Norsat Reports 1999 Fourth Quarter And Year Financial Results
March 29, 2000 09:28 AM Eastern Time
BURNABY, B.C.--(BUSINESS WIRE)--March 29, 2000--Norsat International Inc. NSATF CA:NII , today reported financial results for the fourth quarter and year ended December 31, 1999.
Sales for the quarter were $20,671,000, up 94 percent from $10,682,000 a year ago, reflecting strong sales of DIRECTV(r) systems by Norsat America, the Company's distribution subsidiary. Sales in the Satellite Products Division remained similar to last year's as a result of manufacturing delays on a new line of transmitters.
At year-end, the Company decided to focus exclusively on satellite access technologies and to divest its line of cable television-related products, including N-Code II cable scrambling technology. After a provision of $3,774,000 to write-down the remaining cable assets, Norsat's loss for the fourth quarter was $6,437,000, or $0.31 per share. Excluding that provision, most of which was included in cost of goods sold, the loss was $2,663,000, or $0.13 per share, compared with a loss from continuing operations in the quarter a year ago of $2,459,000, or $0.12 per share. Including a gain from discontinued operations of $1,320,000, the reported net loss in the 1998 period was $1,139,000, or $0.05 per share.
For the year, sales were $63,453,000, up 46 percent from $43,411,000 in 1998, primarily attributable to growth in Norsat America's distribution business, which operates on lower margins than the other divisions. During 1999, the net loss from continuing operations was $7,881,000, or $0.37 per share. Excluding the fourth-quarter charge, the net loss was $4,107,000, or $0.19 per share, attributable primarily to increased investments in new product development, and operating losses in the cable business which is being divested. In 1998, the loss from continuing operations was $2,403,000, or $0.12 per share.
Robert H. Bucher, Norsat's President and CEO, commented, "Our financial results for the fourth quarter and full year were impacted by our strategic initiatives to develop new growth opportunities, including work for the ASTRA-NET and KoreaSAT systems on prototype broadband satellite access terminals, and our new narrowband business. These businesses required additional investment to accelerate their development. While we believe these programs will enhance the Company's longer-term profitability, they entail significant short-term costs. In addition, fourth-quarter shipments of our new transmitters, though improved, were below the level required to meet customer demand or to make the expected contribution to our profitability."
During the quarter, as previously announced, Norsat agreed to become a distributor of Globalstar USA satellite-based telephony and data services, and announced plans to develop a new data terminal. The terminal, incorporating QUALCOMM's proprietary CDMA technology, is expected to offer advantages in terms of cost, reliability, and security of data communications to a variety of industries with widely scattered operating locations.
"With this new narrowband capability, we have rounded out our satellite access product offerings across the microwave spectrum," Mr. Bucher said. "Moreover, in the first quarter of 2000, we agreed to acquire SpectraWorks, Inc., a provider of systems and software for broadcasting multimedia broadband content, which will significantly expand the range of solutions we can deliver for network operators. In order to focus our resources on these new opportunities in our core satellite business, and provide the level of engineering and marketing support they require, we made the strategic decision to divest our N-Code II business and other cable related assets."
The completion of the SpectraWorks transaction is subject to regulatory approval. Terms will be disclosed upon signing of the definitive agreement.
For the fourth quarter, Norsat America's DIRECTV unit sales were 39,914, compared with 6,723 a year ago; unit sales for the year were 98,940, compared with 29,845 a year ago. The increases reflect the continued rapid growth in the direct-to-home (DTH) satellite television industry, expansion of Norsat's dealer network, and Hughes Electronics' success with DIRECTV and DirecPC. Norsat America, which is one of DIRECTV's major TVRO (Television Receive Only) distributors with offices coast-to-coast, plans to add three new branches in 2000, increasing the total to 17.
Mr. Bucher concluded, "We are confident that the benefits of the restructuring actions and new product programs undertaken over the past 18 months will become increasingly apparent later this year and beyond."
Norsat International Inc. designs, engineers and distributes premium products for use in the satellite wireless communications industry. It has four principal operating units. Norsat Satellite Products is a supplier of satellite signal receivers, transmitters, and other ground station equipment. Norsat Broadband Networks develops components and systems to the satellite broadband IP market. Norsat Narrowband Networks specializes in voice and data products and services for the Globalstar satellite constellation. The Company's Norsat America Inc. subsidiary operates a network of 14 branch offices across the U.S. and is a distributor of DIRECTV(r) satellite service to the direct-to-home (DTH) market and a DIRECTV(r) Master System Operator (MSO) for the multiple dwelling unit (MDU) market. Norsat America also distributes DirecPC.
This document may contain certain forward-looking information and statements concerning the Company's operations, performance and financial condition, including, in particular, the likelihood of the Company's success in developing and expanding its business. These statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements.
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