Castelle Reports Second Quarter 2001 Results.Business Editors 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)--July 27, 2001 CASTELLE (Nasdaq:CSTL CSTL Chemical Science and Technology Laboratory CSTL Clinical Study Team Leader ) today announced financial results for the second fiscal quarter ended June June: see month. 29, 2001. 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 second quarter of 2001 were $2.4 million, compared to $3.8 million for the same period in fiscal 2000 and comparable to the first quarter of fiscal 2001. The Company recorded a net loss for the second quarter of 2001 of $268,000, or $0.06 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 profit of $211,000, or earnings of $0.04 per diluted share, for the same period in 2000. This loss was comparable to a loss of $408,000 in the first quarter of fiscal 2001. Net sales for the first six months of 2001 were $4.7 million, compared to $7.9 million for the same six-month period of fiscal 2000. Net loss for the six-month period was $676,000 or $0.14 per diluted share, compared to a net profit of $380,000, or $0.07 per diluted share, for the 2000 period. The loss for the second quarter and the first six months of fiscal 2001 included non-recurring charges of $58,000 and $238,000, respectively, for expenses associated with the reduction in work force and 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 surplus assets. These non-recurring charges represented $0.01 and $0.05 per share, respectively. 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 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. , stated, "Our sales continue to be affected by the economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. and remain flat. We have made progress toward an operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. that will enable us to return to profitability at the current revenue level. In the second quarter we reduced 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. $180,000 sequentially, while maintaining growth in engineering development to address market opportunities. In June, we introduced our new wireless server appliance 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, , LANpress(R) 2P/Wireless, which acts as a wireless access point to the network for email, 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 and all other network resources. We also announced a new partner program with Ricoh Ricoh Company, Ltd. (株式会社リコー Silicon Valley to deliver joint solutions for fax management with their new electronic filing product, eCabinet. On another positive note, we were able to maintain our cash position during these difficult times." 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 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 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 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, California Morgan Hill (IPA: /ˈmɔrgɨn ˈhɪl/) is a city located in the southern part of Santa Clara County, California, USA. 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 (i) develop, introduce and achieve acceptance of new products, (ii) return to profitability or be profitable and (iii) be cash flow positive. 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 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, 2000.
CASTELLE
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
6/29/2001 6/30/2000 6/29/2001 6/30/2000
--------- --------- --------- ---------
Net sales $ 2,370 $ 3,760 $ 4,719 $ 7,860
Cost of sales 842 1,308 1,540 2,957
------- ------- ------- -------
Gross profit 1,528 2,452 3,179 4,903
Operating expenses:
Research and
development 481 489 866 994
Sales and marketing 1,039 1,332 2,165 2,644
General and
administrative 255 416 699 882
Restructuring charges 58 - 238 -
----- ----- ----- -----
Total operating
expenses 1,833 2,237 3,968 4,520
Income/(Loss) from
operations (305) 215 (789) 383
Other income/(Expense),
net 37 (4) 113 3
----- ----- ----- -----
Income/(Loss) before
income taxes (268) 211 (676) 386
Provision for income
taxes - - - 6
------ ------ ------- ------
Net income/(loss) $ (268) $ 211 $ (676) $ 380
======= ====== ======== ======
Net income/(loss) per
share - basic $ (0.06) $ 0.04 $ (0.14) $ 0.08
======== ======= ======== =======
Shares used in per
share calculation
- basic 4,742 4,732 4,744 4,696
====== ====== ====== ======
Net income/(loss)
per share
- diluted $ (0.06) $ 0.04 $ (0.14) $ 0.07
======== ======= ======== =======
Shares used in per
share calculation
- diluted 4,742 5,077 4,744 5,189
====== ====== ====== ======
As a percentage of
net sales:
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 35.5% 34.8% 32.6% 37.6%
------ ------ ------ ------
Gross profit 64.5% 65.2% 67.4% 62.4%
Operating expenses:
Research and
development 20.3% 13.0% 18.4% 12.6%
Sales and marketing 43.8% 35.4% 45.9% 33.6%
General and
administrative 10.8% 11.1% 14.8% 11.2%
Restructuring charges 2.5% 0.0% 5.0% 0.0%
------ ------ ------ ------
Total operating
expenses 77.4% 59.5% 84.1% 57.4%
Income/(Loss) from
operations (12.9%) 5.7% (16.7%) 5.0%
Other income/(Expense),
net 1.6% (0.1%) 2.4% 0.0%
------ ------- ------ -----
Income/(Loss) before
income taxes (11.3%) 5.6% (14.3%) 5.0%
Provision for income
taxes 0.0% 0.0% 0.0% 0.1%
------ ------ ------ -----
Net income/(loss) (11.3%) 5.6% (14.3%) 4.9%
======= ====== ======= =====
CASTELLE
Condensed Consolidated Balance Sheets
(in thousands)
June 29, 2001 December 31, 2000
(unaudited) (audited)
------------- -----------------
Assets
Current assets:
Cash and cash equivalents $ 3,600 $ 3,893
Restricted cash - 125
Accounts receivable, net 1,192 2,083
Inventories 1,587 1,363
Prepaid and other assets 156 209
-------- --------
Total current assets 6,535 7,673
Property, plant & equipment,
net 681 768
Other assets, net 93 102
-------- --------
Total assets $ 7,309 $ 8,543
======== ========
Liabilities & shareholders'
equity
Current liabilities:
Long-term debt, current
portion $ 9 $ 9
Accounts payable 608 1,014
Accrued liabilities 2,530 2,681
-------- --------
Total current liabilities 3,147 3,704
Long-term debt, net of
current portion 58 63
-------- --------
Total liabilities 3,205 3,767
Shareholders' equity 4,104 4,776
-------- --------
Total liabilities &
shareholders' equity $ 7,309 $ 8,543
======== ========
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