Exhibit 99.1
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Lantronix Reports Fiscal 2010 Fourth Quarter and Full Year Financial Results
Eighth Consecutive Quarter of Non-GAAP Profitability; Cash Increases $762,000 to $10.1 Million during the Fourth Quarter
Irvine, Calif., September 2, 2010 – Lantronix, Inc. (NASDAQ: LTRX), a leading provider of secure, remote management, device networking and data center management technologies, today reported financial results for its fiscal 2010 fourth quarter and full year ended June 30, 2010.
Financial Highlights for the Fourth Fiscal Quarter
§ | Net revenue of $11.8 million, an increase of 4% year-over-year. |
§ | GAAP net loss of $509,000, or ($0.05) per share. |
§ | Non-GAAP net income of $169,000, or $0.02 per share. |
§ | Eighth consecutive quarter of non-GAAP net income. |
§ | Cash and cash equivalents increased to $10.1 million at June 30, 2010. |
Jerry Chase, president and CEO, said, “We made substantial progress in fiscal 2010 and are pleased with our positive results and momentum. Shipments in the fourth quarter came in at their highest levels in six quarters, contributing to the substantial improvement in our cash balance at quarter end. We saw continued positive sales momentum across many of our products and geographies during the quarter and are excited with the increasing market traction we are generating with our new products and services.”
“During fiscal 2010, we invested in new products and marketing capabilities to maximize our opportunities in the growing medical device connectivity market. We believe our value-added solutions uniquely position us to benefit from growth in this exciting vertical.”
Recent Non-Financial Highlights
· | Announced the launch of AccessMyDevice.com, a new Internet-based, enterprise-grade subscription service enabling secure remote access behind firewalls to virtually any device from a web browser. |
· | Announced new investments and initiatives to drive increased sales within the growing medical device connectivity market, including the appointment of a new vice president of marketing, the addition of sales professionals in the U.S. and Europe, a comprehensive global rebranding effort, and a new solutions-focused website. |
· | United Oil, a large fueling station services company serving Shell, Exxon, Mobil, ConocoPhillips and United Oil-branded stations throughout the U.S., selected Lantronix’ ManageLinx® solution using VIP Access enabled EDS1100s to remotely access gasoline storage tanks for data collection and analysis, initially for 70 Shell stations in Southern California. |
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· | Perinata, a newly-launched IT services company, selected ManageLinx® to provide secure access to firewall-protected devices via the Internet, enabling its new business model to provide robust IT services from remote locations. |
· | Launched MatchPort® NR, the newest addition to the Company’s MatchPort family of device servers that enables customers to easily configure their products for wired or wireless connectivity with the swap of a module, significantly shortening development time. |
· | XLHost and netdirekt, data center and server hosting companies, selected Spider to provide secure keyboard, video, mouse (KVM) server management over the internet. |
· | STARA Technologies selected WiPort® for its cutting edge Mosquito automated guidance unit. Mosquito is a precision-guided aerial delivery system that precisely delivers blood plasma, batteries, ammunition, ground-based sensors and MREs (meals ready to eat) to Special Operations Forces and other troops on the battlefield. |
Financial Results for the Fiscal Fourth Quarter Ended June 30, 2010
Net revenue was $11.8 million, an increase of 4%, compared to $11.4 million for the fourth fiscal quarter of 2009.
Gross profit margin increased to 50.8%, compared to 49.4% for the fiscal fourth quarter of 2009. The increase in gross profit margin percent primarily reflects a decrease in inventory and warranty reserve expenses, offset by an increase in freight costs due to expedite charges relating to component and product shortages.
GAAP operating expenses were $6.5 million, an increase of $331,000, compared to $6.1 million for the fourth fiscal quarter of 2009. Approximately $400,000 of the increase was attributable to the Company discontinuing its corporate-wide furlough program for the fourth fiscal quarter of 2010.
· | Selling, general and administrative expense was $4.8 million, an increase of $208,000, compared to $4.5 million for the fourth fiscal quarter of 2009. The increase was primarily due to the Company discontinuing its corporate-wide furlough program for the fourth fiscal quarter of 2010 and severance related charges. |
· | Research and development expense was $1.7 million, an increase of $231,000, compared to $1.5 million for the fourth fiscal quarter of 2009. The increase was primarily due to the Company discontinuing its corporate-wide furlough program for the fourth fiscal quarter of 2010. |
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Non-GAAP operating expenses were $5.9 million, compared to $5.4 million for the fourth fiscal quarter of 2009.
GAAP net loss was $509,000, or ($0.05) per share, compared to GAAP net loss of $553,000, or ($0.05) per share, for the fourth fiscal quarter of 2009.
Non-GAAP net income was $169,000, or $0.02 per share, compared to non-GAAP net income of $326,000, or $0.03 per share, for the fourth fiscal quarter of 2009.
Financial Results for the Fiscal Year Ended June 30, 2010
Net revenue was $46.4 million for fiscal 2010, a decrease of 5.6%, compared to $49.1 million for fiscal 2009.
Gross profit margin was 52.0%, compared to 52.2% for fiscal 2009. The decrease in gross profit margin percent reflects product mix and increased freight costs due to expedite charges relating to component and product shortages.
GAAP operating expenses were $25.4 million, a decrease of $838,000, compared to $26.3 million for fiscal 2009.
· | Selling, general and administrative expense was $19.0 million, a decrease of $482,000, compared to $19.5 million for fiscal 2009. The decrease was due to personnel-related and facilities-related expenses, marketing expenses, professional fees and outside services due to cost cutting efforts. |
· | Research and development expense was $6.3 million, an increase of $450,000, compared to $5.9 million for fiscal 2009. The increase was due to personnel-related expenses, facilities-related expenses, and outside services for engineering projects. |
Non-GAAP operating expenses were $22.8 million, a decrease of $167,000, compared to $23.0 million for fiscal 2009.
GAAP net loss was $1.5 million, or ($0.15) per share, compared to GAAP net loss of $780,000, or ($0.08) per share, for fiscal 2009.
Non-GAAP net income was $1.6 million, or $0.15 per share, compared to non-GAAP net income of $2.9 million, or $0.28 per share, for fiscal 2009.
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Balance Sheet Summary
Cash and cash equivalents were $10.1 million as of June 30, 2010, an increase of $938,000, compared to $9.1 million as of June 30, 2009.
Total receivables, which include accounts receivable, net, and contract manufacturers’ receivable, were $2.4 million as of June 30, 2010, compared to $2.5 million as of June 30, 2009.
Net Inventory was $6.9 million as of June 30, 2010, compared to $6.5 million as of June 30, 2009.
Accounts payable were $6.5 million as of June 30, 2010, compared to $5.6 million as of June 30, 2009. The increase was due to the timing of inventory receipts during the quarter as inventory is the primary driver of accounts payable.
Working capital was $7.6 million as of June 30, 2010, compared to $8.1 million as of June 30, 2009.
Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Non-GAAP operating expenses consist of operating expenses excluding share-based compensation and related payroll taxes, depreciation and amortization, litigation settlement, and restructuring charges, as well as charges and gains that are driven primarily by discrete events that management does not consider to be directly related to the company's core operating performance.
Non-GAAP net income (loss) consists of net income (loss) excluding share-based compensation and related payroll taxes, depreciation and amortization, litigation settlement, restructuring charges, interest income (expense), other income (expense), income tax provision (benefit), as well as charges and gains that are driven primarily by discrete events that management does not consider to be directly related to the Company's core operating performance.
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Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP net income (loss) per share, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.
Conference Call and Webcast
Lantronix will host a conference call and webcast today at 2:00 p.m. Pacific Time (5:00 p.m. ET) to discuss its fiscal 2010 fourth quarter and year-end financial results. Those wishing to participate in the live call should dial 800-599-9829 (International dial-in 617-847-8703) using the passcode 14137881. A telephone replay of the call will be available for one week beginning approximately one hour after the call’s conclusion by dialing (888) 286-8010 and entering 24165699 followed by the “#” key when prompted for a code. To access the live webcast of the call, go to the Investor Relations section of Lantronix’s website at www.lantronix.com. The webcast will be archived on the Company's web site for twelve months.
About Lantronix
Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure communication technologies that simplify remote access, management and control of any electronic device. Its solutions empower businesses to make better decisions based on real-time information, and gain a competitive advantage by generating new revenue streams, improving productivity and increasing efficiency and profitability. Easy to integrate and deploy, Lantronix products remotely connect and control electronic equipment via the Internet; provide secure remote access to firewall-protected equipment; and enable remote management of IT equipment over the Internet. Founded in 1989, Lantronix serves some of the largest security, industrial and building automation, medical, transportation, retail/POS, financial, government, consumer electronics/appliances, IT/d ata center and pro-AV/signage entities in the world. The company's headquarters are located in Irvine, Calif. For more information, visit www.lantronix.com
This news release contains forward-looking statements, including statements concerning our future business plans. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that could cause actual reported results and outcomes to differ materially from those expressed in the forward-looking statements. Factors that could cause our expectations and reported results to vary, include, but are not limited to: final accounting adjustments and results; quarterly fluctuations in operating results; our ability to identify and profitably develop new products that will be attractive to our target markets, including products in our device networking business and the timing and success of new product introductions; changing market conditions and compe titive landscape; government and industry standards; market acceptance of our products by our customers; pricing trends; actions by competitors; future revenues and margins; changes in the cost or availability of critical components; unusual or unexpected expenses; and cash usage including cash used for product development or strategic transactions; and other factors that may affect financial performance. For a more detailed discussion of these and other risks and uncertainties, see our SEC filings, including our Quarterly Report on Form 10-Q for the quarters ended March 31, 2010, December 31, 2009 and September 30, 2009 and our Annual Report on Form 10-K for the year ended June 30, 2009. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.
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Investor Relations Contacts:
Todd Kehrli / Jim Byers
MKR Group, Inc.
323-468-2300
ltrx@mkr-group.com
Lantronix, Inc.
Reagan Y. Sakai
Chief Financial Officer
(949) 453-3990
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LANTRONIX, INC. | ||||||||
Unaudited Consolidated Balance Sheets | ||||||||
(In thousands, except share and per share data) | ||||||||
June 30, | June 30, | |||||||
2010 | 2009 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 10,075 | $ | 9,137 | ||||
Accounts receivable (net of allowance for doubtful accounts of | ||||||||
$93 and $130 at June 30, 2010 and 2009, respectively) | 1,342 | 1,851 | ||||||
Inventories, net | 6,873 | 6,479 | ||||||
Contract manufacturers' receivable | 1,015 | 655 | ||||||
Prepaid expenses and other current assets | 515 | 529 | ||||||
Deferred tax asset | 567 | 675 | ||||||
Total current assets | 20,387 | 19,326 | ||||||
Property and equipment, net | 2,392 | 2,230 | ||||||
Goodwill | 9,488 | 9,488 | ||||||
Purchased intangible assets, net | 155 | 265 | ||||||
Other assets | 135 | 122 | ||||||
Total assets | $ | 32,557 | $ | 31,431 | ||||
Liabilities and stockholders' equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 6,545 | $ | 5,626 | ||||
Accrued payroll and related expenses | 1,568 | 1,414 | ||||||
Warranty reserve | 183 | 224 | ||||||
Restructuring reserve | - | 76 | ||||||
Short-term debt | 667 | 667 | ||||||
Other current liabilities | 3,776 | 3,221 | ||||||
Total current liabilities | 12,739 | 11,228 | ||||||
Non-Current Liabilities: | ||||||||
Long-term liabilities | 646 | 117 | ||||||
Long-term capital lease obligations | 153 | 309 | ||||||
Long-term debt | 111 | 778 | ||||||
Deferred tax liability | 567 | 675 | ||||||
Total non-current liabilities | 1,477 | 1,879 | ||||||
Total liabilities | 14,216 | 13,107 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; | ||||||||
none issued and outstanding | - | - | ||||||
Common stock, $0.0001 par value; 200,000,000 shares authorized; | ||||||||
10,322,597 and 10,090,087 shares issued and outstanding at | - | - | ||||||
June 30, 2010 and 2009, respectively | 1 | 1 | ||||||
Additional paid-in capital | 191,147 | 189,584 | ||||||
Accumulated deficit | (173,206 | ) | (171,687 | ) | ||||
Accumulated other comprehensive income | 399 | 426 | ||||||
Total stockholders' equity | 18,341 | 18,324 | ||||||
Total liabilities and stockholders' equity | $ | 32,557 | $ | 31,431 | ||||
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LANTRONIX, INC. | ||||||||||||||||
Unaudited Consolidated Statements of Operations | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Three Months Ended June 30, | Years Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenue (1) | $ | 11,819 | $ | 11,395 | $ | 46,375 | $ | 49,147 | ||||||||
Cost of revenue | 5,819 | 5,762 | 22,257 | 23,478 | ||||||||||||
Gross profit | 6,000 | 5,633 | 24,118 | 25,669 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 4,756 | 4,548 | 19,035 | 19,517 | ||||||||||||
Research and development | 1,700 | 1,469 | 6,338 | 5,888 | ||||||||||||
Restructuring charges | - | 108 | - | 806 | ||||||||||||
Amortization of purchased intangible assets | 18 | 18 | 72 | 72 | ||||||||||||
Total operating expenses | 6,474 | 6,143 | 25,445 | 26,283 | ||||||||||||
Loss from operations | (474 | ) | (510 | ) | (1,327 | ) | (614 | ) | ||||||||
Interest expense, net | (31 | ) | (52 | ) | (149 | ) | (186 | ) | ||||||||
Other income (expense), net | (11 | ) | (24 | ) | (19 | ) | 19 | |||||||||
Loss before income taxes | (516 | ) | (586 | ) | (1,495 | ) | (781 | ) | ||||||||
Provsion (benefit) for income taxes | (7 | ) | (33 | ) | 24 | (1 | ) | |||||||||
Net loss | $ | (509 | ) | $ | (553 | ) | $ | (1,519 | ) | $ | (780 | ) | ||||
Net loss per share (basic and diluted) | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.15 | ) | $ | (0.08 | ) | ||||
Weighted average shares (basic and diluted) | 10,321 | 10,090 | 10,276 | 10,081 | ||||||||||||
(1) Includes net revenue from related parties | $ | 161 | $ | 158 | $ | 642 | $ | 962 |
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LANTRONIX, INC. | ||||||||||||||||
Unaudited Reconciliation of Non-GAAP Adjustments | ||||||||||||||||
(In thousands) | ||||||||||||||||
Three Months Ended June 30, | Years Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
GAAP net loss | $ | (509 | ) | $ | (553 | ) | $ | (1,519 | ) | $ | (780 | ) | ||||
Non-GAAP adjustments: | ||||||||||||||||
Cost of revenues: | ||||||||||||||||
Share-based compensation | 13 | 14 | 43 | 63 | ||||||||||||
Employer portion of withholding taxes on stock grants | - | - | 3 | - | ||||||||||||
Depreciation and amortization | 76 | 45 | 264 | 171 | ||||||||||||
Total adjustments to cost of revenues | 89 | 59 | 310 | 234 | ||||||||||||
Selling, general and adminstrative: | ||||||||||||||||
Share-based compensation | 272 | 359 | 1,380 | 1,315 | ||||||||||||
Employer portion of withholding taxes on stock grants | - | - | 13 | - | ||||||||||||
Depreciation and amortization | 164 | 142 | 625 | 565 | ||||||||||||
Total adjustments to selling, general and administrative | 436 | 501 | 2,018 | 1,880 | ||||||||||||
Research and development: | ||||||||||||||||
Share-based compensation | 89 | 134 | 478 | 488 | ||||||||||||
Employer portion of withholding taxes on stock grants | - | - | 21 | - | ||||||||||||
Depreciation and amortization | 11 | 16 | 56 | 70 | ||||||||||||
Total adjustments to research and development | 100 | 150 | 555 | 558 | ||||||||||||
Restructuring charge | - | 108 | - | 806 | ||||||||||||
Amortization of purchased intangible assets | 18 | 18 | 72 | 72 | ||||||||||||
Total non-GAAP adjustments to operating expenses | 554 | 777 | 2,645 | 3,316 | ||||||||||||
Interest expense, net | 31 | 52 | 149 | 186 | ||||||||||||
Other (income) expense, net | 11 | 24 | 19 | (19 | ) | |||||||||||
Provsion (benefit) for income taxes | (7 | ) | (33 | ) | 24 | (1 | ) | |||||||||
Total non-GAAP adjustments | 678 | 879 | 3,147 | 3,716 | ||||||||||||
Non-GAAP net income (loss) | $ | 169 | $ | 326 | $ | 1,628 | $ | 2,936 | ||||||||
Non-GAAP net income per share ( basic and diluted) | $ | 0.02 | $ | 0.03 | $ | 0.15 | $ | 0.28 | ||||||||
Denominator for GAAP net income per share (basic and diluted) | 10,321 | 10,090 | 10,276 | 10,081 | ||||||||||||
Non-GAAP adjustment | 666 | 476 | 549 | 353 | ||||||||||||
Denominator for non-GAAP net income per share (basic and diluted) | 10,987 | 10,566 | 10,825 | 10,434 | ||||||||||||
GAAP operating expenses | $ | 6,474 | $ | 6,143 | $ | 25,445 | $ | 26,283 | ||||||||
Non-GAAP adjustments to operating expenses | (554 | ) | (777 | ) | (2,645 | ) | (3,316 | ) | ||||||||
Non-GAAP operating expenses | $ | 5,920 | $ | 5,366 | $ | 22,800 | $ | 22,967 |
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LANTRONIX, INC. | ||||||||||||||||||||||||
Unaudited Consolidated Net Revenue by Product Line | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Years Ended June 30, | ||||||||||||||||||||||||
% of Net | % of Net | Change | ||||||||||||||||||||||
2010 | Revenue | 2009 | Revenue | $ | % | |||||||||||||||||||
(In thousands, except percentages) | ||||||||||||||||||||||||
Device enablement | $ | 37,096 | 80.0% | $ | 39,945 | 81.2% | $ | (2,849 | ) | (7.1% | ) | |||||||||||||
Device management | 8,384 | 18.1% | 7,397 | 15.1% | 987 | 13.3% | ||||||||||||||||||
Device networking | 45,480 | 98.1% | 47,342 | 96.3% | (1,862 | ) | (3.9% | ) | ||||||||||||||||
Non-core | 895 | 1.9% | 1,805 | 3.7% | (910 | ) | (50.4% | ) | ||||||||||||||||
Net revenue | $ | 46,375 | 100.0% | $ | 49,147 | 100.0% | $ | (2,772 | ) | (5.6% | ) | |||||||||||||
Quarters Ended June 30, | ||||||||||||||||||||||||
% of Net | % of Net | Change | ||||||||||||||||||||||
2010 | Revenue | 2009 | Revenue | $ | % | |||||||||||||||||||
(In thousands, except percentages) | ||||||||||||||||||||||||
Device enablement | $ | 9,557 | 80.9% | $ | 9,540 | 83.7% | $ | 17 | 0.2% | |||||||||||||||
Device management | 2,103 | 17.8% | 1,569 | 13.8% | 534 | 34.0% | ||||||||||||||||||
Device networking | 11,660 | 98.7% | 11,109 | 97.5% | 551 | 5.0% | ||||||||||||||||||
Non-core | 159 | 1.3% | 286 | 2.5% | (127 | ) | (44.4% | ) | ||||||||||||||||
Net revenue | $ | 11,819 | 100.0% | $ | 11,395 | 100.0% | $ | 424 | 3.7% |