Lexar Media Reports 2Q Results, Loss of $17.4 Million
Press release from the issuing company
FREMONT, Calif., July 25, 2001 - Lexar Media, Inc. (Nasdaq: LEXR), a leading designer, developer and marketer of award-winning high-performance digital film and connectivity products for the digital photography market, today reported revenues for the second quarter ended June 30, 2001. Total revenues of $17.3 million increased 7% compared to revenues of $16.2 million in the first quarter of 2001.
Excluding stock-based compensation charges, imputed interest and other one-time charges, Lexar Media’s pro forma loss was $13.3 million, or $0.23 per share, for the second quarter of 2001, compared to a pro forma loss of $18.0 million, or $0.31 per share, for the first quarter of 2001. Including stock-based compensation charges, imputed interest and other one-time charges, Lexar Media’s loss was $17.4 million, or $0.30 per share, for the second quarter of 2001, compared to a loss of $23.5 million, or $0.41 cents per share, for the first quarter of 2001.
“We realized a number of key goals during the second quarter and received positive market feedback in the form of increased sell-through at our top accounts, increased licensing and controller sale revenues, and the signing of a number of important partnership agreements,” said Eric Stang, Lexar Media’s President and Chief Executive Officer. “We made solid progress in our efforts to align our operations with current market conditions and create the foundation for future profitability. Our recent agreement with Samsung began to contribute to our results last quarter, and we announced three significant new license partners, Dane-Elec, SMART Modular Technologies and Olympus Optical. We expect to continue to improve our results going forward and to generate more than $50 million in licensing fees and controller sales over the next three years.”
Commenting on Lexar Media’s financials and business outlook, Michael Perez, Vice President of Finance and Chief Financial Officer, stated, “Lexar Media’s financial position improved in several areas during the quarter, and we expect to see further improvements over the next two quarters based on the actions we have taken to realign the Company over the past six months. As of June 30, 2001, inventory levels were reduced to $9.3 million from $15.7 million as of March 31, 2001 and we reduced our cash burn from $6.7 million in the first quarter to $1.9 million, excluding a $6.1 million scheduled debt repayment in the second quarter. We ended the quarter with $14 million in cash and short-term investments. Despite cautious revenue growth assumptions in a difficult economy, we are reiterating our goal of fourth quarter profitability on an operating basis excluding non-cash stock based compensation charges.
Lexar Media recently:
* Promoted Eric Stang, age XX41, from the position of COO to President and CEO. Former President and CEO John Reimer was appointed Chairman of the Company’s Board of Directors. Mr. Reimer will continue to provide his strategic vision to the Company and be engaged in communicating Lexar Media’s vision to a broader audience.
* Michael J. Perez, age 54, was named as the Company’s new Vice President of Finance and Chief Financial Officer. Throughout his 28-year career, Mr. Perez has held a variety of executive and management positions with some of the largest brand name technology companies in the world, including Intel Corporation, SyQuest Technology and Symantec and most recently served as Vice President of Finance for the Monterey Bay Aquarium in Monterey, California.
* Implemented an approximately 27 percent reduction in its work force and eliminated expenses from its Printroom.com operations. These actions were taken to allow the Company to focus on its core competitive strengths and position itself for continued revenue growth and near-term profitability.
* Announced a controller licensing agreement with Dane-Elec, a leading memory module manufacturer providing storage solutions for industrial products, PDAs and other consumer electronics devices. Dane-Elec will license Lexar Media’s technology and purchase controllers for the ATA CompactFlash cards beginning in May 2001 for sales throughout the U.S. and Europe.
* Completed a licensing and controller sales agreement with SMART Modular Technologies, a leading manufacturer of memory and I/O products. The strategic alliance combines Lexar Media’s controller technology and SMART’s design and manufacturing capabilities to create a new line of flash memory products for personal computing, telecommunications, networking and related applications.
* Entered into a worldwide OEM and technology licensing agreement with Olympus Optical Co., granting a non-exclusive license to Lexar Media’s technology to be used in digital film cards manufactured by or for Olympus. The companies have also agreed to jointly develop next generation Lexar branded digital film for use in future Olympus digital cameras, and Olympus has agreed to bundle Lexar Media branded film with all Olympus digital cameras to be distributed in Japan.
* Announced an agreement with Ritz Camera Centers, the nation’s largest photo retailer, to jointly develop a co-branded CompactFlash and SmartMedia digital film and card reader product line under the “Ritz Big Print Digital Film by Lexar Media” brand name. Ritz has also agreed to distribute Lexar Media branded Memory Stick, MultiMediaCards, SD cards and card readers at Ritz Camera Centers throughout the U.S. and online at www.ritzcamera.com.
* Announced that Lexar Media CompactFlash digital film will be bundled with Nikon’s Coolpix 995 high-performance consumer digital camera.
* Began volume shipments of MemoryStick, the new USB Memory Stick Reader and the new USB SmartMedia Reader and announced a new USB CompactFlash Reader.
“Despite the need to be fiscally conservative as Lexar Media drives toward profitability, I believe that the Company is well positioned to capitalize on the continued rapid growth of digital photography and other new markets. I am both confident and excited in Eric and Mike’s ability to lead the Company going forward,” concluded John Reimer, Chairman of Lexar Media’s Board of Directors.
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