Gateway Posts Record Second Quarter Earnings.SAN DIEGO--(BUSINESS WIRE)--July 22, 1999-- -- Earnings increase 47% to $.56 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 -- Shipments increase 36% to 1,003,900 -- Sales increase 18% to $1.9 billion -- Income increases 47% to $89 million -- Non-PC income exceeds 10%, achieving company's full-year goal -- Record gross margin of 22.0%, up 60 basis points versus Q1 -- Gateway.net doubles subscriptions, becomes fastest-growing major ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. -- U.S. Consumer PC growth of 46% more than doubles industry rate -- Asia reports 77% unit growth -- U.S. Gateway Business posts record sales of $878 million Powered by strong growth across virtually all segments of its core PC business -- and an increasingly diverse and profitable revenue stream -- Gateway (NYSE NYSE See: New York Stock Exchange : GTW GTW Gateway, Inc. (stock symbol) GTW Global Trade Watch GTW Grand Trunk Western (railroad) GTW Gatwick Airport GTW Global Trading Web (Commerce One B2B-platform) ) today announced record second quarter earnings of $89 million, or $.56 per diluted share, a 47 percent increase over year-ago levels. P. Ted Waitt Theodore "Ted" Waitt (born January 18, 1963) is an American billionaire who was a co-founder of Gateway, Inc. Biography Waitt was born and raised in Sioux City, Iowa and attended the University of Iowa. , Gateway's Chairman and Chief Executive Officer, attributed the strong showing to robust demand in Gateway's consumer PC business, continued strength in the company's Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). operations, renewed growth at Gateway Business and a rapidly-expanding and growing revenue stream beyond the company's core PC business. "We continue to focus like a laser on executing our strategy of moving beyond the box, and it paid off with a record quarter in what's typically the industry's slowest period," Waitt said. "Non-PC income is now well over 10%, which is where we said we'd we'd 1. Contraction of we had. 2. Contraction of we should. 3. Contraction of we would. we'd have ~would be by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . Clearly, we're we're Contraction of we are. we're we are well ahead of our plan to generate a richer, more diverse revenue stream, while our core systems business has never been healthier." Most notable in that regard was the rapid growth of Gateway.net, the Company's internet service provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. (ISP), which it launched in 1997 and began bundling with most computers in February February: see month. this year. Gateway.net subscribers doubled to over 400,000, making Gateway the fastest growing major ISP. "A world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. , scalable ISP continues to be the backbone of our strategy to forge forge Open furnace for heating metal ore and metal for working and forming, or a workshop containing forge hearths and related equipment. From earliest times, smiths (see smithing) heated iron in forges and formed it by hammering on an anvil. lifelong relationships with consumers and businesses," Waitt said. "And with the rapid expansion of Gateway.net, we're poised to drive highly profitable growth across all sectors of the Internet value chain well into the future." In the second quarter of 1999, Gateway shipped 1,003,900 units, a 36% increase from the second quarter of 1998. Sales increased 18% to $1.9 billion from $1.6 billion a year ago. Net income increased 47% to $89.2 million or $.56 per diluted share, compared to $60.7 million or $0.38 per diluted share in the second quarter of 1998. Gateway's half-year results reflect very strong performance in an intensely competitive environment that has seen weakness among some competitors. Unit shipments were up 39% for the first six months versus last year, net income increased 38% and revenues were up 20%, with earnings increasing 37% to $1.18 per diluted share. Quarterly Sales Strong growth in the U.S. for the quarter was driven by continuing strength in Gateway's consumer segment and a record quarter for Gateway's business segment. In the U.S., units increased 36% year over year, with revenues up 18%. Gateway's U.S. consumer segment posted a healthy 46% unit increase over the same period last year, with revenues up 25%. Gateway's U.S. business segment is clearly responding to the new marketplace initiatives and programs the company has launched this year, such as Your:)Ware for Business and dedicated sales and service capabilities in Gateway Country locations throughout the U.S. Gateway Business posted a strong 30% increase in units for the second quarter over the same period last year, with revenues up 12% to a record $878 million. Overall, momentum behind Gateway's total U.S. business continues to mount, as evidenced by a record backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of the quarter that the company is now meeting at a rapid pace. Overseas, Gateway's Asia business continued its rapid growth, while Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). continued to show signs of a turnaround TurnaroundA situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. . In Asia, Gateway posted robust unit volume growth of 77% in the second quarter versus the same period last year, and revenue growth of 58%. Asia's strong showing was driven by healthy growth across all markets and channels, with Japan, once again, posting significant revenue and unit growth far exceeding the industry pace. Europe's unit growth was up slightly, while revenue declined 14% for the quarter over the same period last year. As with the first quarter, however, the United Kingdom's consumer segment responded well as Gateway continued to execute its global strategy, showing healthy unit growth of 20% for the second quarter versus last year, with revenues up 8%. Average unit prices (AUP's) declined 13% from a year ago to $1905 and declined less than 2% from the first quarter of 1999. More importantly, gross margins for the quarter were 22.0%, up from 20.6% last year and up 60 basis points from the first quarter of 1999, marking Gateway's sixth consecutive quarter of year-to-year margin improvement. Gateway Country(R) stores expanded to 168 locations in the U.S. with the addition of 14 new sites in the second quarter. "The tail end of the quarter saw a huge up-tick Noun 1. up-tick - a small increase; "the up-tick in terrorist activity" increment, increase - the amount by which something increases; "they proposed an increase of 15 percent in the fare" in demand, as evidenced by our backlog moving into July," said Jeff Weitzen, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "We've never ended a quarter with stronger momentum and better control over each of our growth levers. As we near our biggest selling season at the end of the year, we're confident that our world-class execution will continue to drive stellar results." Selling, General & Administrative (SG&A) Expenses While Gateway continued to invest in long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , strategic initiatives, the company remained ahead of plan in SG&A productivity for the quarter, and experienced a spending reduction in SG&A versus the first quarter. SG&A spending totaled $298.5 million or 15.6% of sales for the second quarter, versus $249.7 million or 15.4% of sales for the same period last year, and down from the first quarter levels of $309.7 million or 14.7% of sales. Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. Operating income for the second quarter rose to $122.9 million, a 46% increase over last year. Other income increased 51% to $16.5 million compared to $10.9 million in the second quarter of last year, primarily due to increased interest income. Net Income Net income increased to $89.2 million or 47% compared to last year's second quarter level of $60.7 million. Earnings per diluted share increased 47% to $.56 from $.38 per diluted share a year ago. The effective tax rate remains at 36%. Cash and Marketable Securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has Gateway generated $99 million in operating cash for the quarter, ending the quarter with cash and marketable securities at $1.228 billion, down slightly from the first quarter of the year as the company invested cash in strategic initiatives like its stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program and its financing business. Inventory turns increased again this quarter to 42 compared to 30 a year ago. The cash conversion cycle remains strong at negative 7 days, a 12-day improvement over last year and a 4-day improvement over the first quarter. Business Outlook "As we move into our strongest selling season of the year, we're poised to continue delivering consistent earnings results, better-than-industry growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. and a more diverse and profitable revenue stream," said John Todd John Todd is the name of:
Special Note The above statements include 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. based on current management expectations. Factors that could cause future results to differ from these expectations include the following: general economic conditions; growth in the personal computer industry; competitive factors and pricing pressures; component supply shortages; risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc new or acquired businesses; and inventory risks due to shifts in market demand. Additional factors are described in the Company's reports filed with the Securities and Exchange Commission. About Gateway Gateway (NYSE: GTW), a Fortune 250 company founded in 1985, focuses on building lifelong relationships with consumers and businesses through complete technology personalization Custom tailoring information to the individual. On the Web, personalization means returning a page that has been customized for the user, taking into consideration that person's habits and preferences. . Gateway ranked number one in U.S. consumer desktop PC sales in the first quarter of 1999(1.) and number one in customer loyalty. (2.) Our employees worldwide serve clients with services and built-to-order computers that consistently win top awards from leading industry publications. Gateway had total global revenue of $7.5 billion in 1998 and shipped 3.54 million systems. For more information, visit our Web site at www.gateway.com. (1.) According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. GartnerGroup/Dataquest US PC Quarterly statistics. (2.) According to a survey from October 1998 to March 1999 by AC Nielsen. -0-
Gateway
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
----------------------------------------------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
Net sales $1,912,109 $1,618,909 $4,015,520 $3,346,837
Cost of goods sold 1,490,723 1,285,221 3,143,630 2,676,655
---------- ---------- ---------- ----------
Gross profit 421,386 333,688 871,890 670,182
Selling, general and
administrative expenses 298,463 249,699 608,159 476,992
---------- ---------- ---------- ----------
Operating income 122,923 83,989 263,731 193,190
Other, net 16,491 10,917 31,275 20,265
---------- ---------- ---------- ----------
Income before
income taxes 139,414 94,906 295,006 213,455
Provision for income taxes 50,189 34,166 106,202 76,844
========== ========== ========== ==========
Net income $89,225 $60,740 $188,804 $136,611
========== ========== ========== ==========
Net income per share:
Basic $0.57 $0.39 $1.21 $0.88
========== ========== ========== ==========
Diluted $0.56 $0.38 $1.18 $0.86
========== ========== ========== ==========
Basic weighted average
shares outstanding 156,443 155,427 156,470 154,990
========== ========== ========== ==========
Diluted weighted average
shares outstanding 160,157 158,887 160,377 158,231
------------------------- ========== ========== ========== ==========
Gateway
Consolidated Balance Sheets
(in thousands)
June 30, Dec. 31,
1999 1998
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $1,060,920 $1,169,810
Marketable securities 167,399 158,657
Accounts receivable, net 584,882 558,851
Inventory 121,451 167,924
Other 321,841 172,944
---------- ----------
Total current assets 2,256,493 2,228,186
Property, plant, and equipment, net 624,185 530,988
Intangibles, net 59,693 65,944
Other assets 127,213 65,262
========== ==========
$3,067,584 $2,890,380
========== ==========
LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities:
Notes payable and current maturities
of long-term obligations $4,788 $11,415
Accounts payable 711,217 718,071
Accrued liabilities 466,511 415,265
Accrued royalties 162,160 167,873
Other current liabilities 111,147 117,050
---------- ----------
Total current liabilities 1,455,823 1,429,674
Long-term obligations, net of current
maturities 1,973 3,360
Warranty and other liabilities 113,552 112,971
---------- ----------
Total liabilities 1,571,348 1,546,005
---------- ----------
Stockholders' equity
Common stock 1,573 1,566
Additional paid-in-capital 386,481 365,986
Retained earnings 1,169,712 980,908
Treasury stock (54,888) -
Other (6,642) (4,085)
---------- ----------
Total stockholders' equity 1,496,236 1,344,375
========== ==========
$3,067,584 $2,890,380
========== ==========
Top Second Quarter 1999 Awards U.S. Industry Publications Portables -- PC World, No. 1 Best Buy in Top 10 Notebook PC's, Gateway(TM) Solo(R) 5150LS -- Windows Magazine, WinList Award for the General Business Category, Gateway Solo 5150LS -- PC World, Best Buy in Budget Notebook Category, Solo 2500SE -- Windows Magazine, WinList Award for General Business Notebook, Solo 9150LS Home Desktops -- Computer Shopper Computer Shopper could referr to the following publications:
-- PC Computing computing - computer , A-List State-of-the-Art Desktop, Gateway Performance 500 -- Family PC, Top Rated, Gateway G6-400c -- C/Net Computers.com, Editors' Choice, Gateway Performance 500 Business Desktops -- PC Computing A-List, Desktop Workhorse work·horse n. 1. Something, such as a machine, that performs dependably under heavy or prolonged use: "the 50-year-old DC-3 ... PC, Gateway E-3200 450 -- Windows Magazine, WinList Award for Corporate Desktop, Gateway E-4200 -- PC World, Best Buy for Budget Desktops, Gateway E-1200 -- PC World, Best Buy for Power Desktops, Gateway E-4200 500 -- Money Magazine, Money's Most Recommended List, Gateway GP6-400 -- PC World, Best Buy Budget Desktops, Gateway GP6-400-April, May and June www.gateway.com -- PC Computing, I-Biz 100 Top 10 Web Sites-2 categories-By revenue and by retail revenue -- Reviewboard.com, Three Star Award out of a possible three -- Business 2.0 "100 Hottest Companies on the Web" -- Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance Business Directory Award European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Industry Publications United Kingdom -- PC Magazine, Editor's Choice Award, Gateway G6-500 -- PC Direct, Best Buy Award Winner, Gateway G7-500XL -- PC Direct, Best Buy Commendation COMMENDATION. The act of recommending, praising. A merchant who merely commends goods he offers for sale, does not by that act warrant them, unless there is some fraud: simplex commendatio non obligat. Winner, Gateway Solo 2500SE -- PC Direct, Special Achievement Award Category, PC Direct's First Ever 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. Award Germany -- Chip, Buying Recommendation Winners, Gateway G7-500 XL France -- L'Ordinateur Individuel, Recommended Purchase Award, Gateway Solo 2500SE Asia/Pacific Industry Publications Australia -- PC World, Best Buy - Value Notebooks, 1st -Solo 2500SE, 2nd - Solo 3100SE, 3rd - Solo 5150SE, -- PC Authority, Value Award , Gateway G7-500 -- PC Authority, Recommended, Gateway Profile(TM) PC -- Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. Personal Computer, Editor's Choice, Gateway Solo 2500SE New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. -- PC World, Business Desktop, Gateway G6-400c (April 1, May 2 and June 1) -- PC World, Dream PC, Gateway G7-500 - for two consecutive months (May and June) -- NZ Computer, Editors Choice, Gateway G7-500 -- NZ Computer, Budget Buy, (Must Buy), Gateway Solo 3100SE Fireant South Asia This article is about the geopolitical region in Asia. For geophysical treatments, see Indian subcontinent. South Asia, also known as Southern Asia -- PC World Malaysia, No. 1 in Power Desktops, G7-500 -- PC World Malaysia, No. 1 in Power Notebooks, Gateway Solo 3100XL -- PC World Malaysia, No. 2 in Power Notebooks, Gateway Solo 2500LS -- PC World Singapore, No. 1 in Budget Desktops, Gateway Essential 400c -- PC World Singapore, No. 2 in Power Desktops, Gateway Performance 500 |
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