Ariel Corporation Reports Preliminary Fourth Quarter Results
CRANBURY, N.J., March 6 /PRNewswire/ -- Ariel Corp. (Nasdaq: ADSP) today reported net sales for the year ended December 31, 1999 of $11,626,546. The decrease from net sales of $17,445,829 reported for the year ended December 31, 1998 includes a reduction of approximately $5 million in sales to computer equipment suppliers, including $4.2 million to Compaq. Net sales were $2,932,292 for the three months ended December 31, 1999, a decrease of $945,478 from net sales of $3,877,770 for the three months ended December 31, 1998. Decreases in revenues from 1998 reflect a decline in enterprise demand for high-end communications options -- as anticipated by Ariel's shift to internet service providers (ISPs) and technical original equipment manufacturers. Increases in gross margins of $1,049,923 for 1999 as compared to 1998 reflect a significantly improved mix of sales concentrated in Technical OEMs and end users vs. lower-margin PC equipment business. Gross margins for the twelve months ending December 31, 1999 were $6,530,532 or 56% of sales as compared to $5,480,609 or 31% for the same period last year. Gross margins were $1,686,228 or 58% of sales for the fourth quarter of 1999 before costs related to inventory write downs of $195,000. After this adjustment, gross margins were $1,491,228 or 51%, up 16% from the 35% reported for the same period last year before costs incurred to write down inventory. Reduced operating losses were the result of the improved gross margins combined with a reduction in operating expenses. Losses from operations declined 46% to ($3,284,102) for the three months ended December 31, 1999 as compared to ($6,095,468) for the three months ended December 31, 1998. Losses from operations for 1999 decreased by $3,743,953 to ($12,474,160) as compared to ($16,218,113) in 1998. Operating expense reductions were the result of tighter expense controls throughout 1999 and the sale of the DSLAM group in September of 1998. The company realized an increase in cash of approximately $3.8 million as a result of the exercise of outstanding stock options and warrants during the three months ending December 31, 1999. Cash as of December 31, 1999 was $7,088,431 and working capital was $7,827,521 as compared to cash of $17,996,575 and working capital of $12,632,033 as of December 31, 1998. The net loss for the year ending December 31, 1999 was ($12,499,815) or ($1.27) basic and dilutive loss per share. Comparatively, 1998 income includes one time gain on the sale of Ariel's DSLAM group to Cabletron Systems, Inc. of Rochester, New Hampshire (NYSE: CS) on September 1, 1998. The gain represents approximately $2.80 per share diluted after transaction costs, interest and administrative expenses. Net income for the year ending December 31, 1998 was $12,076,506 or basic earnings per share of $1.25 and dilutive earnings per share of $1.11. Before giving affect to the DSLAM transaction Ariel's 1998 basic and loss per share diluted was ($1.69). The net loss for the three months ending December 31, 1999 was ($3,241,078) or ($0.32) basic and dilutive loss per share compared to a net loss of ($5,986,447) or basic and dilutive loss per share of $(.61) for the three months ended December 31, 1998. "The results reflect our continued focus on our ISP and OEM market strategy, improved margin rates and operating expense controls," commented CEO and President, Jay H. Atlas. "The operational results combined with our strengthened balance sheet and working capital put us in an excellent position to execute our objectives for 2000." 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: email@example.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 judgment 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 Twelve months Ended December 31, December 31, 1999 1998 1999 1998 SALES $2,932,292 $3,877,770 $11,626,546 $17,445,829 GROSS MARGIN 1,491,228 (136,436) 6,530,532 5,480,609 LOSS FROM OPERATIONS ($3,284,102) ($6,095,468) ($12,474,160) ($16,218,113) OTHER INCOME (EXPENSE), NET 43,024 109,021 (25,655) 28,663,251 INCOME/(LOSS) BEFORE PROVISION FOR INCOME TAXES ($3,241,078) ($5,986,447) ($12,499,815) $12,445,138 PROVISION FOR INCOME TAXES 0 0 0 368,632 NET INCOME /(LOSS) ($3,241,078) ($5,986,447) ($12,499,815) $12,076,506 BASIC PER SHARE DATA: BASIC WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING 10,090,443 9,755,150 9,843,402 9,652,664 BASIC EARNINGS /(LOSS) PER SHARE ($0.32) ($0.61) ($1.27) $1.25 DILUTIVE PER SHARE DATA: EFFECT OF DILUTIVE OPTIONS 0 0 0 1,190,551 DILUTIVE WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING 10,090,443 9,755,150 9,843,402 10,843,215 DILUTIVE EARNINGS/ (LOSS) PER SHARE ($0.32) ($0.61) ($1.27) $1.11 ARIEL CORPORATION CONDENSED PRELIMINARY CONSOLIDATED BALANCE SHEET (Unaudited) December 31, December 31, ASSETS 1999 1998 Current Assets Cash and cash equivalents $7,088,431 $17,996,575 Accounts receivable, net 3,091,362 3,593,709 Inventories 3,303,057 2,857,326 Prepaid Expenses 775,943 449,691 Other receivables 383,676 1,378,781 14,642,469 26,276,082 Equipment, net 1,387,128 1,365,354 Goodwill & Other Intangible Assets 2,198,889 5,341,599 Other assets 1,588,242 699,345 Total assets $19,816,728 $33,682,380 LIABILITIES & STOCKHOLDERS' EQUITY Liabilities $8,819,834 $13,976,883 Stockholder's equity 10,996,894 19,705,497 Total liabilities & stockholders' equity $19,816,728 $33,682,380
SOURCE Ariel Corporation
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