Any comment on this release?
____________________________________________
JTS Reports Third Quarter Results; CEO Tom Mitchell Expects a
Profitable First Quarter; Company Announces Suspension of 3-Inch
Program.
SAN JOSE, Calif., Dec. 22 /PRNewswire/ -- JTS Corporation (AMEX: JTS - news), today reported net loss of $60.6
million or $0.39 per share on revenues of $24.0 million for the fiscal third quarter ended November 2, 1997. The results
include a one time charge of $38.0 million associated with the company's decision to suspend support for the 3-inch portable
hard drive business.
Tom Mitchell, President and Chief Executive Officer of JTS commented, ''We are beginning to see positive results from our
initiatives. By focusing on our desktop mid-range product offerings, and continuing our emphasis on growing our OEM/System
Integrator business, combined with our efforts to restructure the company to reduce our cost and expense structure, we believe
we have positioned ourselves for profitability. With the qualification of our Champion II product at 2 major OEMs and the
growth in demand we are experiencing from our smaller system integrator customers, we expect to be profitable in our fiscal
first quarter.''
Third quarter revenue and profits were impacted as the company transitioned its product line from Champion I to Champion II
and converted from ATA-3 to an Ultra DMA interface. ''We are encouraged by customer reaction to our Champion II Family
of desktop drives featuring Ultra DMA capacity. Our recent results indicate that our strategy of focusing on mid-range capacity
points in our desktop offerings, foregoing entry level product where excess supply and pricing pressures are most severe, has
paid off with improved average sales prices and gross margins,'' commented Tom Mitchell.
JTS indicated that OEM/System Integrator sales continue to account for a growing percentage of revenue, reaching 30% over
the past two months versus less than 5% for the first 7 months of the fiscal year. It's Champion II line of drives has been
qualified at 2 major OEMs, and is in process of being qualified at 2 additional major OEM accounts.
The one time charge associated with suspending support for the 3-inch portable hard drive business included the following
items: $15.8 of goodwill, $17.9 million of existing technology, $1.8 million of capital assets, and $2.5 million of inventory
commitments.
Tom Mitchell, President and Chief Executive Officer of JTS, stated, ''The intense competitive pressures we continue to see in
the industry necessitate these actions for us to become competitive and profitable. Though strategically we believe the 3-inch
platform continues to offer opportunities, tactically we decided not to continue to support this program; we plan to focus our
resources on our desktop product offerings.''
Joseph Prezioso, Chief Financial Officer of JTS Corporation commented, ''With the latest restructuring actions that we have
implemented, we have reduced our quarterly cost and expense infrastructure in excess of $10M from the beginning of the year.
These actions combined with improving our time to market performance have reduced our operating break-even point by over
50% from 750,000 units per quarter to approximately 350,000 units per quarter. We are committed to continue to drive down
our spending and resource levels until we achieve profitability.'' JTS indicated that worldwide headcount has been reduced by
more that 31% from a high of approximately 8,400 to current levels of approximately 5,800.
Except for the historical information contained herein, the discussion in this press release contains forward-looking statements
that involve certain risks and uncertainties. The Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such variances include: but are not limited to the Company's ability to strengthen
operations, obtaining additional qualifications at additional OEM accounts, the Company's limited operating history; the need
for additional financing; the uncertainty of market acceptance of the Company's products; the highly competitive market; the
Company's ability to achieve and maintain volume shipments of products mentioned in this press release; the Company's
dependence on its relationship with major OEM accounts; its dependence on a single manufacturing facility and those additional
risk factors discussed from time to time in the Company's SEC reports, including but not limited to the Company's Annual
Report on form 10K for the year ended February 2, 1997.
JTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Amounts)
Unaudited
Three Months Ended Nine Months Ended
Nov. 2, Oct. 27, Nov. 2, Oct. 27,
1997 1996 1997 1996
NET SALES $23,981 $33,265 $125,806 $35,056
Cost of sales 33,269 34,877 (174,092) 39,122
GROSS MARGIN
(DEFICIT) (9,288) (1,612) (48,286) (4,066)
Acquired in-process
research and
development -- 110,012 -- 110,012
Amortization of
existing technology
and goodwill -- 1,962 2,388 1,962
Repositioning charge 38,008 -- 38,008 --
Research and
development
expense 3,752 5,710 15,716 6,262
Selling, general
and administrative
expense 4,017 3,916 17,488 5,705
Total operating
expenses (45,941) 156,477 (73,764) 163,063
OPERATING LOSS (53,467) (123,212) (122,050) (128,007)
Exchange gains (loss) (9) 66 57 (604)
Other income
(loss), net (3,187) (824) (2,959) 3,707
Interest income 13 53 336 673
Interest expense (2,043) (1,276) (6,038) (2,415)
NET LOSS (60,455) (125,193) (132,654) (126,646)
Preferred Stock
Dividends (147) -- (975) --
NET LOSS ATTRIBUTABLE
TO COMMON
SHAREHOLDERS (60,602) (125,193) (133,629) (126,646)
LOSS PER COMMON
SHARE $(0.39) $(1.20) $(1.06) $(1.55)
Weighted average
number of shares
used in
computations 155,532 104,323 126,429 81,678
JTS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
November 2, February 2,
1997 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (including
$550, and $1,800 held as restricted
balances at November 2, 1997 and
February 2, 1997, respectively) 1,986 $ 24,766
Accounts receivable, less allowance
for doubtful accounts of $4,292 and
$1,615 at November 2, 1997 and
February 2, 1997, respectively 6,644 21,445
Inventories 7,463 17,750
Other current assets 1,006 2,341
Total current assets 17,099 66,302
PROPERTY AND EQUIPMENT, net 26,440 27,674
ACQUIRED TECHNOLOGY, net -- 19,618
GOODWILL, net -- 16,673
OTHER ASSETS 383 450
TOTAL $43,922 $130,717
LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIT
CURRENT LIABILITIES:
Bank line of credits 8,833 $10,540
Borrowings under factoring arrangement -- 2,981
Accounts payable 60,553 33,327
Accrued liabilities 23,836 16,415
Current portion of long-term obligations 3,152 1,967
Total current liabilities 96,374 65,230
LONG-TERM OBLIGATIONS 52,305 53,081
STOCKHOLDERS' EQUITY DEFICIT:
Convertible preferred stock, Series
Bond C; $.001 par value -- authorized,
10,000,000 shares; outstanding, 1,550 and
40,000 shares at November 2, 1997
and February 2, 1997, respectively -- --
Common stock, $.001 par value
-- authorized, 250,000,000 shares;
outstanding, 165,249,165 and
104,744,765 at November 2, 1997
and February 2, 1997, respectively 165 105
Additional paid-in capital 364,317 349,961
Notes receivable from shareholders (2,460) (2,510)
Accumulated deficit (466,779) (335,150)
Total stockholders' equity deficit 104,757 12,406
TOTAL $43,922 $130,717
SOURCE: JTS Corporation |
