Lexar Media First Quarter Report Meets Expectations

Apr 25, 2001, 01:00 ET from Lexar Media, Inc.

    FREMONT, Calif., April 25 /PRNewswire/ --
 Lexar Media, Inc. (Nasdaq: LEXR), a leading designer, developer and marketer
 of award-winning high-performance digital film and connectivity products for
 the digital photography market, today reported revenues for the first quarter
 ended March 31, 2001.  Total revenues for the first quarter 2001 were
 $16.2 million, a nominal increase over the $16.1 million in revenues reported
 for the first quarter of the previous year.  The Company's revenues for the
 first quarter 2001 were essentially flat from revenues reported in the
 fourth quarter of 2000.
     Excluding stock-based compensation charges, imputed interest, financing
 charges and a one-time $2.9 million write down of unamortized goodwill related
 to the purchase of Printroom in January 2000, Lexar Media's pro forma loss was
 $18.0 million for the first quarter of 2001, or $0.31 per share, compared to a
 pro forma loss of  $12.5 million, or  $0.22 per share, for the fourth quarter
 of 2000, and $4.4 million, or $0.53 per share for the first quarter of 2000.
 Including stock-based compensation charges, imputed interest, financing
 charges, and a one-time charge related to the remaining Printroom acquisition
 goodwill, Lexar Media's loss was $23.5 million, or $0.41 cents per share, for
 the first quarter ended March 31, 2001, compared to a loss of $20.9 million,
 or $0.37 cents per share, for the fourth quarter ended December 31, 2000, and
 a loss of $8.3 million, or $1.01 per share, for the first quarter ended
 March 31, 2000.
     "We are pleased with our results during the first quarter in which, as
 expected, Lexar Media not only achieved revenues that were slightly improved
 over the previous quarter, but also attained a significant decrease in cash
 burn," said John Reimer, Lexar Media's President and Chief Executive Officer.
 "The Company was also successful in decreasing inventory, as we experienced a
 significant increase in shipments compared to the fourth quarter of 2000."
     Mr. Reimer added, "Last year, Lexar Media announced a global technology
 licensing strategy to protect our patent portfolio and to allow sales of our
 proprietary controller technology to partners to address strategic
 opportunities.  We began executing this strategy in the first quarter, leading
 up to our recently announced licensing agreement with Samsung Electronics
 whereby Lexar Media will collect significant royalty payments that have
 started in the second quarter of 2001. The signing of this agreement is a
 recognition of Lexar Media's technology as a growth driver for the flash media
 industry."
     Commenting on Lexar Media's balance sheet, Ron Bissinger, Vice President
 and Chief Financial Officer, stated, "We reduced inventory levels to
 $15.7 million at the end of the first quarter. This $11.9 million reduction
 since December 31, 2000 was primarily accomplished through stricter inventory
 control, cost reductions, and by increasing our inventory reserves to reflect
 current market conditions. We ended the quarter where we expected to be with
 regard to our cash position at $22.1 million in cash and short-term
 investments. We continue to believe that this is sufficient to achieve our
 fourth quarter profitability goal."
     Mr. Bissinger continued, "We expect that licensing and controller sales
 revenue for 2001 will increase from the previously projected $3 million to
 more than $12 million based on our agreement with Samsung Electronics and
 other anticipated agreements that we plan to announce in the near future."
 
     First Quarter Highlights
     During the first quarter of 2001, the Company also:
 
     -- Sales and Marketing
 
       -- Added D&H Distributing, a provider of microcomputer, multimedia and
          emerging technology products, to its growing roster of retail
          outlets. D&H now offers Lexar Media's complete line of digital film
          and readers.
       -- In addition, Maxwell Optical selected the entire Lexar Media product
          offering for distribution throughout the Australia and Norfolk Island
          markets.
       -- Strengthened its management team with key appointments in marketing,
          business development and retail sales. Doug Kellam, formerly with
          Onvia.com, joined the Company as vice president of marketing. Lexar
          Media's former vice president of North American sales, Jack Peterson,
          accepted the responsibilities of the Company's new vice president of
          business development. Tim Sullivan assumed Mr. Peterson's former role
          under the new title of vice president of channel marketing and sales.
          Mr. Sullivan was previously with OneChannel.net. The addition of
          these outstanding managers will significantly impact Lexar Media's
          presence in the photo, mass market and OEM channels.
 
     -- Products
 
       -- Announced plans to release its 512MB Type I CompactFlash card. As
          Lexar Media's highest capacity card, it is designed to meet the
          demanding performance requirements of the professional photographer.
       -- Launched a new 64MB MultiMediaCard to address other markets
          supplemental to digital cameras, including cellular phones, digital
          camcorders, digital music players, PDAs and other portable digital
          devices.
       -- Launched Printroom Professional Studios, which enables professional
          photographers to display and offer for sale selected photos, while
          outsourcing Web-hosting, storage, e-commerce transactions, print
          processing, order fulfillment, customer support and sales reporting.
 
     -- Awards
 
       -- Received the "Best in Category" award by Digital Imaging magazine for
          its CompactFlash(TM) and SmartMedia(TM) digital film products.
 
     -- Europe
 
       -- Lexar Media Europe successfully negotiated an accessory promotion
          with Canon for its D30 that features Lexar Media CompactFlash digital
          film. This is the first time the camera manufacturer has offered a
          non-Canon product to its customers.
 
     -- Japan
 
        -- Debuted SayCheese.com Japan (www.SayCheese.com/japan), the Japanese
           edition of SayCheese.com, Lexar Media's online community and
           educational site for digital photography.
 
     "In light of the Samsung agreements and others on the table, we're more
 confident than ever in our ability to meet profitability targets for 2001,"
 added Mr. Reimer.  "Throughout the first quarter, Lexar Media has worked
 diligently to address our core markets through the photo, OEM and mass market
 channels so that the Company may maintain flexibility to better address
 fast-changing market conditions."
     Mr. Reimer concluded, "We believe Lexar Media is well positioned with the
 combination of product marketing and sales activities and the forward movement
 of our technology licensing strategy -- which is a very high margin business
 segment for us. We expect that as our technology licensing partner list grows,
 so will Lexar Media's margins."
 
     About Lexar Media
     Lexar Media, Inc. is a leading designer, developer and marketer of
 award-winning digital film and connectivity solutions for the professional,
 commercial and amateur digital photography markets. The adoption of Lexar
 Media's digital film and connectivity products for use with digital cameras
 and other digital devices is driven by Lexar Media's innovation in write-speed
 technology, which is the cornerstone of its patented controllers. Lexar
 Media's other digital photography related products include "Shoot & Share"
 image browsing and editing software, an online photofinishing service at
 Printroom.com, and a Web-based educational digital photography site at
 SayCheese.com. Headquartered in Fremont, California, Lexar Media also has
 offices in London and Tokyo. For more information, please call 800-789-9418 or
 visit www.digitalfilm.com.
 
     Cautionary Note Regarding Forward-Looking Statements
     This news release contains forward-looking statements within the meaning
 of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
 Exchange Act of 1934 and is subject to the safe harbor created by those
 sections. These forward-looking statements include statements related to
 projections about Lexar Media's business, the ability of Lexar Media to
 achieve profitability by the fourth quarter of 2001, expectations regarding
 Lexar Media's technology licensing programs to increase revenues and improve
 its gross margins, and the anticipated impact of the recent additions to our
 management team. These forward-looking statements involve a number of risks
 and uncertainties that could cause the actual results of these efforts to
 differ materially from those anticipated by these forward-looking statements.
 These risks include:  the growth in Lexar Media's business depends on the
 growth in and acceptance of the digital photography market and the development
 of digital cameras that take advantage of its digital film's performance;
 there is uncertainty and seasonality relating to the timing of revenue from
 digital film purchases; Lexar Media has a history of losses and may never
 become profitable; the Company's quarterly operating results and gross margins
 are difficult to predict and may fluctuate significantly; many of the
 Company's retail customers and distributors have price protection which could
 require the Company to make large payments if it reduces prices; if Lexar
 Media is unable to anticipate demand and pricing of its products in Japan or
 if it is unable to effectively manage the distributor channels and
 relationships in Japan, its operating results will be harmed; if Lexar Media
 is unable to develop or maintain the strategic relationships necessary to
 develop, sell and market products that are commercially viable and widely
 accepted, the growth and success of its business may be limited; Lexar Media
 depends on a few key customers and the loss of any of them could significantly
 reduce its revenues; the Company must be able to develop and introduce new
 products and services on a timely basis that are accepted by its customers and
 consumers in order to compete effectively and if Lexar Media is unable to
 license its controller technology for application in other products, the
 growth of its business may be limited. Readers should also refer to the risk
 factors described in Lexar Media's filings with the Securities and Exchange
 Commission including its Annual Report on Form 10-K for its fiscal year ended
 December 31, 2000, filed with the Commission on April 2, 2001. Lexar Media
 assumes no obligation to update the forward-looking information contained in
 this news release.
     NOTE:  Lexar Media, the Lexar Media logo, Printroom.com, SayCheese.com and
 Shoot & Share are trademarks of Lexar Media, Inc. Lexar Media, Inc. is an
 authorized licensee of the CompactFlash trademark. All other brand or product
 names are trademarks or registered trademarks of their respective holders.
 
 
                       LEXAR MEDIA, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                  (unaudited)
 
                                                        Three Months Ended
                                                    Mar. 31,           Mar. 31,
                                                     2001                2000
 
     Revenues                                       $16,221            $16,050
     Cost of revenues                                22,172             13,371
       Gross margin                                  (5,951)             2,679
 
     Operating expenses:
       Research, development & engineering            1,594              1,537
       Sales and marketing                            6,661              2,997
       General and administrative                     3,800              2,458
       Impairment reserve                             2,854                 --
       Stock-based compensation                       1,497              4,034
         Total operating expenses                    16,406             11,026
     Loss from operations                           (22,357)            (8,347)
 
     Other income and expense:
       Interest and other  income                       439                206
       Interest expense                              (1,382)              (129)
       Foreign exchange gain (loss)                    (171)               (36)
         Total Other income and expense              (1,114)                41
 
     Net loss                                      $(23,471)           $(8,306)
 
     Net loss per share:
       Basic and diluted                             $(0.41)            $(1.01)
 
     Net loss per share excluding
      impairment reserve,
     stock-based compensation, one-time
      interest
     charge, and imputed interest
       Basic and diluted                             $(0.31)            $(0.53)
 
 
     Shares used in computing net loss
      per share
       Basic and diluted                             57,326              8,368
 
 
                   LEXAR MEDIA, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                             (in thousands)
                              (unaudited)
 
                                 ASSETS
 
                                                          Mar. 31,     Dec. 31,
                                                           2001          2000
 
     Current assets:
       Cash and cash equivalents                          $22,066       $8,755
       Short-term investments                                  --       19,987
       Accounts receivable, net                             9,682        8,767
       Inventories                                         15,663       27,536
       Prepaid expenses and other
        current assets                                      1,106        1,909
         Total current assets                              48,517       66,954
     Property and equipment, net                            3,242        3,364
     Goodwill, intangibles and other
      assets                                                1,468        4,530
                                                          $53,227      $74,848
 
 
                  LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
     Current liabilities:
       Accounts payable and accrued
        liabilities                                        16,304       16,893
       Deferred revenue                                       234          446
       Notes payable                                        7,137        6,450
         Total current liabilities                         23,675       23,789
 
       Notes payable - net of current
        portion                                             1,022        1,521
         Total liabilities                                 24,697       25,310
 
       Total stockholders' equity                          28,530       49,538
                                                          $53,227      $74,848
 
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X11540222
 
 

SOURCE Lexar Media, Inc.
    FREMONT, Calif., April 25 /PRNewswire/ --
 Lexar Media, Inc. (Nasdaq: LEXR), a leading designer, developer and marketer
 of award-winning high-performance digital film and connectivity products for
 the digital photography market, today reported revenues for the first quarter
 ended March 31, 2001.  Total revenues for the first quarter 2001 were
 $16.2 million, a nominal increase over the $16.1 million in revenues reported
 for the first quarter of the previous year.  The Company's revenues for the
 first quarter 2001 were essentially flat from revenues reported in the
 fourth quarter of 2000.
     Excluding stock-based compensation charges, imputed interest, financing
 charges and a one-time $2.9 million write down of unamortized goodwill related
 to the purchase of Printroom in January 2000, Lexar Media's pro forma loss was
 $18.0 million for the first quarter of 2001, or $0.31 per share, compared to a
 pro forma loss of  $12.5 million, or  $0.22 per share, for the fourth quarter
 of 2000, and $4.4 million, or $0.53 per share for the first quarter of 2000.
 Including stock-based compensation charges, imputed interest, financing
 charges, and a one-time charge related to the remaining Printroom acquisition
 goodwill, Lexar Media's loss was $23.5 million, or $0.41 cents per share, for
 the first quarter ended March 31, 2001, compared to a loss of $20.9 million,
 or $0.37 cents per share, for the fourth quarter ended December 31, 2000, and
 a loss of $8.3 million, or $1.01 per share, for the first quarter ended
 March 31, 2000.
     "We are pleased with our results during the first quarter in which, as
 expected, Lexar Media not only achieved revenues that were slightly improved
 over the previous quarter, but also attained a significant decrease in cash
 burn," said John Reimer, Lexar Media's President and Chief Executive Officer.
 "The Company was also successful in decreasing inventory, as we experienced a
 significant increase in shipments compared to the fourth quarter of 2000."
     Mr. Reimer added, "Last year, Lexar Media announced a global technology
 licensing strategy to protect our patent portfolio and to allow sales of our
 proprietary controller technology to partners to address strategic
 opportunities.  We began executing this strategy in the first quarter, leading
 up to our recently announced licensing agreement with Samsung Electronics
 whereby Lexar Media will collect significant royalty payments that have
 started in the second quarter of 2001. The signing of this agreement is a
 recognition of Lexar Media's technology as a growth driver for the flash media
 industry."
     Commenting on Lexar Media's balance sheet, Ron Bissinger, Vice President
 and Chief Financial Officer, stated, "We reduced inventory levels to
 $15.7 million at the end of the first quarter. This $11.9 million reduction
 since December 31, 2000 was primarily accomplished through stricter inventory
 control, cost reductions, and by increasing our inventory reserves to reflect
 current market conditions. We ended the quarter where we expected to be with
 regard to our cash position at $22.1 million in cash and short-term
 investments. We continue to believe that this is sufficient to achieve our
 fourth quarter profitability goal."
     Mr. Bissinger continued, "We expect that licensing and controller sales
 revenue for 2001 will increase from the previously projected $3 million to
 more than $12 million based on our agreement with Samsung Electronics and
 other anticipated agreements that we plan to announce in the near future."
 
     First Quarter Highlights
     During the first quarter of 2001, the Company also:
 
     -- Sales and Marketing
 
       -- Added D&H Distributing, a provider of microcomputer, multimedia and
          emerging technology products, to its growing roster of retail
          outlets. D&H now offers Lexar Media's complete line of digital film
          and readers.
       -- In addition, Maxwell Optical selected the entire Lexar Media product
          offering for distribution throughout the Australia and Norfolk Island
          markets.
       -- Strengthened its management team with key appointments in marketing,
          business development and retail sales. Doug Kellam, formerly with
          Onvia.com, joined the Company as vice president of marketing. Lexar
          Media's former vice president of North American sales, Jack Peterson,
          accepted the responsibilities of the Company's new vice president of
          business development. Tim Sullivan assumed Mr. Peterson's former role
          under the new title of vice president of channel marketing and sales.
          Mr. Sullivan was previously with OneChannel.net. The addition of
          these outstanding managers will significantly impact Lexar Media's
          presence in the photo, mass market and OEM channels.
 
     -- Products
 
       -- Announced plans to release its 512MB Type I CompactFlash card. As
          Lexar Media's highest capacity card, it is designed to meet the
          demanding performance requirements of the professional photographer.
       -- Launched a new 64MB MultiMediaCard to address other markets
          supplemental to digital cameras, including cellular phones, digital
          camcorders, digital music players, PDAs and other portable digital
          devices.
       -- Launched Printroom Professional Studios, which enables professional
          photographers to display and offer for sale selected photos, while
          outsourcing Web-hosting, storage, e-commerce transactions, print
          processing, order fulfillment, customer support and sales reporting.
 
     -- Awards
 
       -- Received the "Best in Category" award by Digital Imaging magazine for
          its CompactFlash(TM) and SmartMedia(TM) digital film products.
 
     -- Europe
 
       -- Lexar Media Europe successfully negotiated an accessory promotion
          with Canon for its D30 that features Lexar Media CompactFlash digital
          film. This is the first time the camera manufacturer has offered a
          non-Canon product to its customers.
 
     -- Japan
 
        -- Debuted SayCheese.com Japan (www.SayCheese.com/japan), the Japanese
           edition of SayCheese.com, Lexar Media's online community and
           educational site for digital photography.
 
     "In light of the Samsung agreements and others on the table, we're more
 confident than ever in our ability to meet profitability targets for 2001,"
 added Mr. Reimer.  "Throughout the first quarter, Lexar Media has worked
 diligently to address our core markets through the photo, OEM and mass market
 channels so that the Company may maintain flexibility to better address
 fast-changing market conditions."
     Mr. Reimer concluded, "We believe Lexar Media is well positioned with the
 combination of product marketing and sales activities and the forward movement
 of our technology licensing strategy -- which is a very high margin business
 segment for us. We expect that as our technology licensing partner list grows,
 so will Lexar Media's margins."
 
     About Lexar Media
     Lexar Media, Inc. is a leading designer, developer and marketer of
 award-winning digital film and connectivity solutions for the professional,
 commercial and amateur digital photography markets. The adoption of Lexar
 Media's digital film and connectivity products for use with digital cameras
 and other digital devices is driven by Lexar Media's innovation in write-speed
 technology, which is the cornerstone of its patented controllers. Lexar
 Media's other digital photography related products include "Shoot & Share"
 image browsing and editing software, an online photofinishing service at
 Printroom.com, and a Web-based educational digital photography site at
 SayCheese.com. Headquartered in Fremont, California, Lexar Media also has
 offices in London and Tokyo. For more information, please call 800-789-9418 or
 visit www.digitalfilm.com.
 
     Cautionary Note Regarding Forward-Looking Statements
     This news release contains forward-looking statements within the meaning
 of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
 Exchange Act of 1934 and is subject to the safe harbor created by those
 sections. These forward-looking statements include statements related to
 projections about Lexar Media's business, the ability of Lexar Media to
 achieve profitability by the fourth quarter of 2001, expectations regarding
 Lexar Media's technology licensing programs to increase revenues and improve
 its gross margins, and the anticipated impact of the recent additions to our
 management team. These forward-looking statements involve a number of risks
 and uncertainties that could cause the actual results of these efforts to
 differ materially from those anticipated by these forward-looking statements.
 These risks include:  the growth in Lexar Media's business depends on the
 growth in and acceptance of the digital photography market and the development
 of digital cameras that take advantage of its digital film's performance;
 there is uncertainty and seasonality relating to the timing of revenue from
 digital film purchases; Lexar Media has a history of losses and may never
 become profitable; the Company's quarterly operating results and gross margins
 are difficult to predict and may fluctuate significantly; many of the
 Company's retail customers and distributors have price protection which could
 require the Company to make large payments if it reduces prices; if Lexar
 Media is unable to anticipate demand and pricing of its products in Japan or
 if it is unable to effectively manage the distributor channels and
 relationships in Japan, its operating results will be harmed; if Lexar Media
 is unable to develop or maintain the strategic relationships necessary to
 develop, sell and market products that are commercially viable and widely
 accepted, the growth and success of its business may be limited; Lexar Media
 depends on a few key customers and the loss of any of them could significantly
 reduce its revenues; the Company must be able to develop and introduce new
 products and services on a timely basis that are accepted by its customers and
 consumers in order to compete effectively and if Lexar Media is unable to
 license its controller technology for application in other products, the
 growth of its business may be limited. Readers should also refer to the risk
 factors described in Lexar Media's filings with the Securities and Exchange
 Commission including its Annual Report on Form 10-K for its fiscal year ended
 December 31, 2000, filed with the Commission on April 2, 2001. Lexar Media
 assumes no obligation to update the forward-looking information contained in
 this news release.
     NOTE:  Lexar Media, the Lexar Media logo, Printroom.com, SayCheese.com and
 Shoot & Share are trademarks of Lexar Media, Inc. Lexar Media, Inc. is an
 authorized licensee of the CompactFlash trademark. All other brand or product
 names are trademarks or registered trademarks of their respective holders.
 
 
                       LEXAR MEDIA, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                  (unaudited)
 
                                                        Three Months Ended
                                                    Mar. 31,           Mar. 31,
                                                     2001                2000
 
     Revenues                                       $16,221            $16,050
     Cost of revenues                                22,172             13,371
       Gross margin                                  (5,951)             2,679
 
     Operating expenses:
       Research, development & engineering            1,594              1,537
       Sales and marketing                            6,661              2,997
       General and administrative                     3,800              2,458
       Impairment reserve                             2,854                 --
       Stock-based compensation                       1,497              4,034
         Total operating expenses                    16,406             11,026
     Loss from operations                           (22,357)            (8,347)
 
     Other income and expense:
       Interest and other  income                       439                206
       Interest expense                              (1,382)              (129)
       Foreign exchange gain (loss)                    (171)               (36)
         Total Other income and expense              (1,114)                41
 
     Net loss                                      $(23,471)           $(8,306)
 
     Net loss per share:
       Basic and diluted                             $(0.41)            $(1.01)
 
     Net loss per share excluding
      impairment reserve,
     stock-based compensation, one-time
      interest
     charge, and imputed interest
       Basic and diluted                             $(0.31)            $(0.53)
 
 
     Shares used in computing net loss
      per share
       Basic and diluted                             57,326              8,368
 
 
                   LEXAR MEDIA, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                             (in thousands)
                              (unaudited)
 
                                 ASSETS
 
                                                          Mar. 31,     Dec. 31,
                                                           2001          2000
 
     Current assets:
       Cash and cash equivalents                          $22,066       $8,755
       Short-term investments                                  --       19,987
       Accounts receivable, net                             9,682        8,767
       Inventories                                         15,663       27,536
       Prepaid expenses and other
        current assets                                      1,106        1,909
         Total current assets                              48,517       66,954
     Property and equipment, net                            3,242        3,364
     Goodwill, intangibles and other
      assets                                                1,468        4,530
                                                          $53,227      $74,848
 
 
                  LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
     Current liabilities:
       Accounts payable and accrued
        liabilities                                        16,304       16,893
       Deferred revenue                                       234          446
       Notes payable                                        7,137        6,450
         Total current liabilities                         23,675       23,789
 
       Notes payable - net of current
        portion                                             1,022        1,521
         Total liabilities                                 24,697       25,310
 
       Total stockholders' equity                          28,530       49,538
                                                          $53,227      $74,848
 
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X11540222
 
 SOURCE  Lexar Media, Inc.