Ariel Corporation Reports Preliminary Second Quarter Results

    CRANBURY, N.J., July 26 /PRNewswire/ -- Ariel Corp. (Nasdaq:   ADSP) today
 reported net sales of $2,760,021 for the three months ended June 30, 1999, a
 decrease of $1,351,169 from net sales of $4,111,190 for the three months ended
 June 30, 1998. Ariel reported a net loss of ($3,247,936) or ($0.33) for the
 three months ended June 30, 1999 compared to a net loss of ($3,378,261) or
 ($0.35) per share for the three months ended June 30, 1998.
     Ariel's net sales for the six months ended June 30, 1999 decreased 44% to
 $5,824,661 from the $10,387,807 reported for the six months ended June 30,
 1998. For the six months ended June 30, 1999, Ariel reported a net loss of
 ($6,254,744) or ($0.64) per share, compared with a net loss of ($5,177,191) or
 ($0.54) per share for the comparable period in 1998.  The revenue decrease in
 1999 as compared with 1998 includes a reduction in sales to PC Integrators of
 approximately $3.3 million as PC Integrator demand for high-end communications
 options remains weak industry-wide -- as anticipated by Ariel's transition to
 focus on internet service providers (ISPs) and technical original equipment
 manufacturers.
     Gross margin for the three months ending June 30, 1999 was $1,585,290 or
 57% of sales, as compared to $1,643,126 or 40% for the same period in 1998.
 For the six months ending June 30, 1999 gross margins were $3,257,792 or 56%
 of sales as compared to $4,239,363 or 41% for the same period last year.  The
 increase in gross margin as a percent of sales reflects a significantly
 improved mix of sales concentrated in Technical OEMs and ISPs vs. lower-margin
 PC Integrator business.
     Jay H. Atlas, CEO and President, commented, "Second quarter results were
 in line with our expectations as we continue to transition our products,
 marketing, and sales programs to more effectively focus on the Internet
 Service Provider and Technical OEM markets. Demand for Ariel's TOEM products
 remains strong, and our recent announcement of Ariel Access Architecture(TM)
 is expected to further strengthen our position with technical original
 equipment manufacturers. Internet industry opinion and initial customer
 reactions to our PowerPOP(TM) architecture continue to be positive. We expect
 our aggressive efforts to fully implement Ariel's transition to this market
 focus will continue through the second half of 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.
     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.
 
 
                               ARIEL CORPORATION
                             CONDENSED PRELIMINARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
 
 
                            Three Months Ended          Six Months Ended
                                 June 30,                   June 30,
                            1999          1998          1999        1998
 
     SALES               $2,760,021    $4,111,190   $5,824,661  $10,387,808
     GROSS MARGIN         1,585,290     1,643,126    3,257,792    4,239,363
     LOSS FROM
      OPERATIONS       ($3,264,687)  ($3,281,625) ($6,284,618) ($4,992,652)
     OTHER INCOME
      (EXPENSE), NET         16,751      (96,635)       29,874    (184,539)
     INCOME/(LOSS)
      BEFORE TAX
      PROVISION        ($3,247,936)  ($3,378,261) ($6,254,744) ($5,177,191)
     INCOME TAX                   0             0            0            0
     NET INCOME/(LOSS) ($3,247,936)  ($3,378,261) ($6,254,744) ($5,177,191)
 
     BASIC PER SHARE DATA:
     BASIC WEIGHTED AVERAGE OF
     COMMON SHARES
      OUTSTANDING         9,755,150     9,697,114    9,755,150    9,514,482
     BASIC EARNINGS/(LOSS)
      PER SHARE             ($0.33)       ($0.35)      ($0.64)      ($0.54)
 
 
                               ARIEL CORPORATION
                             CONDENSED PRELIMINARY
                           CONSOLIDATED BALANCE SHEET
                                  (Unaudited)
 
                                                June 30,       December 31,
     ASSETS                                       1999                 1998
 
     Current Assets
        Cash and cash equivalents            $11,026,567        $17,996,575
        Accounts receivable, net               2,453,554          3,593,709
        Inventories                            2,051,706          2,857,326
        Prepaid Expenses                         467,150            449,691
        Other receivables                      1,099,123          1,378,781
                                              17,098,100         26,276,082
 
     Equipment, net                            1,308,213          1,365,354
 
     Goodwill & Other Intangible Assets        4,227,179          5,341,599
 
     Other assets                                647,218            699,345
        Total assets                         $23,280,710        $33,682,380
 
 
     LIABILITIES & STOCKHOLDER'S EQUITY
 
     Liabilities                             $10,185,996        $13,976,883
     Stockholder's equity                     13,094,714         19,705,497
        Total liabilities &
         stockholder's equity                $23,280,710        $33,682,380
 
 

SOURCE Ariel Corporation

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