Electronic Retailing Systems International, Inc. Reports 1998 revenues increased 91%, Fourth Quarter revenues increases 160%.NORWALK Norwalk (nôr`wôk'). 1 City (1990 pop. 94,279), Los Angeles co., S Calif.; settled in the 1850s, inc. 1957. With the arrival (1875) of the Southern Pacific RR, it became a center for the dairy and logging industries, but , Conn.--(BUSINESS WIRE)--March 31, 1999--Electronic Retailing Systems International, Inc. ("ERS ERS, n.pr See extended rotated side-bent. ") (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 : ERSI ERSI Environment Remote Sensing Institute ) today reported financial results for the year and for the quarter ended December December: see month. 31, 1998. Total revenues for the year ended December 31, 1998 increased 91% to $3,764,000 as compared to $1,972,000 for 1997. Net loss for the year was $34,313,000 or $1.62 per share, compared to a net loss of $26,873,000 or $1.27 per share, for the previous year. Revenues for the fourth quarter of 1998 increased 160%, to $1,080,000 compared to $415,000 for the same period last year. The net loss was $11,972,000 for the quarter ended December 31, 1998, or $0.56 per share as compared to a net loss of $8,776,000 or $0.42 per share for the same period in 1997. The net loss in 1998 reflected interest expenses of $16,886,000 compared to $14,024,000 in the prior year. The interest expense is primarily a non cash charge ERS commenced recording upon the issuance of its senior discount notes in January 1997. The 1998 results also reflect an increase in the Company's reserve for inventory valuation of $2,970,000 included in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold . ERS completed 10 installations in the fourth quarter, compared to a total of 13 installations during the first three quarters of 1998. At year end the company had a total installed base of 72 systems at 9 different customers in the U.S., Brazil and Canada. At year end, ERS also had orders for additional systems to be installed at five Rite Aid Rite Aid (NYSE: RAD) is a United States retailer and pharmacy chain, operating over 5,000 stores in 31 states and the District of Columbia. Rite Aid Corporation is one of the nation's leading drugstore chains. , one Shaws and two Stop & Shop stores. ERS also had previously announced orders for four stores from Waremart, Inc. pending the successful evaluation of the first installation, which is in process in the state of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , and 28 stores from E.W. James and Sons in Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. , pending the successful evaluation of the first installation, which is also in process. "We made a great deal of progress this year," said Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. F. Failing, Jr., Chief Executive Officer of ERS. "We received and filled multiple store orders from Shaws, Stop & Shop and Rite Aid. We received orders from retailers outside the state of Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). indicating what we believe to be a growing interest in our product." "Operationally, we also made progress" continued Failing, "We reduced SG&A expenses by 15% in the fourth quarter of 1998 versus the fourth quarter of 1997, yet we continued to invest heavily in R&D to improve and expand our application capabilities." ERS is a leading developer and supplier of electronic shelf labeling Electronic Shelf Label is a system used by Retailers for displaying price on shelves. Automating the price change process enhances in-store merchandising and store compliance. These features add up to increased sales and reduced overall operational costs. systems designed to improve retailer profitability. The ERS ShelfNet(R) system is designed to assist retailers in cost savings and pricing accuracy by using a wireless network to link a store?s central computer both to its checkout scanner (1) See also antivirus program. (2) An optical device that reads a printed page or transparency and converts it into a graphics image for the computer. The scanner does not recognize or differentiate in any manner the content of the material it is scanning. and to the ESLs that display pricing information at the shelf edge. With ShelfNet, this pricing information is updated automatically on the ESLs when prices in the point-of-sale (POS (1) See point of sale and packet over SONET. (2) "Parent over shoulder." See digispeak. POS - point of sale ) scanner are changed. This provides price integrity between the shelf edge and the POS scanners. ShelfNet uses spread spectrum RF technology, which is the most widely used method of wireless communication in retail today. In addition, ShelfNet uses a suite of patented software applications designed to communicate merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. , inventory and other information to and from store personnel in the aisle. These applications are designed to provide value-added benefits to retailers in the areas of shelf-edge merchandising, replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. control, strategic pricing and shelf set compliance. This press release contains 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. that involve risks and uncertainties. ERS' actual results may vary from those anticipated due to a number of factors, including, without limitation, the timely availability and acceptance of new products, the rate of development of the emerging market for electronic shelf label systems, the impact of competitive products and pricing, the ability to obtain system components from suppliers, the management of growth, and other factors set forth in reports and other documents filed by ERS with the Securities and Exchange Commission from time to time. -0-
Electronic Retailing Systems International, Inc.
Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
1998 1997 1998 1997
Revenues
Product sales $ 791 $ 243 $ 2,900 $ 1,147
Maintenance 289 172 864 825
Total revenues 1,080 415 3,764 1,972
Cost of goods sold 4,657 1,193 8,095 3,699
Gross loss (3,577) (778) (4,331) (1,727)
Operating Expenses
Selling, general and
administrative 3,543 4,185 12,671 12,394
Research and development 1,069 1,039 3,928 3,409
Depreciation and amortization 117 110 375 301
Total operating expenses 4,729 5,334 16,974 16,104
Loss from operations (8,306) (6,112) (21,305) (17,831)
Other income (expenses)
Interest income 838 1,211 3,982 4,982
Interest expense (4,400) (3,875) (16,886) (14,024)
Loss on disposals (104) - (104) -
Total other expenses (3,666) (2,664) (13,008) (9,042)
Net loss $ (11,972) $ (8,776) $ (34,313)$(26,873)
Earnings per Common Share
Weighted average common
shares outstanding 21,248 21,138 21,233 21,096
Basic loss per common share $ (0.56) $ (0.42) $ (1.62) $ (1.27)
Electronic Retailing Systems International, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
Dec. 31, Dec. 31,
1998 1997
Assets
Current assets
Cash and cash equivalents $ 63,877 $ 82,400
Other current assets 9,031 8,454
Total current assets 72,908 90,854
Equipment, net 3,651 3,302
Other non-current assets 5,067 6,052
Total assets $ 81,626 $100,208
Liabilities and Stockholders' Deficit
Current liabilities $ 7,211 $ 2,482
Long-term debt 124,057 113,102
Common stock purchase warrants 5,100 5,100
Stockholders' deficit (54,742) (20,476)
Total liabilities and stockholders'
deficit $ 81,626 $100,208
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