Check it out!
Is this a rosy picture?
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BOCA RATON, Fla.--(BUSINESS WIRE)--Jan. 13, 1997-- Boca Research Inc Monday announced that it expects revenues for the fourth quarter ended Dec. 31, 1996 to be approximately $29 million. Although the company expects to report continued profitability during the fourth quarter of 1996, management anticipates earnings per share will be approximately $0.03. Boca Research plans to announce fourth quarter results early-to-mid-February 1997.
Results will primarily reflect continued modem product pricing pressures, industry-wide excess
inventory levels within the product distribution channels which are impacting current sales as well as
the flow of new business, and transition issues associated with the ramp-up of new products. OEM
business has also been impacted by PC providers' excess channel inventories which have caused
PC manufacturers to delay approximately $5.5 million in orders that had been booked with Boca
and were scheduled to ship in the fourth quarter. The company anticipates that these orders will be
rescheduled in 1997. Also, partially due to the new emphasis on retail and due diligence costs
associated with the acquisition of Creatix, which is also being announced today, Boca's expenses
were $600 thousand higher than previously expected in the fourth quarter.
BOCA RESEARCH ACQUIRES CREATIX
As indicated above, Boca Research has signed an agreement to acquire the assets and operations
of Creatix Polymedia GmbH and its affiliated companies from a court appointed trustee in
bankruptcy. Creatix is a privately held company with headquarters in Saarbrucken, Germany and
significant operations in Europe. A manufacturer of modems, ISDN equipment and other
communications products, Creatix's products are sold primarily to corporate and consumer markets
as well as the OEM channel through its strong distribution network. Creatix has a dominant position
within the German modem market and a developing position within the rest of Europe, coupled with
a well developed OEM business, a strong ISDN business and other emerging digital technologies.
Commenting on the acquisition, Tony Zalenski, president and chief executive officer of Boca
Research, stated: "The addition of Creatix is an important strategic step in broadening our
company's major markets. Creatix has strong brand name recognition in European countries where
we are intent on gaining market share including Germany, France and the U.K. Also, Creatix is
focused on digital technology which will further propel Boca in an emerging product market."
As a leading supplier of ISDN technologies in Germany for the PC market, Creatix has strong
software engineering capabilities which will greatly enhance Boca's R&D team and software
expertise. These products will position Boca to deliver low-cost, proprietary ISDN products to the
U.S. market as well as other international markets. Currently under development at Creatix is the
next generation of digital products i.e., ATM and ADSL. Additionally, the Creatix/Boca
complementary marketing efforts will enable Boca to more effectively launch its other new products
including 56 Kbps modems, videoconferencing, and networking technology into the European
market.
Zalenski added: "Further, there are many synergies between our two companies. Our expertise in
manufacturing and purchasing will enable us to substantially reduce Creatix's cost of goods sold and
further position us for success. In 1996, Creatix achieved approximately US $45 million in sales
with an average selling price of US $111 dollars on a unit volume of 405 thousand. While the
revenue run rate did significantly decrease in the second half of the year due to their inability to
purchase components, our goal is to return Creatix to profitability during its first year of operation."
Creatix's purchase price is at net book value of the equipment and assets, valued at approximately
US $4 million, and financed by a German bank at 6.6% over four years with the principal payment
starting after two years. Also, the German local government is participating in the transaction
through a subsidy. This transaction is subject to certain conditions with which Boca Research's
management team does not anticipate any issues.
BOCA RESEARCH TAKES NEXT STRATEGIC STEP IN RETAIL MARKET
In its continuing efforts to penetrate the retail channel, today Boca Research also announced the
formation of a retail division. James E. Hamilton, Boca's Sr. vice president of domestic sales, will be
president of the division, reporting to Zalenski. Commenting on the news, Zalenski stated: "We have
emphasized the importance of the retail market in Boca's future strategic business and growth plans.
The creation of a separate division is the next logical step in our development of the retail channel. I
am pleased to announce Jim's position as president and I am confident that his extensive 19-year
background in retail management will enable him to further focus our retail business." Hamilton will
work closely with Jason Barzilay and the retail-oriented consulting services of the company he
owns, ARGOQUEST.
Zalenski added: "We are enthusiastic about the future growth opportunities in the retail channel, as
well as further development of OEM relationships, which are enhanced by our relationship with
ARGOQUEST. We are currently evaluating several new value added technologies presented by
this company's strong ties within the personal computer peripheral retail and OEM markets."
This release contains forward-looking statements which reflect management's best judgment based
on factors currently known. However, these statements involve risks and uncertainties including the
successful development and market acceptance of new products, the degree of competition in the
market for such products, competitive pricing practices, the product and channel mix, component
costs, and manufacturing efficiencies. Further, a significant portion of the company's sales are
derived from a limited number of customers, the loss of one or more of which could adversely
impact operating results. These and other risks are detailed in Boca Research's annual report on
Form 10-K for the year ended Dec. 31, 1995 and its quarterly report on Form 10-Q for the
quarter ended Sept. 30, 1996. Such risks and uncertainties could cause actual results to differ
materially from those in the forward-looking statements included in this release.
CORPORATE INFORMATION
Creatix is a privately held company with headquarters in Saarbrucken, Germany and significant
operations in Europe. A manufacturer of modems, ISDN equipment and other communications
products, Creatix's products are sold primarily to corporate and consumer markets as well as the
OEM channel through its strong distribution network.
CORPORATE INFORMATION
Founded in 1985, Boca Research designs, manufactures, markets and supports quality, cost-
effective data communications, videoconferencing, multimedia and networking products to facilitate
the transmission of information on personal computers and computer networks.
The company sells its products worldwide through distributors, original equipment manufacturers
(OEMs), and retailers. Boca Research is a U.S. corporation headquartered in Boca Raton with
international operations and ventures worldwide.
NOTE TO EDITORS: For copies of recent press releases from Boca Research via fax, call
800/331-1323; for company information via the Internet, visit bocaresearch.com
NOTE TO EDITORS: In the Internet/email address noted in this news release, there is an "at"
symbol between gale and bocaresearch.com This symbol may not appear properly in some
systems.
NOTE TO EDITORS: In the World Wide Web address noted in this news release, there is a
double slash between http: and
www.bocaresearch.com These symbols may not appear properly in some
systems.
CONTACT: Boca Reserach Inc., Boca Raton
Gale Blackburn, Director of Corporate Communications
561/997-6227, ext. 305
bocaresearch.com
email: galeb@bocaresearch.com
or
Morgen-Walke Associates Inc.
Michele Katz/Jessica Davis
Press: Lee Foley
212/850-5600
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