Ancor Communications, Inc. Reports Record Third Quarter Results
MINNEAPOLIS, Oct. 30 /PRNewswire/ -- Ancor Communications, Inc.
(Nasdaq: ANCR) today reported record revenues of $3,423,837 for the third
quarter ended September 30, 1997, an increase of 84 percent from revenues of
$1,861,132 reported in the same period a year ago.
The net loss for the recent quarter was $2,452,636, or $0.23 per share,
and includes special charges of $900,000 or $0.08 per share reflecting
reserves for certain inventory, administrative and product expenses. For the
same period last year the company reported a net loss of $1,192,920, or
$0.12 per share.
For the first nine months of 1997, revenues increased 36 percent to
$7,328,414, compared to revenues of $5,372,880 for the first nine months of
the prior year. The net loss for the nine months ended September 30, 1997,
was $6,084,783 or $0.59 per share inclusive of the third quarter charges,
versus a net loss of $2,898,877, or $0.32 per share, in the same period of
1996.
Sources of Revenue Growth
The increase in revenue for the quarter reflects the timing of shipments
against a previously announced order from Ancor's Japanese distributor, Hucom,
Inc. Hucom orders are part of Phase II implementation of the world's largest
Fibre Channel network now being installed at a design and engineering center
being developed by a major Japanese industrial and consumer products company.
Ken Hendrickson, chairman and chief executive officer, said, "The fact
that this customer keeps coming back for more of Ancor's GigWorks switches is
evidence of the value of our product and the need for the performance it
provides in very large networks. The scalability of the GigWorks Fibre
Channel switch makes it uniquely suited to a project with the bandwidth and
throughput requirements of this customer's system."
Also under a previously announced order, Ancor delivered equipment to
Boeing to be evaluated for use in the upgrade of information systems onboard
AWACS reconnaissance planes. Those systems require the real-time transfer of
massive amounts of data, an application for which Fibre Channel technology
offers a compelling solution. In addition, the company delivered an order of
GigWorks Fibre Channel switches to a major oil company for use in a
geo-seismic modeling application.
Third Quarter Loss Includes Special Charges
The loss in the third quarter reflects the company's continuing investment
in product development and marketing, as well as special charges taken in the
period. The largest of these charges totals approximately $500,000 and is
being taken to reflect the company's belief that its inventory of certain host
bus adapter cards exceeds current and future market demand as customers
transition to newer server and workstation platforms. This excess inventory
is not obsolete, however, since it may still fulfill the requirements of
current and prospective customers who may wish to grow existing Fibre Channel
networks using legacy servers and workstations, according to the company.
Other components of the $900,000 in special charges taken during the
quarter include a $250,000 charge to reflect a severance obligation due to a
former officer of the company and a $150,000 reserve for product returns.
Looking Ahead
Hendrickson said he was encouraged by the third quarter results, which
showed continued market acceptance of the company's Fibre Channel products.
"While we reported record revenues for the quarter, the timing of orders and
shipments will result in revenues varying from quarter to quarter. For
example, we currently expect that our 1997 fourth quarter revenues will be
less than our record third quarter revenues," said Hendrickson.
"We have an exciting new product in the GigWorks MKII Fibre Channel
switch, which provides both technical and cost advantages in high performance
networking and high performance storage area network applications,"
Hendrickson added. "We have strengthened management with the addition of
three board members, a new CEO and chairman, vice president of marketing and
chief financial officer. We are in the early stages of discussions with
several large potential OEM customers. While these customers have long
selection and qualification cycles, typically spanning six to nine months, we
are making good progress and may start to see the results of these efforts in
the second half of 1998."
About Ancor Communications
Ancor Communications, Inc. provides GigWorks(TM) high performance storage
and data-intensive network solutions based on Fibre Channel technology. The
company was the first to deliver a Fibre Channel switch, and the first to top
the one-gigabit performance level. In addition to Fibre Channel switches,
Ancor products also include adapters and connectivity solutions. Ancor is a
member of the Fibre Channel Association, the ANSI Standards Committee and the
University of New Hampshire Fibre Channel Consortium to promote the
advancement of Fibre Channel standards and interoperability. Information
about Ancor is available on the World Wide Web at ancor.com.
For more information about Fibre Channel technology and Ancor Fibre
Channel solutions, call 800-342-7379 or access World Wide Web site
ancor.com. Media, contact John Shaughnessy of Ancor, 612-932-4096,
johns@ancor.com or Aaron Pearson of Shandwick for Ancor, 612-832-5000,
apearson@shandwick.com.
Forward-looking statements as defined by the Private Securities Litigation
Reform Act of 1995 are qualified by the risk factors outlined in the documents
Ancor Communications, Inc. files with the Securities and Exchange Commission.
ANCOR COMMUNICATIONS, INCORPORATED
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Net Sales $3,423,837 $1,861,132 $7,328,414 $5,372,880
Cost of Sales 2,587,013 929,602 4,923,271 2,836,383
Gross Profit 836,824 931,529 2,405,143 2,536,497
Operating Expenses
Selling, general and
administrative 2,133,671 1,079,145 5,420,468 2,908,838
Research and
development 1,209,497 1,107,368 3,235,213 2,658,910
Total operating
expenses 3,343,168 2,186,512 8,655,681 5,567,748
Operating loss (2,506,344) (1,254,983) (6,250,538) (3,031,251)
Other income (expense)
Interest expense (5,363) (97) (10,526) (63,720)
Other, net 59,070 62,161 176,281 196,094
Net Loss ($2,452,636) ($1,192,920) ($6,084,783) ($2,898,877)
Net loss per common
share ($0.23) ($0.12) ($0.59) ($0.32)
Weighted average common
and common equivalent
shares outstanding 10,984,569 10,092,441 10,721,111 9,027,092
ANCOR COMMUNICATIONS, INCORPORATED
BALANCE SHEETS
September 30, December 31,
1997 1996
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $1,109,027 $507,041
Short-term investments 3,000,000 1,003,530
Accounts receivable, net of reserves 3,609,521 4,019,000
Inventories 2,397,987 2,695,961
Other current assets 254,177 336,734
Total current assets 10,370,713 8,562,266
Equipment, net of accumulated depreciation 3,124,995 2,838,116
Patents, Prepaid Royalties, and Other Assets,
net of accumulated amortization 209,999 247,754
Capitalized software development costs
net of accumulated amortization 542,042 614,188
TOTAL ASSETS $14,247,749 $12,262,324
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $69,703 $61,923
Accounts payable 1,309,579 1,752,258
Accrued liabilities 660,614 364,064
Total current liabilities 2,039,896 2,178,245
Long-term Debt, less current maturities 178,370 177,382
Shareholders' Equity
Capital Stock 113,913 104,079
Additional paid-in capital 35,269,555 27,071,820
Accumulated deficit (23,353,986) (17,269,202)
Total shareholders' equity 12,029,482 9,906,697
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,247,749 $12,262,324
SOURCE Ancor Communications, Inc.
/EDITOR'S NOTE: GigWorks(TM), ANCOR(TM) and the Ancor logo are the marks
and property of Ancor Communications, Inc./
/CONTACT: Steven Snyder, Chief financial officer, 612-932-4000,
steves@ancor.com or John Shaughnessy, Public relations manager, 612-932-4096,
johns@ancor.com, both of Ancor Communications, Inc./
/Web site: ancor.com
(ANCR) |
