Artecon Reports Third Quarter Results.SAN DIEGO--(BUSINESS WIRE)--Jan. 21, 1999--Artecon (Nasdaq:ARTE), a global leader in high-availability open systems SAN-, server- and 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 ) solutions, today reported results for the quarter ended Dec. 31, 1998. Net revenues for the quarter ended Dec. 31, 1998 were $19.6 million, compared to net revenues of $31 million in the second quarter ended Sept. 30, 1998. Net loss for the third quarter ended Dec. 31, 1998 was ($6.8 million) or ($0.32) per basic share and compared to net income of $282,000 or $0.01 per basic share for the second quarter. Revenues reported in the same period a year ago were $22.4 million and a loss of ($153,000) or ($0.03) per basic share. Results for the third quarter included a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of approximately $1.8 million and $580,000 associated with reduction of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. due to the operational consolidation and workforce reduction announced Dec. 7, 1998, as well as additional one-time write downs of $1.6 million for inventories. Net revenues for the nine months ended Dec. 31, 1998, were $77.6 million, compared to $52.6 million reported in the same period a year ago. Net loss for the first nine months was ($6.4 million), or ($0.30) per basic share, versus a net loss of ($1.6 million) or ($0.29) per basic share for the same period a year ago. Net revenues and net income for the quarter and for the nine months ended Dec. 31, 1997 do not include results for Storage Dimensions, which was acquired in March 1998. "The third quarter proved to be challenging," stated James Lambert Lambert may refer to
Please [ improve this article] or discuss the issue on the talk page. and energy customers; slower than expected production ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale by some of our telco and OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers; a less than typical government spending Government spending or government expenditure consists of government purchases, which can be financed by seigniorage, taxes, or government borrowing. It is considered to be one of the major components of gross domestic product. pattern, exacerbated by the recent crisis in Iraq, which caused some significant orders to be deferred until this quarter and ongoing effects of economic downturns in Asia. "We took decisive action in December, which consisted of consolidating more of our Milpitas, California Milpitas (IPA pronunciation: mɪlpitʌs; inhabitants are called 'Milpitans') is a city in Santa Clara County, California. It is located with San Jose to its south and Fremont to its north, at the eastern end of Highway 237 and generally between Interstate freeways 680 and operations to our headquarters in Carlsbad," continued Lambert. "That consolidation contributed to a reduction to our workforce by approximately 20 percent as well as about $6 million annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. reduction in operational costs. We fully expect these actions to further strengthen our position, have a positive 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. effect on our business, and enable Artecon to return to profitability in the fourth quarter. "There were a number of positive events during the third quarter as well," Lambert elaborated. "We introduced several new products and enhancements, the most significant being our LynxArray family of SAN systems. We appointed key personnel to our NAS management team to further develop our LynxNSS product line. We also made solid progress in our Telco division, with an important OEM agreement to supply Motorola's Cellular Infrastructure Group with a critical switching component and we recruited a telecom industry veteran to sharpen sharp·en tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens To make or become sharp or sharper. sharp our telco/Internet storage focus." QUARTERLY HIGHLIGHTS Artecon Introduces LynxArray 500 Family of Storage Area Network Systems; Fully Integrated Storage Area Network Offers Scalable Capacities from 50GB to Multiple Terabytes On Dec. 10, 1998, Artecon announced the LynxArray(TM) 500 family of Storage Area Network (SAN) systems. The LynxArray 500 offers 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 Sun Solaris customers a fully integrated, plug-and-play SAN that supports scalable capacities ranging from 50GB to multiple terabytes. Artecon Expands Network-Attached Storage Program; James G. Wayda and Frank Padilla Named to Key New Positions in Company's LynxNSS Product Group On Nov. 30, 1998, Artecon announced the expansion of its network-attached storage (NAS) program by appointing industry veterans James G. Wayda and Frank Padilla to newly created management positions in the company's LynxNSS product team. Motorola Selects Artecon in OEM Agreement; Artecon TeleCom Division to Deliver Critical Switching Component in Cellular Networks On Nov. 2, 1998, Artecon announced that it has entered into a multi-year, multimillion-dollar agreement with Motorola Cellular Infrastructure Group (CIG CIG Ceiling (height above ground level to base of clouds) CIG Conference Intergouvernementale (French: Intergovermental Conference) CIG Conservation Innovation Grants (USDA NRCS) ). The agreement calls for Artecon to supply a NEBS NEBS Network Equipment Building System (Bell Telephone Labs) NEBS Network Equipment Building Standards NEBS New England Business Services NEBS New England Barbecue Society NEBS Neue Europäische Bewegung Schweiz (Network Equipment-Building System)-certified cellular infrastructure product called the SwitchMATE(TM) to Motorola CIG on an OEM basis. Artecon Recruits Former Sun Microsystems Sun Microsystems, Inc. (NASDAQ: JAVA[3]) is an American vendor of computers, computer components, computer software, and information-technology services, founded on 24 February 1982. Executive for Key Position in Its Telecommunications/ISP Storage Business; Miles N. Moore Moore, city (1990 pop. 40,761), Cleveland co., central Okla., a suburb of Oklahoma City; inc. 1887. Its manufactures include lightning- and surge-protection equipment, packaging for foods, and auto parts. Brings 25 Years of Achievement to Aggressively Grow Artecon TeleCom Division On Oct. 27, 1998, Artecon announced the appointment of Miles N. Moore to the position of director of business development for Artecon's TeleCom Division. Most recently, Moore served as group marketing manager at Sun Microsystems (Nasdaq:SUNW SUNW Sun Microsystems, Inc (former stock symbol; now JAVA) SUNW Stanford University Network Workstation (Sun Microsystems, Inc) ), where he was responsible for expanding Sun's market share in the telecommunications/ISP (Internet service provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. ) industry. Artecon RAID Storage System Wins PC Magazine Editors' Choice Award; RAIDPro XL Outdistances Competition in Comparative Review On Oct. 28, 1998, Artecon announced that its RAIDPro XL storage solution has won PC Magazine's coveted cov·et v. cov·et·ed, cov·et·ing, cov·ets v.tr. 1. To feel blameworthy desire for (that which is another's). See Synonyms at envy. 2. To wish for longingly. See Synonyms at desire. Editors' Choice award, outdistancing competing systems from other independent storage vendors and Compaq. About Artecon Founded in 1984, Artecon designs, manufactures, markets and supports a broad range of enterprise storage solutions to satisfy the 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. , performance and capacity requirements of the open systems market. On March 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 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 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 the effect on Artecon's business of various strategic initiatives and restructurings, the ability to achieve and sustain profitability and 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 to 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 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. and most recent Form 10-Q Form 10-Q See 10-Q. filings 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 1-800-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. -- FINANCIAL HIGHLIGHTS TO FOLLOW -- -0-
ARTECON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
Three Months Ended
Dec. 31 Dec. 31
1998 1997
NET REVENUES $19,639 $22,401
COST OF SALES 13,554 16,748
RESTRUCTURE EXPENSES 403 --
GROSS MARGIN 5,682 5,653
OPERATING EXPENSES:
Selling & service 7,105 3,248
General & administrative 1,574 963
Research and development 1,825 894
Restructure expenses 1,404 --
Impairment of intangible assets 580 --
Acquired in-process research and
development costs -- --
Total operating expenses 12,488 5,105
OPERATING INCOME (LOSS) (6,806) 548
OTHER EXPENSE:
Other income (expense), net
10 (82)
Loss on foreign currency
transactions, net (1) (149)
Interest, net (282) (172)
Total other expense (273) (403)
INCOME (LOSS) BEFORE INCOME
TAX PROVISION (7,079) 145
INCOME TAX PROVISION (BENEFIT) (284) 298
NET LOSS $(6,795) $(153)
BASIC NET LOSS PER SHARE $(0.32) $(0.03)
WEIGHTED AVERAGE SHARES USED TO
CALCULATE BASIC NET LOSS
PER SHARE 21,595 6,041
DILUTED NET LOSS PER SHARE $(0.32) $(0.03)
WEIGHTED AVERAGE SHARES USED TO
CALCULATE DILUTED NET LOSS
PER SHARE 21,595 6,041
Nine Months Ended
Dec. 31 Dec. 31
1998 1997
NET REVENUES $77,552 $52,601
COST OF SALES 50,139 37,658
RESTRUCTURE EXPENSES 403 --
GROSS MARGIN 27,010 14,943
OPERATING EXPENSES:
Selling & service 20,666 7,646
General & administrative 4,034 2,720
Research and development 5,989 2,337
Restructure expenses 1,404 --
Impairment of intangible assets 580 --
Acquired in-process research and
development costs -- 3,700
Total operating expenses 32,673 16,403
OPERATING INCOME (LOSS) (5,663) (1,460)
OTHER EXPENSE:
Other income (expense), net
15 (77)
Loss on foreign currency
transactions, net (25) (185)
Interest, net (754) (465)
Total other expense (764) (727)
INCOME (LOSS) BEFORE INCOME
TAX PROVISION (6,427) (2,187)
INCOME TAX PROVISION (BENEFIT) 17 (573)
NET LOSS $(6,444) $(1,614)
BASIC NET LOSS PER SHARE $(0.30) $(0.29)
WEIGHTED AVERAGE SHARES USED TO
CALCULATE BASIC NET LOSS
PER SHARE 21,515 5,619
DILUTED NET LOSS PER SHARE $(0.30) $(0.29)
WEIGHTED AVERAGE SHARES USED TO
CALCULATE DILUTED NET LOSS
PER SHARE 21,515 5,619
Artecon Inc.
Consolidated Balance Sheet
(In Thousands)
Dec. 31 March 31,
1998 1998
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,458 $ 7,992
Accounts receivable, net 15,144 18,415
Inventories, net 13,334 12,354
Deferred income taxes 3,510 3,510
Prepaid expenses and other 1,299 1,654
Total current assets 34,745 43,925
Property and equipment, net 2,051 3,726
Other assets 2 133
Goodwill, net 4,168 4,668
Other intangible assets, net 1,763 3,291
Deferred income taxes 1,521 1,602
$44,250 $57,345
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,749 $ 14,161
Accrued compensation 1,501 2,431
Accrued merger liabilities 569 5,406
Other accrued liabilities 3,665 4,317
Short-term borrowings -- 35
Current portion of long-term debt 474 756
Total current liabilities 16,958 27,106
Long-term liabilities 142 13
Borrowings under lines of credit 12,296 7,899
Long-term debt 1,475 2,585
Minority interest 51 63
Total liabilities 30,922 37,666
SHAREHOLDERS' EQUITY
Preferred shares 12 12
Common shares 108 107
Additional paid-in capital 39,376 39,148
Foreign currency translation adjustment (233) (97)
Accumulated deficit (25,935) (19,491)
13,328 19,679
$ 44,250 $ 57,345
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