Castelle CEO Reiterates Growth Strategy and Provides Positive Outlook in Annual Letter to Shareholders.Business Editors/High-Tech Writers MORGAN HILL, Calif.--(BUSINESS WIRE)--May 12, 2003 Castelle (Nasdaq:CSTL CSTL Chemical Science and Technology Laboratory CSTL Clinical Study Team Leader ), a leading provider of fax solutions for Fortune 1000 companies and small to medium-sized businesses, today announced it has begun distribution of its 2002 Annual Report. The text from the Report's Annual Letter to Shareholders is as follows: "Dear Fellow Shareholders, I am pleased to report that 2002 was a very good year for Castelle. Our domestic sales growth and expanding presence in international markets, introduction of new products and cost containment containment Strategic U.S. foreign policy of the late 1940s and early 1950s intended to check the expansionist designs of the Soviet Union through economic, military, diplomatic, and political means. It was conceived by George Kennan soon after World War II. strategies have allowed us to show strength in both our top and bottom lines. In many ways, 2002 was a year of building the foundation for new growth, while 2003 represents the beginning of a new era for Castelle. Rising Sales and a Return to Profitability Results for 2002 reflect our progress on several fronts. First of all, we had a rise in sales and a return to full-year profitability in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a continued -- and widely noted -- slump in business technology investment. 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 year rose 4%, to $9.76 million, up from $9.35 million in 2001, while we saw a $0.26 swing in earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share to net income of $0.14 from a 2001 loss of $0.12. Higher gross margins (rising to 70.9% from 67.0%) and cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. 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. , along with the sales increase, contributed to this 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. . Secondly, we ended the year on an especially strong note as sales and profits gained momentum. The fourth quarter of 2002 was our sixth straight quarter of profitability, and our net income of $337,000 was the highest since the third quarter of 1996. Our fourth quarter sales of $2.59 million were the highest in eight quarters. Finally, we began the New Year on an upswing Upswing An upward turn in a security's price after a period of falling prices. while continuing to maintain a very healthy cash position, giving us plenty of capacity to expand our business further without having to rely on outside sources of capital. As of December 31, 2002, cash and cash equivalents totaled $3.46 million, or about $1.08 per common share outstanding. The year-end cash balance was about $1.10 million below the December 31, 2001 figure. However, we spent more than that -- approximately $2.0 million, including associated investment banking fees -- to buy back 1.62 million shares of stock in the fourth quarter of 2002. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , any drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: in cash went towards the benefit of our shareholders. Key developments of 2002 fall into three categories -- new products, domestic sales and international sales. New FaxPress 7.0 Software Takes Off A major event in 2002 was the successful release of our FaxPress(TM) 7.0 network fax software. FaxPress 7.0 offers several key enhancements, particularly in the area of email integration, and we are pleased with the initial response. A number of customers have already upgraded since the release in October 2002, and we believe this software will be a significant factor in driving our worldwide sales growth this year. We presented FaxPress 7.0 and Castelle's family of office automation solutions at the Microsoft Exchange Messaging and groupware software for Windows from Microsoft. Exchange Server is an Internet-compliant e-mail system that runs under Windows NT/2000 and Windows Server 2003. It can be accessed by Web browsers, the Exchange client, versions of Outlook and the earlier Windows Inbox. Conference (MEC MEC Ministério da Educação (Ministry of Education) MEC Ministerio de Educación y Ciencia (Spain: Ministry for Education and Science) MEC Mountain Equipment Co-Op ), Novell BrainShare, Network + Interop Paris, Comdex, Lotusphere, and most recently, at CeBIT Europe. U.S. Distribution Team Fuels Domestic Sales Growth We continue to derive a majority of our sales from the U.S. market, and our U.S. distribution team showed exceptional performance during 2002. Our two largest distributors, Ingram Micro (NYSE NYSE See: New York Stock Exchange :IM) and Tech Data (Nasdaq:TECD TECD Training Equipment Change Directive ), each had their highest sales of Castelle products for 2002 in the fourth quarter, collectively showing a 28% increase over the same period in 2001 and, on a sequential basis, a 20% increase over the third quarter of 2002. Fourth quarter 2002 sales through Ingram Micro Ingram Micro, Inc. NYSE: IM a Fortune 100 company founded in 1979 and based in Santa Ana, California. It is the world’s largest technology distributor and a leading technology sales, marketing and logistics company. were the highest in 10 quarters, while sales through Tech Data were the highest in over four years. This acceleration late in the year reflected a growing demand for our products and the ability of our resellers to respond to that demand. International Sales Efforts Shift Into High Gear We expanded our presence in the European, Asian and Latin American markets while maintaining our strong presence in the U.S. In the second half of 2002, we initiated a growth strategy that has given us increased exposure in some of the largest international markets, which should give us the platform we need for continued sales and earnings growth in 2003. In Europe, we began a major sales initiative in July 2002 with the selection of AMS AMS - Andrew Message System Ltd. as our master distributor for the UK and Europe. Our objective has been to expand our presence in Europe by leveraging long-time partnerships, while adding new distribution partners in countries with significant growth opportunities. To date, AMS Ltd. has signed four new resellers -- Votive vo·tive adj. 1. Given or dedicated in fulfillment of a vow or pledge: a votive offering. 2. Channels in France, Stephen Software in Italy, Infonor Kometanse in Norway and Haberst in Estonia -- and is actively recruiting more. We also established strategic partnerships with four distributors in mainland China -- Active eSolutions China, Cortelco Shanghai, C and C, and DataWorld China. In Latin America, we now have five distribution partners based in three countries -- Innovations Conceptos and SOKAN in Mexico, Meste in Chile, T DevolveAqui and Teledata in Brazil. It All Adds Up to Building Shareholder Value The recent history of our stock is a story of success. In late 2002, we were in danger of being delisted from the Nasdaq because the price of our shares was not meeting the minimum bid price requirement. However, in addition to our ongoing initiatives, we reacted with an aggressive effort to raise our profile on Wall Street and get our story heard by the investing public. For that purpose we hired an investor relations firm that specializes in helping undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. companies increase their exposure to the investment community, and the results have been gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. . Not only have we returned to our full listing, but our stock, at recent prices, is up significantly from its lowest point last October despite turbulent market conditions. The Leadership of Donald L. Rich Our account of 2002 would not be complete without acknowledging the leadership of Donald L. Rich, who preceded me as Chief Executive and who continues to serve as Chairman of the Board of Directors. Mr. Rich, who had served as Castelle's CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. since November 1998 and retired in April 2002, did an outstanding job of positioning and focusing the Company during harsh economic times. He and his team were invaluable in setting the stage for our current growth, and I am pleased to be working with him and the other Board Members to guide our Company as we continue to grow and evolve. Room to Grow With sales efforts underway, our strategy from this point forward is simple: Increase our share of the fax server market. Worldwide, this is a $250 million market fragmented frag·ment n. 1. A small part broken off or detached. 2. An incomplete or isolated portion; a bit: overheard fragments of their conversation; extant fragments of an old manuscript. 3. among more than two dozen providers. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a recent report by Peter Davidson Peter Davidson can refer to:
industry analyst, the fax server market is expected to continue to grow at about 4% per year. At the end of 2002, our share of the fax server market was just under 4%, but we expect to see an increase as a result of our large investment in new distribution channels and other initiatives. I want to thank you for your continuing support. We have made tremendous progress, and while challenges remain in the short term, we will not let up on our commitment to you, our shareholders. Yours truly, Scott C. McDonald President and Chief Executive Officer" About Castelle Castelle develops office automation systems that allow organizations to easily implement faxing and printing over local area networks and the Internet. A market leader in fax solutions for small to medium sized workgroups, Castelle's FaxPress fax servers provide a simple way to integrate fax with email, desktop and back-end applications. The Company also manufactures LANpress print servers, which enable users to locate printers anywhere on the network. Castelle products are designed to be easy to use and maintain, and provide an economical way for companies to share resources over the network. Castelle was founded in 1987 and is headquartered in Morgan Hill, Calif. Its products are used by Fortune 1000 companies as well as small to medium-sized businesses and are available through a worldwide network of distributors, resellers, online retailers, and the Castelle Online Store. Visit Castelle online at www.castelle.com. If you would like to be added to Castelle's investor email list, please contact Karin Smith at karin.smith@castelle.com. FaxPress(TM) is a trademark and LANPress(R) is a registered trademark of Castelle. All other products and trademarks are the property of their respective owners. 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 including references to demand for Castelle products, sales growth, and our ability to control costs, increase productivity and remain profitable. These statements are subject to risks and uncertainties, including but not limited to the impact on our results from fluctuations in demand for our products, the continued development of domestic and international markets, introduction of new products by our competitors, the timely development, acceptance and pricing of new products, the effectiveness of our cost control and productivity improvement procedures and general economic conditions as they affect the Company's customers. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements as contained in our reports to the Securities and Exchange Commission, including our 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. . The Company assumes no obligation to update the forward-looking information. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion