Applied Innovation Inc. Announces First Quarter Results
DUBLIN, Ohio, April 23 /PRNewswire/ -- Applied Innovation Inc. (Nasdaq: AINN) today announced operating results for the first quarter ended March 31, 1998.
Net sales for the first quarter ended March 31, 1998 increased 37% to $11,517,749, from $8,409,853 for the first quarter of the prior year. Sales in the Data Communications Network ("DCN") Products Group for the AISwitch 180 Series products accounted for all of the first quarter sales.
Gross profit for the first quarter of 1998 was $6,653,382, or 58% of net sales, compared to $4,770,895, or 57% of net sales, for the same period last year. The improvement in gross profit for the first quarter of 1998 was a result of higher production volumes.
Research and development ("R&D") expenses increased in the first quarter of 1998 as a result of the Company's continued commitment to develop Access products. These products are expected to enable telecommunication service providers to deal efficiently with the continued growth in Internet access calls that are overloading their systems. R&D expenses for the first quarter ended March 31, 1998 were $3,339,010, or 29% of net sales, compared to $3,158,974, or 38% of net sales, for the prior year first quarter. The R&D expenditures for the Access Products Group were $2,098,904 for the first quarter of 1998, an increase of 90% over the $1,103,551 expended during the first quarter of the prior year. The R&D expenditures for the DCN Products Group were $1,240,106 for the first quarter of 1998 as compared to $2,055,423 for the first quarter of 1997. The decrease in DCN expenditures relates primarily to a reduction in prototype costs in the current period as compared to the same period of the prior year.
Selling, general and administrative expenses for the first quarter ended March 31, 1998 were $3,598,785, or 31% of net sales, compared to $2,616,796, or 31% of net sales, for the first quarter ended March 31, 1997.
Net loss for the first quarter of 1998 was $116,466, or $0.01 diluted loss per share, versus a net loss of $528,620, or $0.03 diluted loss per share, for the prior year first quarter.
Gerard B. Moersdorf, Jr., Chairman and Chief Executive Officer, commented, "We are pleased with the 37% increase in DCN sales for the first quarter. While we are positive about the 1998 outlook for DCN sales, our full-year expectations are based on an annual growth rate in the range of 10% to 15%. Our DCN business remains strong and growing with good operating margins. We have initiated several key programs which will increase our R&D activities with the goal of expanding the market for and enhancing the value of our DCN products." Mr. Moersdorf added, "Within our Access Products Group we continue the development effort on the DSAM products (Data Services Access Multiplexer). The AI 4800 is currently in trial with two Regional Bell Operating Companies. The results from these two trials are expected by mid- year and will provide important information concerning the potential market for our Access products. We also recently announced the availability of SS7 signaling, an advanced telecommunications protocol that contains routing intelligence for Internet calls, on our AI 4800. We are pleased that the AI 4800 is the first product of its kind to utilize SS7 signaling in its basic design and to have its SS7 capability already fully tested."
William H. Largent, Senior Vice President-Operations and Chief Financial Officer, stated, "The first quarter results came in ahead of our plan. Applied Innovation continues with a strong balance sheet and had $10.8 million in cash and no debt at March 31, 1998." Mr. Largent added, "Our investment in the Access Products Group will continue to increase throughout the balance of 1998 as we begin building prototypes of the AI 5800. Last month we announced plans that we are seeking a strategic partner to leverage the expanded development of the DSAM product line. It is our goal to have the strategic partnering activity concluded and in place by mid-year."
With the exception of historical information, the matters discussed in this press release in the fourth, seventh and eighth paragraphs concerning the Internet Access products and future sales outlook are forward-looking statements that involve risks and uncertainties including, but not limited to, the Company's ability to develop its Internet access products as planned and on budget, the ability to hire technical staff for the Internet Access product line, market acceptance of the Company's Internet Access product line, competitive products and related pricing, technological changes, and other risks detailed from time to time in the Company's Securities and Exchange Commission filings, including the Company's Annual Report on Form 1O-K for the year ended December 31, 1997, all of which factors and risks may cause actual results to differ materially from management's current expectations.
Applied Innovation is the leading provider of mediation products, which enable communications between network elements and operational support systems for the management of telecommunication carriers' networks. The Company, with headquarters in Dublin, Ohio, is also developing products which will assist telecommunication service providers in handling the rapidly increasing Internet traffic. See the following financial highlights for the first quarter ended March 31, 1998. Applied Innovation can be reached on the World Wide Web at aiinet.com.
Applied Innovation Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
Assets 1998 1997
Current assets
Cash $10,792,310 $ 8,195,156
Accounts receivable 8,421,297 11,944,692
Inventory 3,690,003 3,176,299
Prepaid expenses 197,352 298,362
Deferred income taxes 1,110,000 1,145,000
Total current assets 24,210,962 24,759,509
Property, plant and equipment - net 12,383,171 12,833,943
Other assets 126,871 114,096
Total Assets $36,721,004 $37,707,548
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,441,588 $ 3,365,815
Accrued expenses 2,512,100 2,583,426
Accrued warranty expenses 2,280,800 2,155,325
Total current liabilities 7,234,488 8,104,566
Deferred income taxes 200,000 200,000
Stockholders' equity 29,286,516 29,402,982
Total Liabilities and Stockholders' Equity $36,721,004 $37,707,548
Applied Innovation Inc.
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31,
1998 1997
Net Sales $11,517,749 $ 8,409,853
Cost of sales 4,864,367 3,638,958
Gross profit 6,653,382 4,770,895
Research & development expenses 3,339,010 3,158,974
Selling, general & administrative expenses 3,598,785 2,616,796
Loss from operations (284,413) (1,004,875)
Other income 107,947 163,644
Loss before income taxes (176,466) (841,231)
Income taxes (60,000) (312,611)
Net Loss $(116,466) $(528,620)
Net Loss Per Share - Diluted $(0.01) $(0.03)
Weighted Average Number of
Shares Outstanding - Diluted 15,790,832 15,772,832
SOURCE Applied Innovation Inc.
CO: Applied Innovation Inc.
ST: Ohio
IN: TLS
SU: ERN
04/23/98 10:37 EDT prnewswire.com |
