Exhibit 99.2
FOR IMMEDIATE RELEASE JULY 29, 2002
Castelle Reports Fourth Consecutive Quarter of Profitability
o New CEO's Initiatives Designed to Support Castelle's Ongoing Growth and
Expansion Strategy
o Company to Aggressively Pursue International Sales Efforts While
Solidifying Leadership Position in the Domestic Market
o Strong Balance Sheet to Provide Financial Flexibility to Execute Domestic
and International Growth Strategy
MORGAN HILL, CA - July 29, 2002 - Castelle (NasdaqSC: CSTL), a leading provider
of fax solutions for Fortune 1000 companies and small to medium-sized
businesses, today announced financial results for the Company's second fiscal
quarter ended June 30, 2002.
Net sales for the second quarter of fiscal 2002 were $2.3 million, compared to
$2.4 million in the previous quarter and $2.3 million for the same period in
fiscal 2001. The Company recorded net income for the second quarter of fiscal
2002 of $62,000, or $0.01 per diluted share, up from a net loss of $268,000, or
$0.06 per diluted share, for the same period in fiscal 2001. Second quarter 2002
results included a $40,000, or $0.01 per diluted share, non-recurring benefit
arising from the reversal of previously recorded restructuring charges following
completion of the Company's 2001 restructuring programs for less than previously
anticipated. Second quarter 2002 income was also up from the previous quarter,
when the Company earned $32,000, or $0.01 per diluted share.
Net sales for the first six months of 2002 were $4.6 million, comparable to the
$4.6 million for the same six-month period of fiscal 2001. Net income for the
six-month period in fiscal 2002 was $94,000 or $0.02 per diluted share, compared
to a net loss of $676,000, or $0.14 per diluted share, for the 2001 period. The
loss for the second quarter and the first six months of fiscal 2001 included
non-recurring charges of $58,000 and $238,000, respectively, for expenses
associated with the reduction in work force and the write-down of surplus
assets. These non-recurring charges represented $0.01 and $0.05 per share,
respectively.
Castelle Continues Operational and Financial Improvements
Scott C. McDonald, President and CEO, stated, "It is certainly an encouraging
sign that we are able to show another modest profit in the second quarter, our
fourth consecutive quarter of profitability, and on slightly down top-line
sales. With our operating costs now in line, our primary focus and priority is
to grow the business and expand sales, particularly in the international markets
where we have already made substantial headway."
New CEO Sees Growth in Quarters Ahead Driven by its Core Fax Server Business
Since Mr. McDonald was appointed CEO of Castelle on April 22, 2002, the Company
has moved to expand its sales on multiple fronts.
In China, Castelle has agreements with four distributors to sell, promote and
service its FaxPress fax servers and LANpress print servers. In announcing the
deals on July 17, 2002, the Company reported that it had received approximately
$200,000 in new product orders from these distributors, or approximately 10% of
its total international sales in fiscal 2001. Castelle plans to ship these
initial orders during the quarter ending September 30, 2002.
In Europe, Castelle entered into an agreement, announced July 24, 2002, with
long-time strategic partner AMS Ltd. (AMS) under which AMS will sell, promote
and support Castelle's FaxPress and LANpress product lines throughout Europe.
E-2
The Company currently ships on average approximately $200,000 in new products on
a quarterly basis to the UK and Europe. Castelle expects sales in Europe to rise
under the new AMS agreement.
Regarding the Company's sales expansion plans, Mr. McDonald said, "Castelle's
core fax server business has held steady during this difficult economic period
in the technology sector. Our economical and easy-to-use fax servers unify the
fax and email environment, bringing fax messaging to the Internet age. We
believe that there is a large market for our products, both domestically and
internationally, which will allow Castelle to maintain, and hopefully increase,
its profitability in the quarters ahead."
Balance Sheet Strength
As of June 30, 2002, the Company had over $4.3 million in cash and cash
equivalents and little long-term debt. The Company's balance sheet coupled with
improving profitability and working capital are expected to provide Castelle
with the financial flexibility to successfully execute its domestic and
international growth strategy.
If you would like to be added to Castelle's investor fax or email lists, please
contact Karin Smith via email at karin.smith@castelle.com or fax at
408-852-8134.
About Castelle
Castelle develops office automation systems that allow organizations to easily
implement faxing and printing over local area networks and the Internet. It is a
market leader in fax solutions for small to medium sized workgroups. Castelle's
FaxPress fax servers provide a simple way to integrate fax with email, desktop
and back-end applications. In addition, the Company manufactures the popular
LANpress print servers, which enable users to locate printers anywhere on the
network. Castelle products are easy to use and maintain, and provide an
economical way for companies to share resources over the network.
Castelle was founded in 1987 and is headquartered in Morgan Hill, California.
Its products are utilized by Fortune 1000 companies and small to medium-sized
businesses, and are available through a worldwide network of distributors,
value-added resellers, systems integrators, e-commerce retailers, and the
Castelle Online Store. Visit Castelle online at www.castelle.com
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and
uncertainties, relating to future events, including statements regarding
management's expectations about its ability to grow and expand its sales, the
effect of the AMS agreement on the growth of European sales, the ability of the
Company to continue to be profitable, the sufficiency of the Company's financial
resources to execute its growth strategy and certain product shipment dates.
Actual events or the Company's results may differ materially from the events or
results discussed in the forward-looking statements for a number of reasons
including, without limitation, the timely development, acceptance and pricing of
new products and the general economic conditions as they affect the Company's
customers. The Company assumes no obligation to update the forward-looking
information. Investors are referred to the full discussion of risks and
uncertainties associated with forward-looking statements as contained in the
Company's reports to the Securities and Exchange Commission, including the
Company's Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2001.
#############
For more information:
Scott C. McDonald Karin Smith
President & Chief Executive Officer Marketing Communications Manager
Tel: 408-852-8000 Tel: 408-852-8034
karin.smith@castelle.com
E-3