For Immediate Release
LANTRONIX, INC. REPORTS FISCAL 2004 THIRD QUARTER RESULTS
RESERVE ADJUSTMENTS REDUCE EPS NET LOSS TO $0.01 AND CONTRIBUTE TO POSITIVE
INCOME FROM CONTINUING OPERATIONS; FOUR NEW PRODUCT LINES LAUNCHED
IRVINE, CA, MAY 6, 2004 - Irvine, CA - Lantronix, Inc. (NASDAQ: LTRX) today
reported results for its third fiscal quarter ended March 31, 2004:
- - Revenues for the three-month period ended March 31, 2004 were $12.3
million, flat with the same period last year when the company recorded
$12.3 million in revenues.
- - Net loss was reduced to $(553,000), or $(0.01) per share for the third
fiscal 2004 quarter, compared with net loss of $(9.9) million, or $(0.18)
per share for the same quarter in fiscal 2003. Results for the quarter
ended March 31, 2004 included favorable accounting adjustments to
previously recorded restructuring reserves, and adjustments to expenses
related to the disposition of the Premise business unit during the quarter.
- - Cash balance was reduced during the quarter by $390,000, in line with the
company's earlier guidance.
- - Four new IT Management and Device Networking product lines were launched
during the quarter.
As previously disclosed, the company completed the sale of its Premise
subsidiary in the March 2004 quarter, which has been reclassified and is
presented as discontinued operations for all periods.
For the third fiscal quarter ended March 31, 2004, the company reported
revenues of $12.3 million and net income from continuing operations of $116,000,
or $0.00 per share, compared with revenues of $12.3 million and net loss from
continuing operations of $(7.8) million, or $(0.14) per share for the third
fiscal 2003 quarter and revenues of $12.5 million and net loss from continuing
operations of $(1.5) million, or $(0.03) per share for the prior consecutive
quarter ended December 31, 2003.
Net loss from discontinued operations of the company's Premise subsidiary,
which was sold during the quarter, was $(669,000), or $(0.01) per share, and
$(2.1) million, or $(0.04) per share for the third fiscal quarters ended March
31, 2004, and 2003, respectively, and $(3.7) million, or $(0.06) per share for
the quarter ended December 31, 2003.
Net loss was $(553,000), or $(0.01) per share, and $(9.9) million, or
$(0.18) per share for the third fiscal quarters ended March 31, 2004, and 2003,
respectively, and $(5.3) million, or $(0.09) per share for the quarter ended
December 31, 2003.
For the nine month period ended March 31, 2004, Lantronix recorded revenues
of $37.0 million and net loss from continuing operations of $(3.7) million, or
$(0.07) per share, compared with revenues of $37.6 million and a net loss from
continuing operations of $(24.4) million, or $(0.45) per share, for the same
period last year.
Net loss from discontinued operations was $(5.2) million, or $(0.09) per
share, and $(4.0) million, or $(0.08) per share for the nine month periods ended
March 31, 2004, and 2003, respectively.
Net loss was $(8.9) million, or $(0.16) per share, and $(28.4) million, or
$(0.53) per share for the nine month periods ended March 31, 2004, and 2003,
respectively.
Cash and cash equivalents and marketable securities decreased approximately
$390,000 during the quarter ended March 31, 2004, compared with a decrease of
$5.5 million for the same period a year earlier, and in line with the company's
earlier guidance of less than $1 million. The company borrowed $500,000 from its
line of credit to finance a contractual settlement.
The company settled certain contractual obligations and reduced previously
accrued restructuring costs by $2.1 million in the March 2004 quarter.
During the quarter, the company launched four new IT Management and Device
Networking product lines, the most in its 15-year history:
- - WiPort , the industry's first wireless device networking solution to offer
IEEE 802.11 (WiFi) wireless and wired connectivity in a complete compact
integrated module. "We believe the advent of affordable wireless edge
technology and infrastructure components serve to eliminate one of the key
barriers to widespread adoption of device networking," said Nussbaum. "With
the introduction of the WiPort product line, Lantronix is well positioned
to capitalize on the explosive growth in wireless infrastructure and
applications."
- - The SecureBox product family, the world's first and currently only U.S.
NIST Advanced Encryption Standard (AES) certified device servers. The AES
certification is required for all federal agencies to ensure secure and
private electronic transmission of data and is being adopted widely by
non-government organizations as well. In late March, the company announced
that Honeywell, a global leader in diversified technology and
manufacturing, selected the Lantronix Secure Box product family to provide
enterprise class security management and access control solutions for the
Honeywell Enterprise Building Integrator Suite.
- - SecureLinx Remote KVM (Keyboard Video Mouse) product line, offering a
cost-effective remote management solution without the hassle of special
cabling or proprietary software. "With the launch of the SecureLinx Remote
KVM family, Lantronix has established itself as a complete provider of
remote management solutions for both Windows and non-Windows operating
environments," said Nussbaum.
- - The industry's first NEBS Level 3 compliant ActiveLinx console server
product line. Level three NEBS is the most rigorous standard developed by
the Networking Equipment Building Systems association, which qualifies
equipment under extreme environmental conditions for the telecommunications
industry.
"While we experienced flat overall revenue in the March quarter as a result
of normal holiday seasonality, year to date revenues from the on-going core IT
Management and Device Networking business increased modestly as we simplified
the business and exited certain activities," stated Marc Nussbaum, president and
CEO. "With a portfolio of new and compelling product lines, continued quarterly
double digit growth in sales of our XPort product family, and our improving
operational fundamentals, we are confident that Lantronix has the right pieces
in place to grow this business going forward."
(a) FOURTH FISCAL 2004 QUARTER OUTLOOK
The following statements are forward-looking and are based on current
expectations. Statements about future revenues, product successes or sales, or
cash usage are subject to variations in any specific period. Actual results may
differ materially from those described below. The company undertakes no
obligation to update this release.
"With the launch and anticipated market acceptance of our new products, we
look forward to continued improvement in our core business and operational
fundamentals with cash usage in the range of $1 million in the June quarter,"
said Nussbaum.
About Lantronix
Lantronix, Inc. (Nasdaq: LTRX) is a provider of hardware and software
solutions ranging from systems that allow users to remotely manage network
infrastructure equipment to technologies that network-enable products and
appliances. Lantronix was established in 1989, and its worldwide headquarters
are in Irvine, Calif. For more information, visit the company on the Internet at
www.lantronix.com.
2. Cautionary Note Regarding Forward-looking Statements
Certain statements in this press release may be considered "forward-looking
statements" within the meaning of the federal securities laws. The
forward-looking statements include without limitation statements regarding: our
ability to grow the business; our continued improvement in our core business and
operational fundamentals; and our expected cash usage of approximately $1
million in the fourth quarter of fiscal 2004. These forward-looking statements
are based on the opinions and estimates of management at the time the statements
are made and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated in the
forward-looking statements.
Factors that could affect Lantronix's actual results include, but are not
limited to, business and economic conditions and growth trends in our industry
and target markets, as well as the geographic regions we serve; variations in
customer demand for products and services; changes in customer order patterns or
customer mix; insufficient, excess or obsolete inventory; litigation involving
patents, intellectual property, antitrust, stockholder and other matters,
including the impact of pending litigation; our ability to successfully manage
costs and expenses; new product introductions by our competitors or entry of new
competitors into the markets for our products; possible development or marketing
delays relating to our product offerings; continued or increased reductions in
spending in the networking sector; significant turnover of our key employees;
unpredictability of future quarters; possible defects in our product offerings.
In addition, for a more detailed description of the risks and uncertainties
that could cause our actual results to differ materially from those anticipated
in the forward-looking statements, please see the "Risk Factors" described in
our Securities and Exchange Commission filings, including our Annual Report on
Form 10-K for the fiscal year ended June 30, 2003 and our quarterly reports on
Form 10-Q for the quarters ended subsequent to June 30, 2003. All
forward-looking statements included in this release are based upon information
available to Lantronix as of the date of the release, and we assume no
obligation to update any such forward-looking statement to reflect any event or
circumstance occurring after the date of this press release.
# # #
Lantronix is a registered trademark of Lantronix, Inc. All other trademarks are
properties of their respective owners.
Media Contacts:
Jim Kerrigan, CFO
Lantronix
949-453-3990
SELECTED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS)
MARCH 31, JUNE 30,
2004 2003
---------- ----------
Cash and cash equivalents and marketable securities $ 12,863 $ 14,078
Accounts receivable, net. . . . . . . . . . . . . . 3,891 3,818
Inventories . . . . . . . . . . . . . . . . . . . . 7,357 6,011
Goodwill. . . . . . . . . . . . . . . . . . . . . . 9,488 9,488
Purchased intangible assets, net. . . . . . . . . . 2,561 4,275
Long-term investments . . . . . . . . . . . . . . . 5,007 5,458
Total assets. . . . . . . . . . . . . . . . . . . . 52,606 62,856
Accumulated deficit . . . . . . . . . . . . . . . . (149,281) (140,424)
Total stockholders' equity. . . . . . . . . . . . . 31,327 37,717
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2004 2003 2004 2003
-------- -------- -------- ---------
Net revenues . . . . . . . . . . . . . . . . . $12,310 $12,340 $37,009 $ 37,624
Cost of revenues . . . . . . . . . . . . . . . 5,393 9,226 18,292 24,834
-------- -------- -------- ---------
Gross profit . . . . . . . . . . . . . . . . . 6,917 3,114 18,717 12,790
-------- -------- -------- ---------
Operating expenses:
Selling, general and administrative. . . . . 6,572 7,225 18,027 22,359
Research and development . . . . . . . . . . 2,042 2,260 5,587 7,367
Stock-based compensation . . . . . . . . . . 89 490 307 1,270
Amortization of purchased intangible assets. 29 301 118 557
Restructuring charges. . . . . . . . . . . . (2,098) 120 (2,098) 4,938
-------- -------- -------- ---------
Total operating expenses . . . . . . . . . 6,634 10,396 21,941 36,491
-------- -------- -------- ---------
Income (loss) from operations. . . . . . . . . 283 (7,282) (3,224) (23,701)
Interest income (expense), net . . . . . . . . 8 20 43 287
Other income (expense), net. . . . . . . . . . (103) (527) (283) (935)
-------- -------- -------- ---------
Income (loss) before income taxes. . . . . . . 188 (7,789) (3,464) (24,349)
Provision for income taxes . . . . . . . . . . 72 14 208 62
-------- -------- -------- ---------
Income (loss) from continuing operations . . . 116 (7,803) (3,672) (24,411)
Loss from discontinued operations. . . . . . . (669) (2,118) (5,185) (4,034)
-------- -------- -------- ---------
Net loss . . . . . . . . . . . . . . . . . . . $ (553) $(9,921) $(8,857) $(28,445)
======== ======== ======== =========
Basic income (loss) per share:
Income (loss) from continuing operations . . $ 0.00 $ (0.14) $ (0.07) $ (0.45)
Loss from discontinued operations. . . . . . (0.01) (0.04) (0.09) (0.08)
-------- -------- -------- ---------
Basic net loss per share . . . . . . . . . . . $ (0.01) $ (0.18) $ (0.16) $ (0.53)
======== ======== ======== =========
Diluted income (loss) per share:
Income (loss) from continuing operations . . $ 0.00 $ (0.14) $ (0.07) $ (0.45)
Loss from discontinued operations. . . . . . (0.01) (0.04) (0.09) (0.08)
-------- -------- -------- ---------
Diluted net loss per share . . . . . . . . . . $ (0.01) $ (0.18) $ (0.16) $ (0.53)
======== ======== ======== =========
Weighted average shares (basic). . . . . . . . 57,295 54,919 56,236 54,178
======== ======== ======== =========
Weighted average shares (diluted). . . . . . . 58,087 54,919 56,236 54,178
======== ======== ======== =========