Aureal Announces Third Quarter Operating Results
Sales Jump 119% Over Prior Quarter
FREMONT, Calif., Oct. 20 /PRNewswire/ -- Aureal Semiconductor Inc. (OTC Bulletin Board: AURL) today announced its financial results for its third fiscal quarter ended September 27, 1998. Sales of $7.5 million for the quarter more than doubled from the $3.4 million recorded in the second quarter. Year-to-date revenues were $14.6 million compared to $1.5 million for the same period in 1997, an increase of over 850%.
“We are jazzed about the growth in the PCI audio market and our growth within that market in the third quarter,” indicated Kip Kokinakis, President and CEO of Aureal. “The transition to PCI audio started slowly in 1998, but has kicked into gear in the second half, and Aureal's A3D and Vortex technologies are being recognized as high quality offerings in the marketplace. We are very pleased with the progress the company made in the third quarter—revenues are really beginning to ramp up and new product development is accelerating.”
The net loss from operations of $4.1 million declined from both the loss of $5.4 million in the second quarter of this year and $4.8 million in the third quarter of 1997. Continued investments in R&D over recent months have contributed heavily toward the announcements of the Vortex 2 processor, A3D 2.0 and Aureal's commencement of audio board sales to partner Diamond Multimedia Systems, Inc. “We believe that Aureal's long-term growth will stem from its ability to continue to lead the audio market with new technologies and increased functionality,” continued Kokinakis.
“We are pleased to see gross margins of 28% for the quarter and 30% for the year-to-date, as they reflect the series of product introductions throughout the year, most recently as Aureal commenced audio board product shipments at the end of the third quarter,” said Brendan O'Flaherty, Vice President and General Manager of the Systems Division. “We are excited to continue to bring new product offerings to the market, recognizing the initial pricing and gross margin pressures that new products face during their introductions and early stages.”
Operating expenses for the quarter totaled $5.7 million, just up from $5.4 million in the second quarter. Increases in both R&D and general and administrative expenses were primarily related to new business related to Vortex 2 and A3D rollouts as well as the commencement of audio board sales as the quarter closed. In addition, Aureal continues to work to expand its product offerings for future quarters.
“Obviously, we are very enthused about the sales increase in this quarter and the direction which we see the market moving,” said Dave Domeier, Vice President—Finance and CFO. “We are continuing to increase some expense categories in efforts to insure continued growth in our revenues—a long-term approach to growing the company and its shareholders' value. As we work toward positive cash flow goals, the company will continue to expand its offerings in the market, while recognizing and managing the related costs.”
Basic and diluted loss per common share was $0.14 per share for the third quarter, compared to $0.42 per share in the second quarter. In addition to operating losses, $1.9 million of non-cash charges for accretion and dividends on preferred stock increased the loss attributable to common shareholders for the third quarter.
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, but not limited to, dependence on the PC and consumer electronics markets and on product lines based on new technologies; foundry capacity, availability and reliability; competition and pricing pressures, and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission.
About Aureal
Aureal develops and markets audio semiconductor, audio board and software solutions for the PC and consumer electronics markets. Dedicated to improving audio functionality and continuing to advance audio standards in the marketplace, Aureal has recently introduced Vortex 2 and A3D 2.0 technologies to expand the overall audio abilities for the PC as well as improving positional three-dimensional technologies beyond the pre-existing market. For information on Aureal, its products, and its industry leading A3D audio technologies, please call Corporate Communications at 510-252-4582 or visit our Website at www.aureal.com.
NOTE: Aureal, the Aureal logo, Aureal A3D and A3D are trademarks of Aureal Semiconductor Inc. Other names may be trademarks of their owners.
Aureal Announces Third Quarter Results
Aureal Semiconductor Inc.
Third Quarter 1998 Financial Information
(dollars in thousands, except per share amounts)
Nine Months Ended Three Months Ended
Condensed Statements
of Operations Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1998 1997 1998 1997
(Unaudited)
Sales $14,553 $1,460 $7,535 $338
Gross Profit 4,337 1,342 2,145 263
Operating Expenses:
Research and
Development 8,548 4,861 3,014 1,862
Sales and Marketing 4,495 2,554 1,511 880
General and
Administrative 2,868 1,802 1,192 621
Amortization of
Reorganization Asset -- 1,875 -- 625
Total Operating
Expenses 15,911 11,092 5,717 3,988
Operating Loss (11,574) (9,750) (3,572) (3,725)
Interest Expense
and Other (3,456) (2,005) (526) (1,044)
Net Loss $(15,030) $(11,755) $(4,098) $(4,769)
Accretion/Dividends
on Preferred Stock (14,012) -- (1,891) --
Net Loss Attributable
to Common
Stockholders $(29,042) $(11,755) $(5,989) $(4,769)
Basic Loss per
Share Attributable
to Common
Stockholders $(0.69) $(0.29) $(0.14) $(0.12)
Condensed Balance Sheets: Sept. 27, December 28,
1998 1997
(Unaudited)
Current Assets $11,091 $ 4,238
Property and Equipment 2,202 1,214
Other Long-term Assets 1,008 898
Total Assets $14,301 $ 6,350
Current Liabilities $6,946 $ 4,883
Credit Facility 3,394 21,975
Other Long-term Liabilities 1,776 3,641
Total Liabilities 12,116 30,499
Stockholders' Equity
(Deficit) 2,185 (24,149)
Total Liabilities and
Stockholders Equity
(Deficit) $14,301 $ 6,350
SOURCE Aureal Semiconductor Inc.
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