Ariel Corporation Reports Preliminary Fourth Quarter Results

Mar 06, 2000, 00:00 ET from Ariel Corporation

    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
     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:  World Wide Web:
     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
                             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
      OPERATIONS     ($3,284,102)  ($6,095,468) ($12,474,160)  ($16,218,113)
      (EXPENSE), NET       43,024       109,021      (25,655)     28,663,251
      INCOME TAXES   ($3,241,078)  ($5,986,447) ($12,499,815)    $12,445,138
      INCOME TAXES              0             0             0        368,632
      /(LOSS)        ($3,241,078)  ($5,986,447) ($12,499,815)    $12,076,506
       OUTSTANDING     10,090,443     9,755,150     9,843,402      9,652,664
       PER SHARE          ($0.32)       ($0.61)       ($1.27)          $1.25
       OPTIONS                  0             0             0      1,190,551
       OUTSTANDING     10,090,443     9,755,150     9,843,402     10,843,215
       (LOSS) PER SHARE   ($0.32)       ($0.61)       ($1.27)          $1.11
                               ARIEL CORPORATION
                             CONDENSED PRELIMINARY
                           CONSOLIDATED BALANCE SHEET
                                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                $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