CORNERSTONE POSITIVE EARNINGS SURPRISE!
If you're a Cornerstone shareholder, read it and cheer. .17/share almost 50% above First Call's estimate of .12/share.
Subj: Cornerstone Imaging Reports 1996 Fourth Quarter Results
Date: 97-02-04 08:30:59 EST
From: AOLNewsProfiles@aol.net
SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 4, 1997--Cornerstone
Imaging, Inc., a leading provider of display products and document
capture software for document imaging in enterprise computing
systems, today released operating results for the fourth quarter of
1996.
Fourth quarter 1996 highlights include:
-- Record revenues, increased 12% from Q396 and increased 3% from
Q495
-- Q4 EPS at 17 cents, compared to Q3 EPS at 6 cents
-- Strong balance sheet, cash at $18.5 million
-- ImageAccel 3, new generation of graphic controller family
introduced and shipping
-- Divestiture of Pegasus storage product line
-0-
*T
Summary financial results:
(dollars and shares in millions)
Q4:96 Q3:96 Q4:95
Revenues $ 29.8 $ 26.7 $ 28.8
Gross Margin 33.9% 31.4% 36.0%
Operating Margin 5.7% 2.3% 10.7%
Operating Income (Loss) $ 1.7 $ 0.6 $ 3.1
Net Income (Loss) $ 1.3 $ 0.4 $ 2.3
EPS $ 0.17 $ 0.06 $ 0.30
Cash and Marketable
Securities $18.5 $ 12.8 $ 10.4
Weighted Average Shares 7.5 7.6 7.7
*T
Revenues for the quarter ended December 31, 1996 were $29.8
million, an increase of $3.1 million from Q3 1996 and $1 million from
Q4 1995. Thomas T. van Overbeek, President and Chief Executive
Officer of Cornerstone Imaging, commented, "Fourth quarter revenues
for both display and software products were at record levels,
continuing the growth we experienced the last two quarters. Software
revenues of $2.6 million were up 11% from the third quarter and more
than doubled for the entire year."
For Q4 1996, gross margins improved to 33.9% compared with 31.4%
in Q3 1996 and 36% in Q4 1995. The improvement in margins from Q3
1996 is a result of lower costs for display products. "We have
priced ImageAccel 3 aggressively and were still able to achieve
improved margins compared to ImageAccel 2 due to a major cost
reduction," said van Overbeek.
Research and development expenses were $2.3 million for Q4 1996,
or 7.6% of revenues, compared to $2.5 million, or 9.3%, in Q3 1996
and $2.3 million, or 7.9%, in Q4 1995. Selling, general, and
administrative expenses were $6.1 million, or 20.6% of revenues,
compared with $5.3 million, or 19.8%, in Q3 1996 and $5 million, or
17.4%, in Q4 1995. The growth in spending is primarily attributable
to the build-up of a software sales force and marketing costs
associated with the introduction of ImageAccel 3.
Net income for Q4 1996 was $1.3 million, or 17 cents per share,
compared with $430,000, or 6 cents per share, in Q3 1996 and net
income of $2.3 million, or 30 cents per share, in Q4 1995.
For the year ended December 31, 1996, revenues were $96.8 million
compared with $91.2 million for 1995. The net loss for the current
year was $1.2 million, or 15 cents per share compared to net income
of $6.2 million for 1995, or 81 cents per share. The loss for the
current year includes a restructuring charge of $1.4 million taken in
Q1 1996.
Cash and marketable securities increased $5.7 million in the
quarter to $18.5 million, and compares to $10.4 million at the end of
1995. Inventory at December 31, 1996 was $10.7 million, increasing
$1.2 million during the quarter, but down from $14.1 million at
December 31, 1995. Accounts receivable decreased from $17.9 million
at December 31, 1995 to $17.2 million at December 31, 1996. "Our
cash balances ended the year at record levels. The strong demand for
displays continued to keep our inventory at low levels. We
anticipate higher inventory in Q1 to support the anticipated revenue
growth in 1997," commented van Overbeek.
Management Comments
"In 1996, the market for Cornerstone's high-performance display
products became more competitive as market growth attracted new
players. As the market became more competitive, margins eroded which
became evident in Q1 of 1996. As a result, we have had to redesign
Cornerstone's business model and transition from a low unit volume,
high gross margin niche strategy to a higher unit volume, lower gross
margin business model typical of larger markets. We believe that
Q4's results are evidence that the company can successfully complete
this transition. The essence of our plan is to focus on the
company's core competencies of high resolution ergonomic display
products and document capture software."
DISPLAY PRODUCTS, IMAGEACCEL 3
"Our display business provides high performance large screen display
products for people who spend all day in front of a monitor. Our
primary market has been production document imaging users. During
1996 we completely updated both the controller and monitor product
lines with products that have more functionality and performance at
lower costs.
"The most important event in the redesign of our display business
is the announcement of ImageAccel 3 which began shipping in Q4. This
new generation of graphics controllers replaces the earlier
ImageAccel 2 family of products. Compared to ImageAccel 2, it
provides significantly improved Windows functionality and
performance, better imaging performance and sells for approximately
40% of its' predecessor's price.
"We believe our new product line will enable us to continue to be
the market leader for display products used for document imaging
applications as well as compete for business in other applications
which demand high quality display products."
SOFTWARE PRODUCTS
"During Q4 1996, Cornerstone's software business continued to
grow, posting revenue of $2.6 million. We had a successful first
year shipping InputAccel and believe we have established a standard
for document capture software. Given the opportunities for extending
the InputAccel architecture with new products, we have decided to
focus software development resources on document scanning and
capture. For this reason, the company is divesting of its Pegasus
Storage products in Q1 1997.
"1996 was a critical year for Cornerstone. We believe that the
company is now well positioned competitively for 1997."
About Cornerstone
Cornerstone Imaging, Inc., headquartered in San Jose is a
provider of display products and document capture software for
document imaging in enterprise applications. Cornerstone high
performance monitors and graphics controllers are designed for
all-day computer users who access multiple applications and
data-types. Cornerstone software products facilitate the scanning
and capture of paper-based information. Cornerstone Imaging, Inc.
is traded on the NASDAQ under the CRNR symbol. Visit the Cornerstone
Web Page at WWW.corimage.com .
This Press Release contains forward-looking statements that
involve risk and uncertainties. The Company's actual results may
differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but
are not limited to, those discussed in "Risk Factors" in the
Company's 1995 Annual Report on Form 10-k as well as the following:
the emergence of the document image processing market, potential
fluctuations in quarterly results, competition, new products and
technological change, general economic conditions and dependence on
capital spending of customers, a lengthy sales cycle and dependence
on system sales, inherent risks associated with international sales
and international sources of supply, limited sources of supply and
reliance upon third-party manufacturers and distributors, and
dependence upon key personnel.
For more information on Cornerstone Imaging, Inc. via fax, dial
1-800-PRO-INFO, code 045. No cost.
-0-
*T
CORNERSTONE IMAGING, INC.
BALANCE SHEET
(in thousands)
December 31
1996 1995
ASSETS
Current assets:
Cash and marketable
securities $ 18,486 $ 10,441
Account receivable 17,181 17,885
Inventories 10,710 14,075
Deferred income taxes 4,878 3,228
Advances and other current
assets 816 2,159
Total current assets 52,071 47,788
Property and equipment 2,860 3,356
Deferred taxes and other
assets 723 1,412
Total $ 55,654 $ 52,556
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,093 $ 8,825
Accrued liabilities 5,781 3,963
Deferred revenue 762 437
Total current liabilities 16,636 13,225
Stockholders' equity:
Common stock and paid-in
capital 30,990 30,140
Retained earnings 8,028 9,191
Stockholders' equity 39,018 39,331
Total $ 55,654 $ 52,556
CORNERSTONE IMAGING, INC.
STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended Year Ended
Dec. 31, 1996 Dec. 31, 1996
1996 1995 1996 1995
Net revenues $ 29,759 $ 28,767 $ 96,847 $ 91,156
Cost of revenues 19,675 18,415 66,147 57,592
Gross profit 10,084 10,352 30,700 33,564
Research and development 2,264 2,276 9,539 7,758
Sales, general and
administrative 6,112 4,994 21 |
