Artecon Reports Second Quarter Results.SAN DIEGO--(BUSINESS WIRE)--Oct. 22, 1998--Artecon Inc. (Nasdaq: ARTE), a global leader in high availability Also called "RAS" (reliability, availability, serviceability) or "fault resilient," it refers to a multiprocessing system that can quickly recover from a failure. There may be a minute or two of downtime while one system switches over to another, but processing will continue. open systems network -- and server-attached storage solutions, today reported results for the second quarter ended Sept. 30, 1998. Net revenues for the quarter ended Sept. 30, 1998 increased 15 percent to $31 million, compared to net revenues of $26.9 million for the first quarter ended June June: see month. 30, 1998 and net revenues of $18 million in the same period a year ago. Net income for the second quarter ended Sept. 30, 1998 was $282,000, or $0.01 per basic share compared to net income of $69,000, or less than $0.01 per basic share for the first quarter and a net loss of $1.6 million, or ($0.26) per basic share, for the same period a year ago, which included a charge to earnings of $3.7 million related to the acquisition of Falcon Systems in August 1997. Net revenues for the six months ended Sept. 30, 1998 increased to $57.9 million compared to $30.2 million reported in the same period a year ago. Net income for the first six months increased to $351,000, or $0.02 per basic share, versus a net loss of $1.5 million, or ($0.26) per basic share for the same period a year ago. Net revenues and net income for the quarter and six months ended Sept. 27, 1997, do not include results for Storage Dimensions, which was acquired by Artecon in March 1998. "We are pleased to report improvements in our financial performance despite the historical effects of summer seasonality," commented James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. Lambert Lambert may refer to
adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. strengthen operational performance and managing expenses which drove the top line and bottom line. We are starting to see the benefits of the new Artecon through stronger sales of products across our key target markets -- network-attached storage See NAS. (NAS (1) See network access server. (2) (Network Attached Storage) A specialized file server that connects to the network. A NAS device contains a slimmed-down operating system and a file system and processes only I/O requests by supporting the popular ), telco and enterprise storage. Our focus moving forward is to continue to strengthen our NAS product offerings and to execute our Storage Area Network (SAN) and Fibre Channel strategies." "During the second quarter, we secured ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9002 certification, which demonstrates our pledge to continuous quality improvement. We obtained Microsoft Cluster Server Clustering software from Microsoft for Windows NT/2000. It provides rudimentary load balancing and two-node failover, which allows a second server to take over if the first one fails. Cluster Server was formerly code named Wolfpack. validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. for our SuperFlex 5500 System for NT clustering applications. We broke the price barrier for dual-active RAID storage with our SuperFlex 5000E and we announced that Global Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the chose Artecon's LynxArray RAID for mission-critical Internet services. We introduced new Sphinx sphinx (sfĭngks), mythical beast of ancient Egypt, frequently symbolizing the pharaoh as an incarnation of the sun god Ra. The sphinx was represented in sculpture usually in a recumbent position with the head of a man and the body of a lion, enclosures for Sun Ultra 30/60," concluded Lambert. Quarterly Highlights Artecon Ruggedizes Sun Ultra 30/60 Workstations with New Sphinx Enclosures; Rackmount Products Complement Artecon's LynxArray Storage for Telecom and Other Key Markets On Sept. 29, 1998, Artecon announced its Sphinx(TM) enclosures for rackmounting Sun Microsystems' Ultra(TM) 30 or Ultra 60 workstations. The new Sphinx adds tremendous flexibility to the high-performance Ultra workstations and is particularly suited for ruggedized/mission-critical applications in the telecommunications network A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. infrastructure, factory automation process control, and field data acquisition and analysis. Global Internet Chooses Artecon LynxArray RAID for Mission-Critical Internet Services On Sept. 9, 1998, Artecon announced that Global Internet Ltd. and its sister company, GX Networks, have selected LynxArray(TM) RAID systems for their mission-critical applications. Artecon's fully redundant LynxArray will be a key component for providing 24-hours-a-day, 365-days-a-year domestic and commercial Internet services with 600 gigabytes of fault-tolerant disk storage. Artecon Breaks Price Barrier for RAID Storage with Dual-Active Controllers; New SuperFlex 5000E Makes Enterprise-Class Resilience resilience (r  ·zilˑ·yens),n and Performance -- Available at a Price Below $15,000 On Aug. 10, 1998, Artecon introduced SuperFlex(TM) 5000E, the first dual-active controller RAID storage system for 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. and NetWare priced below $15,000. The UltraSCSI system has also been engineered with dual redundant data I/O (Input/Output) The transfer of data between the CPU and a peripheral device. Every transfer is an output from one device and an input to another. See PC input/output. I/O - Input/Output paths and mirrored read-ahead and write-back cache for the highest resiliency The ability to recover from a failure. The term may be applied to hardware, software or data. and performance. Artecon Secures ISO 9002 Certification; Milestone Certification Demonstrates Artecon's Commitment to Continuous Quality Improvement On July 28, 1998, Artecon announced that its corporate manufacturing facility in Carlsbad, Calif. earned the prestigious ISO 9002 certification from the International Organization for Standardization International Organization for Standardization (ISO) Organization for determining standards in most technical and nontechnical fields. Founded in Geneva in 1947, its membership includes more than 100 countries. . Artecon's RAID Storage System Gains Microsoft Cluster Server Validation; Microsoft Approves SuperFlex 5500 System for NT Clustering Applications On July 20, 1998, Artecon announced that its SuperFlex(TM) 5500 RAID storage system has been validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. as a "Cluster Device" by Microsoft Windows See Windows. (operating system) Microsoft Windows - Microsoft's proprietary window system and user interface software released in 1985 to run on top of MS-DOS. Widely criticised for being too slow (hence "Windoze", "Microsloth Windows") on the machines available then. Hardware Quality Labs. The SuperFlex 5500 system can now officially be used to create Windows NT 4.0 Enterprise Edition Microsoft Cluster Server (MSCS See Microsoft Cluster Server. ) configurations (also known as Wolfpack) when combined with other Microsoft-approved devices. About Artecon Founded in 1984, Artecon designs, manufactures, markets, and supports a broadrange of enterprise storage solutions to satisfy the high availability, performance and capacity requirements of the open systems market. On Mar. 31, 1998, Artecon completed a merger with independent RAID storage vendor Storage Dimensions, creating one of the world's largest open systems, independent storage companies serving the PC-LAN PC-LAN Personal Computer Local Area Network and UNIX UNIX Operating system for digital computers, developed by Ken Thompson of Bell Laboratories in 1969. It was initially designed for a single user (the name was a pun on the earlier operating system Multics). markets. The combined company's products consist of server-attached as well as network-attached storage systems. In addition, the company's EXTREME product line includes disaster-tolerant RAID systems for telco Central Office and Internet applications. Artecon has a Japan-based subsidiary and a Europe-based subsidiary with offices in France, England and the Netherlands. The company also operates through reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. and distributor channels worldwide. Additional information on Artecon can be found on the Internet at http://www.artecon.com. This press release contains 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. . These forward-looking statements include statements about product performance and industry leadership. Actual results may differ materially due to factors including, but not limited to: uncertainty regarding industry demand, Artecon's ability successfully integrate the combined Artecon and Storage Dimensions businesses and to retain existing staff, and to recruit and train replacement staff as required; the company's ability to consolidate and to eliminate redundant activities; the company's ability to leverage resources in major markets, achieve greater productivity from its employees and assets, maximize effectiveness of sales offices, reduce costs and improve financial performance; the impact of competitive products and pricing; and the fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. demand for PC-LAN and UNIX server A medium to large-scale computer system in a network that runs under Unix. Unix servers are widely used as application servers and database servers and are available from a variety of vendors, including Sun, IBM, HP and others. products in general and storage systems in particular. These and other risks are described in more detail in the company's 10K filing made with the Securities and Exchange Commission, which may be accessed on the World Wide Web at http://www.sec.gov. For more information regarding Artecon via fax at no cost, dial 800/PRO-INFO, ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors ARTE. -0-
ARTECON INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
Three Months Ended Six Months Ended
Sept. 30, Sept.27, Sept. 30, Sept. 27,
1998 1997 1998 1997
--------- -------- --------- ---------
NET REVENUES $30,968 $18,042 $57,913 $30,200
COST OF SALES 19,868 12,215 36,585 20,910
GROSS MARGIN 11,100 5,827 21,328 9,290
OPERATING EXPENSES:
Selling and Service 6,720 2,474 13,561 4,398
General & Administrative 1,594 1,331 2,460 1,757
Research and development 2,007 766 4,164 1,443
Acquired in-process
research and development
costs -- 3,700 -- 3,700
Total operating expenses 10,321 8,271 20,185 11,298
OPERATING INCOME (LOSS) 779 (2,444) 1,143 (2,008)
OTHER EXPENSE:
Other income (expense), net (3) 13 5 5
Loss on foreign currency
transactions, net (1) (24) (24) (36)
Interest, net (248) (152) (472) (293)
Total other expenses (252) (163) (491) (324)
INCOME (LOSS) BEFORE
INCOME TAX PROVISION 527 (2,607) 652 (2,332)
INCOME TAX PROVISION
(BENEFIT) 245 (1,042) 301 (871)
NET INCOME (LOSS) $282 $(1,565) $351 $(1,461)
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustment 302 45 363 174
COMPREHENSIVE INCOME (LOSS) $584 $(1,520) $714 $(1,287)
BASIC NET INCOME (LOSS)
PER SHARE $0.01 $(0.26) $0.02 $(0.26)
WEIGHTED AVERAGE SHARES
USED TO CALCULATE BASIC
NET INCOME (LOSS) PER
SHARE 21,525 5,910 21,475 5,558
DILUTED NET INCOME
(LOSS) PER SHARE $0.01 $(0.26) $0.01 $(0.26)
WEIGHTED AVERAGE SHARES
USED TO CALCULATE
DILUTED NET INCOME
(LOSS) PER SHARE 23,898 5,910 23,483 5,558
ARTECON INC.
CONSOLIDATED BALANCE SHEET
(In Thousands)
Sept. 30, March 31,
1998 1998
---------- ----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 2,745 $ 7,992
Accounts receivable, net 21,972 18,415
Inventories, net 13,884 12,354
Deferred income taxes 3,510 3,510
Prepaid expenses and other 1,396 1,654
Total current assets 43,507 43,925
Property and Equipment, net 2,921 3,726
Other Assets 2 133
Goodwill, net 4,335 4,668
Other Intangible Assets, net 3,047 3,291
Deferred Income Taxes 1,521 1,602
55,333 57,345
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 12,442 $ 14,161
Accrued compensation 2,132 2,431
Accrued merger liabilities 1,320 5,406
Other accrued liabilities 3,344 4,317
Income Taxes Payable 293 --
Short-term borrowings -- 35
Current portion of long-term debt 466 756
Total current liabilities 19,997 27,106
Long-Term Liabilities 103 13
Borrowings Under Lines of Credit 12,965 7,899
Long-Term Debt 1,592 2,585
Minority Interest 59 63
Total Liabilities 34,716 37,666
SHAREHOLDERS' EQUITY
Preferred shares 12 12
Common shares 108 107
Additional paid-in capital 39,371 39,148
Foreign currency translation adjustment 266 (97)
Accumulated deficit (19,140) (19,491)
Total shareholders'equity 20,617 19,679
$ 55,333 $ 57,345
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