Ariel Corporation Reports Preliminary Unaudited Second Quarter Results

    CRANBURY, N.J., Aug. 9 /PRNewswire/ -- Ariel Corp. (Nasdaq:   ADSP) today
 reported net sales of $1,097,211 for the three months ended June 30, 2000
 compared to net sales of $2,760,021 for the three months ended June 30, 1999.
 Ariel reported a net loss of ($6,785,563) or ($0.52) basic and dilutive loss
 per share for the three months ended June 30, 2000 compared to net loss of
 ($3,267,936) or basic and dilutive loss per share of ($.33) for the three
 months ended June 30, 1999.  Per share losses for the three months ended
 June 30, 2000 were ($.34) prior to restructuring and other charges.
     In June 2000 the board of directors approved a plan to phase out the
 Company's low end products and reduce ongoing investment in these products in
 Europe.  Accordingly, results for the quarter were impacted by other
 non-recurring charges of $2.3 million including goodwill of $1.5 million as
 well as restructuring of approximately $800,000.  Of the $2.3 million
 approximately $2.0 are non-cash charges.
     For the six months ended June 30, 2000, net sales were $3,169,432,
 compared to net sales of $5,824,661 for the six months ended June 30, 1999.
 Ariel reported a net loss of ($9,598,539) or ($0.78) basic and dilutive loss
 per share for the six months ended June 30, 2000 compared to net loss of
 ($6,274,744) or basic earnings and dilutive loss per share of ($.64) for the
 six months ended June 30, 1999.  Per share losses for the six months ended
 June 30, 2000 were ($.59) prior to restructuring and other charges.
     The decrease in sales reflects two major transitions; original equipment
 manufacturer (OEM) customers using older products supplied by Ariel are
 approaching the end of their products' respective life cycles and a delayed
 ramp-up of both new OEM and ISP projects.
     Gross margins were impacted by a write-down of approximately $548,000 in
 inventories as the Company continues to phase out products focused outside of
 its targeted markets.  Margins were approximately 57% before recording
 inventory reserves.
     "In the second quarter, Ariel successfully worked through significant
 transitions and structural changes.  I believe these changes significantly
 improve Ariel's opportunity for future success and I remain positive about our
 ISP and OEM prospects in future quarters," said CEO and President, Dennis
 Schneider.
     For the three months ended June 30, 2000, operating expenses decreased
 $399,463 to $4,515,514 from $4,914,977 before non-recurring restructuring
 charges.  Operating expenses for the six month period decreased $1,075,041 to
 $8,532,369 from $9,607,410 for the comparable period last year before
 non-recurring restructuring charges.
     Ariel recorded a backlog of $1.7 million and working capital of
 $8.4 million as of June 30, 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: 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
 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             Six Months Ended
                                June 30,                      June 30,
                             2000          1999          2000          1999
 
     SALES               $1,097,211     $2,760,021    $3,169,432   $5,824,661
     GROSS MARGIN            75,829      1,630,290     1,279,676    3,302,792
     OPERATING EXPENSES   4,515,514      4,914,977     8,532,369    9,607,410
     RESTRUCTURING AND
     OTHER CHARGES        2,356,656              0     2,356,656            0
     LOSS FROM
      OPERATIONS       ($6,796,341)   ($3,284,687)  ($9,609,349) ($6,304,618)
     OTHER INCOME            10,778         16,751        10,810       29,874
     (LOSS) BEFORE
      PROVISION FOR
      INCOME TAXES     ($6,785,563)   ($3,267,936)  ($9,598,539) ($6,274,744)
     PROVISION FOR
      INCOME TAXES                0              0             0            0
     NET (LOSS)        ($6,785,563)   ($3,267,936)  ($9,598,539) ($6,274,744)
 
     BASIC PER SHARE DATA:
     BASIC WEIGHTED AVERAGE
      OF COMMON SHARES
      OUTSTANDING        13,073,920      9,760,150    12,376,934    9,760,150
     BASIC (LOSS)
      PER SHARE             ($0.52)        ($0.33)       ($0.78)      ($0.64)
 
                               ARIEL CORPORATION
                             CONDENSED PRELIMINARY
                           CONSOLIDATED BALANCE SHEET
                                  (Unaudited)
 
                                                    June 30,     December 31,
     ASSETS                                           2000           1999
 
     Current Assets
     Cash and cash equivalents                     $6,749,205     $7,088,431
     Accounts receivable, net                         841,053      3,091,362
     Inventories                                    3,074,080      3,303,057
     Prepaid Expenses                                 755,091        775,943
     Other receivables                                336,642        383,676
                                                   11,756,071     14,642,469
 
     Equipment, net                                 1,406,121      1,387,128
 
     Goodwill, Intangible & Other assets            1,626,807      3,787,475
     Total assets                                 $14,788,999    $19,817,072
 
 
     LIABILITIES & STOCKHOLDER'S EQUITY
 
     Liabilities                                   $5,018,833     $8,819,833
     Stockholder's equity                           9,770,166     10,997,239
     Total liabilities & stockholder's equity     $14,788,999    $19,817,072
 
 

SOURCE  Ariel Corporation