Boundless Corporation Reports Third Quarter 2000 Results; $5 Million Investment by National Semiconductor Infuses Internet Appliance Subsidiary.Business Editors HAUPPAUGE, NY--(BUSINESS WIRE)--Nov. 13, 2000 Boundless Corporation (AMEX AMEX See: American Stock Exchange : BND BND In currencies, this is the abbreviation for the Brunei Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) today announced highlights and financial results for the third quarter ended September 30, 2000. The company reported that revenues decreased 20% for the third quarter ended September 30, 2000 to $ 16,047,000 compared with revenues of $19,970,000 for the third quarter ended September 30, 1999. On a year-to-date basis current period revenues declined 8% compared to the same period last year. The company reported an anticipated net loss for the quarter of $ 4,410,000, or $ 0.97 per common share, all of which is directly attributable to investments in the Company's two subsidiaries Merinta, Inc., and Boundless Manufacturing Services, Inc. which were launched earlier this year. As announced in a previous release, the $5 million investment into Merinta by National Semiconductor Corporation (NYSE NYSE See: New York Stock Exchange :NSM (Network and System Management) Running and controlling the networks and computer systems in an enterprise. See network management. ), the leading provider of "system-on-a-chip" solutions for the Information Age, eliminates the need for future cash expenditures by the company for Merinta. "Softer sales in the company's general text terminal business and certain production delays associated with the company's new Capio II(TM) Windows(R)-based Terminal (WBT See Windows-based terminal. ) resulted in the decrease in revenue for the quarter," commented Joseph Gardner Joseph Gardner (1752–1794) was an American physician who was a delegate for Pennsylvania to the Continental Congress in 1784 and 1785. Joseph was born in Honey Brook Township of Chester County, Pennsylvania in 1752. He studied medicine and practiced in Philadelphia. , Chief Financial Officer of Boundless Corporation. "Non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $1,200,000 against excess inventory and external factors such as the effect of the anticipated introduction of the Euro The introduction of the euro took place principally between 31 December 1998, when the exchange rates between the euro and legacy currencies in the Eurozone became fixed, and early 2002, when euro notes and coins were introduced and the legacy currencies withdrawn. currency also affected profitability. However, the most notable impact to profitability was the significant investment we have made in our subsidiaries, particularly with Merinta. National Semiconductor's equity interest in Merinta will not only enable the company to co-develop and quickly bring to market high performance end-to-end Internet Appliance Also called "information appliance," "smart appliance," and "Web appliance," it is a device specialized for accessing the Web and/or e-mail. Designed for ease of use, it plugs into a telephone jack or LAN connection for Internet hookup. solutions, but will also allow us to reallocate Verb 1. reallocate - allocate, distribute, or apportion anew; "Congressional seats are reapportioned on the basis of census data" reapportion allocate, apportion - distribute according to a plan or set apart for a special purpose; "I am allocating a loaf of capital to strengthen our other growing divisions." "In a span of less than a year, we've undertaken a number of major initiatives to build the foundation for future growth, including the realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of the company as three separate entities and the negotiation of nine complementary business relationships, including the most recent alliance with National Semiconductor Corporation," said J. Gerald Combs Gerald Combs, a computer science graduate of the University of Missouri-Kansas City, is the creator and lead developer of Ethereal, now Wireshark, which was first released in 1998. , Chief Executive Officer of Boundless Corporation. "As previously stated, much of the increase in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. this quarter was anticipated and necessary to foster the development of Merinta, whose software we hope will become the technical underpinning for Internet Appliances. We believe the company has the potential to be a world leader in the emerging Internet Appliance market. National Semiconductor's plans to bundle Merinta's technology into upcoming development kits sold to design houses and OEMs and their $5 million equity investment into the company validates this belief." Mr. Combs added, "Our display terminal and contract manufacturing subsidiaries have worked diligently to cultivate and solidify so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. new opportunities which will materialize in the final quarter. Boundless Technologies continues to target emerging marketplaces including the Application Service Provider (ASP) market with solid product and marketing programs. During this quarter, Boundless rolled out its groundbreaking 'ThinLease(SM)' financing program to assist ASPs in their sales motions. The company's efforts were lauded in October when it was recognized by the ASP Consortium as `having distinguished itself as among the very best in the ASP industry.' Meanwhile, Boundless Manufacturing Services has developed a number of contract manufacturing opportunities and will begin shipments to some of these new customers in the next two quarters. Announcements sharing the details of these new relationships are anticipated to begin to be released between now and the end of this year. We are confident that the upcoming opportunities that lie before each subsidiary will favorably impact the organization as a whole." ABOUT BOUNDLESS CORPORATION Boundless Corporation, composed of three subsidiaries, is a global technology company focused on developing, manufacturing and distributing hardware, software and services that make accessing information on the Internet and centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. servers easy, fast and cost-effective. Merinta, Inc. (www.merinta.com), which is headquartered in Austin, TX, is a premier provider of enabling software and technologies for Internet Appliances (IA). The iBrow(TM) Solution of software and services is positioned to offer end-users an easy, enjoyable and visually rich Internet browsing experience while providing companies with a revolutionary way to market and grow online business. The iBrow Solution is hardware and O/S independent and is the most flexible IA platform on the market. The iBrow Solution also features remote management software that allows for the end-user interface and content to be upgraded as needed as needed prn. See prn order. . Boundless Technologies, Inc. (www.boundless.com/bti) is the largest U.S. based manufacturer of text, Windows-based(R) Terminals and thin-client products. Boundless has helped revolutionize rev·o·lu·tion·ize tr.v. rev·o·lu·tion·ized, rev·o·lu·tion·iz·ing, rev·o·lu·tion·iz·es 1. To bring about a radical change in: Television has revolutionized news coverage. 2. the computing industry by providing businesses worldwide a vast array of information access and display products, including the Capio, ADDS, VT and Dorio product lines. Boundless products offer appliance-like ease-of-use and access to Microsoft(R) 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. (R) applications as well as older "legacy" applications operating on mainframes, mid-range, and Unix systems Noun 1. UNIX system - trademark for a powerful operating system UNIX, UNIX operating system operating system, OS - (computer science) software that controls the execution of computer programs and may provide various services . Key customers include Lucent Technologies, IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , NCR (NCR Corporation, Dayton, OH, www.ncr.com) A technology company specializing in financial terminal transactions, retail systems and data warehousing. Until the late 1990s, NCR was heavily invested in the hardware side of the industry, known worldwide as a major manufacturer of computers , Compaq Computer and Hewlett-Packard, as well as extensive distribution and VAR partners. The company is based in Hauppauge, New York Hauppauge (pronounced /hɔpɔg/) is a hamlet in the Town of Islip and the Town of Smithtown in Suffolk County, New York, United States. , with European offices in the Netherlands and sales, support and distribution centers throughout the world. Boundless Manufacturing Services, Inc. (www.boundless.com/manufacturing) is an emerging EMS company providing build-to-order (BTO BTO British Trust for Ornithology BTO Business Technology Optimization BTO Bachman Turner Overdrive (band) BTO Business Transformation Outsourcing BTO Build-Transfer-Operate BTO Brutto (German: Gross [quantity]) ) manufacturing as well as complete end-to-end solutions (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. from design through product end-of-life to its customers. Headquartered in Hauppauge, New York, Boundless offers in-house engineering expertise and an extensive design library to significantly decrease time-to-market for 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. Core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
(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 manufacturing facilities in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Florida, build-to-order, same day shipping and customer specific customizations. For more information, visit the Boundless web site at http://www.boundless.com, or call 1/800-231-5445. Editors: All company/product names and service marks may be trademarks or registered trademarks of their respective companies. Except of the historical information herein, the matters discussed in this news release include 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. that may involve a number of risks and uncertainties. Actual results may vary significantly based on a number of factors, including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product demand, the impact of competitive products and pricing, changing economic conditions and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.
Boundless CORPORATION and subsidiaries
condensed consolidated BALANCE SHEETS
(in thousands)
September 30, December 31,
2000 1999
Current assets: (unaudited)
Cash and cash equivalents $ 776 $ 1,285
Trade accounts receivable, net 11,202 12,378
Income tax refund - 833
Inventories 9,890 13,751
Deferred income taxes 2,576 2,576
Prepaid expenses and
other current assets 2,176 1,039
-----------------------------
Total current assets 26,620 31,862
Property and equipment, net 11,508 10,987
Goodwill, net 5,445 6,272
Other assets 1,682 1,339
-----------------------------
$ 45,255 $ 50,460
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion
of long-term debt $ 2,346 $ 1,650
Accounts payable 7,588 6,148
Accrued expenses 5,441 5,565
Deferred revenue 658 557
-----------------------------
Total current liabilities 16,033 13,920
-----------------------------
Long-term liabilities:
Long-term debt, less
current maturities 16,174 14,206
Deferred income taxes 281 281
Other 717 638
-----------------------------
Total long-term
liabilities 17,172 15,125
-----------------------------
Total liabilities 33,205 29,045
Stockholders' equity:
Preferred stock - -
Common stock 46 45
Additional paid-in capital 34,073 32,508
Accumulated deficit (22,069) (11,138)
-----------------------------
Total stockholders' equity 12,050 21,415
-----------------------------
$ 45,255 $ 50,460
=============================
Boundless CORPORATION and subsidiaries
condensed CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Nine Months Ended Three Months Ended
September 30, September 30,
--------------------------------------------
2000 1999 2000 1999
--------------------------------------------
(unaudited) (unaudited)
Revenue $ 56,190 $ 61,256 $ 16,047 $ 19,970
Cost of revenue 46,947 43,610 13,530 14,011
--------------------------------------------
Gross margin 9,243 17,646 2,517 5,959
--------------------------------------------
Operating expenses:
Sales and marketing 8,598 7,303 2,773 2,910
General and
administrative 6,614 4,859 2,318 1,475
Research and
development 4,738 3,884 1,863 1,489
Other (credits) (499) (2,832) (488) (2,282)
--------------------------------------------
Total operating
expenses 19,451 13,214 6,466 3,592
--------------------------------------------
Operating income
(loss) (10,208) 4,432 (3,949) 2,367
Interest expense, net 979 1,110 461 359
Other expense (credits) (256) 101 - -
--------------------------------------------
Income (loss) before
income taxes (10,931) 3,221 (4,410) 2,008
Income tax expense - 1,226 - 765
--------------------------------------------
Net income (loss) (10,931) 1,995 (4,410) 1,243
Dividend on preferred
stock of subsidiary - 51 - -
Net income (loss)
available for common
stockholders $(10,931) $ 1,944 $ (4,410) $ 1,243
============================================
Weighted average
common shares
outstanding 4,532 4,432 4,542 4,438
============================================
Basic net income (loss)
per common share $ (2.41) $ 0.44 $ (0.97) $ 0.28
============================================
Weighted average
dilutive
shares outstanding 4,532.00 4,456.00 4,542.00 4,461.00
============================================
Diluted net income
(loss) per
common share $ (2.41) $ 0.44 $ (0.97) $ 0.28
============================================
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