Ariel Corporation Reports Preliminary First Quarter Results

    CRANBURY, N.J., May 10 /PRNewswire/ -- Ariel Corp. (Nasdaq:   ADSP) today
 reported net sales of $3,073,529 for the three months ended March 31, 1999, a
 decrease of $3,203,088 from net sales of $6,276,617 for the three months ended
 March 31, 1998. Ariel reported a net loss of approximately ($2,914,313) or a
 loss per share of ($.30) for the three months ended March 31, 1999 compared to
 a net loss of ($1,798,930) or ($0.19) per share for the three months ended
 March 31, 1998.
     Gross margin rates improved from 41% for the three months ending
 March 31, 1998 to 55% for the same quarter this year reflecting a larger
 percentage of sales concentrated in Technical OEMs and end-users such as ISPs.
 The revenue decrease in this same comparison includes a reduction in sales to
 PC Integrators of approximately $2.2 million as Ariel continues to focus on
 its two primary markets, Technical OEMs (TOEM) and Internet Service Providers
 (ISPs). First quarter 1999 results also reflect the first full quarter in
 which Ariel's newly acquired European subsidiary's financials are
 consolidated. European operations increased expenses by approximately $790,000
 including $250,000 in amortization of goodwill arising from the acquisition.
     Jay H. Atlas, CEO and President, commented "First quarter results are in
 line with our expectations as we implemented improvements in internal
 operations, integrated our new European operations, and built and began
 implementing our new marketing and sales programs targeting the Internet
 Service Provider and Technical OEM markets. Ariel's recent announcements of
 our PowerPOP(TM) architecture for ISPs, support for Linux-based systems, and
 our new relationship with Red Hat Software have been exceptionally well-
 received by industry experts and our target customers alike. Ariel's focus on
 technical original equipment manufacturers and internet service providers will
 sharpen throughout 1999, and we expect the bulk of our 1999 revenue to come
 from these targets. This new focus reflects our expectations that weak demand
 for remote access hardware from pc manufacturers and integrators targeting
 enterprise markets will continue throughout 1999."
 
     More About Ariel
     Ariel Corp. (Nasdaq:   ADSP) is a leading provider of high-density remote
 access plug-in cards for applications such as Internet access, corporate
 Intranet/Extranet access, on-line services, telecommuting, transaction
 processing, and unified messaging. Ariel's remote access products make it easy
 for OEMs and system integrators targeting ISPs, corporate enterprises and
 other service providers to add high-density remote access to open systems
 platforms running a variety of popular operating systems, including Windows NT
 and Linux. Ariel's high-density remote access cards provide V.34, V.90-
 compatible 56K, and basic rate ISDN remote dial-in, LAN dial-out, and Internet
 back-haul.  Available in ISA, PCI and CompactPCI formats, the cards connect to
 T1, E1, ISDN, and POTS lines. Ariel's remote access products run Windows NT
 and Linux out of the box. An SDK is available for OEMs who want to use Ariel's
 remote access products with other operating systems.
 
     For more information on Ariel products, please contact Ariel Corporation
 at 2540 Route 130, Cranbury, NJ 08512. Phone: 609-860-2900.
 Fax: 609-860-1155. Email: info@ariel.com.  World Wide Web:
 http://www.ariel.com.
 
     Statements contained in this press release that are not historical facts
 are forward-looking statements that are made pursuant to the safe harbor
 provisions of the Private Securities Litigation Reform Act of 1995, as
 amended.  Forward-looking statements involve risks and uncertainties,
 including market acceptance of the Company's products by technical original
 equipment manufacturers and internet service providers, the timely development
 and acceptance of new products, the impact of competitive products and
 pricing, changing market conditions and the other risks detailed from time to
 time in the Company's  filings with the SEC.  These risks and uncertainties
 could cause actual results to differ materially from those projected or
 currently expected.  These forward-looking statements represent the Company's
 judgement as of the date of this release.  The Company disclaims, however, any
 intent or obligation to update these forward-looking statements.
 
                               ARIEL CORPORATION
                             CONDENSED PRELIMINARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
 
 
                               Three Months Ended
                                  March 31,
 
                                        1999            1998
 
     SALES                        $3,073,529      $6,726,617
     GROSS MARGIN                  1,679,931       2,596,238
     LOSS FROM OPERATIONS       ($2,929,450)    ($1,711,026)
     OTHER INCOME
      (EXPENSE), NET                  15,137        (87,904)
     INCOME/(LOSS) BEFORE
      TAX PROVISION             ($2,914,313)    ($2,635,407)
     INCOME TAX                            0               0
     NET INCOME/(LOSS)          ($2,914,313)    ($1,798,930)
 
     BASIC PER SHARE DATA:
     BASIC WEIGHTED AVERAGE OF
     COMMON SHARES OUTSTANDING     9,755,150       9,380,293
     BASIC EARNINGS/(LOSS) PER SHARE ($0.30)         ($0.19)
 
 
 
                               ARIEL CORPORATION
                             CONDENSED PRELIMINARY
                           CONSOLIDATED BALANCE SHEET
                                  (Unaudited)
 
 
                                  March 31,         December 31,
     ASSETS                         1999              1998
 
     Current Assets
     Cash and cash equivalents   $12,858,830     $17,996,575
     Accounts receivable, net      2,910,536       3,593,709
     Inventories                   2,263,012       2,857,326
     Prepaid Expenses                354,875         449,691
     Other receivables             1,164,534       1,378,781
     19,551,786                   26,276,082
 
     Equipment, net                1,392,443       1,365,354
 
     Goodwill & Other Intangible
      Assets                       4,802,655       5,341,599
 
     Other assets                    640,223         690,435
     Total assets                $26,387,107     $33,682,380
 
 
     LIABILITIES & STOCKHOLDER'S EQUITY
 
     Liabilities                  $9,862,676     $13,976,883
     Stockholder's equity         16,524,431      19,705,497
     Total liabilities &
      stockholder's equity       $26,387,107     $33,682,380
 
 

SOURCE  Ariel Corporation