GTW Gateway

Gateway Reports Preliminary Fourth Quarter, Full Year 2004 Results * Q4 earnings consistent with guidance IRVINE, Calif., Jan. 27 /PRNewswire-FirstCall/ -- Gateway, Inc. (NYSE:GTW) today reported results for its fourth quarter and full-year ended December 31, 2004. (Logo: http://www.newscom.com/cgi-bin/prnh/20020930/LAM050LOGO) Revenue amounted to $1.029 billion in the fourth quarter, compared with $915 million in the third quarter and $875 million a year earlier. The year earlier period excludes revenue from eMachines, which was acquired on March 11, 2004. The company reported net income available to common shareholders of $94 million. This compares with a net loss of $59 million in the third quarter, and a net loss of $114 million a year earlier. Basic EPS, or net income per common share, was 25 cents. Diluted EPS was a negative two cents after deducting the gain associated with the retirement of the company's Series A and Series C preferred stock previously held by AOL. On a pro forma basis including the preferred stock gain, fully diluted EPS was 23 cents. Restructuring, transformation and integration costs in the fourth quarter were $22 million, compared with $63 million in the third quarter and $65 million a year earlier. Excluding these restructuring, transformation and integration costs and the gain associated with retirement of the company's Series A and Series C preferred stock previously held by AOL, non-GAAP operational net earnings per share was a profit of four cents, at the high end of previous guidance. Included in the fourth quarter net income available to common shareholders, and previous guidance, is a one-time $100 million gain from the retirement of the Series A and Series C preferred stock previously held by AOL, and a one-time approximate $7 million gain from the retirement of liability associated with a recent outsourcing of extended service plans and $7 million in proceeds from legal claims, partially offset by a $7 million incremental investment in service parts and other non-recurring warranty items, primarily to improve support for our Professional customers. Also included in net income is the $22 million in restructuring, transformation and integration costs indicated earlier. "We are pleased with the progress our fourth quarter represents," said Wayne Inouye, president and chief executive officer. "Since combining Gateway and eMachines last March, we have made great strides towards our goal of long-term, sustainable profitability. With the vast majority of restructuring now behind us, we see 2005 as a year to build, leveraging our highly scalable model and low SG&A structure to achieve growth across all segments." Q4 Progress & Highlights During the fourth quarter, the company continued to simplify its processes, increase productivity and expand distribution of its products worldwide. Key accomplishments include: * Expanded distribution of Gateway notebook and desktop PCs at major retailers in North America. Gateway-branded PCs are now available at leading retailers including Best Buy, Circuit City, Comp USA, Micro Center and Office Depot in the United States as well as Best Buy and Future Shop in Canada; * This month IDC recognized Gateway as having the largest U.S. sequential PC growth of the major PC makers in its Q4 Quarterly PC Tracker Report(1); * International expansion of Gateway PCs with the return of retail sales in Japan; * SG&A on both a GAAP and non-GAAP basis has been reduced over 50 percent year-over-year providing a platform for long term leverage and earnings growth; * Continued consolidation of the company's supply base and service and support relationships to further drive business efficiencies, ensure quality and optimize the overall customer experience; * Introduction of an award-winning line of Media Center PCs, which provide industry-leading value. The systems also feature Gateway's unique implementation of BTX technology for whisper quiet operation; * Recognition from PC World and its readers for eMachines having the highest overall service and reliability scores of all U.S. PC makers surveyed(2). Financial Performance The company sold 1.2 million PC units in the fourth quarter, up 29 percent sequentially, and 128 percent year-over-year. The increase in unit sales is due to strong market demand in the Retail and Direct segments, partially offset by seasonal declines in the Professional segment. On a normalized basis, which adds eMachines sales and subtracts Gateway-owned retail stores from the fourth quarter of 2003 comparison, PC unit sales increased 20 percent year-over-year. The Retail segment delivered revenue of $604 million, with PC units of 926,000. Sequentially, Retail revenue increased 48 percent and PC units increased 53 percent. The sequential increase in Retail revenue and PC units is associated with strong product demand and significant market share gains during the period, including increased market share in both the desktop and notebook categories. The Direct Sales segment delivered revenue of $188 million, with PC units of 102,000. Sequentially, Direct sales revenue increased 3 percent and PC units increased 21 percent. The sequential increase in Direct Sales revenue and PC units is a result of increased seasonal demand and market share gains associated with Gateway products in the Direct segment. The Professional segment delivered revenue of $237 million, with PC units of 171,000. Sequentially, Professional revenue decreased 27 percent and PC units decreased 29 percent. The sequential revenue decrease generally reflects seasonal demand patterns and some market share loss. Total CE and non-PC revenue was down 2 percent sequentially and down 33 percent year-over-year. The sequential and year-over-year decreases are due to lower CE revenue, largely associated with the Gateway-owned retail store closures in April and the completion of excess inventory sales in the third quarter resulting from these closures. CE and non-PC sales represented 18 percent of total revenue in the fourth quarter, which compares with 20 percent in the third quarter and 31 percent a year earlier. Gross margin contribution from CE and non-PC products and services represented 62 percent of the gross margin dollars in the fourth quarter compared to 60 percent in the prior quarter and 64 percent a year earlier. Gross margin contribution from non-PC products more than offset the reduced contribution from CE products. Gross margin percentage for the fourth quarter was 8.8 percent (including 0.4 percentage points impact from restructuring, transformation and integration costs). This compares with 10.1 percent in the prior quarter (including 1.1 percentage points impact from restructuring, transformation and integration costs) and 15 percent in the fourth quarter of 2003 (including 1.3 percentage points impact from restructuring, transformation and integration costs). Gross margin results include a $7 million benefit from legal settlements offset by a one-time $7 million investment in service parts and other non-recurring warranty costs. Excluding restructuring, transformation and integration costs, gross margin percentage declined 2.0 percentage points sequentially, primarily due to the increased mix of lower margin Retail sales and the incremental investment in service parts to improve support for our Professional customers. On a non-GAAP operational basis, excluding restructuring, transformation and integration costs, year-over-year gross margins decreased 7.1 percentage points primarily due to a significantly higher mix of third-party retail sales and lower CE products sales associated with the closure of the Gateway stores. SG&A expense was $106 million (including $18 million in restructuring, transformation and integration costs) compared to $154 million (including $53 million for restructuring, transformation and integration costs) in the prior quarter. On a non-GAAP operational basis, excluding restructuring, transformation and integration costs, SG&A was down 13 percent sequentially and more than 50 percent year-over-year. These reductions in SG&A resulted from the closure of Gateway's retail stores, reduced direct marketing costs partially related to the shift toward third-party retail, rationalization of headcount costs and IT expenses, and continued focus on other SG&A cost savings. SG&A expense as a percentage of revenue was 10.2 percent compared to 16.8 percent in the prior quarter and 26 percent a year earlier. On a non-GAAP operational basis -- excluding restructuring, transformation and integration costs -- SG&A as a percent of revenue improved to 8.5 percent in the fourth quarter, compared to 11 percent in the third quarter and 22 percent a year earlier. Net income available to common shareholders was $94 million (including $22 million for restructuring, transformation and integration costs), compared with a loss of $59 million in the third quarter (including $63 million for restructuring, transformation and integration costs) and a loss of $114 million a year earlier (including $65 million for restructuring, transformation and integration costs). Before restructuring, transformation and integration costs, and the gain on the previously announced retirement of the Series A and C preferred stock, the company recorded a net profit of $15 million, consistent with the upper range of previous guidance and the second consecutive quarterly non-GAAP operational profit. Restructuring, transformation and integration costs Including the $22 million of restructuring, transformation and integration costs in the fourth quarter, all but approximately $7 million of the previously announced restructuring, transformation and integration expenses have now been incurred. The cash outlays associated with these restructuring, transformation and integration plans were $34 million in the fourth quarter, leaving approximately $50 million of remaining net cash outlays to be incurred over the next several quarters under the previously announced plans. These cash outlays are primarily associated with ongoing lease obligations. Cash and marketable securities Gateway ended the quarter with $644 million in cash and marketable securities. Cash and marketable securities decreased $16 million during the fourth quarter primarily due to the restructuring, transformation and integration cash outlays of $34 million mentioned above, partially offset by net financing activity of approximately $25 million. The net financing activity was comprised of net proceeds of $291 million from the sale of Senior Convertible Notes in December 2004 plus a $50 million borrowing under the ABL revolving credit facility, less an aggregate purchase price of $316 million paid to AOL in connection with the retirement of the preferred stock mentioned above and the repurchase of approximately 2.7 million shares of Gateway common stock held by AOL. Full year 2004 Gateway reported full-year 2004 revenue of $3.65 billion and a net loss of $475 million, or a loss of $1.31 per share. Included in the net loss was $364 million, or $1.00 per share, related to restructuring costs, transformation and integration expenses, a tax benefit, and the Series A and C preferred stock gain as discussed above. Total PC unit sales for the year were 3.5 million, a 70 percent increase over the prior year. SG&A expenses for the year were $909 million, including $392 million in restructuring, transformation and integration expenses, compared with $974 million in 2003, including $128 million in restructuring, transformation and integration expenses. Before restructuring, transformation and integration expenses, SG&A expenses were down approximately $328 million year-over-year. Outlook Gateway expects an approximate first quarter revenue range of $810 million to $850 million, consistent with sales mix shifts between segments and in-line with previously announced full-year revenue guidance of $4 billion to $4.25 billion. Total GAAP earnings per share for the first quarter are projected to be breakeven to a loss of four cents per share, including restructuring, transformation and integration costs of approximately one cent per share. Gateway expects first quarter non-GAAP earnings per share before restructuring, transformation and integration costs of breakeven to a loss of three cents per share. Gateway is maintaining the previously communicated full year GAAP earnings per share guidance of 15 to 17 cents and full year earnings per share before restructuring, transformation and integration costs of 17 to 19 cents. Conference call information Gateway will host a conference call for analysts on Thursday, Jan. 27 at 5:30 pm EDT/2:30 pm PDT, which will be accessible via live audio webcast at http://www.gateway.com/. About Gateway Since its founding in 1985, Irvine, Calif.-based Gateway (NYSE:GTW) has been a technology pioneer, offering award-winning PCs and related products to consumers, businesses, government agencies and schools. After acquiring eMachines in early 2004, Gateway is now the third largest PC company in the U.S. and among the top ten worldwide. The company's value-based eMachines brand is sold exclusively by leading retailers worldwide, while the premium Gateway line is available at major retailers, over the web and phone, and through its direct and indirect sales force. See http://www.gateway.com/ for more information. (1) IDC PC Tracker, January 2005 (2) PC World, "Readers Rate the Manufacturers," January 2005 Certain non-GAAP financial information This press release contains certain non-GAAP financial information, including disclosure of the portion of the company's SG&A, gross margins and results of operations relating to, or affected by, certain restructuring charges, transformation expenses and integration expenses. This non-GAAP financial information is provided as supplementary information and is not an alternative to GAAP. This non-GAAP financial information is used by management and management believes it is useful to investors to analyze the company's baseline performance before charges and expenses that are considered by management to be outside of Gateway's core operating results, notwithstanding the fact that such restructuring, transformation and integration expenses may be recurring. This non-GAAP information is among the primary indicators management uses as a basis for evaluating Gateway's financial performance as well as for forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for reported results determined in accordance with GAAP. Special note This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove incorrect, could cause Gateway's results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be forward- looking statements, including any projections or preliminary estimates of earnings, revenues, or other financial items; any statements of plans, strategies and objectives of management for future operations; the extent of seasonal changes in demand; any statements regarding proposed new products, services or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. The risks that contribute to the uncertain nature of these statements include, among others, risks related to shifting our distribution model to third-party retail; competitive factors and pricing pressures, including the impact of aggressive pricing cuts by larger competitors; general conditions in the personal computing industry, including changes in overall demand and average selling prices, shifts from desktops to mobile computing products and information appliances and the impact of new microprocessors and operating software; the ability to simplify the company's business, change its distribution model and restructure its operations and cost structure; component supply shortages; short product cycles; the ability to access new technology; infrastructure requirements; risks of international business; foreign currency fluctuations; risks relating to new or acquired businesses, joint ventures and strategic alliances; risks related to financing customer orders; changes in accounting rules; the impact of litigation and government regulation generally; inventory risks due to shifts in market demand; the impact of employee reductions and management changes and additions; and general economic conditions, and other risks described from time to time in Gateway's Securities and Exchange Commission periodic reports and filings. Gateway assumes no obligation to update any forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made. Gateway, Inc. Consolidated Condensed Statements of Operations (Preliminary) (in thousands, except per share amounts) (unaudited) Three months ended Twelve months ended December 31, December 31, 2004 2003 2004 2003 Net sales $1,028,627 $875,134 $3,649,734 $3,402,364 Cost of goods sold 938,036 743,664 3,342,662 2,938,800 Gross profit 90,591 131,470 307,072 463,564 Selling, general, and administrative expenses 105,709 224,022 909,050 974,139 Operating loss (15,118) (92,552) (601,978) (510,575) Other income, net 8,956 4,843 20,247 19,328 Loss before income taxes (6,162) (87,709) (581,731) (491,247) Benefit (provision) for income taxes (437) (23,565) 14,113 (23,565) Net loss (6,599) (111,274) (567,618) (514,812) Gain on redemption of preferred stock, net of dividends 100,513 (2,787) 92,142 (11,138) Net income (loss) attributable to common stockholders $93,914 $(114,061) $(475,476) $(525,950) Net income (loss) per share: Basic $0.25 $(0.35) $(1.31) $(1.62) Diluted $(0.02)* $(0.35) $(1.45) $(1.62) Weighted average shares outstanding: Basic 373,844 324,377 363,708 324,160 Diluted 398,958 324,377 391,115 324,160 * The calculation of diluted loss per share assumes conversion of the Series A and Series C preferred stock at the beginning of the period rather than redemption for a gain. Accordingly, the $100.5 million gain on the redemption of Series A and Series C has been excluded from the calculation of diluted loss per share. Had the gain been included, weighted average shares outstanding would have been 407,486 and diluted earnings per share would have been $0.23. Gateway, Inc. Consolidated Condensed Balance Sheets (Preliminary) (in thousands) (unaudited) December 31, December 31, 2004 2003 ASSETS: Current assets: Cash and cash equivalents $358,633 $349,101 Marketable securities 284,876 739,936 Accounts receivable, net 342,121 210,151 Inventory 196,324 114,136 Other 217,663 250,153 Total current assets 1,399,617 1,663,477 Property, plant, and equipment, net 102,657 330,913 Intangibles, net 95,392 13,983 Goodwill 155,619 -- Other assets 18,502 20,065 $1,771,787 $2,028,438 LIABILITIES AND EQUITY: Current liabilities: Notes payable $50,000 $-- Accounts payable 532,329 415,971 Accrued liabilities 271,912 277,455 Accrued royalties 41,796 48,488 Other current liabilities 226,615 257,090 Total current liabilities 1,122,652 999,004 Long-term debt 300,000 -- Other long-term liabilities 104,098 109,696 Total liabilities 1,526,750 1,108,700 Series C preferred stock -- 197,720 Stockholders' equity 245,037 722,018 $1,771,787 $2,028,438 Gateway, Inc. Analysis of Consolidated Condensed Statement of Operations (Preliminary) For the three months ended December 31, 2004 (in thousands, except per share amounts) (unaudited) Results of Operations, Trans- net of formation and Restructuring Integration Charges Expenses and Transformation Preferred and Integration Restruc- Stock Expenses and Results of turing Redemption Redemption Operations Charges(1) Gain(1) Gain(1) Net sales $1,028,627 $-- $-- $1,028,627 Cost of goods sold 938,036 2,398(2) 1,544(4) 934,094 Gross profit 90,591 (2,398) (1,544) 94,533 Selling, general, and administrative expenses 105,709 16,318(3) 1,450(4) 87,941 Operating income (loss) (15,118) (18,716) (2,994) 6,592 Other income, net 8,956 -- -- 8,956 Income (loss) before income taxes (6,162) (18,716) (2,994) 15,548 Provision for income taxes (437) -- -- (437) Net income (loss) (6,599) $(18,716) $(2,994) $15,111 Gain on redemption of preferred stock, net of dividends 100,513 -- 100,513 -- Net income (loss) attributable to common stockholders $93,914 $(18,716) $97,519 $15,111 Net income (loss) per share: Basic $0.25 $(0.05) $0.26 $0.04 Diluted $(0.02)(5) $(0.05) $(0.01) $0.04 Weighted average shares outstanding: Basic 373,844 373,844 373,844 373,844 Diluted 398,958 398,958 398,958 407,486 (1) This non-GAAP financial information is provided as supplementary information and is not an alternative to GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results of operations presented in accordance with GAAP. (2) Represents costs related to the severance of employees. (3) Represents costs related to the closure of facilities and accelerated depreciation and the severance of employees. (4) Represents outsourcing transition costs and other expenses related to the Company's integration following the acquisition of eMachines in the first quarter of 2004. (5) The calculation of diluted loss per share assumes conversion of the Series A and Series C preferred stock at the beginning of the quarter rather than redemption for a gain. The $100.5 million gain on redemption has been excluded from the calculation of this figure. Had the gain been included, weighted average shares outstanding would have been 407,486 and diluted earnings per share would have been $0.23. Gateway, Inc. Analysis of Consolidated Condensed Statement of Operations For the twelve months ended December 31, 2004 (in thousands, except per share amounts) (unaudited) Results of Operations, Trans- net of formation and Restructuring Integration Charges Expenses and Transformation Preferred and Integration Restruc- Stock Expenses and Results of turing Redemption Redemption Operations Charges(1) Gain(1) Gain(1) Net sales $3,649,734 $-- $-- $3,649,734 Cost of goods sold 3,342,662 74,735(2) 11,251(4) 3,256,676 Gross profit 307,072 (74,735) (11,251) 393,058 Selling, general, and administrative expenses 909,050 336,888(3) 54,816(4) 517,346 Operating income (loss) (601,978) (411,623) (66,067) (124,288) Other income, net 20,247 -- -- 20,247 Income (loss) before income taxes (581,731) (411,623) (66,067) (104,041) Provision for income taxes (14,113) -- 12,785 (1,328) Net income (loss) (567,618) $(411,623) $(53,282) $(102,713) Gain on redemption of preferred stock, net of dividends 92,412 -- 100,513 (8,371) Net income (loss) attributable to common stockholders $(475,476) $(411,623) $47,231 $(111,084) Net income (loss) per share: Basic $(1.31) $(1.13) $0.13 $(0.31) Diluted $(1.45)(5) $(1.05) $(0.14) $(0.26) Weighted average shares outstanding: Basic 363,708 363,708 363,708 363,708 Diluted 391,115 391,115 391,115 391,115 (1) This non-GAAP financial information is provided as supplementary information and is not an alternative to GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results of operations presented in accordance with GAAP. (2) Represents costs related to the severance of employees, closure of facilities, and write-downs of inventory resulting from the closure of our stores. (3) Represents costs related to the closure of facilities and accelerated depreciation, asset write-offs, the severance of employees, costs associated with lease obligations net of recoveries and contract termination fees. (4) Represents outsourcing transition costs and other expenses related to the Company's integration following the acquisition of eMachines in the first quarter of 2004. (5) The calculation of diluted loss per share assumes conversion of the Series A and Series C preferred stock at the beginning of the quarter rather than redemption for a gain. The $100.5 million gain on redemption has been excluded from the calculation of this figure. Gateway, Inc. Analysis of Consolidated Condensed Statement of Operations For the three months ended September 30, 2004 (in thousands, except per share amounts) (unaudited) Results of Operations, net of Restructuring Trans- Charges, Restruc- formation and Transformation Results of turing Integration and Integration Operations Charges(1) Expenses(1) Expenses(1) Net sales $915,132 $-- $-- $915,132 Cost of goods sold 823,038 9,112(2) 1,067(4) 812,859 Gross profit 92,094 (9,112) (1,067) 102,273 Selling, general, and administrative expenses 153,768 41,904(3) 10,978(4) 100,886 Operating income (loss) (61,674) (51,016) (12,045) 1,387 Other income, net 3,424 -- -- 3,424 Income (loss) before income taxes (58,250) (51,016) (12,045) 4,811 Benefit for income taxes 1,774 -- -- 1,774 Net income (loss) $(56,476) $(51,016) $(12,045) $6,585 Preferred stock dividends and accretion (2,792) -- -- (2,792) Net income (loss) attributable to common stockholders $(59,268) $(51,016) $(12,045) $3,793 Net income (loss) per share $(0.16) $(0.14) $(0.03) $0.01(5) (1) This non-GAAP financial information is provided as supplementary information and is not an alternative to GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results of operations presented in accordance with GAAP. (2) Represents costs related to the severance of employees and the closure of facilities. (3) Represents costs related to the closure of facilities and accelerated depreciation, the severance of employees and contract termination fees. (4) Represents outsourcing transition costs and other expenses related to the Company's integration following the acquisition of eMachines in the first quarter. (5) Calculated based on diluted weighted average shares outstanding for the quarter ended September 30, 2004. Gateway, Inc. Analysis of Consolidated Statement of Operations For the three months ended December 31, 2003 (in thousands, except per share amounts) (unaudited) Results of Operations, net of Restructuring Trans- Charges, Restruc- formation Transformation Results of turing Expenses Expenses and Operations Charges(1) and Taxes(1) Taxes(1) Net sales $875,134 $-- $-- $875,134 Cost of goods sold 743,664 10,978(2) 297(4) 732,389 Gross profit 131,470 (10,978) (297) 142,745 Selling, general, and administrative expenses 224,022 14,449(3) 15,439(4) 194,134 Operating loss (92,552) (25,427) (15,736) (51,389) Other income, net 4,843 -- -- 4,843 Loss before income taxes (87,709) (25,427) (15,736) (46,546) Provision for income taxes 23,565 -- 23,565(5) -- Net loss $(111,274) $(25,427) $(39,301) $(46,546) Preferred stock dividends and accretion (2,787) -- -- (2,787) $(114,061) $(25,427) $(39,301) $(49,333) Net loss per share $(0.35) $(0.08) $(0.12) $(0.15) (1) This non-GAAP financial information is provided as supplementary information and is not an alternative to GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results of operations presented in accordance with GAAP. (2) Represents approximately $8 million related to the severance of employees and approximately $3 million related to the closure of facilities. (3) Represents approximately $8 million related to the closure of facilities and accelerated depreciation and approximately $6 million related to the severance of employees. (4) Represents outsourcing transition costs and other expenses related to the Company's transformation into a branded integrator. (5) Represents certain state income tax receivables and net deferred tax assets that are deemed not recoverable. Gateway, Inc. Analysis of Consolidated Statement of Operations For the twelve months ended December 31, 2003 (in thousands, except per share amounts) (unaudited) Results of Operations, net of Restructuring Trans- Charges, Restruc- formation Transformation Results of turing Expenses Expenses and Operations Charges(1) and Taxes(1) Taxes(1) Net sales $3,402,364 $-- $-- $3,402,364 Cost of goods sold 2,938,800 60,858(2) 2,393(4) 2,875,549 Gross profit 463,564 (60,858) (2,393) 526,815 Selling, general, and administrative expenses 974,139 95,937(3) 32,557(4) 845,645 Operating loss (510,575) (156,795) (34,950) (318,830) Other income (loss), net 19,328 -- -- 19,328 Loss before income taxes (491,247) (156,795) (34,950) (299,502) Provision for income taxes 23,565 -- 23,565(5) -- Net loss $(514,812) $(156,795) $(58,515) $(299,502) Preferred stock dividends and accretion (11,138) -- -- (11,138) $(525,950) $(156,795) $(58,515) $(310,640) Net loss per share $(1.62) $(0.48) $(0.18) $(0.96) (1) This non-GAAP financial information is provided as supplementary information and is not an alternative to GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results of operations presented in accordance with GAAP. (2) Represents costs related to the severance of employees and closure of facilities. (3) Represents costs related to the closure of facilities and accelerated depreciation and costs related to the severance of employees. (4) Represents outsourcing transition costs and other expenses related to the Company's transformation into a branded integrator. (5) Represents certain state income tax receivables and net deferred tax assets that are deemed not recoverable. http://www.newscom.com/cgi-bin/prnh/20020930/LAM050LOGO http://photoarchive.ap.org/ DATASOURCE: Gateway, Inc. CONTACT: Media, David Hallisey, +1-949-471-7703, , or Investors, Marlys Johnson, +1-605-232-2709, , both of Gateway, Inc. Web site: http://www.gateway.com/

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