CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--May 21,
1998--Nimbus CD International, Inc. (Nasdaq:NMBS) today
reported financial results for the fourth quarter and twelve months
ended March 31, 1998.
Net sales for the fourth quarter of fiscal 1998 were $30.1 million
as compared to $28.5 million reported in the fourth quarter of
fiscal 1997. Net income for the quarter increased to $2.6 million,
or $0.11 per diluted share, versus a net loss of $1.9 million, or a
loss of $0.08 per diluted share, reported in the fourth quarter of
fiscal 1997. Before accounting for the one-time provision for the
closing of Nimbus' Sunnyvale, CA. facility, net income for the
fourth quarter of fiscal 1997 was $1.8 million, or $0.08 per diluted
share.
Net sales for fiscal 1998 increased to $132.3 million versus
$129.5 million reported in fiscal 1997. Net income for fiscal 1998
was $13.8 million, or $0.60 per diluted share, as compared to net
income of $9.2 million, or $0.40 per diluted share for last fiscal
year, after accounting for the Sunnyvale closing.
Mr. Lyndon J. Faulkner, Chairman and Chief Executive Officer,
commented, "We are pleased with the 44.4% growth in earnings
in the fourth quarter. DVD unit sales have continued to increase in
each consecutive quarter since we initiated commercial production
in March 1997. Nimbus sold 1 million DVD discs in the fourth
fiscal quarter of 1998, bringing the total units sold for the first full
year of DVD production to 2.2 million discs. For the year, we
continued to experience growth in CD-ROM unit sales, which
increased 24.5% from last fiscal year. The UK CD-ROM market,
with unit sales increasing 63.7% for the year, was exceptionally
strong, while company-wide CD-audio disc sales for the year
increased 5.9%."
Mr. Faulkner continued, "It is anticipated that 1,000 DVD titles
will be available by June 1998. Consumers purchased
approximately 200,000 DVD players in the U.S. in 1997. By
comparison, sales of VCRs took two years to reach this level of
market penetration when this medium was introduced in 1975.
The number of DVD players shipped by manufacturers during
1997 was nearly 10 times the 35,000 CD players sold in 1983,
the first year that the CD format was available to consumers. As
the movie industry continues to accelerate its DVD release
schedules, Nimbus expects that it will become a significant
provider of DVD products to a number of the most prominent
names in the movie industry. Nimbus currently is the leading
supplier of DVD product to Buena Vista Home Entertainment
(Disney), and produces DVD discs for a number of major and
independent studios."
Mr. Faulkner added, "Nimbus also recently signed a five-year
agreement with Digital Video Express, LP, to replicate what the
companies estimate could exceed 150 million Divx discs over the
term of the contract. The number of units anticipated to be
produced per year are scheduled to increase over the term of the
agreement. The actual number of discs produced will depend upon
the ongoing growth of Divx in the consumer marketplace. In the
first year alone, the Company anticipates that its Divx production
volumes could be as large as for open DVD. We are delighted to
be the first of only a few suppliers in our industry to be selected to
bring this exciting new disc format to market. Divx uses a unique
encryption technology to create discs which can be used either on
a pay per use or an unlimited play basis. Unlike the VHS rental
market where a single tape is rented multiple times, the Divx retail
market will require one disc for each transaction. As a result, the
Company anticipates that Divx requirements will increase the
overall demand for discs."
Mr. Faulkner continued, "In fiscal 1998, we established a series of
formal relationships with Microsoft Corporation. Nimbus has been
designated as an Authorized Replicator of Microsoft products,
qualified to supply complete CD-ROM software manufacturing
services for major PC manufacturers who are licensed to bundle
Microsoft product. In addition, Nimbus is currently the only
Microsoft Authorized Replicator for DVD-ROM products for the
North American OEM market. Also, our 3dcd, L.L.C. joint
venture with Applied Holographics, plc, signed an agreement to
license the Security Band application of its 3-D id(TM)
holographic technology to Microsoft on an exclusive worldwide
basis. We believe that these important relationships with Microsoft
will place us in a strong position to manufacture product directly
for Microsoft, as well as be a supplier of Microsoft product to the
OEM business sector."
Mr. Faulkner concluded, "In order to maximize the many
opportunities we anticipate from these significant business
relationships, the Company recently announced a $22 million
investment in plant upgrades and facility expansion. The
investment, which will be funded through operating cash flow, will
nearly double Nimbus' worldwide DVD capacity to 28 million
discs, as well as enhance DVD mastering and packaging
capability. In addition, we have committed capital to expand our
Luxembourg facility to meet expected demand for CD products
and further support its role as a key supplier in the Microsoft
Authorized Stamper Program."
Nimbus is one of the world's leading independent manufacturers of
optical discs distributed throughout North America, the United
Kingdom and continental Europe. The Company is at the forefront
of optical disc manufacturing technologies and provides complete
DVD, software, and audio production services.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This release contains forward-looking
statements that are subject to risks and uncertainties, including, but
not limited to, the impact of competitive products and pricing,
product demand and market acceptance, new product
development, reliance on key strategic alliances, availability of raw
materials, the regulatory environment, fluctuations in operating
results, and other risks detailed from time to time in the Company's
filings with the Securities and Exchange Commission. |
