AlphaSmart Announces First Quarter 2004 Results LOS GATOS, Calif.,
April 14 /PRNewswire-FirstCall/ -- AlphaSmart, Inc. today announced
its operating results for the first quarter ended March 31, 2004.
Net revenue was $8.8 million, compared with $8.3 million for the
first quarter of 2003. Net income under generally accepted
accounting principles (GAAP) was $63,000, or $0.00 per share on a
fully diluted basis, which included the effect of $588,000 in
interest and a premium paid on the redemption of mandatorily
redeemable preferred stock. This compared with first quarter 2003
net income under GAAP of $483,000, or $0.04 per share on a fully
diluted basis, including the effect of $177,000 in interest paid on
mandatorily redeemable preferred stock. All outstanding shares of
mandatorily redeemable preferred stock were redeemed in connection
with AlphaSmart's initial public offering of common stock in
February 2004. Accordingly, the company has no further interest or
premium obligations. Excluding the effects of the interest and
premium described above, first quarter 2004 net income (pro forma)
was $651,000, or $0.05 per share on a fully diluted basis, compared
with $660,000, or $0.06 per share on a fully diluted basis, for the
same quarter a year ago. As a result of AlphaSmart's initial public
offering, the number of weighted average shares outstanding on a
fully diluted basis increased to 13.8 million shares for the first
quarter of 2004 from 10.9 million shares a year earlier. "We are
pleased with AlphaSmart's first quarterly results as a public
company," said Ketan D. Kothari, chairman, chief executive officer
and co-founder. "Order flows in the first quarter trended
positively. In an effort to invest in longer-term market
opportunities, we increased marketing and sales spending in the
first quarter. This decision had the effect of slightly reducing
first quarter earnings per share. We believe that we have begun
2004 in a favorable position and look forward to expanding our
geographic reach and further penetrating the K-12 education
market." Forward-Looking Guidance "For full year fiscal 2004,
AlphaSmart expects net revenue in the range of $42 million to $44
million," said James M. Walker, vice president, chief financial
officer and chief operating officer. "We expect GAAP net income per
share on a fully diluted basis in the range of $0.31 to $0.35, and
pro forma net income per share on a fully diluted basis in the
range of $0.36 to $0.40, excluding the effect of the first quarter
interest and premium paid on the redemption of mandatorily
redeemable preferred stock." AlphaSmart plans to conduct a
management conference call on first quarter 2004 results at 2:00
p.m. PDT/5:00 p.m. EDT today. This call will be webcast live for
all investors on the AlphaSmart website at
http://www.shareholder.com/alphasmart/medialist.cfm . In addition,
a phone replay of the call will be available at 719-457-0820,
access code 590412, through April 21, 2004. AlphaSmart intends to
discuss financial and other statistical information on today's
conference call. This information will also be available on the
company's website at
http://www.shareholder.com/alphasmart/medialist.cfm , in the
webcast described above. Use of Non-GAAP Financial Measures
AlphaSmart believes that the supplemental presentation of net
income and net income per share calculations excluding the effects
of interest and a premium paid on the redemption of mandatorily
redeemable preferred stock provides meaningful non-GAAP financial
measures to help investors understand and compare business trends
among different reporting periods on a consistent basis,
independently of events impacted by the company's initial public
offering in February 2004 or other infrequent or unusual events.
AlphaSmart management also uses pro forma financial measures to
plan and forecast results for future periods. Readers are cautioned
not to view pro forma results as an alternative to GAAP results or
as being comparable to results reported or forecasted by other
companies, and should refer to the reconciliation of GAAP results
with pro forma results for the first quarters of 2004 and 2003,
respectively, in the attached financial statements. AlphaSmart,
Inc. AlphaSmart, Inc. is a provider of technology solutions for the
education market. AlphaSmart's portable computer-companion products
are used by students in 7,500 U.S. school districts to enhance
writing, keyboarding and comprehension. Based in Los Gatos,
California, AlphaSmart was founded in 1992 by former Apple Computer
engineers. This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including
statements related to (i) the company having no further interest or
premium obligations; (ii) our belief that we have begun 2004 in a
favorable position; (iii) our belief that having begun 2004 in a
favorable position, we can expand our geographic reach and further
penetrate the K-12 education market; (iv) our expectations of net
revenue and net income per share on a fully diluted basis for full
year fiscal 2004. Our expectations and beliefs regarding these
matters may not materialize. Actual results in future periods are
subject to risks and uncertainties that could cause actual results
to differ materially from those projected. These risks include
fewer teachers and administrators embracing technology solutions
and one-to-one computing than we expect; our platforms failing to
obtain broad market acceptance; a decline in investment in, or a
loss or reduction of funding for, educational institutions; our
need to maintain and develop strong brand identity; our potential
customers choosing the greater functionality offered by PCs over
our platforms; the risk that some government initiatives may not
endorse, or be complementary to, our platforms; risks associated
with the lack of diversity among our product offerings; our Dana by
AlphaSmart platform's dependence on our license with PalmSource;
and our dependence on our suppliers, particularly our single-source
suppliers, among other risks. The forward-looking statements
contained in this press release are also subject to other risks and
uncertainties, including those more fully described in AlphaSmart's
filings with the Securities and Exchange Commission, including its
Registration Statement on Form S-1 declared effective by the
Securities and Exchange Commission in February 2004. AlphaSmart
does not undertake to update any forward-looking statements. NOTE:
AlphaSmart is a registered trademark of AlphaSmart, Inc. All other
trademarks are the property of their respective owners. ALPHASMART,
INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET (In thousands)
March 31, December 31, 2004 2003 ASSETS Current assets: Cash and
cash equivalents $7,597 $2,285 Accounts receivable, net 5,461 4,405
Inventory 3,238 2,818 Other current assets 2,473 1,470 Total
current assets 18,769 10,978 Property and equipment, net 861 709
Other assets 513 2,005 Total assets $20,143 $13,692 LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(DEFICIT) Current liabilities: Accounts payable $2,985 $1,892
Accrued liabilities 2,232 3,957 Borrowings under loan facility,
current portion -- 2,680 Other current liabilities 1,081 701 Total
current liabilities 6,298 9,230 Borrowings against line of credit
873 873 Borrowings under loan facility, net of current portion --
1,340 Other long-term liabilities 144 166 Mandatorily redeemable
preferred stock (Redemption value of $10,335) -- 9,747 Total
liabilities 7,315 21,356 Redeemable convertible preferred stock --
13,468 Stockholders' equity (deficit) 12,828 (21,132) Total
liabilities, redeemable convertible preferred stock and
stockholders' equity (deficit) $20,143 $13,692 ALPHASMART, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In
thousands, except per share amounts) Three Months Ended March 31,
March 31, 2004 2003 Net revenue $8,786 $8,298 Cost of revenue 4,281
4,076 Gross margin 4,505 4,222 Operating expenses: Research and
development 614 761 Sales and marketing 1,846 1,411 General and
administrative 977 986 Total operating expenses 3,437 3,158
Operating profit 1,068 1,064 Other expenses (623) (260) Profit
before income taxes 445 804 Provision for income taxes (382) (321)
Net income $63 $483 Net income per share: Basic $0.01 $0.09 Diluted
$0.00 $0.04 Shares used in computing per share amounts: Basic
11,630 5,523 Diluted 13,840 10,895 ALPHASMART, INC. UNAUDITED PRO
FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (EXCLUDING
INTEREST ON MANDATORILY REDEEMABLE PREFERRED STOCK) (In thousands,
except per share data) Three Months Ended March 31, March 31, 2004
2003 Net revenue $8,786 $8,298 Cost of revenue 4,281 4,076 Gross
margin 4,505 4,222 Operating expenses: Research and development 614
761 Sales and marketing 1,846 1,411 General and administrative 977
986 Total operating expenses 3,437 3,158 Operating profit 1,068
1,064 Other expenses (35) (83) Profit before income taxes 1,033 981
Provision for income taxes (382) (321) Net income $651 $660 Net
income per share: Basic $0.06 $0.12 Diluted $0.05 $0.06 Shares used
in computing per share amounts: Basic 11,630 5,523 Diluted 13,840
10,895 A reconciliation of our pro forma net income excluding
interest on mandatorily redeemable preferred stock to our net
income under generally accepted accounting principles is shown
below: Net income excluding interest on mandatorily redeemable
preferred stock $651 $660 Interest on mandatorily redeemable
preferred stock (588) (177) Net income as reported $63 $483
DATASOURCE: AlphaSmart, Inc. CONTACT: investors, James M. Walker,
Vice President, Chief Financial Officer and Chief Operating Officer
for AlphaSmart, Inc., +1-408-355-1029, or Web site:
http://www.alphasmart.com/
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