ESS Technology Reports Fourth Quarter Results
Revenue of $83.3 Million and Net Income of $16.3 Million Fourth Quarter Diluted EPS of $0.35 Reports Strong Growth in DVD Chip Sales
FREMONT, Calif., Jan. 23 /PRNewswire-FirstCall/ -- ESS Technology (Nasdaq: ESST - news) today reported fourth quarter 2001 revenues of $83.3 million and net income of $16.3 million, or $0.35 per diluted share. Pro forma net income for the fourth quarter was $0.37 per diluted share which compares to $0.07 in the fourth quarter of 2000 and $0.20 in the third quarter of 2001. Pro forma net income excludes the results of discontinued operations, acquisition-related costs, and investment gains or losses.
Revenues for the year ended December 31, 2001 totaled $271.4 million, a decrease of 11% from fiscal year 2000 revenues of $303.4 million. Net loss for the year was $1.8 million, or a $0.04 loss per diluted share, compared to net income of $48.3 million, or $1.05 per diluted share, for the year ended December 31, 2000. Pro forma net income for the year was $28.9 million, or $0.63 per diluted share, compared to $47.8 million, or $1.04 per diluted share for 2000.
Robert Blair, president and chief executive officer of ESS Technology commented, ``I am extremely pleased with the results of the fourth quarter. Once again, we had record DVD shipments with over 5 million units shipped during the quarter. This represents sequential growth in unit shipments of over 40% from our record third quarter of 3.5 million, and we believe that we continue to be the market leader for both DVD chips and overall digital video player chips. Including our VCD chips, we shipped over 11 million digital video units in total during this quarter.''
Mr. Blair continued, ``Our gross margins increased from 37% in the third quarter to 41% in the recent quarter, fueled by the higher gross margins from our DVD products, and we further strengthened our balance sheet. Our cash increased by $29 million during the quarter to end the year with $129 million in cash and short-term investments.''
``2001 was a very successful year for ESS. We transitioned our company to a DVD and digital entertainment chip supplier as we grew our DVD and video CD revenues from $171 million to $210 million, a growth of 23%. During 2001, ESS more than doubled cash and short-term investments, reduced its inventories and repurchased 1.6 million shares of its stock. As we look to the future, we believe the trend of more and more entertainment technologies becoming digitized will continue. With our leading market position in the digital video market, we believe that ESS is well positioned to be a leading player in the emerging digital entertainment market in the coming years,'' Mr. Blair concluded.
About ESS Technology
ESS Technology, Inc., is a leading supplier of high-performance feature-packed chips for the rapidly expanding DVD and digital entertainment markets. The company is also a leading provider of solutions for applications in the growing consumer entertainment market. ESS provides advanced products that enable the emergence of digital home systems that deliver and manage entertainment and information in the home.
ESS, headquartered in Fremont, California, has R&D, sales, and technical support offices worldwide. ESS Technology's common stock is traded on the Nasdaq under the symbol ESST. ESS Technology's web site address is: esstech.com.
The matters discussed in this news release include certain forward-looking statements that involve risks and uncertainties, including, but not limited to, the timely availability and acceptance of the company's new products, the impact of competitive products and pricing, including unanticipated declines in average selling price for the company's products, the dependence on continued growth in demand for PC and consumer multimedia products, the possible disruption in consumer demand occasioned by terrorist activity and armed conflict, the effect of quarter to quarter variations in revenue and earnings, the effect of general economic conditions both domestically and internationally on the demand for the company's products, as well as the other risks detailed from time to time in the SEC reports of ESS, including the reports on Form 10-K, Form 8K and Form 10Q. Actual results could differ materially from those projected in the forward-looking statements.
ESS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
Dec 31 Dec 31
2001 2000
ASSETS
Current Assets:
Cash and cash equivalents $96,995 $25,715
Short-term investments 32,039 33,123
Accounts receivable, net 42,642 51,884
Inventories, net 37,452 98,940
Prepaid expenses and other assets 1,894 2,780
Net assets of discontinued operation -- 46,131
Total current assets 211,022 258,573
Property, plant and equipment, net 22,438 31,081
Other assets, net 4,505 4,737
Total Assets $237,965 $294,391
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses $49,173 $70,300
Income taxes payable and
deferred income taxes 4,883 3,601
Total current liabilities 54,056 73,901
Non-current deferred tax liability 6,931 9,061
Shareholders' equity:
Common stock 153,678 149,197
Other comprehensive loss (1,374) (7,378)
Retained earnings 24,674 69,610
Total shareholders' equity 176,978 211,429
Total Liabilities and
Shareholders' Equity $237,965 $294,391
ESS TECHNOLOGY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Three months ended Twelve months ended (A)
Dec 31 Dec 31 Dec 31 Dec 31
2001 2000 2001 2000
Net revenues $83,266 $52,538 $271,380 $303,436
Cost of revenues 48,725 37,521 180,231 192,452
Gross profit 34,541 15,017 91,149 110,984
Operating expenses:
Research and
development 5,934 6,258 22,490 21,818
Selling,
general and
administrative 11,420 7,049 40,689 36,225
Operating income 17,187 1,710 27,970 52,941
Nonoperating
income, net 701 1,977 2,407 4,954
Income before
provision for
income taxes 17,888 3,687 30,377 57,895
Provision for
income taxes 899 492 1,486 10,089
Net income $16,989 $3,195 $28,891 $47,806
Net income per share
Basic $0.40 $0.07 $0.68 $1.12
Diluted $0.37 $0.07 $0.63 $1.04
Weighted average
common shares:
Basic 41,976 42,699 42,274 42,548
Diluted 45,867 44,704 45,536 45,943
(A) Pro forma adjustments are detailed within the schedule entitled
"Reconciliation of GAAP Basis Net Income to Pro Forma Net Income."
ESS TECHNOLOGY, INC.
RECONCILIATION OF GAAP BASIS NET INCOME TO PRO FORMA NET INCOME
(unaudited)
(in thousands)
Three months ended Twelve months ended
Dec 31 Dec 31 Dec 31 Dec 31
2001 2000 2001 2000
Net income (loss)
- GAAP basis $16,279 $(1,595) $(1,817) $48,306
Pro Forma Adjustments
In process research
and development,
net of tax (A) -- -- -- 2,625
Acquisition
amortization,
net of tax (B) 747 1,281 5,467 6,015
Sale of land,
net of tax (C) -- (1,811) -- (1,811)
Cisco stock
sale (D) -- -- 21,187 (35,045)
Cisco stock
sale tax
effect 37 90 (8,748) 12,856
Discontinued
operation,
net of tax (E) -- 5,230 12,802 14,860
Net income (loss)
- Pro forma $16,989 $3,195 $28,891 $47,806
(A) Pro forma amounts for all periods presented exclude the effect of
in-process research and development related to the acquisition of
Netridium in Q1 2000, amounting to $0, and $2,625 for the twelve
months ended December 31, 2001 and December 31, 2000, respectively.
(B) Pro forma amounts for all periods presented exclude the effect of
acquisition amortization, amounting to $747 and $1,281 for the three
months ended December 31, 2001 and December 31, 2000, respectively,
and $5,467 and $6,015 for the twelve months ended December 31, 2001
and December 31, 2000, respectively.
(C) Pro forma amounts for all periods presented exclude the effects of
the sale of land, amounting to $0 and $1,811 for the three months
ended December 31, 2001 and December 31, 2000, respectively, and
$0 and $1,811 for the twelve months ended December 31, 2001 and
December 31, 2000, respectively.
(D) Pro forma amounts for all periods presented exclude the effect of the
Cisco stock related transactions, amounting to ($21,187) and $35,045
for the twelve months ended December 31, 2001 and December 31, 2000,
respectively.
(E) Pro forma amounts for all periods presented exclude the effects of
the discontinued operation, amounting to $0 and ($5,230) for the
three months ended December 31, 2001 and December 31, 2000,
respectively, and ($12,802) and ($14,860) for the twelve months ended
December 31, 2001 and December 31, 2000, respectively.
ESS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-GAAP BASIS
(unaudited)
(in thousands, except per share data)
Three months ended (A) Twelve months ended (A)
Dec 31 Dec 31 Dec 31 Dec 31
2001 2000 2001 2000
Net revenues $83,266 $52,538 $271,380 $303,436
Cost of revenues 48,725 37,521 180,231 192,452
Gross profit 34,541 15,017 91,149 110,984
Operating expenses:
Research and
development 6,681 7,539 27,957 27,832
In-process
research and
development -- -- -- 2,625
Selling,
general and
administrative 11,420 7,049 40,689 36,225
Operating income 16,440 429 22,503 44,302
Nonoperating
income (loss),
net 701 3,788 (18,780) 41,810
Income before
provision for
income taxes 17,141 4,217 3,723 86,112
Provision for
(benefit from)
income taxes 862 582 (7,262) 22,946
Net income from
continuing
operations 16,279 3,635 10,985 63,166
Net loss from
discontinued
operation -- (5,230) (4,205) (14,860)
Loss from
disposal of
discontinued
operation -- -- (8,597) --
Net income (loss) $16,279 $(1,595) $(1,817) $48,306
Net income (loss)
per share:
Basic
Continuing
operations $0.39 $0.08 $0.26 $1.49
Discontinued
operation $-- $(0.12) $(0.30) $(0.35)
$0.39 $(0.04) $(0.04) $1.14
Diluted
Continuing
operations $0.35 $0.08 $0.26 $1.37
Discontinued
operation $-- $(0.12) $(0.30) $(0.32)
$0.35 $(0.04) $(0.04) $1.05
Weighted average
common shares:
Basic 41,976 42,699 42,274 42,548
Diluted 45,867 42,699 42,274 45,943
(A) Amounts in previous periods have been reclassified to take into
account the effects of discontinued operation.
SOURCE: ESS Technology, Inc. |
