Echelon Corporation Announces Fourth Quarter 1999 Revenues Increase 33% From Prior Year
January 20, 2000 04:05 PM
PALO ALTO, Calif.--(BUSINESS WIRE)--Jan. 20, 2000--Echelon Corporation ELON today announced financial results for the quarter and year ended December 31, 1999.
Revenues for the quarter ended December 31, 1999 were $11.4 million, an increase of 33% over revenues of $8.6 million for the same period in 1998. Excluding the effect of non-recurring charges of $549,000, net loss for the quarter ended December 31, 1999 was $298,000, or $0.01 per share, based on a weighted average of 33,143,000 common shares outstanding, compared to a net loss of $1.4 million, or $0.04 per share, based on a weighted average of 32,509,000 common shares outstanding in the fourth quarter of 1998. The non-recurring charges relate to the Company's plans to exit its Palo Alto leased facilities. This plan will enable the Company to relocate its Palo Alto headquarters to a new facility in San Jose, which not only provides for our future expansion needs, but is also less than one-half the rent we would otherwise incur long-term in Palo Alto.
Revenues for the year ended 1999 were $39.8 million, an increase of 23% over revenues of $32.2 million for the same period one year ago. Net loss for the year ended December 31, 1999 was $3.9 million, or $0.12 per share, based on a weighted average of 32,910,000 common shares outstanding, compared to a net loss of $5.9 million, or $0.24 per share, based on a weighted average of 24,845,000 common shares outstanding for the same period in 1998. Giving effect to the conversion of 7,887,381 shares of convertible preferred stock into an equivalent number of shares of common stock concurrent with the closing of the Company's initial public offering of its common stock on July 31, 1998, the proforma net loss per share for the year ended December 31, 1998 was $0.20 per share, based on a weighted average of 29,405,000 shares outstanding.
"Revenues for the fourth quarter were in line with Company and analyst expectations. We're very pleased that we had a strong revenue quarter and that our gross margins were over 62%," said M. Kenneth Oshman, the Company's chairman, chief executive officer, and president. "Excluding the non-recurring charges, operating expenses were also in line with Company forecasts."
Oshman continued, "This was truly an outstanding quarter for Echelon, not only because of our strong financial performance, but also because of the many significant events that occurred and the positive momentum they created.
"The quarter saw several important actions towards recognizing our LONWORKS(R) system as an open standard for networking everyday devices. In October, the American National Standards Institute (ANSI) approved the protocol underlying our LONWORKS networks as an open industry standard. In November, we accepted Microsoft Corporation's invitation to serve on the Universal Plug and Play (UPnP) Forum's Steering Committee, the leadership body that sets the agenda, technology focus, and guiding principles for the organization.
"On November 30th, Echelon, along with keynote speakers Judy Estrin, chief technology officer and senior vice president, Cisco Systems, and Bill Joy, chief scientist and co-founder, Sun Microsystems, held an industry briefing for leading members of the Internet, press, and financial communities. The briefing described how connected LONWORKS devices will drive the next wave of Internet innovation and wealth creation and how Echelon is Bringing the Internet to Life(TM).
"In December, we completed our highly successful Open Systems'99 seminar series, in which Echelon, along with key OEMs from the building automation market, brought our open systems message directly to almost 3,000 building and facility managers, consulting engineers, and architects in 39 North American cities. The program generated a great deal of interest and excitement from attendees, and we expect to increase the demand for open, interoperable, multi-vendor LONWORKS control networks and Echelon's products. During the fourth quarter, we added 23 new companies to our Authorized Network Integrator Program representing Asia, Australia, Europe, and North America. The strong 45% growth, representing all corners of the globe, points to the success of our open systems message in the worldwide market.
"The strong momentum with which we closed this past year has continued to build into the new millennium. Echelon's LONWORKS system was featured in home networking exhibits by Cisco Systems, GTE, Microsoft, Sun Microsystems, and Oracle Corporation as well as in keynote speeches from Eric Benhamou, chairman and chief executive officer of 3Com, and Scott McNealy, chairman and chief executive officer of Sun Microsystems, at the 2000 International Consumer Electronics Show (CES). Following the adoption of our underlying protocol as an ANSI standard in the fourth quarter, ANSI adopted the free topology networking technology implemented by our FTT-10 transceiver as an open industry standard. Additional news in the standards area came from Finland, where our LONWORKS system was chosen as the preferred standard for networking everyday devices in homes by the Finnish National Technology Agency (TEKES), the Finnish Association of Building Owners and Construction Clients (RAKLI), and the Finnish Association of Consulting Firms (SKOL). Finally, we have recently announced that NTT DATA, Japan's largest information services company, has joined our family of Echelon Authorized Network Integrators, a significant milestone in Echelon's efforts to penetrate the Japanese market."
For those interested in further discussion regarding this release, Echelon's management will participate in a conference call at 2:00 P.M. PST today, January 20, 2000. To access the conference call, dial 800/313-6624 (toll-free) any time after 1:50 P.M. PST. The call will be available for playback on the Investor Relations section of Echelon's web site (www.echelon.com) through January 24, 2000.
About Echelon Corporation
Echelon Corporation is the developer of LONWORKS networks, recognized internationally as a standard for open, interoperable control networks. With thousands of application developers and millions of devices installed worldwide, LONWORKS is the leading cross-industry standard for networking everyday devices in building, home, industrial, transportation, and public utility applications. Echelon offers a full range of off-the-shelf hardware and software products to support the development, installation and management of intelligent, open and interoperable control networks.
Products that have been verified to conform to Echelon's LONMARK(R) interoperability guidelines are eligible to carry the LONMARK logo, an indicator that a product has been designed to interoperate over a LONWORKS network.
Echelon is based in Palo Alto, with international offices in China, France, Germany, Japan, Korea, The Netherlands, and the United Kingdom. Further information can be found at echelon.com. Further information about the LONMARK Interoperability Association can be found at lonmark.org.
This press release may contain statements relating to future plans, events or performance. Such statements may involve risks and uncertainties, including risks associated with uncertainties pertaining to the timing and level of customer orders, demand for products and services, development of markets for Echelon's products and services, and other risks identified in Echelon's SEC filings. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Echelon undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
The financial statements that follow should be read in conjunction with the notes set forth in Echelon's Form 10-K when filed with the Securities and Exchange Commission.
Note to Editors: Echelon, the Echelon logo, LonMark, the LonMark logo, and LONWORKS are registered trademarks and Bringing the Internet to Life is a trademark of Echelon Corporation registered in the United States and other countries. Other marks belong to their respective holders.
ECHELON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
1999 1998
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and
short-term investments......... $ 24,304 $ 29,053
Accounts receivable, net............. 7,303 4,559
Inventories.......................... 3,159 3,364
Other current assets................. 2,297 2,170
Total current assets................. 37,063 39,146
Property and equipment, net.......... 2,648 2,804
$ 39,711 $ 41,950
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable....................... $ 2,586 $ 1,787
Accrued liabilities.................... 2,540 2,067
Current portion of deferred revenues... 1,647 1,559
Total current liabilities.............. 6,773 5,413
LONG-TERM LIABILITIES:
Deferred rent, net of
current portion.................... -- 76
Deferred revenues, net of
current portion................. -- 675
Total long-term liabilities............ -- 751
Total stockholders' equity............. 32,938 35,786
------ ------
$ 39,711 $ 41,950
ECHELON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
December 31, Year Ended
(Unaudited) December 31
1999 1998 1999 1998
REVENUES:
Product................. $ 10,881 $ 7,896 $ 37,546 $ 29,163
Service................. 521 677 2,220 3,038
Total revenues.......... 11,402 8,573 39,766 32,201
COST OF REVENUES:
Cost of product......... 3,911 3,479 14,297 12,784
Cost of service......... 363 434 1,529 1,836
Total cost of revenues.. 4,274 3,913 15,826 14,620
Gross profit............ 7,128 4,660 23,940 17,581
OPERATING EXPENSES:
Product development..... 2,360 2,000 9,214 7,564
Sales and marketing..... 4,354 3,430 15,152 12,535
General and
administrative......... 966 1,027 4,101 4,119
Non-recurring charges... 549 -- 549 --
Total operating
expenses............... 8,229 6,457 29,016 24,218
Loss from operations.... (1,101) (1,797) (5,076) (6,637)
INTEREST AND OTHER
INCOME, NET........ 310 433 1,355 945
Loss before provision
for income taxes... (791) (1,364) (3,721) (5,692)
Provision for
income taxes..... 56 22 186 159
Net loss.............. $ (847) $ (1,386) $ (3,907) $(5,851)
Basic net loss
per share............ $ (0.03) $ (0.04) $ (0.12) $ (0.24)
Shares used in
computing basic
net loss per share... 33,143 32,509 32,910 24,845
Proforma basic net loss
per share............ $ (0.20)
Shares used in computing
proforma basic net loss
per share............ 29,405
CONTACT: Echelon Corporation Jane Wang, 650/855-7414 (Press Contact) jwang@echelon.com or Chris Stanfield, 650/855-7443 (Investor Relations) stanfield@echelon.com
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