NCD Reports Break-Even Third-Quarter Net Income of $51,000
October 15, 1997 04:01 PM
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Oct. 15, 1997--Network Computing Devices, Inc.
NCDI reported today that 1997 third-quarter revenues were $34,646,000, up substantially from last year's
$27,951,000 but about even with this year's second-quarter revenues of $34,362,000.
The company, a leading developer and manufacturer of network computing hardware and software, posted
break-even net income of $51,000 for the quarter ended September 30, 1997, compared with $20,000 in 1996.
Through nine months of 1997, NCD earned net income of $1,600,000, or 9 cents per share, reflecting a
turnaround from the 1996 net loss of $6,287,000, or minus 38 cents per share for the same period.
Discussing the quarter, Robert G. Gilbertson, president and CEO, said: "Overall revenues were about 10%
less than budgeted, and that hurt profitability. European results were especially disappointing, and sales
momentum elsewhere was impeded because the latest version of Windows NT was simply unavailable in a
multi-user form.
"During the quarter, we took action to revitalize selling efforts in Europe," Mr. Gilbertson pointed out,
"including adding new management who we believe can boost revenues and improve results. As for
multi-user Windows NT, its developers demonstrated version 4.0 at an industry trade show last week, so
we now expect deliveries early in 1998."
"Meanwhile, we continued to make significant progress in product development and marketing," he added. "In
late September, we introduced a new line of our pioneering low-cost thin client network computers (NCs).
Our Explora(TM) models 400, 450 and 700 totally replace existing products, and they range in capability from
a simple terminal replacement to the flexible power of a complex workstation." Exploras support Windows
access, efficient execution of Java applets, and video and stereo audio applications, with prices starting at
less than $700.
Commenting on NCD's relationship as OEM supplier of NCs to IBM for their Network Station line, Mr.
Gilbertson stated, "IBM again increased its purchases under our multi-year agreement, and those sales
represented about one third of our net revenues for the third quarter. We also experienced renewed OEM
interest. For example, last month, it was announced that NCR Corporation will offer our WinCenter Windows
NT software on NCR server systems." He also noted that NCD continues to work with Microsoft and
various semiconductor vendors in the development of Windows-based terminals.
Looking ahead, Mr. Gilbertson said: "Customers want clarity in the direction that thin-client computing will
take, but, increasingly, they believe that the evolution to this low-cost-of-ownership approach is inevitable.
NCD has the experience with NCs, the advanced technology, the commitment to cost-effectiveness, and the
strong financial condition and healthy balance sheet we need to be a significant player in the emerging
thin-client world." He concluded: "The benefits of thin-client computing are undeniable, and NCD is in one of
the best positions in our industry to capitalize on it and, in the process, build significant shareholder value."
The forward statements in this release regarding NCD's plans and strategies are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all
forward-looking statements involve risk and uncertainties that may cause actual results to differ materially
from expectations. Those risks and uncertainties include, but are not limited to, continuing acceptance of
NCD's products, the Company's ability to develop new products, competitive pressures in the network
computing marketplace, the Company's ability to obtain component parts, manage the transition to indirect
channels, continued overall growth in the network computing market, pricing pressures, changes in customer
requirements and product mix. Further information on factors that could cause actual results to differ from
those anticipated is included in filings made by the Company from time to time with the Securities and
Exchange Commission, including but not limited to, the Form 10K for the year ended December 31, 1996, and
the form 10-Q for the quarter ended September 30, 1997.
About NCD
Founded in 1988, Network Computing Devices, Inc. provides thin client hardware and software that delivers
simultaneous, high-performance, easy-to-manage access to any application from thin client, UNIX and PC
desktops. NCD's products include the Explora family of thin clients, WinCenter multi-user Windows NT
server software and PC-Xware software that delivers PC access to UNIX and multi-user Windows NT.
Over 400,000 NCD thin clients are installed with over 2 billion hours of operation. NCD's technology is
incorporated into products sold by companies such as IBM, Sun and Novell. The company is based in
Mountain View, California, and is traded on the NASDAQ stock exchange under the symbol NCDI. Its
Internet address is www.ncd.com
NETWORK COMPUTING DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited - in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Total net revenues $ 34,646 $ 27,951 $ 100,072 $ 87,718
Total cost of
revenues 22,343 16,654 60,721 61,556
Gross profit margin 12,303 11,297 39,351 26,162
Operating expenses:
Research and
development 3,703 3,207 10,674 11,346
Marketing and selling 7,379 6,181 22,749 25,140
General and
administrative 1,722 2,219 5,064 8,255
Credit on litigation
settlement (147) -- (147) --
Total operating
expenses 12,657 11,607 38,340 44,741
Operating income (loss) (354) (310) 1,011 (18,579)
Interest income, net 435 343 1,452 1,167
Other income, net -- -- 200 --
Gain on sale of
product line -- -- -- 6,932
Income (loss) before
income taxes 81 33 2,663 (10,480)
Provision for income taxes
(income tax benefit) 30 13 1,063 (4,193)
Net income (loss) $ 51 $ 20 $ 1,600 $ (6,287)
Net income (loss)
per share: $ 0.00 $ 0.00 $ 0.09 $ (0.38)
Shares used in per
share computations 17,957 17,700 18,520 16,460
-0-
NETWORK COMPUTING DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1997 1996
(unaudited)
ASSETS
Current assets:
Cash and equivalents and
short-term investments $ 37,411 $ 35,671
Accounts receivable, net 18,012 21,549
Inventories 14,724 9,776
Prepaid expenses and other 7,230 11,939
Total current assets 77,377 78,935
Property and equipment, net 4,604 4,895
Other assets 1,637 1,863
Total assets $ 83,618 $ 85,693
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,412 $ 4,383
Accrued expenses 9,471 9,337
Current portion of capital
lease obligations 198 748
Deferred revenue 4,262 3,486
Total current liabilities 23,343 17,954
Long-term portion of capital
lease obligations 182 314
Shareholders' equity:
Common stock 59,285 68,217
Retained earnings
(accumulated deficit) 808 (792)
Total shareholders' equity 60,093 67,425
Total liabilities and
shareholders' equity $ 83,618 $ 85,693
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