7/30/2002 - SimpleTech, Inc. (Nasdaq:STEC), a technology solutions provider offering products based on DRAM, SRAM and Flash memory technologies, today announced its financial results for the second quarter and the six months ended June 30, 2002.
Revenues for the second quarter of 2002 were $43.3 million, a decrease of 15% from $51.0 million for the first quarter of 2002 and an increase of 18% from $36.8 million for the second quarter of 2001. Net loss for the second quarter was $716,000, which included a non-recurring research and development income tax benefit of approximately $800,000. This net loss compares to net income of $313,000 for the first quarter of 2002 and a net loss of $1.9 million for the second quarter of 2001. For the second quarter of 2002, loss per diluted share was $0.02, compared with earnings per diluted share of $0.01 for the first quarter of 2002 and a loss per diluted share of $0.05 for the second quarter of 2001.
During the second quarter of 2002, the company realized the following achievements:
Revenues from Commercial Division customers comprised 69% of total revenues for the second quarter of 2002, a decrease from 86% of total revenues for the first quarter of 2002. Commercial revenues decreased 32% to $29.8 million for the second quarter of 2002 from $43.7 million for the first quarter of 2002 due primarily to seasonally weak demand and lower DRAM prices during the quarter. Commercial revenues for the quarter increased 12% from the same period last year due primarily to increased unit shipments.
Revenues from Industrial Division customers comprised 31% of total revenues in the second quarter of 2002, an increase from 14% of total revenues for the first quarter of 2002. Industrial revenues increased 85% to $13.5 million for the second quarter of 2002 from $7.3 million for the first quarter of 2002 due primarily to a 72% increase in unit shipments. Industrial revenues for the quarter increased 75% from the same period last year due to a 346% increase in unit shipments partially offset by a 61% reduction in the average selling price of Industrial products.
The Xiran Division remains on target to release product prototypes by the end of 2002. SimpleTech's on-going investment in its Xiran Division is in line with its previous guidance and the company expects the Xiran Division to contribute to its total revenues in the second half of 2003.
DRAM prices have been volatile during the past two years. The second quarter gross margin was 14.2%, down from 22.5% for the first quarter due to the impact of DRAM price declines on DRAM inventory held in stock. To minimize the effect of the DRAM price decline, the company aggressively reduced its DRAM inventory position from $14 million at March 31, 2002, to less than $5 million at June 30, 2002. The spot market prices for DRAM components have begun to increase in the third quarter due primarily to an anticipated seasonal increase in memory and storage demand for the second half of 2002. If there is no further decline in DRAM prices in the third quarter of 2002, SimpleTech expects its gross margins to return to their historical level of approximately 22%.
SimpleTech's Industrial and Commercial Division customer bases continue to grow. During the past two years, the Commercial Division has added major customers such as Costco, Sam's Club, Amazon.com and Gateway. From 1998 through 2000, the Industrial Division developed strong relationships with telecom and networking customers such as Cisco, Alcatel and Unisys. After a period of dormancy in the telecom and networking space in 2001, these customers are beginning to purchase again. In addition, during the past six months, SimpleTech has shipped products into a number of new applications including casino gaming machines, defense sub-systems, medical instrumentation and point-of-sale systems.
About SimpleTech, Inc.
SimpleTech, Inc. is a technology solutions provider offering products based on DRAM, SRAM and Flash memory technologies. Headquartered in Santa Ana, Calif., the company is a leader in the design, development, manufacturing and marketing of memory solutions. For information, please contact the company's Investor Relations department at (949) 260-8328 (firstname.lastname@example.org) or visit www.simpletech.com
SimpleTech will hold an open conference call to discuss results for the second quarter of 2002. The call will take place today at 1:30 p.m., Pacific/4:30 p.m., Eastern. The call-in numbers for the conference are 1-800-781-3662 (United States and Canada) and 1-706-643-7710 (International).
Safe Harbor Statement
This release may contain forward-looking statements that involve risks and uncertainties, including, but not limited to, statements concerning the schedule for the Xiran Division's release of prototype products, Xiran Division's contribution to the company's future total revenues, and the expected increase in memory and storage demand for the second half of 2002. Actual results may differ materially from the results predicted. Important factors which could cause actual results to differ materially from those expressed or implied in the forward-looking statements are detailed under "Risk Factors" in filings with the Securities and Exchange Commission made from time to time by SimpleTech, including its Annual Report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. Other factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements include the following risks: the market demand for memory and storage products does not increase as anticipated for the second half of 2002, the cost of raw materials may fluctuate widely in the future, new and changing technologies may limit the applications of SimpleTech's products, new customer and supplier relationships may not be implemented successfully, and the technology being developed by the Xiran Division may not achieve timely product commercialization or may not be synergistic with SimpleTech's existing business. SimpleTech undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
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