Castelle Reports First Quarter 2002 Results.Business Editors/High-Tech Writers MORGAN Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. HILL, Calif.--(BUSINESS WIRE)--May 1, 2002 Castelle (Nasdaq:CSTL CSTL Chemical Science and Technology Laboratory CSTL Clinical Study Team Leader ) today announced financial results for the first fiscal quarter ended March 31, 2002. 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 first quarter of fiscal 2002 were approximately $2.4 million, compared to approximately $2.3 million for the same period in fiscal 2001. The Company recorded a net profit for the first quarter of fiscal 2002 of $32,000, or $0.01 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, compared to a net loss of $408,000, or $0.09 per diluted share, for the same period in fiscal 2001. Sales in the first quarter of fiscal 2002 reflected the implementation of the new accounting standard, Emerging Issues Task Force No. 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. of the Vendor's Products), which was adopted with effect from January January: see month. 1, 2002 and requires certain marketing development funds to be classified as reductions to sales rather than classified as 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. . The effect of the implementation of this new accounting standard was a reduction of sales of $88,000 and $56,000 in the first fiscal quarters of 2002 and 2001, respectively, with a corresponding reduction in operating expenses. The new accounting standard has no impact on the Company's operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , net income or earnings per share. The $408,000 loss in the first fiscal quarter of 2001 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. to income of $180,000, or $0.04 per diluted share. Excluding this charge, the results in the first quarter of fiscal 2001 would have reflected a loss of $228,000, or $0.05 per diluted share. The restructuring charge included the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of assets and expenses associated with worldwide consolidations. On April 22, 2002, 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, 60, announced his retirement as 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. . He will continue on as Chairman of the Board. Scott C. McDonald, who joined Castelle as its new President and CEO, stated, "I am very pleased with the opportunity to take over from Don who has turned the Company around since taking the CEO reins reins pl.n. The kidneys, loins, or lower back. in 1998. The first quarter 2002 results extend the Company's record of profitability to eight of the past ten quarters. I believe that Don and the Castelle team have done an outstanding job in positioning and refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus Castelle over the past few years in what has been a very tough economic time." Mr. Rich stated, "Scott has been a Director of Castelle for the past three years and has worked closely with me as well as the Company, so he is already familiar with the business. I look forward to supporting Scott and the management team as they lead the Company forward." Mr. McDonald continued, "Castelle's core fax server business has held steady during this difficult economic period in the technology sector. Faxing is a basic method of business communication. Castelle fax servers help automate To turn a set of manual steps into an operation that goes by itself. See automation. faxing as well as integrate faxing into backoffice An earlier suite of network server software products from Microsoft that was licensed and supported as one inclusive bundle. The suite was discontinued in late 2001, but some of the underlying products and their client access licenses (CALs) remained as stand-alone products. and email systems. Castelle's economical and easy-to-use fax servers help bring basic faxing into the 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 age." About Castelle Founded in 1987, Castelle develops and markets products that enable organizations to easily implement Internet and Intra-office messaging, data storage and printing over local area networks. Castelle is one of the pioneers of application server appliances A self-contained computer system specialized for network use. Its applications are pre-installed, and access to setup and configuration is via a Web browser. Server appliances may provide a single application or several applications; for example, a single device may provide file server, and has developed expertise to integrate most complex functions into very easy-to-use and maintain, "plug-&-forget" shared devices. Castelle believes that its products are more economical than comparable software-only solutions, as they do not require a large technical staff to install, operate and maintain. Castelle products are utilized by industry leaders including Fortune 1000 companies and also by small and medium-sized business 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. , 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. , 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 the Castelle On-Line Store. Castelle is headquartered in Morgan Hill, Calif., and can be reached at 408-852-8000, fax 408-852-8100 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 the economy on the Company's performance and ability of the Company to be profitable. 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 information. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements as contained in the Company's reports to the Securities and Exchange Commission, including 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 Form 10-K/A for the fiscal year ended December 31, 2001.
CASTELLE
Condensed Consolidated Statements of Operations
(in thousands, except per-share data)
(unaudited)
Three months ended
March 31, 2002 March 30, 2001
-------------- --------------
Net sales $ 2,368 $ 2,293
Cost of sales 777 698
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Gross profit 1,591 1,595
Operating expenses:
Research and development 413 385
Sales and marketing 763 1,070
General and administrative 404 444
Restructuring charges - 180
------------------------
Total operating expenses 1,580 2,079
Income/(Loss) from operations 11 (484)
Interest and other income, net 21 76
------------------------
Income/(Loss) before income taxes 32 (408)
Provision for income taxes - -
------------------------
Net income/(Loss) $ 32 $ (408)
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Net income/(Loss) per share - basic $ 0.01 $ (0.09)
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Shares used in per share
calculation - basic 4,745 4,741
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Net income/(Loss) per share - diluted $ 0.01 $ (0.09)
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Shares used in per share
calculation - diluted 4,774 4,741
========================
As a percentage of net sales:
Net sales 100.0% 100.0%
Cost of sales 32.8% 30.4%
------------------------
Gross profit 67.2% 69.6%
Operating expenses:
Research and development 17.4% 16.8%
Sales and marketing 32.2% 46.7%
General and administration 17.1% 19.4%
Restructuring charges - % 7.8%
------------------------
Total operating expenses 66.7% 90.7%
Income/(Loss) from operations 0.5% (21.1%)
Interest and other income, net 0.9% 3.3%
------------------------
Income/(Loss) before income taxes 1.4% (17.8%)
Provision for income taxes - -
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Net income/(Loss) 1.4% (17.8%)
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CASTELLE
Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2002 December 31, 2001
(unaudited) (audited)
-------------- -----------------
Assets
Current assets:
Cash and cash equivalents $ 4,462 $ 4,568
Accounts receivable, net 758 680
Inventories, net 774 926
Prepaid and other assets 116 130
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Total current assets 6,110 6,304
Property & equipment, net 546 598
Other assets 108 108
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Total assets $ 6,764 $ 7,010
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Liabilities & shareholders' equity
Current liabilities:
Long-term debt, current portion $ 18 $ 18
Accounts payable 138 280
Accrued liabilities 2,314 2,446
------------------------
Total current liabilities 2,470 2,744
Long-term debt, net of
current portion 60 64
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Total liabilities 2,530 2,808
Shareholders' equity 4,234 4,202
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Total liabilities &
shareholders' equity $ 6,764 $ 7,010
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