Castelle Announces a Profit for Fourth Quarter 1999 and 1999 Results.Business Editors SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--Feb. 24, 2000 Castelle (Nasdaq:CSTL CSTL Chemical Science and Technology Laboratory CSTL Clinical Study Team Leader ) today announced financial results for the fourth quarter of 1999 and its full year ended Dec. 31, 1999. FOURTH QUARTER 1999 RESULTS: Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter of 1999 were $3.9 million compared with $3.6 million in the same period of 1998. The company recorded net income for the fourth quarter of 1999 of $114,000 or profit of $0.02 per share, compared to a net loss of $6.4 million or a loss of $1.47 per share for the comparable period of 1998. The 1998 fourth quarter results included the effect of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges to reverse the deferred asset related to the benefit of net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. and to increase the sales return reserves. Without these adjustments the 1998 fourth quarter results would have been net sales of $4.6 million and net loss of $1.7 million or $0.39 per share. 1999 RESULTS: Net sales for the year ended Dec. 31, 1999 were $16.1 million compared with $21.7 million for the same period of 1998. Net loss for the year ended Dec. 31, 1999 was $3.6 million or $0.78 per share, compared with $7.5 million or $1.67 per share for the same period of 1998. Net sales and net loss in 1998 would have been $22.7 million and $1.7 million ($0.38 per share) respectively, excluding the effect of one-time fourth quarter 1998 adjustments noted above and the additional one-time adjustment of $1.1 million in 1998 from the acquisition of Traffic Software. Lower net sales in 1999, as compared to 1998, reflect the continuing decline in print server sales, primarily due to business conditions in the Asia Pacific Region, and the decline in shipments to distributors to support the company's effort to manage down inventory levels in the distribution channel. Donald Donald (Domnall, Domhnall, Dumhnuil, Dónall) is an anglicized version of a Scottish or Irish Gaelic personal name, containing the elements dumno "world" and val "rule", viz. "ruler of the world". Compare Dumnorix. L. Rich, president and chief executive officer, stated: "Over the course of the past year we have restructured and implemented cost reduction programs resulting in lower 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. and higher margins in the second half of the year. Through these efforts, Castelle was able to reach its goal of positive net income by the fourth quarter, the first time in seven quarters. We have continued to manage down our inventory levels and inventory in the distribution channel. Our cash balance increased to $4.7 million at Dec. 31,1999 from $3.9 million at the end of 1998 and 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). improved to 35 days at Dec. 31, 1999 from 87 days at the end of 1998. We are continuing to develop new products and over the past 12-months have replaced our entire Fax Server product line with new enhanced hardware models and software releases. We believe we now have a cost structure to support the business going forward and our challenge for the future is to grow the top line." About Castelle Castelle develops network appliances (1) A specialized device for use on a network. For example, Web servers, cache servers and file servers can be implemented as general-purpose computers with the appropriate software or as network appliances, which are computers dedicated to a single function and cannot do anything providing office messaging solutions and other shared services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. . The company pioneered network appliances, establishing a benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. for "plug and play" and ease-of-use with its fax and print server product families, first introduced in 1988. Castelle products are installed in the majority of Fortune 1000 companies and in small and medium-sized Me´di`um-sized` a. 1. Having a medium size; as, a medium-sized man s>. Adj. 1. medium-sized - intermediate in size medium-size, moderate-size, moderate-sized businesses worldwide and are available through a worldwide network of distributors, value-added resellers A value-added reseller (VAR) is a company that adds some feature(s) to an existing product(s), then resells it (usually to end-users) as an integrated product or complete "turn-key" solution. , e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. retailers, and systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. . Castelle is headquartered in Santa Clara and can be reached at 408/496-0474, fax 408/496-0502 or www.castelle.com. 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. This press release contains forward-looking statements that involve risks and uncertainties, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the future events, including the effect of improved business conditions in the Asia Pacific Region on the company's results of their print server sales, the ability of the company to continue to manage down inventory levels and develop new products and the effect of the company's cost structure on its business going forward. Actual events or the company's results may differ materially from the events or results discussed in the forward-looking statements for a number of reasons including, without limitation, the timely development, acceptance and pricing of new products and the general economic conditions as they affect the company's customers. The company assumes no obligation to update the forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's 10-K for the fiscal year ended Dec. 31, 1998.
CASTELLE
Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, Dec. 31,
1999 1998
(audited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 4,714 $ 3,924
Restricted cash 125 125
Accounts receivable, net 1,525 3,472
Inventories 1,411 3,739
Prepaid and other assets 262 398
Total current assets 8,037 11,658
Property, plant & equipment, net 387 666
Other assets, net 78 170
Total assets $ 8,502 $ 12,494
Liabilities & shareholders'
equity
Current liabilities:
Long-term debt, current $ 97 $ 96
Accounts payable 1,336 2,084
Accrued liabilities 3,048 2,715
Total current liabilities 4,481 4,895
Other long-term liabilities 1 98
Total liabilities 4,482 4,993
Shareholders' equity 4,020 7,501
Total liabilities &
shareholders' equity $ 8,502 $ 12,494
CASTELLE
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Audited)
Three months ended Year ended
12/31/99 12/31/98 12/31/99 12/31/98
Net sales $ 3,893 $ 3,600 $16,116 $21,746
Cost of sales 1,563 1,814 7,712 10,148
Gross profit 2,330 1,786 8,404 11,598
Operating expenses:
Research and
development 523 701 2,741 2,878
Sales and
marketing 1,266 2,349 6,732 8,776
General and
administrative 564 1,089 2,139 2,443
Restructuring charges (120) -- 402 --
Amortization of
intangible assets -- 40 40 120
Acquisition of
in-process R&D -- -- -- 1,124
Total operating
expenses 2,233 4,179 12,054 15,341
Income/(Loss) from
operations 97 (2,393) (3,650) (3,743)
Other income, net 21 0 99 174
Income/(Loss) before
income taxes 118 (2,393) (3,551) (3,569)
Provision for
income taxes 4 4,002 4 3,965
Net income/(loss) $ 114 $(6,395) $(3,555) $(7,534)
Net income/(loss) per
share -- basic $ 0.02 $ (1.47) $ (0.78) $ (1.67)
Shares used in per share
calculation -- basic 4,637 4,336 4,579 4,507
Net income/(loss) per share
-- diluted $ 0.02 $ (1.47) $ (0.78) $ (1.67)
Shares used in per share
calculation -- diluted 4,873 4,336 4,579 4,507
As a percentage of
net sales:
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 40.1% 50.4% 47.9% 46.7%
Gross profit 59.9% 49.6% 52.1% 53.3%
Operating expenses:
Research and
development 13.4% 19.5% 17.0% 13.2%
Sales and
marketing 32.5% 65.2% 41.8% 40.3%
General and
administrative 14.5% 30.3% 13.3% 11.2%
Restructuring
charges (3.1%) -- 2.5% --
Amortization of
intangible assets -- 1.1% 0.2% 0.6%
Acquisition of
in-process R&D -- -- -- 5.2%
Total operating
expenses 57.3% 116.1% 74.8% 70.5%
Income/(Loss) from
operations 2.6% (66.5%) (22.7%) (17.2%)
Other income, net 0.5% -- 0.6% 0.8%
Income/(Loss) before
income taxes 3.1% (66.5%) (22.1%) (16.4%)
Provision for income
taxes 0.1% 111.1% 0.0% 18.2%
Net income/(loss) 3.0% (177.6%) (22.1%) (34.6%)
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