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Technology Stocks : Ampex Corporation (AEXCA) -- Ignore unavailable to you. Want to Upgrade?

To: DrD who wrote (5592)	2/17/1999 5:03:00 PM
From: Paul Lee	Read Replies (2) \| Respond to of 17679

This will never do for an internet co. Ampex Corporation Reports Preliminary Unaudited Net Income of $10.4 Million and Earnings of $0.20 Per Share for Fiscal 1998 REDWOOD CITY, Calif.--(BUSINESS WIRE)--Feb. 17, 1999--Ampex Corporation (AMEX:AXC) reported today net income of approximately $10.4 million on sales of $63.3 million and diluted earnings per share of $0.20 for the fiscal year ended December 31, 1998. In 1997, the Company reported net income of $14.8 million on sales of $80.3 million and diluted earnings per share of $0.32. Significant factors contributing to the fiscal 1998 results were the acquisition of MicroNet Technology, Inc. ("MicroNet") on June 30, 1998, which resulted in operating losses and acquisition related charges totaling $3.0 million ($0.06 per share), and an increase in restructuring charges and supplementary pension expense of $5.1 million ($0.10 per share). Earnings also declined due to an increase in net interest expense in 1998 of $3.7 million ($0.07 per share) and the issuance of Common Stock and the dilutive effect of the new series of Preferred Stock ($0.03 per share). Declining sales in the Company's mass data storage and instrumentation products in 1998, offset by expense reductions, resulted in a decline in operating income of $7.1 million ($0.13 per share). Earnings were favorably impacted by the settlement of a state tax dispute of $5.2 million ($0.10 per share) and tax benefits realized upon the final liquidation of an Italian subsidiary of $10.2 million ($0.19 per share). Sales declined by $17.0 million in fiscal 1998, primarily due to lower sales of instrumentation products to government customers and a decline in sales of television aftermarket products, due to the Company's previously announced withdrawal from television product lines. Demand for the Company's instrumentation products has been affected by previously announced restrictions on government spending. These sales declines were offset in part by the inclusion of revenues of MicroNet, a producer of disk-based storage systems. MicroNet has been withdrawing from lower priced product lines and is refocusing on higher performance disk-array products which are being introduced in 1999. In the fourth quarter of 1998, the Company reported net income of approximately $0.6 million on sales of $15.3 million and diluted earnings per share of $0.01. In the fourth quarter of 1997, the Company reported net income of $4.9 million on sales of $19.7 million and diluted earnings per share of $0.11. Sales of 19-millimeter data storage products increased materially over fourth quarter 1997 levels, but as noted previously, instrumentation products and aftermarket sales were lower than in the comparable quarter in 1997. MicroNet reported a net loss of $1.5 million in the fourth quarter of 1998 ($0.02 per share), and net interest expense increased by $1.2 million ($0.02 per share). In connection with the purchase of MicroNet, the Company engaged an independent appraisal firm to value all intangible assets being acquired, including in-process research and development ("IPR&D"), which was charged to operations in the second quarter of 1998. In September 1998, the Securities and Exchange Commission (SEC) specified that a different methodology should be used to value IPR&D from the methodology previously generally employed by valuation experts. Accordingly, the Company instructed the independent appraisal firm to remeasure IPR&D using the SEC's stage of completion methodology, resulting in a lower charge. The Company has elected to restate its quarterly financial results and to reissue its Form 10-Qs for the periods ended June 30, 1998 and September 30, 1998 due to the magnitude of the change, which increased net income by $1.9 million in 1998 ($0.03 per share). Future operating results will be adversely affected by increased goodwill amortization that results from the revised appraisal. Cash and short term investments increased to $62.6 million at December 31, 1998 from $41.8 million at December 31, 1997, largely due to the issuance of $44.0 million in Senior Notes. In 1998, the Company invested a portion of the proceeds in MicroNet and to acquire approximately 20% of Reiter Associates, Inc. ("Reiter"), a provider of turnkey electronic commerce support, web hosting, Internet consulting and monitoring services for enterprises that use the world wide web. Subsequent to year-end, Ampex announced the acquisition of a majority interest in Reiter and a strategic investment in TV onthe Web, an Internet video provider. The Company has previously announced that it is evaluating, both internally and through acquisitions, additional technology initiatives and strategic investments relating to its Internet video strategy. These activities are expected to require significant expenditures that may result in consolidated net losses in future periods, while the Company is building its presence in Internet video markets.