NCD Sharply Reduced 3rd Quarter Pre-Tax Loss To $463,000; Posts $6.9 Million One-Time Non-Cash Charge to Write Off Tax Assets.MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Oct. 21, 1999-- Revenues Increased from New Thin Client Software & Hardware Company Forecasts Return to Profitability in 4th Quarter Network Computing Devices (company) Network Computing Devices - (NCD) Producer of X terminals, PC-Xware and Z-Mail. http://ncd.com/. , Inc. (Nasdaq:NCDI NCDI Northern Centre for Digital Imaging (West Yorkshire, UK) ) today reported a sharp reduction in its pre-tax loss during the third quarter and forecasted a return to profitability in the fourth quarter. Revenues for the three months ended September 30, 1999, increased from newly introduced thin client software and record shipments of NCD's full line of network computing Storing and/or running applications in servers in a network. See cloud computing and network computer. hardware. 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. declined compared with the prior quarter. During the quarter, the company also recorded a one-time non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $6.9 million, or 43 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , to write off the value of the tax loss carryforwards tax loss carryforward See carryforward. that were shown on the balance sheet. However, these tax loss carryforwards and others not shown on the balance sheet will still be available to shelter future income. For the third quarter of 1999, revenues rose 12% to $29.3 million, compared with $26.1 million during the same period last year. The company's loss for this year's September quarter, before the one-time tax-related charge, was $463,000, or 3 cents per share, compared with a net loss of $2.2 million, or 14 cents per share, in 1998. After the charge, the net loss was $7.4 million, or 46 cents per share. On a quarter-over-prior-quarter basis, NCD's pre-tax loss of $463,000 was down sharply from this year's June quarter 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 $1.8 million. Second-quarter revenues were $27.9 million. For the first nine months of 1999, NCD NCD - Network Computing Devices posted revenues of $83.6 million, compared with $79.9 million last year. The loss through three quarters of 1999 was $4.3 million, or 26 cents per share, before the tax-related write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. , and a net loss of $11.2 million, or 69 cents per share, after that one-time charge. One year ago, the company's net loss was $3.5 million, or 21 cents per share. Commenting on the quarter's performance, Rudolph G. Morin, president and chief executive officer, said: "We came close to breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations from operations this past quarter. With continued revenue growth and the benefits from the cost reductions already implemented, we expect to post our first quarterly net profit since we began restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). our business model in 1997." "Since we are not going to be profitable for the full 1999 year," Mr. Morin stated, "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 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 , we wrote off the value of those tax assets. This clears the decks for future earnings to be tax free and go directly to our bottom line." "We are confident about NCD becoming profitable," Mr. Morin continued, "because of the improvements we are seeing in market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" by our innovative thin client software and the industry's most comprehensive offering of network computing hardware. We began shipping NCD ThinPATH Manager software during the third quarter and introduced innovative full desktop mirroring capability earlier this month. The market response to our software has been very good, and we expect significant revenue growth in coming quarters." Mr. Morin cited industry trends showing that the movement toward deployment of thin clients has clearly begun. This is also seen in a variety of new applications, including retail point-of-sale, help desks, and public kiosks. Concluding his remarks, Mr. Morin said: "Taken together, market trends and our operating improvements should put black ink on our bottom line once again and leave us well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. our thin client leadership. We are convinced we have the advanced software that customers want to manage their applications and that we need to be successful against virtually any competitor. That combination helps to make NCD the only thin client company with the full product line and the unwavering commitment to this market to best meet important customer I.T. requirements in the new millennium." About NCD: Founded in 1988, Network Computing Devices, Inc., is the leading provider of thin client hardware and software that delivers simultaneous, high-performance, easy-to-manage, simple access to any application from thin client, UNIX UNIX Operating system for digital computers, developed by Ken Thompson of Bell Laboratories in 1969. It was initially designed for a single user (the name was a pun on the earlier operating system Multics). and PC desktops. NCD's products include the NCD ThinSTAR Windows-based Terminals A specialized terminal or slimmed-down PC used as a client to Windows Terminal Server. See Windows terminal. and NCD Business Network Computer family of thin clients; NCD ThinPATH software to extend the functionality reach of NCD ThinSTAR Windows-based Terminals and for implementing thin client computing See thin client. to a variety of enterprise desktops; NCD WinCenter multi-user Windows NT-based server software and NCD PC-Xware software that delivers PC access to UNIX. About 1 million NCD thin clients are installed with over 3 billion hours of operation. The company can be reached on the Internet at www.ncd.com. TABLES FOLLOW This press release includes 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. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements regarding NCD's product offerings, market position and customer base, and growth in demand for thin client and other products. No assurances can be given as to the effect of the acquisition on NCD's business, results of operations and financial condition. These statements involve risks and uncertainty, and actual results could differ materially from those discussed in the forward-looking statements. Although the Company believes its expectations reflected in such forward-looking statements are based on reasonable assumptions, no assurances can be given that such expectations will prove correct. Further information on factors that could cause actual results to differ from those anticipated is included in filings made by the Company from time to time with the Securities and Exchange Commission, including but not limited to, the 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 the year ended December 31, 1998. -0-
NETWORK COMPUTING DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited - in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Total net
revenues $ 29,292 $ 26,115 $ 83,590 $ 79,444
Total cost
of revenues 17,747 16,924 49,282 50,075
Gross profit
margin 11,545 9,191 34,308 29,369
Operating
expenses:
Research and
development 3,097 3,236 9,808 9,998
Marketing and
selling 7,451 7,405 24,431 22,986
General and
administrative 1,585 1,427 4,768 3,881
Total
Operating
Expenses 12,133 12,068 39,007 36,865
Operating
income (loss) (588) (2,877) (4,699) (7,496)
Interest
income, net 125 413 465 1,290
Other income -- 228 -- 2,090
Income (loss)
before income
taxes (463) (2,236) (4,234) (4,116)
Provision for
income taxes 6,951 6,951
(income tax
benefit) -- -- -- (658)
Net income
(loss) $ (7,414) $ (2,236) $(11,185) $ (3,458)
Net income
(loss) per
share
Basic $ (0.46) $ (0.14) $ (0.69) $ (0.21)
Diluted $ (0.46) $ (0.14) $ ( 0.69) $ (0.21)
Shares used
in per share
computations
Basic 16,219 16,228 16,136 16,522
Diluted 16,219 16,228 16,136 16,522
NETWORK COMPUTING DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept. 30, Dec. 31,
1999 1998
ASSETS (unaudited)
Current assets:
Cash and equivalents
and short-term investments $ 15,831 $ 21,359
Accounts receivable, net 21,849 21,590
Inventories 15,952 14,362
Prepaid expenses and other 4,947 6,340
Total current assets 58,579 63,651
Property and equipment, net 4,520 3,850
Other assets 3,469 7,645
Total assets $ 66,568 $ 75,146
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,933 $ 10,438
Accrued expenses 6,329 5,921
Current portion of
capital lease obligations 92 90
Deferred revenue 4,257 6,105
Total current liabilities 24,611 22,554
Long-term portion of
capital lease obligations -- 69
Shareholders' equity:
Common stock 60,360 59,737
Retained earnings (accumulated deficit) (18,403) (7,214)
Total shareholders' equity 41,957 52,523
Total liabilities
and shareholders' equity $ 66,568 $ 75,146
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