products and an expanded list of high quality
services. During the first quarter, we invested in the necessary organizational
and strategic changes to meet this goal."

About Interphase Corporation

Interphase Corporation (NASDAQ: INPH) delivers solutions for LTE and WiMAX,
interworking gateways, packet processing, network connectivity, and security for
key applications for the Communications, Aerospace-Defense, and Enterprise
markets. Founded in 1974, Interphase provides expert Engineering Design and
Contract Manufacturing Services, in addition to its COTS portfolio, and plays a
leadership role in next generation AdvancedTCA (ATCA), AdvancedMC (AMC), PCI-X,
and PCIe standards and solutions. Interphase is headquartered in Plano, Texas,
with sales offices across the globe. Clients include Alcatel-Lucent, Emerson
Network Power, Fujitsu Ltd., Hewlett Packard, Samsung, and Sun Microsystems.
Visit www.iphase.com.

Safe Harbor

This press release contains forward-looking statements with respect to financial
results and certain other matters. These statements are made under the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995 and
involve a number of risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Such risks and
uncertainties include, without limitation, fluctuations in demand, the quality
and price of similar or comparable networking products, access to sources of
capital, general economic conditions in the company's market areas, and that
future sales and growth rates for the industry and the company could be lower
than anticipated.

Interphase, the Interphase logo, SlotOptimizer and iNAV are trademarks or
registered trademarks of Interphase Corporation. All other trademarks are the
property of their respective owners.

Condensed Consolidated Financial Statements

Interphase Corporation

Condensed Consolidated Statements of Operations
(amounts in thousands, except per-share amounts)

Three Months Ended Mar. 31,
2010 2009
Revenues $ 3,759 $ 8,421
Gross margin 1,859 5,017
Research and development 2,093 2,025
Sales and marketing 1,260 1,474
General and administrative 1,004 1,188
Total operating expenses 4,357 4,687
(Loss) income from operations (2,498 ) 330
(Loss) income before income tax (2,530 ) 427
Net (loss) income (2,363 ) 707
Net (loss) income per diluted share $ (0.34 ) $ 0.11
Weighted average common and dilutive shares 6,871 6,714

Selected Consolidated Balance Sheet Information
(amounts in thousands)

Mar. 31, 2010 Dec. 31, 2009
Cash and marketable securities $ 15,916 $ 17,839
Accounts receivable, net 4,174 5,106
Inventories 1,900 1,699
Net property, plant and equipment 616 692
Total assets 25,871 28,647
Total liabilities 8,881 9,385
Total shareholders' equity $ 16,990 $ 19,262

Interphase Corporation
Media Contact:
Julie Parenzan, 214-654-5000
pr@iphase.com
or
Investor Contact:
Joseph Hassett, 866-630-INPH
ir@iphase.com

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