ADAPTIVE SOLUTIONS SUBSTANTIALLY REDUCES LOSS FOR 1997, POSTS
FOURTH QUARTER PROFIT BEFORE CHARGES
Beaverton, OR -- February 5, 1998 -- Adaptive Solutions Inc. (NASDAQ:ADSO) today announced a
significant reduction in its net loss in 1997 compared with 1996. Excluding one-time charges related to
the company's acquisition of the Eastman Kodak OCR business, the company also recorded a profit in
the fourth quarter of the year, as previously forecast.
Total revenue for the fourth quarter of 1997 was $1,199,000, up 23% from revenue of $975,000 in the
fourth quarter of 1996. The 1997 fourth quarter includes one-time charges to write off inventory and
in-process research and development expense totaling $840,000. If these one-time charges are
excluded from 1997 fourth quarter results, net income would have been $490,000 or $0.07 basic
earnings per share. As stated the net loss for the latest quarter was $350,000 or $0.05 per share,
compared with a net loss of $283,000 or $0.04 per share a year ago.
For the full year 1997, revenue was $3,270,000, compared with $7,275,000 in 1996. The net loss for
1997 was $1,154,000 or $0.16 per share, compared with $5,550,000 or $0.82 per share in the prior
year.
"The fourth quarter was a pivotal time period for Adaptive Solutions," commented Dan Meub,
president and chief executive officer of the company. "As a major step in our goal of becoming a
leading Computer Assisted Data Entry company, we completed the acquisition of Kodak's OCR
business, and the one-time charges in the fourth quarter are associated with that acquisition. The new
product line provides us with service revenue, an installed base of customers, and a product foundation
to build on in the coming year.
"As previously announced, the fourth quarter included revenue of $750,000 as a result of changes in a
contract with Motorola," continued Meub, "and we will record an additional $750,000 of revenue in the
first quarter of 1998. Combined with revenue from the former Kodak installed base and some revenue
from our CNAPS business, this payment is expected to contribute to profitability in the first quarter of
1998. We are enthusiastic about the integration of the recently-acquired Kodak IMAGELINK OCR
product with EntryLink, our new full-function data entry product line. Moreover, we are finalizing key
channel partnerships and are actively pursuing a range of solid sales prospects. As a result, we are
optimistic about ongoing service, upgrade, and new product revenue opportunities visible to us during
the remainder of 1998."
This press release contains forward-looking statements which involve risks and uncertainties that
could cause actual results to differ materially from those anticipated in the forward-looking statements,
including, without limitation, development of additional sales of Kodak OCR products from new and
existing customers, implementation of the company's plans to add to the acquired product line,
successful completion of expected contracts and continued cost control. These risks and uncertainties
are discussed in greater detail in the company's reports to the S.E.C.
Adaptive Solutions, headquartered in Beaverton, Oregon, was founded in 1988 and pioneered data
parallel processing for advanced pattern recognition, image processing, and intelligent character
recognition applications. Today, Adaptive Solutions provides productive, mission critical, data entry
through standards-based Computer Assisted Data Entry (CADE) solutions.
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