Avocent Reports Third Quarter Results
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HUNTSVILLE, Ala., Oct. 18 /PRNewswire/ -- Avocent Corporation (Nasdaq: AVCT - news) today reported its results for the third quarter ended September 28, 2001.
``Third quarter sales of $55.1 million exceeded our initial estimates for the quarter but were affected by weak order demand in September, primarily from U.S.-based companies,'' stated Stephen F. Thornton, president and chief executive officer of Avocent Corporation. ``Our sales to resellers and distributors were down 48% compared with the third quarter of last year and represented 41% of sales for the quarter. Sales to OEMs were up 3% and represented 54% of total third quarter sales.
``We continue to invest in new product technologies and expect to announce several new products in the near term that will solidify our position as the leader in analog and digital switching solutions. Our products are positioned well to benefit from higher spending in network centers as managers focus on increased data security, data backup and disaster recovery plans in view of current events. In addition, recent product introductions and planned releases of new products are expected to expand the potential market for our proprietary solutions in the future. We also opened an OEM sales office in Texas during the third quarter to enhance our customer sales and support,'' continued Mr. Thornton.
Income, excluding merger-related expenses, declined to $7.2 million, or $0.16 per diluted share, compared with income of $15.9 million, or $0.35 per diluted share, in the third quarter of last year.
``Avocent's decline in income was related to our lower sales volume, lower margins due to a shift in product mix, and higher R&D expenses,'' continued Mr. Thornton. ``We remain focused on improving our operating profit through our emphasis on improved manufacturing efficiencies. We also made solid progress in reducing selling, general, and administrative expenses since last year. SG&A was down 4% from the third quarter of last year.''
Third Quarter Results
Net sales for the third quarter were $55.1 million compared with net sales of $77.2 million in the third quarter a year ago. Approximately 63%, or $35 million in sales, was generated from U.S. customers with the remainder from international accounts. U.S. sales, as a percent of total sales, were lower than the third quarter of last year, primarily due to lower sales to U.S. distributors and resellers.
Gross profit for the third quarter was $25.5 million with a gross margin of 46.2% compared with $39.3 million and a gross margin of 50.9% in the third quarter of the prior year. The decline in margin was related to the higher percentage of sales to OEMs in the latest quarter, changes in DS1800 pricing, and lower absorption of overhead. Operating income for the third quarter was $8.1 million compared with $22.0 million in the third quarter a year ago.
Research and development expenses rose 18% to $4.5 million for the third quarter and represented 8% of sales. These costs support R&D activities at four facilities in the United States and two in Europe.
Net loss for the third quarter of 2001 was $29.3 million, or $0.66 per share, and included $36.4 million, net of tax benefits, of charges related to intangible amortization and merger-related expenses. This compares with a net loss of $124.4 million, or $2.89 per share, in the third quarter of 2000. For the third quarter of 2000, results include $140.3 million of charges, net of tax, related to intangible amortization and merger-related expenses.
Avocent's balance sheet and cash position remained strong as of September 28, 2001. The Company reported cash flow exceeding $16 million for the third quarter with $151.6 million in cash, cash equivalents, and short-term investments at the quarter's end. |
