SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 30, 2003
VIXEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 000-27221 84-1176506
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
11911 North Creek Parkway South
Bothell, Washington 98011
(Address of principal executive office)
(425) 806-5509
(Registrant's telephone number including area code)
Item 9. Regulation FD Disclosure
On January 30, 2003, Vixel Corporation, a Delaware corporation, issued
a press release reporting financial results for its fourth quarter and fiscal
year ended December 29, 2002. The text of the press release is set forth below.
January 30, 2003
Vixel Corporation Announces Fourth Quarter and Fiscal Year 2002 Results
21% sequential quarterly increase in revenue as company
builds upon its embedded storage switch leadership position
Bothell, WA, January 30, 2003 - Vixel Corporation (Nasdaq: VIXL), the leading
provider of embedded storage switching technologies, today announced financial
results for its fourth quarter and fiscal year ended December 29, 2002.
Revenue for the fourth quarter of 2002 was $6.1 million, a 21% increase compared
with $5.0 million in the third quarter. Revenue in the fourth quarter of 2001
was $4.7 million. Gross margin was 49.4% of total revenue in the fourth quarter
of 2002, compared with 49.3% in the third quarter of 2002 and 40.1% in the
fourth quarter of 2001.
Net loss for the fourth quarter of 2002 was $2.5 million, or $0.10 per share.
This compares to a net loss of $2.6 million or $0.11 per share in the third
quarter of 2002, and a net loss of $4.4 million or $0.19 per share for the
fourth quarter of 2001.
For the 12 months ended December 29, 2002, total revenue, which consisted
entirely of systems revenue, was $20.6 million, compared with systems revenue of
$16.8 million in 2001. Total revenue in 2001 was $21.8 million, which included
$5.0 million of component transceiver revenue. During 2001, the company
successfully completed its transition out of the component transceiver business.
Net loss for the 12 months ended December 29, 2002 was $9.7 million or $0.40 per
share, compared with a net loss of $21.9 million or $0.93 per share for the 12
months ended December 30, 2001. Adjusted net loss for fiscal 2002, excluding a
$4.5 million gain on sale of the company's SAN InSite assets and $1.7 million of
restructuring expenses, was $12.5 million, or $0.52 per share.
"We are actively engaged in product evaluation and test of our InSpeed(TM)
products with almost all of the top-tier storage OEMs as we execute our strategy
to solidify Vixel's position of leadership in the embedded storage switch
market," said Jim McCluney, president and CEO of Vixel Corporation. "Having
pioneered this new and critical technology, InSpeed, and with four OEM Alpha
Design Agreements already in place, our existing products are gaining widespread
acceptance even as we invest in new products and relationships, such as the
recently announced agreement with Marvell for the development of our next
generation products. Our newly released InSpeed SOC 320 has already begun
shipping to five OEMs for product and design evaluation and test for their
target applications."
Kurt Adams, CFO of Vixel Corporation, added, "Vixel has made tremendous progress
over the last two years. Our systems revenue has grown sequentially for seven
consecutive quarters; we expanded our gross margins from 35% of revenue in 2001
to 48% in 2002; we reduced our costs of ongoing operations by 26% year over year
and we significantly improved our bottom line. We accomplished these
improvements during a period in which we transitioned to a new line of products
for a new market and divested of a legacy software line."
Adams went on to say, "This progress is a clear indication of Vixel's ability to
effectively adapt to and capitalize on market opportunities to expand the
application of its core technologies. These trends reflect our success in
implementing strategic initiatives that drive revenue while effectively managing
resources. Looking forward to 2003, we are more confident than ever that we have
the infrastructure in place to continue to leverage our technological
innovation, broaden our product platforms and serve the increasing market demand
for our products."
Also today, the company announced the repurchase of approximately 1.4 million
shares of outstanding common stock from the Company's chief executive officer
and chief financial officer in exchange for approximately $3.4 million of notes
owed to the Company.
RECENT HIGHLIGHTS
On January 28th, Vixel announced completion of a new technology development
agreement with Marvell Semiconductor, to use Marvell's High Speed SERDES
semiconductor technology to deploy next generation storage products that address
the requirements of leading storage solution providers. Marvell is a global
semiconductor provider with a diverse portfolio of advanced technology offerings
that include extreme broadband solutions for the communications industry, such
as low power multi Gigabits physical layer technologies, and storage
infrastructure technologies, such as Serial ATA (SATA).
On January 27th, Vixel announced the general availability of the next generation
InSpeed switch-on-a-chip. The new 20-port InSpeed SOC 320 includes advanced
features and functionality that make it easier than ever before for OEMs to
build ultra-reliable switched-back-end storage architectures. The new SOC 320
has already shipped to key customers for evaluation and testing, reflecting
customer acceptance and anticipation developed the past quarter for this new
product. At present the top five storage OEMs have InSpeed in-house for
evaluation and testing.
Since Vixel's last earnings announcement on October 22, 2002, four Alpha
agreements have been signed with key OEMs who are investing in the formal
evaluation or implementation of InSpeed for their next generation of products.
For Vixel, these Alpha agreements represent a key milestone in the design-in
process.
Vixel also recently announced that it has signed a technology development
agreement with Marvell Corporation, a leading semiconductor company. The
agreement establishes both a technology development effort and foundry source
for Vixel's future generation of embedded storage switching technology
innovations.
In early January, Vixel announced that the company partnered with LangChao
Electronics, China's leading national supplier of server products, to bring new
SAN solutions to the Chinese market. Vixel's 12-port InSpeed-based Model 335 and
8-port 9050-FF switches will be integrated with LangChao's NF and SP series
servers to create new 2 Gb/s Fibre Channel server clustering and tape back-up
solutions.
On November 18, 2002, Vixel announced its innovative storage switch technology
IP portfolio was bolstered when the company was awarded U.S. Patent No.
6,470,007, entitled "Interconnect System for Fiber Channel Arbitrated Loop
Including Private Loop Devices." The new patent protects the exclusivity of
several core elements of Vixel's switching technology and offers its current
InSpeed customers a natural evolution to even more scalable and reliable
switched storage architectures. The patent also describes innovations that will
enable the merging of Internet Protocol (IP) and Fibre Channel based networks.
In late October, the company adopted a stock repurchase program to purchase up
to 2.0 million shares of its common stock. The repurchase program, which
underscores the confidence Vixel's management has in the Company's long-term
outlook, is expected to continue through the end of 2003. Repurchases are to be
made at the discretion of management as market conditions warrant. During the
fourth quarter approximately 250,000 shares were repurchased.
In mid-October, Vixel announced that NEC Corporation would OEM Vixel's
InSpeed-based 315 switch into clustering solutions in its low and mid-level IA
Clustering platform offerings. Also in October, Eurologic Systems certified
Vixel's InSpeed-based Model 335 storage switch for inclusion in its SANbloc
Series of 2 Gb/s Storage Solution offerings.
Finally, in October, Hewlett Packard, the world's leading storage provider and
the first SAN provider to implement InSpeed technology, announced that its new
StorageWorks EVA offering had achieved the highest benchmark performance levels
in an comparative independent test. The new EVA line from HP includes a switched
back-end architecture created with InSpeed technology.
- -------------------------------------------------------------------------------
Q4 02 RESULTS CONFERENCE CALL
Vixel Corporation will host a conference call at 5:00 p.m. Eastern Time (2:00
p.m. Pacific Time) on January 30, 2003 to discuss its fourth quarter and
year-end fiscal 2002 results. The call will feature remarks by Jim McCluney,
president and CEO, and Kurt Adams, Chief Financial Officer. The dial-in number
is 888-417-2317 or 973-935-2100 for international callers. A live webcast of the
call may be found in the Investor Relations section of the Company's website,
www.vixel.com. A replay will also be available following the conclusion of the
call.
- -------------------------------------------------------------------------------
Except for historical information contained herein, this news release contains
forward-looking statements that are subject to risks and uncertainties that may
cause actual results to differ materially from the results discussed in the
forward-looking statements. Factors that may cause such a difference include
risks affecting performance and market acceptance of Vixel's products, Vixel's
ability to meet its quality and performance standards, development of the
storage area network, or SAN market, the competitiveness and performance of
Vixel's products in the rapidly changing SAN market, the ability of Vixel to
meet evolving product standards required by customers and others involved in the
distribution channel for SAN products, the ability of Vixel to increase its
customer base for its InSpeed technology-based products and the acceptance of
embedded storage solutions generally. Further information on the factors and
risks that could affect Vixel's business, financial condition and results of
operations, are contained in Vixel's Annual Report on Form 10-K and most recent
Form-10Q, which are available at www.sec.gov.
- -------------------------------------------------------------------------------
About Vixel Corporation
Vixel Corporation is creating disruptive storage networking technologies that
deliver easily managed, easily integrated, high performance interconnectivity at
highly competitive prices. Vixel's award winning InSpeedTM technology is a
unique switching architecture designed from the ground-up as an effortlessly
managed storage interconnect solution. Optimized for the needs and price
requirements of storage and server suppliers, InSpeed has been designed to
overcome cost/performance barriers inhibiting broad storage networking adoption.
Vixel is an industry leader in providing a new breed of embedded storage switch
products that improve data access and availability to business applications -
regardless of scale. Vixel also offers a new generation of high-performance
storage switches designed for businesses of all sizes that need affordable and
simple Storage Area Networks (SANs). As a leading provider of SAN solutions,
Vixel's comprehensive portfolio of technology offerings also includes
multivendor certified solutions and Fibre Channel switches and hubs that deliver
reliable, interoperable solutions to its customers and partners. Vixel products
and technologies are used by major system suppliers including Avid Technology,
BlueArc, HP, Lucent, NEC, Network Appliance and Sun Microsystems and are
available worldwide through its network of value-added resellers, alliances and
OEMs. Vixel is an ISO 9001 certified company.
For more information, visit Vixel's web site at www.vixel.com. Vixel Corporation
is headquartered at 11911 North Creek Parkway South, Bothell, Washington 98011
and can be contacted by phone at 425-806-5509 or e-mail at marketing@vixel.com.
All logos, trademarks and names contained herein are the property of their
respective owners.
(financial tables to follow)
Vixel Corporation
Statement of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
---------------------------------- ---------------------------------
December 29, December 30, December 29, December 30,
2002 2001 2002 2001
-------------- --------------- -------------- --------------
Revenue:
Systems $ 6,062 $ 4,651 $ 20,606 $ 16,769
Components - - - 5,034
-------------- --------------- -------------- --------------
Total revenue 6,062 4,651 20,606 21,803
Cost of revenue (1) 3,068 2,794 10,715 14,069
-------------- --------------- -------------- --------------
Gross profit 2,994 1,857 9,891 7,734
-------------- --------------- -------------- --------------
Operating expenses:
Research and development (2) 3,067 3,288 11,307 14,657
Selling, general and administrative (3) 2,412 2,723 10,699 14,423
Amortization of goodwill (2001 only)
and other intangibles 109 191 436 820
Amortization of stock-based compensation 81 278 591 1,353
-------------- --------------- -------------- --------------
5,669 6,480 23,033 31,253
Restructuring costs - - 1,742 -
Loss (gain) on sale of assets (1) 5 (4,445) 5
-------------- --------------- -------------- --------------
Total operating expenses 5,668 6,485 20,330 31,258
-------------- --------------- -------------- --------------
Loss from operations (2,674) (4,628) (10,439) (23,524)
Other income, net 187 232 751 1,596
-------------- --------------- -------------- --------------
Net loss $ (2,487) $ (4,396) $ (9,688) $ (21,928)
============== =============== ============== ==============
Basic and diluted net loss per share $ (0.10) $ (0.19) $ (0.40) $ (0.93)
============== =============== ============== ==============
Weighted-average shares outstanding 24,571 23,614 24,106 23,504
============== =============== ============== ==============
(1) Includes amortization of stock-based compensation of $2 and $5 for the
three months ended December 29, 2002 and December 30, 2001, respectively,
and $10 and $28 for the twelve months ended December 29, 2002 and December
30, 2001, respectively.
(2) Excludes amortization of stock-based compensation of $2 and $7 for the
three months ended December 29, 2002 and December 30, 2001, respectively,
and $13 and $32 for the twelve months ended December 29, 2002 and December
30, 2001, respectively.
(3) Excludes amortization of stock-based compensation of $79 and $271 for the
three months ended December 29, 2002 and December 30, 2001, respectively,
and $578 and $1,321 for the twelve months ended December 29, 2002 and
December 30, 2001, respectively.
Vixel Corporation
Balance Sheet
(in thousands)
(unaudited)
December 29, December 30,
2002 2001
--------------- ---------------
Assets
Current assets:
Cash and investments $ 16,401 $ 25,978
Accounts receivable, net 2,782 2,995
Inventory 1,503 2,951
Note receivable 2,500 -
Prepaid expenses and other current assets 1,488 1,271
--------------- ---------------
Total current assets 24,674 33,195
Property and equipment, net 2,243 4,299
Goodwill, intangibles and other assets, net 568 1,271
--------------- ---------------
Total assets $ 27,485 $ 38,765
=============== ===============
Liabilities and stockholders' equity Current liabilities:
Capital leases, current portion $ 178 $ 1,340
Accounts payable 2,900 4,046
Accrued liabilities 3,507 4,022
Deferred revenue 735 1,147
Accrued restructuring costs, current portion 307 -
--------------- ---------------
Total current liabilities 7,627 10,555
Capital leases, net of current portion 44 184
Accrued restructuring costs, net of current portion 306 -
--------------- ---------------
Total liabilities 7,977 10,739
--------------- ---------------
Stockholders' equity:
Capital stock 153,270 152,100
Accumulated deficit (133,762) (124,074)
--------------- ---------------
Total stockholders' equity 19,508 28,026
--------------- ---------------
Total liabilities and stockholders' equity $ 27,485 $ 38,765
=============== ===============
# # #
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 30, 2003 VIXEL CORPORATION
By: /s/ Kurtis L. Adams
--------------------------
Kurtis L. Adams
Chief Financial Officer,
Vice President of Finance,
Treasurer and Secretary