EXHIBIT 99.1
Ciprico Reports First Quarter Results
Minneapolis, MN – February 1, 2005 — Ciprico Inc. (NASDAQ: CPCI), a leading provider of digital media workflow solutions, today announced results for the first quarter ended December 31, 2004.
Sales for the quarter were $3.0 million, a decrease of 8 percent over the fourth quarter of fiscal 2004 and a decrease of 50% over the prior year. Gross profit margins were 36.2 percent versus 38.2 percent for the previous year. Total operating expenses, excluding the restructuring adjustment of $466,000 (discussed below), were approximately $1.7 million, a sequential decrease of $350,000 or 17 percent and a decrease of $1.6 million or 50 percent over the same prior year period.
In December 2004 as part of its efforts to reduce cash losses, the Company entered into an agreement to sub-lease a portion of its headquarter facility. As a result of this agreement Ciprico recorded a positive restructuring adjustment of $466,000 in the quarter to reduce a portion of the lease abandonment charges previously recorded in fiscal 2004 in accordance with Generally Accepted Accounting Principles.
Ciprico recorded net income for the quarter of $21,000 or $0.00 per share versus a loss of ($593,000) or ($0.13) per share in the fourth quarter of fiscal 2004, and a loss of ($892,000) or ($0.19) per share for the same period last year. Excluding the restructuring adjustment, the Company had a net loss for the quarter of ($445,000) or ($0.09) a share.
James W. Hansen, CEO, said, “We reduced our operating losses through continued tight expense management and realization of the benefits from our restructuring last year. Lower volumes primarily impacted our margins between years. We experienced some use of working capital during the quarter with our soft sales levels, but continue to closely manage our balance sheet.
Hansen continued, “We are disappointed with our sales performance this past quarter but are encouraged as we continue to narrow our losses and introduce new products. Our broadcast business had the biggest impact between years reflecting competitive effects at each of our key broadcast OEM’s. Our military sales this past quarter were relatively flat both sequentially and versus the prior year. Our DiMedaä product was sold into a few new military programs this past quarter but we continue to see cyclical spending with some of our legacy customers. The NAS line however continues to show year over year growth. We have completed and are releasing two new products that will allow us to pursue new opportunities at both OEM and newer distribution channel prospects, however we do not expect significant sales from these prospects over the next quarter as they move through the qualification process. As these new products come to market our focus is shifting from engineering to sales development.
Hansen added, “We have continued to evaluate new strategic opportunities to strengthen our market position that are complementary to our technology capabilities, leverage our strong brand name in digital media applications and expand our distribution channels. We believe the combination of internal innovation, partnerships and third-party alliances are all key elements for future growth of the Company. We are committed to growth through completion of our common storage software platform, development of alliances and selective acquisition opportunities to maximize shareholder value.”
Hansen concluded, “Our financial position and liquidity remain strong. We remain focused on achieving break-even operating performance in the short term and positioning the Company for long term sustainable profitability.”
The Company will host a conference call on February 2, 2005 at 11:00 a.m. Eastern Time and 10:00 a.m. Central Time, to discuss this release. The conference call will be broadcast live via the Internet at www.ciprico.com. The conference call will also be available live via telephone at 800-257-1836. A replay will be available through February 9, 2005 at 800-405-2236, replay code 11023335.
Certain statements in this news release are forward-looking and should be read in conjunction with cautionary statements in Ciprico’s SEC filings, reports to shareholders and other news releases. Such forward-looking statements, which reflect our current view of future events and financial performance, involve known and unknown risks that could cause actual results and facts to differ materially from those expressed in the forward-looking statements for a variety of reasons. Some of these reasons include the ability to achieve and maintain profitability; the impact of geopolitical and economic factors affecting the markets in which we are concentrated; the impact on revenues and earnings of the timing of product enhancements and new product releases; market acceptance of new products; sales and distribution issues; competition; dependence on suppliers; limited backlog and the historic and recurring pattern of a disproportionate percentage of total quarterly sales occurring the last month and weeks of a quarter. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Ciprico undertakes no obligation to update publicly or revise any forward-looking statements.
About Ciprico
Ciprico designs and delivers products, services and solutions for high performance digital media workflows. Ciprico is headquartered in Minneapolis, MN. More information about Ciprico is available at www.ciprico.com
For Additional Information:
James W. Hansen
CEO
(763) 551-4000 | | Thomas S. Wargolet
Vice President – Finance and CFO
(763) 551-4000 |
(more)
CIPRICO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended
December 31, | |
(Amounts in thousands except per share amounts) | | 2004 | | 2003 | |
| | | | | |
NET SALES | | $ | 3,018 | | $ | 6,042 | |
Cost of sales | | 1,924 | | 3,736 | |
| | | | | |
GROSS PROFIT | | 1,094 | | 2,306 | |
| | | | | |
OPERATING EXPENSES: | | | | | |
Research and development | | 840 | | 1,387 | |
Sales and marketing | | 573 | | 1,410 | |
General and administrative | | 246 | | 501 | |
Restructuring (1) | | (466 | ) | — | |
Total operating expenses | | 1,193 | | 3,298 | |
| | | | | |
LOSS FROM OPERATIONS | | (99 | ) | (992 | ) |
Other income, primarily interest | | 120 | | 100 | |
| | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | 21 | | (892 | ) |
Income tax benefit | | — | | — | |
| | | | | |
NET INCOME (LOSS) | | $ | 21 | | $ | (892 | ) |
| | | | | |
Shares used to calculate loss per share: | | | | | |
Basic and diluted | | 4,743 | | 4,689 | |
| | | | | |
NET INCOME (LOSS) PER COMMON SHARE: | | | | | |
Basic and diluted | | $ | — | | $ | (.19 | ) |
(1) Represents adjustment to previously recorded lease abandonment charges associated with sublease agreement executed during the period.
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SALES INFORMATION
Comparative information on sales by market and geographic location for the period ended December 31 are shown in the charts below (in millions).
| | 2004 | | 2003 | |
Market | | Sales | | % of Total | | Sales | | % of Total | |
Broadcast/Entertainment | | $ | 1.1 | | 37 | % | $ | 3.8 | | 63 | % |
Military/Government | | 1.9 | | 63 | | 1.8 | | 30 | |
Other | | 0.0 | | 0 | | 0.4 | | 7 | |
Total | | $ | 3.0 | | 100 | % | $ | 6.0 | | 100 | % |
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CIPRICO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands) | | December 31,
2004 | | September 30,
2004 | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 4,675 | | $ | 4,394 | |
Marketable securities and short term investments | | 15,906 | | 16,946 | |
Accounts receivable, less allowance | | 1,324 | | 1,665 | |
Inventories | | 1,736 | | 1,330 | |
Other current assets | | 310 | | 288 | |
Total current assets | | 23,951 | | 24,623 | |
Property and equipment, net | | 402 | | 498 | |
Other assets | | 41 | | 41 | |
| | $ | 24,394 | | $ | 25,162 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 1,391 | | $ | 1,432 | |
Accrued expenses | | 1,841 | | 2,581 | |
Deferred revenue | | 260 | | 292 | |
Total current liabilities | | 3,492 | | 4,305 | |
| | | | | |
Shareholders’ equity: | | | | | |
Capital stock | | 47 | | 47 | |
Additional paid-in capital | | 35,123 | | 35,118 | |
Retained deficit | | (14,238 | ) | (14,259 | ) |
Deferred compensation from restricted stock | | (30 | ) | (49 | ) |
Total shareholders’ equity | | 20,902 | | 20,857 | |
| | $ | 24,394 | | $ | 25,162 | |
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CIPRICO INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months Ended
December 31, | |
(In thousands) | | 2004 | | 2003 | |
| | | | | |
Cash flows for operating activities: | | | | | |
Net income (loss) | | $ | 21 | | $ | (892 | ) |
Depreciation and amortization | | 98 | | 367 | |
Changes in operating assets and liabilities | | (888 | ) | 837 | |
| | | | | |
Net cash flows provided by (used in) operating activities | | (769 | ) | 312 | |
| | | | | |
Cash flows from investing activities: | | | | | |
| | | | | |
Equipment purchases | | (13 | ) | (72 | ) |
Purchases of marketable securities | | (5,239 | ) | (6,719 | ) |
Proceeds from sale or maturity of marketable securities | | 6,302 | | 5,033 | |
| | | | | |
Net cash flows provided by (used in) investing activities | | 1,050 | | (1,758 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
| | | | | |
Proceeds from issuance of common stock | | — | | 92 | |
| | | | | |
Net cash flows provided by (used in) financing activities | | — | | 92 | |
| | | | | |
Net increase (decrease) in cash and cash equivalents | | 281 | | (1,354 | ) |
| | | | | |
Cash and cash equivalents at beginning of period | | 4,394 | | 5,159 | |
| | | | | |
Cash and cash equivalents at end of period | | 4,675 | | 3,805 | |
| | | | | |
Marketable securities, current | | 15,906 | | 16,900 | |
Marketable securities, non-current | | — | | 1,552 | |
| | | | | |
Total cash and marketable securities | | $ | 20,581 | | $ | 22,257 | |
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