AST Reports Second Quarter Results.IRVINE Irvine, town, Scotland Irvine (ûr`vĭn), town (1991 pop. 32,507), North Ayrshire, SW Scotland, on the Irvine River estuary. Industries include iron and brass foundries. Other products are chemicals, electric goods, and clothing. , Calif.--(BUSINESS WIRE)--Aug. 1, 1996--AST Research, Inc. (ASTA-NASDAQ) today announced revenues of $553.7 million for the second quarter of fiscal year 1996, ended June June: see month. 29. This compares with revenues of $662.0 million reported during the comparable prior year period and $530.0 million during the first quarter of fiscal year 1996. The company reported a net loss of $98.7 million, or net loss per share of $2.21 during the second quarter of fiscal year 1996, compared to a net loss of $31.6 million and net loss per share of 98 cents reported during the prior year period. The net loss includes charges of $13.6 million, or approximately 30 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , including $6.5 million that was taken as part of the company's previously-announced worldwide restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities and $7.1 million of other charges. "Second quarter performance, excluding the $13.6 million in charges, improved by $30.6 million when compared with the immediately preceding quarter, indicating that our efforts to grow market share and return to profitability are definitely moving in the right direction," said Ian Diery, president and chief executive officer. "We grew revenues in the U.S. sequentially which resulted in a domestic market share increase and the re-establishment Noun 1. re-establishment - restoration to a previous state; "regular exercise resulted in the re-establishment of his endurance" restoration - the act of restoring something or someone to a satisfactory state of AST (AST Computer, Irvine, CA) A PC manufacturer founded in 1980 by Albert Wong, Safi Quershey and Tom Yuen (A, S and T). It offered a complete line of PCs that sold through its dealer channel. as a top 10 PC supplier." Improved internal processes that were established months earlier began to achieve results during the second quarter. "We made further progress towards our goals of being first to market with new technologies, maintaining aggressive pricing levels relative to direct manufacturers and improved quality and customer satisfaction levels within the company's service and support operations, said Diery. "AST also maintained tight asset management controls which resulted in above-average inventory turn levels, as well as a six percentage point gross margin improvement from the preceding quarter." Worldwide revenues for the second quarter included sales of $538.7 million, as well as $15 million that was received from Samsung as part of a previously-announced intellectual property assignment agreement. Worldwide sales represented a 19 percent decrease from the prior year period, and a four percent increase over first quarter. Lower year-over-year sales in the quarter was primarily caused by sluggish international performance. Sales of $337.9 million in the Americas A·mer·i·cas , the See America. represented a four percent decline over the prior-year period but a 30 percent increase when compared to the immediately preceding quarter. Sales within the company's Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia Pacific regions declined 35 percent over
the prior year's quarter and were 23 percent lower versus last
quarter.
"On a sequential basis, we've we've Contraction of we have. we've have shown dramatic improvement in domestic sales, due largely from having the right mix of leading-edge products available at aggressive price points which are typically at or below those of direct PC manufacturers like Dell and Gateway," said Diery. "With this as a foundation, we've used aggressive advertising and other brand awareness efforts to enhance customer knowledge about the outstanding value that our products represent across the desktop, notebook and server platforms." Unit shipments during the second quarter totaled approximately 321,000, comprised of 274,000 desktops and 47,000 notebooks. The total represented a decline of approximately 19 percent over the prior year period and an increase of seven percent when compared sequentially. Total second quarter notebook shipments decreased 13 percent over last year's second quarter but were 57 percent higher as compared sequentially. "Despite tough competition, executing on our strategy has resulted in a significant jump in domestic unit shipments during the second quarter," said Diery. "AST has returned as a top 10 PC company due to increases in business desktop and notebook systems, as well as the success of our sub-$1,000 PCs that are selling at Wal-Mart  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. ."
Balance Sheet Summary During the second quarter, AST sustained its sharp focus on improving its balance sheet and maintaining prudent inventory management. At June 29, 1996, total cash and cash equivalents were $66.9 million, with $95.0 million in short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. borrowings against a $200 million credit line. Total net inventory was $218.1 million, up from $190.4 million at Mar. 30 and represented inventory turns of 9.8. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying totaled $387.5 million, which represented 63 days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). . In July July: see month. , the company repaid its $90 million three-year promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. to Tandy See RadioShack. (company) Tandy - A US company, the parent company of Radio Shack, makers of the TRS-80 and other early personal computers. Corp. utilizing $30 million in newly issued common stock and $60 million in cash. Cash paid to Tandy was advanced to AST by Samsung, which resulted in Samsung receiving approximately 8.5 million shares of newly-issued AST stock. "Samsung and AST will continue to closely monitor the potential need that AST may have for further financial support from Samsung," said Kwang Ho Kim Kim orphan wanders streets of India with lama. [Br. Lit.: Kim] See : Adventurousness , AST chairman and Samsung Electronics Samsung Electronics (SEC, Hangul:삼성전자; KSE: 005930, KSE: 005935, LSE: SMSN, LSE: SMSD) is a South Korean multinational corporation and the world's largest and leading electronics and information technology company. vice chairman, president and chief executive officer. Second Quarter Summary During the quarter, AST made significant improvements in its strategic direction of being first to market with leading-edge products, maintaining short and flexible supply lines, becoming the best and most reliable supplier to the indirect channel and becoming the company of choice to supply product worldwide. AST's first to market strategy resulted in the industry's first shipments of Bravo BRAVO Cardiology A clinical trial–Blockade of the GP IIB/IIIA Receptor to Avoid Vascular Occlusion– which evaluated lotrafiban in preventing strokes and acute MI. See GP IIB/IIIA. business desktops based on 200 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. Intel Pentium Pentium Family of microprocessors developed by Intel Corp. Introduced in 1993 as the successor to Intel's 80486 microprocessor, the Pentium contained two processors on a single chip and about 3.3 million transistors. processors, Manhattan servers and Bravo business desktops based on 180 MHz and 200 MHz Pentium Pro The sixth generation of the Intel x86 family of CPU chips. The term may refer to the chip or to a PC that uses it. Introduced in 1995 as the successor to the Pentium, models from 150 MHz to 200 MHz were released. processors and Ascentia mobile systems based on Intel's 100 MHz and 133 MHz Pentium processors. In the consumer channel, the company was first to ship Advantage! desktop systems with 200 MHz Pentium processors and 6X CD-ROM drives CD-ROM drives, which today typically means a CD-RW drive that is a combo CD-ROM, CD-R and CD-RW drive, come in a variety of speeds. The original drive (1x) transferred data at 150KB per second. , as well as breaking the $1,000 price barrier for a complete multimedia system with monitor. AST was also first to begin a unique notebook service program with Federal Express, called Express ONE, which enables overnight notebook system exchanges, anywhere nationwide, to ensure maximum user productivity and minimum downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. . To further enhance the company's ability to speed products to market, AST recently enhanced its product development processes, including design verification testing, reliability testing and other prototype engineering activities. Working through these processes with increased engineering resources is expected to result in product designs that are more efficiently manufactured, which will save additional time. In addition, teams from AST and Samsung are now implementing joint procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. , product development and manufacturing efficiency projects which are designed to leverage the combined strengths of both company's resources. AST is also in the process of significantly enhancing its research and development efforts, including an expansion of its product development and engineering staff housed in Irvine. In total, more than 80 positions are to be added in the current quarter which will allow the company to more quickly adapt to changing market requirements and expand into new areas, better implement concurrent product designs and enhance other systems-related activities. The majority of the benefits of additional research and development resources are not expected to be realized until 1997. Working closely with its major vendors, AST has established short and flexible supply lines which are beneficial to quickly adapt to changes in customer demand. Just-in-time (JIT JIT - dynamic translation ) delivery and closely-coupled vendor ordering and forecasting programs are among the worldwide activities that AST is utilizing to enhance flexibility. In addition, the company has begun development of SAP systems in its European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations to more closely orchestrate or·ches·trate tr.v. or·ches·trat·ed, or·ches·trat·ing, or·ches·trates 1. To compose or arrange (music) for performance by an orchestra. 2. regional sales, manufacturing and procurement activities. The company's efforts in Europe are part of a two-year program which will result in worldwide SAP implementation. Resellers and end users are beginning to notice AST's efforts in becoming the best and most reliable supplier to the indirect channel. AST has received positive feedback regarding its product and pricing strategy that helps resellers compete against direct marketers. This also has assisted AST in achieving its goal of recruiting an additional 400 domestic resellers. In addition, the company's increased emphasis on service and support has resulted in an increase in responsiveness to technical support phone calls and speed in spare parts Spare parts, also referred to as Service Parts is a term used to indicate extra parts available and in proximity to the mechanical item, such as a automobile, boat, engine, for which they might be used. Spare parts are also called “spares. shipments which are now operating at best-in-class levels. AST also achieved progress towards its efforts to become the company of choice to supply product worldwide. During the quarter, the company laid the groundwork that will allow companies, both domestic and internationally-based, to purchase PCs on a worldwide basis by establishing and staffing a major accounts group that will target companies with global operations Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. . Outlook "We have started to turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. and have seen significant progress in the U.S.," said Diery. "Our foundation is more stable than last quarter, which we expect will act as a catalyst for more positive future results." "Our plans for the remainder of the year are to maintain consistency in bringing new technologies to market in advance of competitors, while working with our strategic partner towards expanding market share in the commercial desktop and notebook arenas." "Long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , we aim to continue our efforts to associate first-to-market and AST together in the minds of our customers," said Diery. "One extremely important short-term goal is to pave PAVE Cardiology A clinical trial–Post AV Node Ablation Evaluation a smooth path for corporate buyers to make early and strategic investments in Pentium Pro systems that will utilize the benefits of the Microsoft's recently-announced Windows NT (Windows New Technology) A 32-bit operating system from Microsoft for Intel x86 CPUs. NT is the core technology in Windows 2000 and Windows XP (see Windows). Available in separate client and server versions, it includes built-in networking and preemptive multitasking. 4.0 operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. . In the consumer market, we see communication and networking as the next trend and will take action to be the first company premiering several useful technologies, including video conferencing See videoconferencing. (communications) video conferencing - A discussion between two or more groups of people who are in different places but can see and hear each other using electronic communications. , for home and home office users." Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements contained in this press release which are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause results to differ materially from those projected. Such potential risks and uncertainties include, but are not limited to: the level of competitive pricing pressures in the computer industry; the company's ability to continue to develop, produce and deliver new products that incorporate leading-edge PC technologies on a timely basis, that are competitively priced and achieve significant market acceptance; the effect of any continued losses on the company's supplier and customer relationships; and its ability to fund continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . Additional factors which could affect the company's financial results are included in the company's report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for Transition Period 1995 which is filed with the Securities and Exchange Commission. Corporate Background AST Research AST Research, Inc. was a personal computer manufacturer, founded in Irvine, California in 1980 by Albert Wong, Safi Qureshey and Thomas Yuen. (The name comes from the initials of their first names. Inc., a member of the Fortune 500 list of America's largest industrial and service companies, is one of the world's leading personal computer manufacturers. The company develops a broad spectrum of desktop, mobile and server PC products that are sold in more than 100 countries worldwide. AST systems meet a wide range of customer needs, ranging from corporate business applications to advanced home and home office use. Corporate headquarters is located at 16215 Alton Parkway, P.O. Box 57005, Irvine, Calif. 92619-7005. Telephone (714) 727-4141 or (800) 876-4278. Fax: (714) 727-9355. Information about AST and its products can be found on the World Wide Web at http://www.ast.com. -0- Note to Editors: AST, Advantage!, Ascentia and Bravo are trademarks of AST Research, Inc. Intel and Pentium are registered trademarks, and Pentium Pro is a trademark of Intel Corp. Windows is a registered trademark and Windows NT is a trademark of Microsoft Corp. AST RESEARCH, INC Condensed Consolidated Balance Sheets (In thousands)
Quarter Ended
-------------------------------
June 29, December 31,
1996 1995
(Unaudited)
-------------------------------
Assets: Cash and cash equivalents $ 66,947 $ 125,387 Accounts receivable, net 387,495 392,598 Inventories 218,149 252,339 Other current assets 49,257 67,297
----------- -----------
Total current assets 721,848 837,621 Property and equipment, net 96,605 98,725 Other assets 103,882 119,696
----------- ----------
Total assets $ 922,335 $ 1,056,042
=========== ===========
Liabilities and shareholders' equity: Current liabilities $ 659,895 $ 614,075 Long-term debt 158,564 125,540
Other non-current liabilities 7,241 5,545
----------- -----------
Total liabilities 825,700 745,160
Common stock and additional capital 415,425 415,182 Retained earnings (deficit) (318,790) (104,300)
----------- -----------
Total shareholders' equity 96,635 310,882
----------- -----------
Total liabilities and
shareholders' equity $ 922,335 $1,056,042
=========== ===========
AST RESEARCH, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts)
Three Months Ended Six Months Ended
(Unaudited) (Unaudited)
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
Net sales $ 538,759 $ 662,002 $ 1,058,731 $ 1,332,178 Revenue from related party 15,000 - 25,000 - Total revenue 553,759 662,002 1,083,731 1,332,178 Cost of sales 535,158 606,886 1,084,775 1,190,120 Gross profit (loss) 18,601 55,116 (1,044) 142,058 Selling, general and administrative expenses 86,275 80,694 160,416 163,259 Engineering and development 9,645 8,817 20,159 17,833 Restructuring and other charges 13,619 - 13,619 - Operating loss (90,938) (34,395) (198,081) (37,408) Other expense, net (7,792) (4,898) (16,409) (10,019) Loss before taxes (98,730) (39,293) (214,490) (47,427) Income tax benefit - (7,662) - (9,248) Net loss $(98,730) $ (31,631) $ (214,490) $ (38,179) Net loss per share $ (2.21) $ (0.98) $ (4.80) $ (1.18) Shares used in computing net loss per share 44,723 32,393 44,702 32,385 AST RESEARCH, INC. Computation of Net Loss per Share (In thousands, except per share amounts)
Three Months Ended Six Months Ended
(Unaudited) (Unaudited)
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
Shares used in
computing primary
loss per share:
Weighted average
shares of common
stock outstanding 44,723 32,393 44,702 32,385
Effect of stock
options treated as
common stock
equivalents under
the treasury stock
method - - - -
Weighted average common and common equivalent shares outstanding 44,723 32,393 44,702 32,385 Net loss $ (98,730) $ (31,631) $(214,490) $(38,179) Net loss per share - primary $ (2.21) $ (0.98) $ (4.80) $ (1.18) Shares used in computing fully diluted loss per share: Weighted average shares of common stock outstanding 44,723 32,393 44,702 32,385 Effect of stock options treated as equivalents under the treasury stock method - - - - Shares assumed issued on conversion of Liquid Yield Option Notes - - - - Weighted average common and common equivalent shares outstanding 44,723 32,393 44,702 32,385 Net loss Net loss - primary earnings per share $(98,730) $(31,631) $ (214,490) $(38,179) Adjustment for interest on LYONs, net of tax - - - - Adjusted net loss - fully diluted loss per share $(98,730) $(31,631) $ (214,490) $(38,179) Net loss per share - fully diluted $ (2.21) $ (0.98) $ (4.80) $ (1.18) CONTACT: AST Research Emory Epperson, 714/727-7958 (media) or Misty mist·y adj. mist·i·er, mist·i·est 1. Consisting of or marked by mist: a misty rain; a misty night. 2. Ohmart, 714/727-7728 (analyst) |
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