EXHIBIT 99.1
FOR IMMEDIATE RELEASE
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Editorial Contact: W. David Wright
Reporting and Investor Relations Manager
Phone: (800) 334-9191, (619) 453-9191
Fax: (619) 453-9294
Email: dwright@andataco.com
ANDATACO, Inc. Reports Second Quarter Results
SAN DIEGO - June 15, 1999 - ANDATACO, INC. (OTC BB: ANDA) today reported results
for the second fiscal quarter of 1999, which ended April 30, 1999.
Revenues for the quarter ended April 30, 1999 were $14,992,000, with a net loss
of $894,000, or $0.04 per share, compared to revenues of $20,996,000, with a
net loss of $189,000, or $0.01 per share, for the second quarter of fiscal 1998.
Net loss for the quarter ended April 30, 1999 includes $418,000 for amortization
of goodwill and $426,000 for depreciation. Net loss for the quarter ended April
30, 1998 includes $418,000 for amortization of goodwill and $399,000 for
depreciation.
Revenues for the six-month period ended April 30, 1999 were $31,370,000, with a
net loss of $1,591,000, or $0.07 per share, compared to revenues of $42,756,000,
with a net loss of $609,000 or $0.03 per share for the first six months ended
April 30, 1998. The net loss for the first six months of fiscal 1999 includes
$836,000 of amortization of goodwill and $879,000 of depreciation. The net loss
for the first six months of fiscal 1998 included $836,000 of goodwill
amortization and depreciation expense of $769,000.
During the first six months of fiscal 1999, the Company generated $873,000 of
cash from operations, primarily from improvement in working capital. Offsetting
the cash generated from operations was cash used to reduce the Company's line of
credit by $462,000 and purchases of property and equipment of $411,000. At April
30, 1999, the Company was not in compliance with the financial covenant
concerning the Company's minimum net tangible worth; however, effective June 11,
1999, the bank notified the Company that it will temporarily waive its rights
and remedies associated with this default subject to further negotiations. The
bank and the Company
are currently negotiating the terms and conditions of the temporary waiver,
which will include applying a default interest rate of 10.5% during the waiver
period.
Harris Ravine, Chief Executive Officer and Chairman of the Company's Board of
Directors, commented, "although the financial results for the second quarter are
disappointing, we are pleased with the progress we have made in gaining customer
acceptance of our Storage Area Network Solutions as well as the integration of
the nStor Technologies, Inc. ("nStor") product line.
"Andataco has been advised that nStor completed its purchase of W. David Sykes'
block of shares in Andataco, (representing 75.7% of the outstanding common stock
of Andataco, Inc.) and the note in the principal amount of $5,196,000 owed by
Andataco, Inc. to Mr. Sykes, as of June 8, 1999 and that nStor has stated that
it intends to acquire the remaining outstanding shares of Andataco, for an
amount to be determined by an independent valuation of the Andataco shares, in a
transaction which should be completed by September 30, 1999. In conjunction with
the change in control the existing members of the board of directors have
indicated an intention to tender their resignation. The Company is in the
process of working out an orderly transition of the board of directors which is
expected prior to month's end.
"Steps are underway to affect the integration of the nStor product line with the
Andataco product line which will allow us to offer a complete line of storage
solutions to our customers."
ANDATACO is a global leader in innovative storage solutions for Windows NT and
UNIX environments. The company offers SCSI, RAID and RAID-ready disk arrays,
tape backup and restore products and storage management software. ANDATACO is
leading the way in the latest SCSI technology storage systems serving customers'
current needs and providing a cost-effective product migration next generation
SCSI architectures.
Beyond SCSI, ANDATACO offers customized Storage Area Networks (SAN) using Fibre
Channel and SCSI technologies from best-of-breed industry leading manufacturers.
Since 1986, ANDATACO has provided more than 10,000 customers with industry-
leading technology to protect mission critical data and outstanding service and
support provided by over 200 employees world-wide. To learn more about
ANDATACO's products and the OEM "Keep the Drive Alive" Partnership Program,
please visit http://www.andataco.com
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This press release contains forward-looking statements that are subject to risks
and uncertainties. These forward-looking statements include the Company's
strategy, and goals of increasing sales and sales productivity and the intention
stated by nStor with regard to a possible acquisition of the remaining shares of
Andataco. There are a number of factors that could cause actual results to
differ materially from any forward-looking statements contained in this release.
Any such statements are based on the assumptions and expectations of the
Company's management at the time these statements are made. These factors
include, but are not limited to: rapid technological and market changes which
could shorten the life cycle of existing products; dependence on key personnel
and suppliers; competitive pressures; continued new product introductions;
market acceptance of the Company's new product introductions; and new product
introductions by competitors. Additional information on potential factors that
could affect the Company's financial results are included in the Company's
Annual Report to the SEC on Form 10-K for the fiscal year ended October 31, 1998
and the Company's other periodic reports.
ANDATACO, INC.
Consolidated Balance Sheet
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April 30, October 31,
1999 1998
(Unaudited)
Assets
Current assets:
Cash....................................................................................... $ 23,000 $ 23,000
Accounts receivable, net................................................................... 6,257,000 10,628,000
Inventories................................................................................ 6,451,000 4,923,000
Other current assets....................................................................... 1,056,000 634,000
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Total current assets...................................................................... 13,787,000 16,208,000
Goodwill, net............................................................................... 5,156,000 5,993,000
Property and equipment, net................................................................. 2,947,000 3,415,000
Other assets................................................................................ 96,000 66,000
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$21,986,000 $25,682,000
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable .......................................................................... $ 6,515,000 $ 7,853,000
Accrued expenses .......................................................................... 2,420,000 2,610,000
Deferred revenue .......................................................................... 2,102,000 2,259,000
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Total current liabilities ................................................................ 11,037,000 12,722,000
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Long-term liabilities:
Bank line of credit ....................................................................... 5,000,000 5,462,000
Shareholder loan .......................................................................... 5,196,000 5,196,000
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Total long-term liabilities .............................................................. 10,196,000 10,658,000
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Shareholders' equity:
Common stock .............................................................................. 238,000 238,000
Additional paid in capital ................................................................ 10,149,000 10,107,000
Accumulated deficit ....................................................................... (9,634,000) (8,043,000)
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Total shareholders' equity ............................................................... 753,000 2,302,000
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$21,986,000 $25,682,000
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ANDATACO, INC.
Consolidated Statement of Operations
(Unaudited)
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Three months ended Six months ended
April 30, April 30,
1999 1998 1999 1998
Sales................................. $14,992,000 $20,996,000 $31,370,000 $42,756,000
Cost of sales......................... 10,503,000 14,325,000 22,375,000 29,300,000
----------- ----------- ----------- -----------
Gross profit ....................... 4,489,000 6,671,000 8,995,000 13,456,000
----------- ----------- ----------- -----------
Operating expenses:
Selling, general and
administrative ..................... 4,879,000 6,048,000 9,432,000 12,463,000
Rent expense to shareholder ......... 83,000 83,000 166,000 166,000
Research and development ............ 184,000 473,000 506,000 914,000
----------- ----------- ----------- -----------
Total operating expenses ........... 5,146,000 6,604,000 10,104,000 13,543,000
----------- ----------- ----------- -----------
(Loss) income from operations......... (657,000) 67,000 (1,109,000) (87,000)
Interest expense ..................... 120,000 139,000 248,000 288,000
Interest expense to shareholder ...... 117,000 117,000 234,000 234,000
----------- ----------- ----------- -----------
Net loss.............................. $ (894,000) $ (189,000) $(1,591,000) $ (609,000)
=========== =========== =========== ===========
Net loss per share (basic
and diluted) ........................ $(0.04) $(0.01) $(0.07) $(0.03)
=========== =========== =========== ===========
Shares used in computing
net loss per share (basic
and diluted
.................................... 23,819,399 23,819,399 23,819,399 23,819,399
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