Exhibit 99.1
Castelle Reports Strong Financial and Operating Results for First Quarter 2003
o Sales In First Quarter Reach $2.50 Million, Up Approximately 6% from $2.37
Million a Year Earlier o Net Income Rises Sevenfold, Increasing to
$243,000, or $0.06 per Diluted Share, from $32,000, or $0.01 per Diluted
Share in the Year-Ago Quarter
o Company Records Its Seventh Straight Quarter of Profitability
o Balance Sheet Remains Strong, With Cash at $3.36 Million, or $1.06 per
Outstanding Share
MORGAN HILL, CA - April 24, 2003 - Castelle (Nasdaq: 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 first quarter
ended March 31, 2003.
Net sales for the quarter were $2.50 million, up from $2.37 million, or
approximately 6% from the same period in 2002. Net income for the quarter was
$243,000, or $0.06 per diluted share, up from $32,000, or $0.01 per diluted
share, in the first quarter of 2002. The Company has now been profitable in each
of the past seven quarters.
Scott C. McDonald, President and CEO, stated, "Our recent results are further
indication that Castelle's strategy of introducing advanced new products,
maintaining growth in domestic sales while expanding overseas is paying off. We
continue to be pleased by the response to our FaxPress(TM) 7.0 network fax
software, which began shipping last November. It is also significant that
Castelle just recorded its seventh straight profitable quarter, despite some of
the toughest quarters in the history of the technology sector."
Positive Developments in First Quarter 2003
During the first quarter of 2003, Castelle took steps to enhance its sales
efforts both in the U.S. and internationally. On the domestic front, Castelle
promoted Todd Olsen to the new position of Director of Distribution Sales, with
a focus on strengthening the Company's relationship with its U.S. distributors.
Castelle continues to experience strong contributions from its key U.S.
distributors, Ingram Micro (NYSE: IM) and Tech Data (Nasdaq: TECD).
Internationally, Castelle announced the addition of new resellers in Europe and
Latin America. The new European resellers, recruited by AMS Ltd, Castelle's
master distributor for the UK and Europe, are based in France, Italy, Norway and
Estonia. Castelle also established strategic partnerships with five resellers
based in three Latin American countries - Mexico, Chile and Brazil. Castelle
continues to expand into international markets, and recently exhibited at CeBIT
Europe in the Novell Partner Pavilion.
Castelle's new LANpress(R) 2000 USB network print server was introduced on April
1, 2003. The LANpress 2000 USB is a multi-protocol print server that allows a
printer with a USB connection to be shared by Microsoft, Novell, UNIX/Linux and
Macintosh users. Although the Company's FaxPress network fax servers are its
principal revenue-generating products, Castelle has also been selling print
servers for over 10 years and intends to continue expanding and updating that
product line.
Balance Sheet Remains Strong
"With our solid balance sheet, which includes $3.36 million in cash and nearly
zero debt, Castelle remains in a strong position for continued growth." Mr.
McDonald concluded, "We are prepared to ride out further economic uncertainty
and, once the economy recovers, to profit from a renewed demand for business
solutions such as ours."
4
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. The Company also manufactures LANpress print servers,
which enable users to locate printers anywhere on the network. Castelle products
are designed to be 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 used by Fortune 1000 companies as well as small to medium-sized
businesses and are available through a worldwide network of distributors,
resellers, online retailers, and the Castelle Online Store.
Visit Castelle online at www.castelle.com.
If you would like to be added to Castelle's investor email list, please contact
Karin Smith at karin.smith@castelle.com.
FaxPress(TM) is a trademark and LANPress(R) is a registered trademark of
Castelle. All other products and trademarks are the property of their respective
owners.
Forward-Looking Statements
This press release contains forward-looking statements including references to
demand for Castelle products, sales growth, and our ability to control costs,
increase productivity and remain profitable. These statements are subject to
risks and uncertainties, including but not limited to the impact on our results
from fluctuations in demand for our products, the continued development of
domestic and international markets, introduction of new products by our
competitors, the timely development, acceptance and pricing of new products, the
effectiveness of our cost control and productivity improvement procedures and
general economic conditions as they affect the Company's customers. Investors
are referred to the full discussion of risks and uncertainties associated with
forward-looking statements as contained in our reports to the Securities and
Exchange Commission, including our Form 10-K. The Company assumes no obligation
to update the forward-looking information.
For more information:
Scott C. McDonald Karin Smith
President & Chief Executive Officer Marketing Manager
Tel: 408-852-8000 Tel: 408-852-8034
Fax: 408-852-8134
karin.smith@castelle.com
5
CASTELLE
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three months ended
March 31, 2003 March 31, 2002
----------------------- --------------------
Net sales $ 2,500 $ 2,368
Cost of sales 697 777
----------------------- --------------------
Gross profit 1,803 1,591
Operating expenses:
Research and development 355 413
Sales and marketing 735 763
General and administrative 457 404
----------------------- --------------------
Total operating expenses 1,547 1,580
Income from operations 256 11
Interest and other income/(expense), net (11) 21
----------------------- --------------------
Income before income taxes 245 32
Provision for income taxes 2 -
----------------------- --------------------
Net income $ 243 $ 32
======================= ====================
Net income per share - basic $ 0.08 $ 0.01
======================= ====================
Net income per share - diluted $ 0.06 $ 0.01
======================= ====================
Shares used in per share calculation - basic 3,200 4,745
======================= ====================
Shares used in per share calculation - diluted 3,828 4,774
======================= ====================
As a percentage of net sales:
Net sales 100.0% 100.0%
Cost of sales 27.9% 32.8%
----------------------- --------------------
Gross profit 72.1% 67.2%
Operating expenses:
Research and development 14.2% 17.4%
Sales and marketing 29.4% 32.2%
General and administrative 18.3% 17.1%
----------------------- --------------------
Total operating expenses 61.9% 66.7%
Income from operations 10.2% 0.5%
Interest and other income/(expense), net (0.4%) 0.9%
----------------------- --------------------
Income before income taxes 9.8% 1.4%
Provision for income taxes 0.1% -
----------------------- --------------------
Net income 9.7% 1.4%
======================= ====================
6
CASTELLE
Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2003 December 31, 2002
(unaudited)
------------------------ -------------------------
Assets
Current assets:
Cash and cash equivalents 3,356 3,460
Accounts receivable, net 444
660
Inventories, net 963 1,110
Prepaid and other assets 201 88
------------------------- --------------------------
Total current assets 5,180 5,102
Property and equipment, net 458 425
Other assets 108 108
------------------------- --------------------------
Total assets 5,746 5,635
========================= ==========================
Liabilities and shareholders' equity
Current liabilities:
Long-term debt, current portion 21 21
Accounts payable 282 359
Accrued liabilities 2,266 2,288
------------------------- --------------------------
Total current liabilities 2,569 2,668
Long-term debt, net of current portion 39 44
------------------------- --------------------------
Total liabilities 2,608 2,712
Shareholders' equity 3,138 2,923
------------------------- --------------------------
Total liabilities and shareholders'
equity 5,746 5,635
========================= ==========================