ESS Technology Reports Fiscal Year and Fourth Quarter Results
Wednesday January 29, 4:03 pm ET
FREMONT, Calif., Jan 29 /PRNewswire-FirstCall/ -- ESS Technology (Nasdaq: ESST - News) today reported net revenues of $273.4 million for the year ended December 31, 2002, and net income for the year of $37.3 million or $0.80 per diluted share. On a pro forma basis, net income for 2002 was $40.5 million, a 40% increase over 2001 pro forma net income of $28.9 million. Pro forma earnings per diluted share for 2002 were $0.87, which compares to pro forma earnings of $0.64 per diluted share for 2001. Pro forma net income and loss excludes the effects of amortization of intangible assets, investment gains and losses, and discontinued operations.
Net revenues for the fourth quarter of 2002 were $47.5 million, down $35.8 million or 43.0% from net revenues of $83.3 million in the same quarter last year, and down $13.2 million or 21.7% from net revenues of $60.7 million in the third quarter of 2002.
Net income for the fourth quarter of 2002 was $0.8 million, a 95.1% decrease from net income of $16.3 million in the fourth quarter of 2001 and a 71.4% decrease from net income of $2.8 million in the third quarter of 2002. Earnings per diluted share in the fourth quarter of 2002 were $0.02 compared to earnings of $0.35 per diluted share in the fourth quarter of 2001 and earnings of $0.06 per diluted share in the third quarter of 2002.
Pro forma net income for the fourth quarter of 2002 was $1.4 million, compared to pro forma net income of $17.0 million for the fourth quarter of 2001 and pro forma net income of $3.3 million for the third quarter of 2002. Pro forma earnings per diluted share for the fourth quarter of 2002 were $0.03, compared to pro forma earnings of $0.37 per diluted share in the same quarter last year and pro forma earnings of $0.07 per diluted share in the third quarter of 2002.
"Our fourth quarter came in as we had expected, with both VCD and DVD revenues where we had forecasted," said Robert Blair, President and CEO of ESS Technology. "Increased competition in the DVD market caused us to lose market share from manufacturers in China, but we increased our DVD shipments to Japan, Korea, Europe and the rest of the world. We also increased our market share in the expanding VCD market and expect this business to continue to be strong for ESS throughout 2003. Most importantly, we have begun to demonstrate our new single-chip DVD product, the Vibratto II, to selected customers. We believe this new high-performance chip will allow ESS to gain market share in China and the rest of the world during the coming season."
Mr. Blair continued, "additionally, we were very successful gaining design wins for our Vantage MPEG encoding chip during the last quarter. We have now received design wins for DVD-recordable or digital video recorder (DVR) products from leading manufacturers in Japan, Korea, China, Singapore and Europe. We believe this is the next important digital video product area and our Vantage MPEG encoder has the right features and performance to be successful in this rapidly expanding market. Overall, we look forward to the coming quarters and to all of 2003."
First Quarter 2003 Guidance
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
We expect overall revenues for the first quarter of 2003 to range from $30 - $35 million, gross margins to range from 31% - 34%, a GAAP loss per diluted share to be in the range of $0.02 to $0.08 and a pro forma loss per diluted share in the range of $0.01 to $0.07.
Earnings Conference Call
ESS Technology, Inc. has scheduled a conference call for 5:00 p.m. ET today to discuss its fourth quarter and fiscal year 2002 results. An Internet simulcast and replay will be available at www.esstech.com and videonewswire.com.
About ESS Technology
ESS Technology, Inc., is a leading supplier of high-performance feature-rich chips, applications and solutions for digital entertainment markets. ESS provides advanced products that enable the emergence of digital home systems that deliver and manage entertainment and information in the home.
ESS, headquartered in Fremont, California, has R&D, sales, and technical support offices worldwide. ESS Technology's common stock is traded on the Nasdaq National Market under the symbol "ESST." ESS Technology's web site address is: esstech.com.
The matters discussed in this news release include certain forward-looking statements that involve risks and uncertainties, including, but not limited to, the impact of competitive products and pricing, the possible reduction of consumer spending occasioned by general economic conditions, the timely availability and acceptance of the Company's new products, the dependence on continued growth in demand for consumer multimedia products, the uncertainty of the outcome of any litigation proceedings, and the other risks detailed from time to time in the SEC reports of ESS, including the reports on Form 10-K and Form 10-Q. Actual results could differ materially from those projected in the forward-looking statements.
NOTE: All trademarks mentioned in this news release are owned by their respective holders and are used in this news release for identification purposes only.
ESS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
Dec. 31 Dec. 31
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $138,072 $96,995
Short-term investments 61,030 32,039
Accounts receivable, net 28,468 42,642
Inventories 24,155 37,452
Prepaid expenses and other assets 2,834 1,894
Total current assets 254,559 211,022
Property, plant and equipment, net 18,985 22,438
Other assets, net 8,058 4,505
Total Assets $281,602 $237,965
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $35,084 $49,173
Income taxes payable and deferred
income taxes 9,474 4,883
Total current liabilities 44,558 54,056
Non-current deferred tax liability 7,676 6,931
Shareholders' equity:
Common stock 196,344 153,678
Accumulated other comprehensive gain (loss) 504 (1,374)
Retained earnings 32,520 24,674
Total shareholders' equity 229,368 176,978
Total Liabilities and
Shareholders' Equity $281,602 $237,965
ESS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- GAAP BASIS
(unaudited)
(in thousands, except per share data)
Three months ended Twelve months ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
2002 2001 2002 2001
Net revenues $47,544 $83,266 $273,442 $271,380
Cost of revenues 35,133 48,725 176,454 180,231
Gross profit 12,411 34,541 96,988 91,149
26% 41% 35% 34%
Operating expenses:
Research and
development 6,380 6,681 26,964 27,957
Selling, general and
administrative 6,311 11,420 34,170 40,689
Operating income
(loss) (280) 16,440 35,854 22,503
Nonoperating income
(loss), net 1,151 701 2,407 (18,780)
Income before provision
for income taxes 871 17,141 38,261 3,723
Provision for
(benefit from)
income taxes 61 862 984 (7,262)
Income from continuing
operations 810 16,279 37,277 10,985
Loss from discontinued
operation -- -- -- (4,205)
Loss from disposal of
discontinued
operation -- -- -- (8,597)
Net income (loss) $810 $16,279 $37,277 $(1,817)
Net income (loss)
per share:
Basic
Continuing
operations $0.02 $0.39 $0.85 $0.26
Discontinued
operation $-- $-- $-- $(0.30)
$0.02 $0.39 $0.85 $(0.04)
Diluted
Continuing
operations $0.02 $0.35 $0.80 $0.24
Discontinued
operation $-- $-- $-- $(0.28)
$0.02 $0.35 $0.80 $(0.04)
Weighted average
common shares:
Basic 43,378 41,976 44,044 42,274
Diluted 44,188 45,867 46,731 45,262
ESS TECHNOLOGY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (A)
(unaudited)
(in thousands, except per share data)
Three months ended Twelve months ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
2002 2001 2002 2001
Net revenues $47,544 $83,266 $273,442 $271,380
Cost of revenues 35,133 48,725 176,454 180,231
Gross profit 12,411 34,541 96,988 91,149
26% 41% 35% 34%
Operating expenses:
Research and
development 6,159 5,934 26,223 22,490
Selling, general and
administrative 6,311 11,420 34,170 40,689
Operating income
(loss) (59) 17,187 36,595 27,970
Nonoperating income,
net 1,501 701 6,063 2,407
Income before provision
for income taxes 1,442 17,888 42,658 30,377
Provision for
income taxes 90 899 2,115 1,486
Net income $1,352 $16,989 $40,543 $28,891
Net income per share
Basic $0.03 $0.40 $0.92 $0.68
Diluted $0.03 $0.37 $0.87 $0.64
Weighted average
common shares:
Basic 43,378 41,976 44,044 42,274
Diluted 44,188 45,867 46,731 45,262
(A) Pro Forma adjustments are detailed within the schedule entitled
"Reconciliation of GAAP Basis Net Income (Loss) to Pro Forma Net
Income"
ESS TECHNOLOGY, INC.
RECONCILIATION OF GAAP BASIS NET INCOME (LOSS) TO PRO FORMA NET INCOME
(unaudited)
(in thousands)
Three months ended Twelve months ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
2002 2001 2002 2001
Net income (loss)
- GAAP basis $810 $16,279 $37,277 $(1,817)
Pro Forma Adjustments:
Amortization of
intangible
assets (A) 221 82 649 2,988
Write down of
investments (B) 350 665 3,687 2,479
Cisco stock sale (C) -- -- 61 21,187
Tax effect to items
(A) and (B) and (C) (29) (37) (1,131) (8,748)
Discontinued operation,
net of tax (D) -- -- -- 12,802
Net income
- Pro forma $1,352 $16,989 $40,543 $28,891
(A) Pro forma amounts for all periods presented exclude the effects of
amortization of intangible assets, amounting to $221 and $82 for the
three months ended December 31, 2002 and December 31, 2001,
respectively, and $649 and $2,988 for the twelve months ended
December 31, 2002 and December 31, 2001, respectively.
(B) Pro forma amounts for all periods presented exclude the effects of
the write-down of investments, amounting to $350 and $665 for the
three months ended December 31, 2002 and December 31, 2001,
respectively, and $3,687 and $2,479 for the twelve months ended
December 31, 2002 and December 31, 2001, respectively.
(C) Pro forma amounts for all periods presented exclude the realized
losses on the sale of Cisco stock, amounting to $61 and $21,187 for
the twelve months ended December 31, 2002 and December 31, 2001,
respectively.
(D) Pro forma amounts for all periods presented exclude the effects of
the discontinued operation, amounting to $0 and $12,802 for the
twelve months ended December 31, 2002 and December 31, 2001,
respectively.
--------------------------------------------------------------------------------
Source: ESS Technology, Inc. |
