Patrick,
I thought it was inspiring to know why they moved the cc up to the 23rd from the usual last of the month/early next month. ;-) If there was an offer for 8 bucks, why didn't she take it?
Thursday July 23, 6:58 am Eastern Time
Company Press Release
SOURCE: Ancor Communications, Inc.
Ancor Reports Second Quarter Results
MINNEAPOLIS, July 23 /PRNewswire/ -- Ancor Communications, Inc. (Nasdaq: ANCR - news) today reported a net loss
of $7,300,632, or $.63 per diluted share, on revenues of $137,036 for the second quarter ended June 30, 1998. The
company's second quarter results include a charge of $4,432,000 for additions to reserves for inventory as a result of the
company's shift in emphasis from local area networking (LAN) to storage area networking (SAN) and the lack of demand in
Japan.
In the comparable 1997 period, the company reported a net loss of $1,834,913, or $.18 per diluted share, on revenues of
$2,101,799.
For the six months ended June 30, 1998, Ancor reported a net loss of $10,065,653, or $.88 per diluted share on revenues of
$1,179,263 compared to a net loss of $3,632,147, or $.36 per diluted share, on revenues of $3,904,577 for the comparable
fiscal 1997 period.
Overview of Second Quarter Results
Ken Hendrickson, Ancor's chairman and chief executive officer, attributed the company's second quarter results to three
factors. ''First, we did not recognize revenues on approximately $1 million of equipment shipped to our Japanese distributor
early in the second quarter. Second, we did not receive any additional orders from our Japanese distributor, contrary to our
expectations. Third, our local area networking business decreased,'' said Hendrickson.
Hendrickson said that the company did not recognize revenue on the $1 million of equipment shipped to its Japanese distributor
in the second quarter because the distributor's current financial and business circumstances create uncertainty about the
prospects for payment. He added that Ancor is re-evaluating its distribution plans in Japan to ensure its products are effectively
marketed and supported there.
Hendrickson also noted that Ancor's shift to emphasis on opportunities in the storage area networks market has resulted in
diminished revenues from customers in the high-performance local area networking market. ''We will continue to offer our
Fibre Channel products for high performance networking applications, but primarily to customers who can address themselves
any systems integration and interoperability issues the introduction of Fibre Channel into their networks may pose. We are
instead concentrating our resources on the larger opportunities for Fibre Channel in storage area networks,'' said Hendrickson.
Outlook for 1998's Second Half
''We continue to believe that storage area networking is the high opportunity market for Fibre Channel, but the opportunities
have been slower to develop than we had hoped,'' said Hendrickson. ''The slower-than-anticipated pace of market
development, combined with the lack of orders from our distributor in Japan and diminished revenues from local area
networking customers, will likely result in weak second half revenues,'' he said.
Hendrickson noted that the company has strengthened its sales and marketing capabilities in the storage systems area through
the addition of two seasoned sales and marketing executives with records of success in sales to major computer and storage
systems suppliers. In addition, he said the company is encouraged by the increasing deployment of Fibre Channel adapters and
hubs. ''As Fibre Channel connections proliferate in the storage area network environment, there will be an increasing need for
the Fibre Channel switching provided by our GigWorks MKII product. Fibre Channel switching is an uncrowded marketplace
with high barriers to entry where our product offers compelling capabilities and performance - and where most of the business
has yet to be awarded,'' he said.
While our outlook near-term is challenging, we are confident in our long- term prospects, thanks to our strong team and a
product that we believe is well-suited to emerging marketplace needs,'' said Hendrickson. He said the company is pursuing
additional financing to help fund its ongoing market and product development efforts as it transitions to a sharper focus on the
storage area networks market.
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.
NOTE: GigWorks(TM), ANCOR(TM) and the Ancor logo are the marks and property of Ancor Communications, Inc. For
more information about Fibre Channel technology and Ancor Fibre Channel solutions, call 800-342-7379 or access World
Wide Web site ancor.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 Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Net sales $137,036 $2,101,799 $1,179,263 $3,904,577
Cost of goods sold 4,506,911 1,243,190 5,206,519 2,336,258
Gross profit (4,369,875) 858,609 (4,027,256) 1,568,319
Operating expenses
Selling, general and
administrative 1,802,684 1,784,800 3,513,801 3,286,797
Research and
development 1,219,870 1,002,344 2,669,076 2,025,717
Total operating
expenses 3,022,554 2,787,144 6,182,876 5,312,514
Operating loss (7,392,428) (1,928,534) (10,210,133) (3,744,194)
Nonoperating income (expense)
Interest expense (7,126) (2,564) (20,182) (5,163)
Other, primarily
interest 98,923 96,186 164,662 117,211
Net loss ($7,300,632) ($1,834,913) ($10,065,653) ($3,632,147)
Basic and diluted
net loss per
common share ($0.63) ($0.18) ($0.88) ($0.36)
Weighted average
common shares
outstanding 11,949,093 10,741,733 11,916,736 10,587,199
ANCOR COMMUNICATIONS, INCORPORATED
Balance Sheets
June 30, December 31,
1998 1997
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $1,524,887 $2,001,404
Short-term investments 3,963,336 0
Accounts receivable 878,519 1,499,634
Inventories 1,878,882 2,493,722
Prepaid expenses and
other current assets 156,312 154,983
Total current assets 8,401,936 6,149,743
Equipment, net of
accumulated depreciation 3,219,877 3,273,528
Patents, prepaid royalties, and other assets,
net of accumulated amortization 249,608 269,190
Capitalized software development costs
net of accumulated amortization 316,259 471,043
TOTAL ASSETS $12,187,680 $10,163,504
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $151,115 $65,145
Accounts payable 1,406,717 963,321
Accrued liabilities 1,793,560 688,990
Total current liabilities 3,351,392 1,717,456
Long-term debt, less current
maturities 184,811 129,702
Shareholders' Equity
Additional paid-in capital 45,809,333 35,408,549
Accumulated deficit (37,157,855) (27,092,202)
Total shareholders' equity 8,651,478 8,316,346
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $12,187,680 $10,163,504
SOURCE: Ancor Communications, Inc.
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