AST Reports Third Quarter Results; Company Also Announces Intent For Additional $200 Million Financial Support from Samsung; Roger W. Johnson, Former Western Digital Chairman and CEO, Joins Board.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)--Nov. 7, 1996--AST Research Inc. (ASTA-NASDAQ) today announced revenues of $408.5 million for the third quarter of fiscal year 1996, ended Sept. 28. This compares with revenues of $403.4 million reported during the comparable prior year period. Total revenues for the first three quarters of fiscal year 1996 were $1.492 billion, versus $1.736 billion for the previous year's period. The company reported a net loss of $135.3 million ($2.41 per share) during the third quarter of fiscal year 1996, compared to a net loss of $96.4 million ($2.36 per share) reported during the prior year period. The 1996 third quarter net loss included a $21.6 million one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge due to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of goodwill associated with the company's 1993 acquisition of Tandy See RadioShack. (company) Tandy - A US company, the parent company of Radio Shack, makers of the TRS-80 and other early personal computers. Corporation's personal computer manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . Third quarter revenues represented the first year-over-year increase in the past five quarters. Unit shipments during the third quarter increased over the prior year quarter by approximately 11 percent to 273,000, comprised of 242,000 desktops and 31,000 notebooks. Commercial desktop and notebook system businesses were adversely affected due to selected product development delays, lower sales to a key Asia Pacific customer and a continued aggressive pricing environment, especially for notebook systems. Worldwide revenues increased approximately one percent over the comparable prior-year quarter. Sales of $227.5 million in the Americas were 19 percent higher primarily because of increased consumer retail channel demand. Sales within the company's Europe and Asia Pacific regions declined 14 percent due to traditional seasonal slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. and intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: competitive pressures. "Our operating performance remains disappointing, but the numbers really do not tell the story at 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. right now," said Y.S. Kim, president and chief executive officer. "In just eight weeks time, our new senior management team has begun to aggressively address the key operational challenges that need to be met in order to turn the company around. We believe that the actions being implemented by AST will eventually have a positive impact on the bottom line." Mr. Kim cited three current activities that are key to the success of AST's strategy to return to profitability: -- The implementation of a clear operating strategy that centers on strengthening AST's research and development capabilities, increasing efficiency across the company and marketing more aggressively to end users. -- The 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. commitment from Samsung -- AST's largest shareholder -- as a global strategic partner through continued financial support, the realization of product component and branding synergies, and the sharing of expertise, especially in the form of engineering, management and product development talent. -- The continued endorsement of AST's 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. program by major customers. Mr. Kim pointed out that AST has maintained its business relationships with major customers during the recent management transition, and that at least two new relationships have been established since his tenure began -- one to distribute AST products through a major retail consumer products chain, and the other to supply systems to a Fortune 100 company. Additional Samsung Financial Support AST also announced it has entered into a non-binding letter of intent with Samsung which contemplates that Samsung will provide an additional $200 million in bank credit guarantees, in exchange for shares of AST non-voting preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . Subject to the execution of a definitive agreement, Samsung will provide AST with a bank credit guarantee of $100 million in Dec. 1996 and an additional $100 million in April 1997, both maturing on Dec. 31, 1998. These new guarantees are in addition to AST's current $200 million in Samsung bank credit guarantees extending through Dec. 31, 1997. Until the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of the new credit guarantees, Samsung also has provided AST with a $50 million 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. loan due on Dec. 19, 1996. Inventory Management Summary AST continued its focus on improved inventory management, which has resulted in a 45 percent reduction in inventory levels and a near doubling of inventory turns over the past year. Total net inventory was $192.3 million, down from $218.1 million at June 29, 1996 and represented inventory turns of 8.9. 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 $344.4 million, which represented 76 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). . At Sept. 28, 1996, total cash and cash equivalents were $30.0 million, with $124.0 million in short-term borrowings. New Board Member AST also announced that Roger W. Johnson, 62, past chairman, chief executive officer and president at Western Digital Corp. and a former top official for the U.S. General Services Administration The General Services Administration (GSA) was established by section 101 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C.A. § 751). The GSA sets policy for and manages government property and records. (GSA (1) (Global mobile Suppliers Association, Sawbridgeworth, U.K., www.gsacom.com) A membership organization of suppliers of GSM products and services. Its goal is to promote GSM as the worldwide mobile communications standard. See GSM Association and GSM. ) within the Clinton Administration Noun 1. Clinton administration - the executive under President Clinton executive - persons who administer the law , was named to the company's Board of Directors. During an 11-year tenure at Western Digital, he helped grow the company from revenues of approximately $30 million, to multi-billion, Fortune 500 status. Reorganization Summary During the quarter and into October, AST implemented a management reorganization that is designed to improve its future financial performance. New executive appointments included that of Mr. Kim as president and chief executive officer; Won Suk SUK Sveriges Unga Katoliker (Swedens Young Catholics) Yang yang (yang) [Chinese] in Chinese philosophy, the active, positive, masculine principle that is complementary to yin; see yin, under principle. as acting senior vice president, finance, and chief financial officer; and Noh Byung (N.B.) Park as senior vice president, worldwide product development and manufacturing. To address end-user demand generation, AST created the Global Corporate Marketing and Communications Group and established two senior-level positions to lead the group's activities. The new function consolidates responsibilities for global marketing and channel strategies, in addition to customer relations, brand promotion, advertising and corporate communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. . AST also established the Product Planning Product Planning is the ongoing process of identifying and articulating market requirements that define a product’s feature set. See also
Outlook "Disappointing results for this quarter have not diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. the intensity of our turnaround efforts," said Mr. Kim. "Our goals for the remainder of the year are to significantly increase our worldwide brand awareness efforts and re-establish consistency in delivering products to our customers. Long-term, we must continue to keep operational costs down, enhance customer recognition for our products and strive to quickly bring the latest technologies to our worldwide customer base, including systems based on Intel(R) Pentium(R) Pro processors and Microsoft(R) Window's NT software." 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-
AST RESEARCH INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 28, December 30,
1996 1995
(In thousands) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 29,851 $ 125,387
Accounts receivable, net 344,361 392,598
Inventories 192,349 252,339
Other current assets 48,529 67,297
Total current assets 615,090 837,621
Property and equipment, net 94,747 98,725
Other assets 76,004 119,696
Total assets $ 785,841 $ 1,056,042
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 599,134 $ 614,075
Long-term debt 128,563 125,540
Other non-current liabilities 6,911 5,545
Total liabilities 734,608 745,160
Common stock and additional
capital 505,291 415,182
Retained earnings (deficit) (454,058) (104,300)
Total shareholders' equity 51,233 310,882
Total liabilities and
shareholders' equity $ 785,841 $ 1,056,042
AST RESEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 28, Sept. 30, Sept. 28, Sept. 30
(In thousands, except 1996 1995 1996 1995
per share amounts)
Net sales $ 408,483 $ 403,357 $ 1,467,214 $ 1,735,535
Revenue from
related party - - 25,000 -
Total revenue 408,483 403,357 1,492,214 1,735,535
Cost of sales 427,245 410,126 1,512,020 1,600,246
Gross profit (loss) (18,762) (6,769) (19,806) 135,289
Selling, general and
administrative expenses 78,020 75,193 243,634 236,826
Engineering and development
expenses 8,873 9,566 29,032 27,399
Restructuring charge - - 6,527 -
Other charges 21,643 - 26,380 -
Total operating
expenses 108,536 84,759 305,573 264,225
Operating loss (127,298) (91,528) (325,379) (128,936)
Financing and other
expense, net (7,970) (4,854) (24,379) (14,873)
Loss before income
taxes (135,268) (96,382) (349,758) (143,809)
Income tax provision
(benefit) - - - (9,248)
Net loss $ (135,268) $ (96,382) $ (349,758) $ (134,561)
Net loss per share $ (2.41) $ (2.36) $ (7.21) $ (3.83)
Weighted average common
shares outstanding 56,164 40,762 48,523 35,177
AST RESEARCH INC.
Computation of Net Loss Per Share
Three Months Ended Nine Months Ended
Sept. 28, Sept. 30, Sept. 28, Sept. 30,
(In thousands, except 1996 1995 1996 1995
per share amounts)
Primary loss per share
Shares used in computing
primary loss per share:
Weighted average shares
of common stock
outstanding 56,164 40,762 48,523 35,177
Effect of stock options
treated as common stock
equivalents under the
treasury stock method - - - -
Weighted average common
and common equivalent
shares outstanding 56,164 40,762 48,523 35,177
Net loss $ (135,268) $ (96,382) $(349,758) $(134,561)
Loss per share - primary $ (2.41) $ (2.36) $ (7.21) $ (3.83)
Fully diluted loss per share
Shares used in computing fully
diluted loss per share:
Weighted average shares
of common stock
outstanding 56,164 40,762 48,523 35,177
Effect of stock options
treated as common stock
equivalents under the
treasury stock method - - - -
Shares assumed issued on
conversion of Liquid Yield
Option Notes (LYONs) - - - -
Total fully diluted shares
outstanding 56,164 40,762 48,523 35,177
Net loss - fully diluted
earnings per share:
Net loss $ (135,268) $(96,382) $(349,758)$(134,561)
Adjustment for interest
on LYONs, net of tax - - - -
Adjusted net loss -
fully diluted $ (135,268) $ (96,382) $ (349,758)$(134,561)
Loss per share -
fully diluted $ (2.41) $ (2.36) $ (7.21) $ (3.83)
-0- Note to Editors: AST(R), Advantage!(R), Ascentia and 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. are trademarks of AST Research Inc. Intel and Pentium are registered trademarks, and 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. is a trademark of Intel Corp. Windows is a registered trademark and 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. is a trademark of Microsoft Corp. CONTACT: AST Research Inc. Emory Epperson, 714/727-7958 |
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