Elcom International, Inc. Reports Third Quarter 2000 Operating Results.Business/Technology Editors NORWOOD Norwood. 1 Town (1990 pop. 28,700), Norfolk co., E Mass.; settled 1678, set off from Dedham and Walpole and inc. 1872. Chiefly residential, its industries include printing and publishing and the manufacture of plastics, apparel, computer software, and , Mass.--(BUSINESS WIRE)--Nov. 7, 2000 Elcom ELCOM Estuary, Lake and Coastal Ocean Model International, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ELCO ELCO Eastern Lebanon County (school district, Pennsylvania) ELCO El Camino ELCO Electrolytic Capacitor ELCO Early Opening Local Census Office ELCO Electronic Company ), today announced operating results for its third quarter ended September September: see month. 30, 2000. 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 quarter ended September 30, 2000 were $77.1 million compared to $91.3 million in the comparable quarter of 1999, reflecting a decrease in revenues primarily attributable to the sale of the Company's U.K. remarketing group operations in July 1999 and the Company's ongoing strategy to reduce its exposure to customers that do not pay on time or that demand pricing that negatively impacts margins and/or generates unacceptable inventory exposure. The Company reported an operating loss 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. of $5.2 million for the 2000 quarter compared to an operating loss of $7.6 million reported in the comparable quarter of 1999. A portion of the 2000 quarter's operating loss is attributable to increased investments in staffing and the branding campaign for elcom, inc., the Company's eBusiness unit. The Company recorded a net loss for the quarter ended September 30, 2000 of $3.8 million, compared to a net loss of $7.5 million in the third quarter of 1999. Basic and 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. net loss per share for the third quarter of 2000 was ($0.12), compared with a basic and diluted net loss per share of ($0.27) in the third quarter of 1999. The Company also indicated that its cash and cash equivalents as reflected on its balance sheet were $34.4 million at September 30, 2000. Additional information will be available in the Company's Form 10-Q Form 10-Q See 10-Q. which is expected to be filed this week. Net sales for the nine months ended September 30, 2000 were $240.9 million versus $415.1 million in the comparable period of 1999, again reflecting the influences described above, including the sale of the U.K. businesses in July 1999. The Company reported an operating loss of $17.4 million in the nine month period ended September 30, 2000, compared to $29.4 million in the first nine months of 1999, which included an asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $19.5 million related to the sale of the U. K. businesses. The Company recorded a net loss for the nine months ended September 30, 2000 of $15.7 million compared to a net loss of $31.7 million in the 1999 period including the net effects of this same charge. Basic and diluted net loss per share for the first nine months of 2000 was ($0.52), compared with basic and diluted net loss per share of ($1.14) in the comparable 1999 period. The Company also stated that, on a sequential quarterly basis, sales decreased from $83.7 million in the second quarter of 2000 to $77.1 million in the third quarter; however, gross profit increased to $8.1 million in the third quarter from $7.6 million in the second quarter, thereby reducing the Company's net loss from $4.3 million to $3.8 million. On an operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon basis, elcom, inc. and Elcom Services Group ("ESG ESG Enterprise Strategy Group (Veritas) ESG Emergency Shelter Grant (Florida, USA) ESG Expeditionary Strike Group ESG Electronic Service Guide (used in DVB) ") generated net sales of $51.3 million and $25.8 million, respectively, in the third quarter compared to $51.7 million and $32.0 million in the second quarter. Gross profit for elcom, inc. and ESG increased to $5.0 million and $3.1 million, respectively, in the third quarter, compared to $4.6 million and $3.0 million in the second quarter. As a result, the Company's basic and diluted net loss per share was reduced from ($0.14) in the second quarter of 2000 to ($0.12) in the third quarter of 2000. The Company further stated that it intends to continue to invest in the expansion of the direct sales force and marketing for elcom, inc. Robert J. Crowell, Elcom International, Inc.'s chairman 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 quarterly results have improved in several areas, including Elcom Services Group, and overall, the operating results were a bit better than our expectations." Further, Mr. Crowell said, "We continue to position elcom, inc. as a leader in the emerging area of remotely-hosted, automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. systems and recently introduced PECOS Internet Exchange See IXP and NAP. Manager, our eMarketplace enabling technology, which we expect to deploy during the next several quarters as our second generation eMarketplace technology. As these two technology platforms converge con·verge v. con·verged, con·verg·ing, con·verg·es v.intr. 1. a. To tend toward or approach an intersecting point: lines that converge. b. in 2001, we expect to have an integrated product offering that will be able to automate To turn a set of manual steps into an operation that goes by itself. See automation. a company's internal and external procurement, enable eMarketplaces, and importantly, allow these systems to interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. with other eMarketplaces. Using an open architecture, our customers will be able to access and search through other eMarketplaces and bring those products, and associated supplier information, back into our system which represents a giant step forward in our product strategy. elcom, inc.'s first external eMarketplace, (using PECOS Internet Exchange Manager which was announced on October 3, 2000), is expected to be in conjunction with the Commonwealth Business Council, which is now targeted to become operational this quarter at www.cbcmarketplace.com." About Elcom International, Inc. Elcom International, Inc. (www.elcominternational.com), through its wholly-owned subsidiaries, develops, licenses, and uses Internet-based eProcurement systems, including PECOS 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 Procurement Manager, (elcom, inc.'s remotely-hosted automated procurement system) and digital marketplace enabling technologies. elcom, inc. operates Starbuyer.com, its B2B (Business to Business) Refers to one business communicating with or selling to another. See B2B e-commerce, B2C and B2G. B2B - business to business Digital Marketplace through which it offers business products, including PC-oriented and office products which are automatically sourced using the Company's electronic commerce and automated procurement and sourcing technology. elcom, inc., (www.elcom.com), the Company's technology and eProcurement subsidiary, licenses its PECOS technologies to ESG's customers and to other companies and competes against companies like Ariba, Inc., Commerce One, PurchasePro.com, and Clarus Corporation. Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and This press release includes statements that may constitute 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. . All statements other than statements of historical fact, including, without limitation, those with respect to the Company's objectives, plans and strategies set forth herein and those preceded by or that include the words "believes," "intends," "expects," "will," "plans," "anticipates," or similar expressions, are forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Such risks and uncertainties include: the overall markets' and individual customers' acceptance and usage of the Company's electronic commerce software systems, corporate demand for (and price decreases of) PC products and other office products, changes in manufacturer policies reducing price protection and tightening on returns and other policies, the risks of doing business in foreign countries, and the impact of competitive technology products, competitive pricing pressures and the availability and terms of appropriate working capital and/or other financing as well as factors and other risks detailed in the Company's Registration Statement on Form S-3 and from time to time in the Company's other reports filed with the SEC. The Company assumes no obligation to update any of the format, or information contained or referenced, in this announcement. Regulation FD (Fair Disclosure) Under Regulation FD (Fair Disclosure), promulgated prom·ul·gate tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates 1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce. 2. by the Securities and Exchange Commission and effective October 23, 2000, the Company would like the investing public and its shareholders to be aware of the following general information which, from time to time, the Company may wish to discuss with other parties. The Company's previous press releases containing information promulgated pursuant to Regulation FD, can be found on our web site at www.elcominternational.com/press_releases or may be requested from the Company via registered mail. The financial data set forth below should be read in conjunction with the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and other disclosures contained in the Company's 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. for 1999, as well as the Company's quarterly reports on Form 10-Q filed or to be filed with the SEC during 2000. The Company intends to file its September 30, 2000 10-Q by the end of this week.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Net sales $ 77,051 $ 91,326 $ 240,950 $ 415,090
Cost of sales 68,932 83,606 218,785 376,677
Gross profit 8,119 7,720 22,165 38,413
Expenses:
Selling, general
and administrative 12,771 14,972 38,013 47,409
Research and development 583 357 1,544 932
Asset impairment charge -- -- -- 19,504
Total expenses 13,354 15,329 39,557 67,845
Operating profit (loss) (5,235) (7,609) (17,392) (29,432)
Interest and other, net 826 (645) 919 (2,098)
Income (loss) before
income taxes (4,409) (8,254) (16,473) (31,530)
Provision (recovery)
for income taxes (616) (769) (786) 142
Net income (loss) (3,793) (7,485) (15,687) (31,672)
Basic net income
(loss) per share $ (0.12) $ (0.27) $ (0.52) $ (1.14)
Basic weighted average
shares outstanding 30,727 27,944 30,383 27,690
Diluted net income
(loss) per share $ (0.12) $ (0.27) $ (0.52) $ (1.14)
Diluted weighted
average shares
outstanding 30,727 27,944 30,383 27,690
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept 30, December 31,
2000 1999
Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $34,420 $34,159
Accounts receivable, net 46,157 50,054
Inventory 2,123 1,462
Prepaids and other current assets 2,520 1,221
Total current assets 85,220 86,896
PROPERTY, EQUIPMENT AND SOFTWARE, NET 11,375 10,965
OTHER ASSETS 832 178
TOTAL ASSETS $97,427 $98,039
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit 32,967 29,870
Other current liabilities 29,130 20,981
Total current liabilities 62,097 50,851
CAPITAL LEASE OBLIGATIONS,
NET OF CURRENT PORTION 265 260
TOTAL STOCKHOLDERS' EQUITY, NET 35,065 46,928
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $97,427 $98,039
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