Crossroads Systems Reports First Quarter Results; Loss Narrows, Quarterly Revenues Up 6 Percent, Operating Expenses Down 12 Percent.Business Editors & High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers AUSTIN Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , Texas--(BUSINESS WIRE)--Feb. 20, 2002 Crossroads Systems Inc. (Nasdaq:CRDS CRDS Contribution pour Le Remboursement de la Dette Sociale (French: Social Debt Repayment Contribution) CRDS Cavity Ring-Down Spectroscopy CRDS Community Rehabilitation and Disability Studies ) a global provider of connectivity for storage networking solutions, today reported results for its fiscal first quarter ended Jan. 31, 2002. Total revenues for the first quarter of fiscal 2002 were $9.2 million compared with $8.7 million for the fourth quarter of fiscal 2001 and $10.0 million in the first quarter of fiscal 2001. Net loss for the first quarter of fiscal 2002 was $6.4 million, or $0.23 per share. Net loss for the fourth quarter of fiscal 2001 was $7.9 million, or $0.30 per share, and net loss for the first quarter of fiscal 2001 was $10.7 million, or $0.39 per share. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the first quarter of fiscal 2002, which excludes the effects of stock-based compensation of $1.2 million and amortization of intangibles of $0.1 million, was $5.1 million, or $0.19 per share. Pro forma net loss for the fourth quarter of fiscal 2001 was $6.8 million, or $0.25 per share, which excludes the effects of stock-based compensation of $1.1 million and amortization of intangibles of $0.1 million. Pro forma net loss for the first quarter of fiscal 2001 was $4.6 million, or $0.17 per share, which excludes the effects of stock-based compensation of $2.6 million and amortization of intangibles of $3.6 million. Please note that pro forma net loss is not a measure of financial performance under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) and should not be considered in isolation or as an alternative to net loss as determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. Pro forma net loss as presented may not be comparable to other similarly titled measures of other companies. "We are encouraged by our quarter-on-quarter revenue growth, which came primarily from our current products and customers," said Larry Sanders For the television show and fictional character, see . Larry Sanders (born in New York) is an Oxfordshire County Councillor. He has lived in Oxford since 1969. He was trained professionally as a social worker and lawyer. , Crossroads president and chief executive officer. "We also 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. by 12 percent from the prior quarter." "For the remainder of the year, we have a number of opportunities. The Crossroads 10000, which we launched in January January: see month. , is scheduled to begin shipping in April. We are in the final testing for the first in the suite of products for Compaq (Compaq Computer Corporation, Houston, TX, www.compaq.com) Compaq was the leading PC manufacturer when it was acquired by HP in 2002. Founded in 1982 by Rod Canion, Jim Harris and Bill Murto, one year later the company shipped 53,000 PC-compatible COMPAQ Portables, resulting in $111 , which are also scheduled to ship in April. We have been shipping embedded Inserted into. See embedded system. storage solutions to StorageTek and Hewlett-Packard, both of whom plan to launch their new product initiatives over the next few months. "Our challenge for the next quarter will be to manage both the internal and external launches for these sophisticated SAN solutions," Sanders San´ders n. 1. An old name of sandalwood, now applied only to the red sandalwood. See under Sandalwood. said. "We believe our expense actions, combined with our new products and our incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue from Compaq, will help drive us to cash-flow break-even by the end of 2002." Recent highlights include: -- Operational Performance -- In the first fiscal quarter, Crossroads: -- Grew revenues 6 percent from the prior quarter to $9.2 million, -- Reduced operating expenses by 12 percent. Excluding the non-cash effects of stock-based compensation of $1.2 million and amortization of intangibles of $0.1 million, Crossroads decreased operating expenses by 15 percent from the prior quarter to $8.7 million, and -- Delivered Days Sales Outstanding of 46 days and Inventory Turns of 7.1. -- Crossroads 8000 Successes -- Following its debut last fall, the Crossroads 8000 multi-protocol storage router has achieved interoperability and integration milestones with a number of industry leaders, including EMC, Brocade, QLogic and Computer Associates. -- Crossroads 10000 Launch -- In January, the company launched the Crossroads 10000, the only multi-protocol storage router to offer connectivity and management of SCSI and Fibre Channel storage devices into Fibre Channel, iSCSI and InfiniBand storage networks. As the second in a series of Crossroads multi-protocol routers with a common code base, the 10000 provides end users a platform that is easy to manage, scalable, cost-efficient and able to handle any of the storage routing protocols available today. Shipments are scheduled to begin in April 2002. NOTE: Crossroads will hold a conference call (630/395-0091; passcode: Crossroads) and simultaneous Webcast (www.crossroads.com) at 3:30 p.m. (CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ) today. About Crossroads Systems Inc. With headquarters in Austin, Texas, Crossroads Systems (Nasdaq:CRDS) is a leading global provider of connectivity and intelligent management for storage networks regardless of technology or location. Crossroads enables protocol-independent connectivity at gigabit speeds for a wide range of devices that scale from small businesses to global enterprises. Crossroads' products are in solutions from ADIC, ATL (Active Template Library) A set of software routines from Microsoft that provide the basic framework for creating ActiveX and COM objects. Stemming from the standard template library (STL) that comes with C++ compilers, ATL includes an object wizard that sets up , Compaq, Dell, Fujitsu-Siemens, Groupe Bull Groupe Bull (also known as Bull Computer or simply Bull) is a French computer company based in Les Clayes-sous-Bois, outside Paris. The company has also been known at various times as Bull General Electric, Honeywell Bull, CII Honeywell Bull , Hewlett-Packard, Hitachi Data Systems See HDS. , 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) , McDATA, StorageTek, Sun Microsystems Sun Microsystems, Inc. (NASDAQ: JAVA[3]) is an American vendor of computers, computer components, computer software, and information-technology services, founded on 24 February 1982. , Unisys, ACAL ACAL Asociación de Archiveros de Castilla Y León (Castille and Leon, Spain) ACAL Academia de Ciencias de América Latina (Spanish: Academy of Sciences of Latin America, Venezuela) , Bell Micro, Cranel/Adexis, Datalink and Tech Data. Crossroads is a voting member of the Storage Networking Industry Association An association of producers and consumers of storage networking products, whose goal is to further storage networking technology and applications. The Storage Networking Industry Association, or SNIA (SNIA (Storage Networking Industry Association, San Francisco, CA, www.snia.org) An organization devoted to the advancement of mission critical storage systems. Founded in 1997, its goal is to determine the standards that must be developed to allow hosts and storage systems to interact via ). For more information about Crossroads Systems, please visit www.crossroads.com or call 800/643-7148. 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 release may contain forward-looking statements that involve risks and uncertainties. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: the quarterly fluctuations of Crossroads' operating results and Crossroads' inability to accurately predict revenues and budget for expenses for future periods; the extent of Crossroads' future operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. and negative cash flow; the company's ability to maintain its operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ; the deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: economic environment, including in particular related expense reductions by organizations affecting their IT spending and budget; the dependence of Crossroads' business on the storage area network market which is evolving and unpredictable; the possibility that the pending shareholder class action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax could result in an adverse outcome to the company; Crossroads' ability to develop new and enhanced products that achieve market acceptance; the effect of competition; the effect of undetected software or hardware errors, which may affect the company's results or reduce demand for Crossroads' products in the long term; Crossroads' inability to protect its intellectual property rights, including any adverse outcome in the company's pending patent litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with certain of its competitors; the continuation of Crossroads' successful relationships with its limited number of 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, including its ability to replace revenue from ADIC and Compaq Computer Corporation (company) Compaq Computer Corporation - The largest US manufacturer and vendor of IBM PC compatible personal computers and servers. Compaq was started in 1982 by three ex-Texas Instruments employees. Quarterly sales $2499M, profits $210M (Aug 1994). http://compaq.com/. and/or to realize the benefit of the new agreement with Compaq; Crossroads' ability to retain and recruit key personnel to manage its business successfully; Crossroads' ability to successfully achieve the benefits of the acquisition of Polaris Communications and any subsequent acquisition or strategic relationship; and that Crossroads' stock price could be volatile regardless of Crossroads' actual financial performance and other factors detailed in Crossroads' filings with the Securities and Exchange Commission, including its Annual Report on 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 Quarterly Reports on 10-Q. - TABLES ATTACHED -
CROSSROADS SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
Oct. 31, Jan. 31,
2001 2002
------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 43,686 $ 27,202
Short-term investments 10,000 19,000
------------------ ------------------
Total cash, cash
equivalents and
short-term investments 53,686 46,202
Accounts receivable, net 3,768 4,591
Inventories, net 3,080 3,279
Prepaids and other current
assets 1,894 1,845
------------------ ------------------
Total current assets 62,428 55,917
Notes receivable from related
party, net 244 191
Property and equipment, net 11,021 10,426
Intangibles, net 997 928
Other assets 713 713
------------------ ------------------
Total assets $ 75,403 $ 68,175
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,070 $ 5,796
Accrued expenses 2,744 1,532
Accrued warranty costs 597 719
Deferred revenue 746 705
------------------ ------------------
Total current liabilities 11,157 8,752
Stockholders' equity:
Common stock 28 28
Additional paid-in capital 184,042 185,376
Deferred stock-based
compensation (3,914) (3,674)
Notes receivable from
stockholders (118) (120)
Accumulated deficit (115,535) (121,929)
Treasury stock at cost (257) (258)
------------------ ------------------
Total stockholders' equity 64,246 59,423
------------------ ------------------
Total liabilities and
stockholders' equity $ 75,403 68,175
================== ==================
CROSSROADS SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
Three Months Ended
Jan. 31,
--------------------------------------
2001 2002
------------------ ------------------
Revenue:
Product revenue $ 9,824 $ 9,034
Other revenue 150 163
------------------ ------------------
Total revenue 9,974 9,197
Cost of revenue 4,876 5,876
------------------ ------------------
Gross profit 5,098 3,321
------------------ ------------------
Operating expenses (1):
Sales and marketing 4,068 2,310
Research and development 4,302 5,184
General and administrative 4,716 2,469
Amortization of intangibles 3,596 70
------------------ ------------------
Total operating expenses 16,682 10,033
------------------ ------------------
Loss from operations (11,584) (6,712)
Other income, net 974 318
------------------ ------------------
Net loss before cumulative
effect of accounting change (10,610) (6,394)
Cumulative effect of
accounting change (2) (130) --
------------------ ------------------
Net loss $ (10,740) $ (6,394)
================== ==================
Basic and diluted net loss
per share:
Before cumulative effect of
accounting change $ (0.38) $ (0.23)
Cumulative effect of
accounting change (2) (0.01) --
------------------ ------------------
Basic and diluted net loss
per share $ (0.39) $ (0.23)
================== ==================
Shares used in computing
basic and diluted net loss
per share 27,284,797 27,274,904
================== ==================
(1) The Company allocates stock-based compensation to specific line
items within the statement of operations based on the
classification of the employees who received the benefit.
Stock-based compensation for the periods indicated was allocated
as follows:
Three Months Ended
Jan. 31,
--------------------------------------
2001 2002
------------------ ------------------
Cost of revenue $ 39 $ 24
Sales and marketing 48 189
Research and development 265 79
General and administrative 2,222 955
------------------ ------------------
Total stock-based
compensation $ 2,574 $ 1,247
================== ==================
(2) Effective Nov. 1, 2000, the Company adopted the provisions of
Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements." The cumulative effect of the accounting
change was to increase net loss $130 (or one cent per share) with
an increase to total revenue and cost of revenue of $207 and $77,
respectively.
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