These numbers don't look too good to ME . . . What aspect of this scenario is impressive to YOU? I AM curious. I don't understand if you are impressed by the upside or the downside. They are very low in CASH, their inventory investment is large, their sales are less than the preceding 3 months and a bit better for the previous 6 months, indicating the last 3 months have been negative. Appropriate measure to contain losses were taken to by reducing the workforce, and the CFO is resiigning. Am I misunderstanding something here?
ROSS Technology Reports Financial Results for Second Fiscal Quarter `97; Company Successfully Secures Backing for a $25 Million Credit Facility
PR Newswire - November 14, 1996 08:08
FINANCIAL RTEC CPR ERN V%PRN P%PRN
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AUSTIN, Texas, Nov. 14 /PRNewswire/ -- ROSS Technology, Inc.
(Nasdaq: RTEC) today announced results for the second quarter of the 1997
fiscal year, ended September 30, 1996. The Company reported a net loss of
$6.3 million for the second quarter, or $0.27 per share, on net sales of
$21.2 million. This compares to net income of $4.2 million, or $0.22 per
share on revenue of $23.7 million for the corresponding quarter in the prior
fiscal year.
In a related development, the Company also announced that Fujitsu Limited,
its majority stockholder, strongly reaffirmed its long-term strategic
commitment to ROSS by agreeing to provide a guarantee for a $25 million credit
facility to be established with a major international commercial bank. The
credit facility will be established, pending current negotiations, to
facilitate operations of the Company's growing systems business.
ROSS Technology on September 26 reported that it anticipated second
quarter results to be below outside analysts' expectations, due in part to
revenue recognition delays related to the effects of stocking newly-
established distributor inventory channels for its recently-announced systems
product families. For the second quarter, the Company reported net factory
shipments of $30.1 million, reflecting its product investment into its new
distribution channel. As certain of these shipments are subject to
contractual rights of return and special payment terms, the Company only
recognizes revenue from such shipments when its distributors actually ship
product to their customers.
Net sales in the quarter ended September 30, 1996 decreased 10.5% to $21.2
million from $23.7 million in the same period of fiscal 1996. This was
primarily due to a substantial reduced volume of sales to the Company's
primary OEM microprocessor chip customers.
For the first six months of the 1997 fiscal year, the company reported a
net loss of $2.4 million on net sales of $52.1 million, compared to net income
of $7.3 million on net sales of $45.5 million for the first six months of the
1996 fiscal year.
"The phasing effects of revenue recognition related to the Company's
expansion into the SPARC systems market segment had an adverse impact on our
financial results for the second quarter," said Roger D. Ross, Chairman,
President and CEO of ROSS Technology.
"Market acceptance of our system products -- especially the hyperSTATION
workstation family -- has continued and increased," said Mr. Ross. "Since the
installed base of SPARC systems is greater than twice that of any other RISC
processor, and accounts for greater than 40 percent of new workstation system
sales, we look forward to continued market acceptance of our system products.
We believe the continued progress we have made in our efforts to expand our
distribution channels -- we consummated two significant distribution
agreements during the second quarter and have subsequently stepped up our
reseller recruitment activities during the current quarter -- indicates that
our revenue diversification strategy will be ultimately successful.
"We believe diversification of our product lines and revenue sources -- in
response to market demand for performance- and value-enhanced offerings based
on the SPARC version 8 architecture -- will fuel future revenue growth and
profitability," said Mr. Ross.
According to David A. Zeleniak, Chief Financial Officer of ROSS, "Gross
profit margins for the second quarter were 34 percent, compared to 47 percent
for the first quarter of fiscal 1997. This decrease in gross profit margins
is attributable to two factors: a decline in upgrade subsystem module sales,
which historically have generated higher gross profit margins than OEM sales;
and increased revenue from full system-level product sales, which have lower
gross margins than the microprocessor business."
Important additional information concerning the Company's financial
condition and results of operations for the second quarter and six months
ending September 30, 1996 is contained in its Quarterly Report on Form 10-Q,
which is being filed today with the Securities and Exchange Commission. The
text of the Form 10-Q will be available on the World Wide Web at
sec.gov or in hard copy by request to the Company's Investor
Relations office.
Safe Harbor Statement under Private Securities Litigation Reform Act of
1995:
To the extent that this release contains forward-looking statements with
respect to the financial condition, results of operations and business of the
Company, such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially and adversely from those set
forth in the forward-looking statements, including without limitation the
Company's dependence on the timely development, manufacture, introduction and
customer acceptance of new products, the ability of the Company to
successfully implement its strategy of expanding into the system products
business, the various effects on revenue, margins and operating expenses of
transitions in the Company's product lines and overall business, the effects
of building and maintaining product inventories in the Company's hands and in
its distribution channels, the Company's dependence on distributors and
resellers for product sales to end-users, the availability of financial
resources adequate to the Company's needs, the impact on revenue and margins
of rapidly changing technology, competition, downward pricing pressures and
allocations of product among different distribution channels, supply and
manufacturing constraints and costs, changes in plans, programs or expenses
for research, development or marketing, general economic conditions, and the
other risks and uncertainties described from time to time in the Company's
public announcements and Securities and Exchange Commission filings, including
without limitation the Form S-1 and Final Prospectus filed in November 1995
and the Company's Quarterly and Annual Reports on Forms 10-Q and 10-K,
respectively. The Company cautions that the foregoing list of important
factors is not exclusive. The Company does not undertake to update any
written or oral forward-looking statement that may be made from time to time
by or on behalf of the Company.
ROSS Overview
ROSS Technology was incorporated in 1988 and is a majority-owned
subsidiary of Fujitsu Limited. A minority position in ROSS is held by Sun
Microsystems, Inc. As of September 30, 1996, the Company's outstanding Common
Stock was held 60 percent by Fujitsu, 5 percent by Sun, and 35 percent by
employees and the public. The Company's objective is to drive SPARC, the
industry's highest-volume reduced instruction set computing architecture, to
increased performance leadership and market share. ROSS is one of the
industry's most prominent suppliers of SPARC microprocessors and
microprocessor-related products to both the OEM and end-user markets.
ROSS Technology, Inc.
and Subsidiary
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
Sept. 30, 1996 Oct. 2, 1995 Sept. 30, 1996 Oct. 2, 1995
Net sales $21,197 $23,706 $52,109 $45,508
Cost of sales 14,096 12,581 30,826 24,546
Gross profit 7,101 11,125 21,283 20,962
Operating expenses:
Research and
development 9,090 3,505 13,489 7,278
Selling, general and
administrative 7,484 2,478 10,974 4,367
Amortization of
goodwill 272 298 544 596
Total operating
expenses 16,846 6,281 25,007 12,241
Income (loss) from
operations (9,745) 4,844 (3,724) 8,721
Interest income
(expense) --- (565) 107 (1,230)
Income (loss) before
income taxes (9,745) 4,279 (3,617) 7,491
Income tax expense
(benefit) (3,411) 107 (1,266) 171
Net income (loss) $(6,334) $4,172 $(2,351) $7,320
Net income (loss)
per share $(0.27) $0.22 $(0.10) $0.39
Weighted average
common and common
equivalent shares
outstanding 23,418 18,920 23,331 18,900
ROSS Technology, Inc.
and Subsidiary
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
ASSETS
Sept. 30, April 1,
1996 1996
Current assets:
Cash $164 $17,941
Account receivable:
Trade accounts receivable, net allowance
of $4,752 and $2,057, respectively 18,485 16,207
Receivable from Fujitsu 5,991 6,780
Other receivables 3,618 200
Inventory, net 50,781 32,321
Prepaid expenses and other assets 2,479 2,506
Total current assets 81,518 75,955
Property and equipment, net 18,460 16,119
Deferred tax asset 3,448 2,182
Intangible assets, net 3,103 3,637
$106,529 $97,893
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $19,284 $9,587
Accrued liabilities 1,744 3,103
Payable to Fujitsu 20,043 18,929
Notes payable 1,400 ---
Total current liabilities 42,471 31,619
Stockholders' equity
Common stock 24 23
Additional paid-in capital 82,493 82,358
Accumulated deficit (17,208) (14,856)
65,309 67,525
Less: treasury stock (1,251) (1,251)
Total stockholders' equity 64,058 66,274
$106,529 $97,893
SOURCE ROSS Technology, Inc.
CONTACT: Press: John C. Rasco, MarCom Director, 512-436-2121, or
john@ross.com, or Investor/Analyst: David A. Zeleniak, CFO, 512-436-2511, or
davez@ross.com, both of ROSS Technology, or Company Information: 800-ROSS-YES,
Intl: 512-349-3108, or ross.com |
