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Melville, NY, March 14, 2002 -- Andrea Electronics Corporation (AMEX:
AND) announced
today that net sales for the year ended December 31, 2001, were
approximately $10.3 million, before restructuring charges(1) versus
$15.6 million in the prior year. Net loss applicable to common shareholders
for the year ended December 31, 2001 was approximately $9.7 million,
before giving effect to a special, one-time, non-cash equity charge(2)
and before giving effect to restructuring charges. The net loss
applicable to common shareholders for the year ended December 31,
2001, including the one-time, non-cash equity charge and restructuring
charges, was $21.7 million, or $1.43 per share on a diluted basis,
versus net loss applicable to common shareholders of approximately
$9.9 million, or $0.72 per share on a diluted basis, for the year
ended December 31, 2000. For the fourth quarter ended December 31,
2001, net sales were approximately $2.1 million, before restructuring
charges, versus $3.9 million in the same period in 2000. Net loss
applicable to common shareholders for the three months ended December
31, 2001, before giving effect to restructuring charges, was approximately
$2.3 million. The net loss applicable to common shareholders for
the three months ended December 31, 2001, including restructuring
charges, was $6.8 million or $0.42 per share on a diluted basis,
compared to a net loss applicable to common shareholders of approximately
$2.7 million, or $0.19 per share on a diluted basis, for the three
months ended December 31, 2000.
Quarter Ended Twelve Months Ended
(In thousands, except per share information)
12/31/01 12/31/00 12/31/01 12/31/00
Sales - Operating 2,088 $3,866 $10,259 $15,568
Sales Returns -
restructuring (337) -- (337) --
Net Sales 1,751 3,866 9,922 15,568
Loss From Operations,
before restructuring
charges (2,209) (2,670) (9,330) (9,779)
Restructuring Charges,
including cost of
sales and sales
returns (4,463) -- (4,463) --
Loss From Operations (6,672) (2,670) (13,793) (9,779)
Net Loss (6,647) (2,568) (13,630) (9,574)
Preferred Stock
Dividend 134 139 565 351
$(6,781) $(2,707) $(14,195) $ (9,925)
Non-Cash Charge
Attributable to
Beneficial Conversion
Feature -- -- 7,500 --
Net Loss Applicable
To Common
Shareholders $(6,781) $(2,707) $(21,695) $(9,925)
PER SHARE INFORMATION:
Net Loss Applicable
to Common Shareholders
- Basic and Diluted $(0.42) $(0.19) $(1.43) $(0.72)
Common Shares Used
in Computing Per
Share Data - Basic
and Diluted 16,047,091 13,885,942 15,190,834 13,748,945
(1) Restructuring Charges - The net loss applicable to Common Shareholders
reflects the impact of restructuring charges associated with exiting a
specific PC headset customer type, or channel, within the Anti-Noise
Product business segment as follows:
Sales returns $ 337
Cost of sales $2,573
Restructuring charges $1,553
Total $4,463
(2) Non-cash charge attributable to beneficial conversion feature - The
net loss applicable to Common Shareholders reflects the intrinsic
value of the realization, during the third quarter of 2001, of a
contingent beneficial conversion feature related to the Company's
Series C Redeemable Convertible Preferred Stock.
The principal
factors that contributed to the operating loss for the fourth quarter
ended December 31, 2001, continue to be lower than expected revenues,
significant investments in research and development activities primarily
associated with the Company's efforts in developing digital audio
far-field microphone technologies, goodwill and intangible amortization
expense, expenses associated with creating and maintaining strategic
alliances, and significant operating expenses related to marketing
the Company's digital audio far-field microphone technologies, particularly
to the automotive telematics and PC communications markets. In addition,
the fourth quarter ended December 31, 2001 includes restructuring
charges in connection with exiting an unprofitable PC headset customer
base within the Anti-Noise Product segment. The restructuring was
primary a result of decreasing demand for the Company's PC headset
products from specific customers, including IBM, as well as the
Company's overall shift in strategic direction to deliver digital,
far-field microphone solutions. Furthermore, the loss applicable
to common shareholders for the three months ended December 31, 2001,
includes the effect of approximately $134 thousand in preferred
stock dividends.
During the year
ended December 31, 2001, research and development expenses decreased
approximately 26% over the same period in 2000. During the fourth
quarter ended December 31, 2001, research and development expenses
decreased approximately 33% over the same period in 2000. These
decreases, consistent with the nine months of 2001, is due primarily
to a reduction in expenses associated with research efforts that
were not integral to the Company's core portfolio of digital audio
far-field microphone technologies. Notwithstanding these decrease,
the relatively high level of research and development expenses when
compared to total sales is comprised of the Company's ongoing efforts
to develop its digital audio far-field microphone technologies,
including patented and patent-pending DSDA®, PureAudio®,
DFTA® and EchoStop(TM), among others. These technologies broaden
Andrea Electronics' exposure to key targeted industries, including
the automotive telematics and PC communications markets. Accordingly,
the Company anticipates continued significant spending in research
and development during 2002.
KEY FIRST QUARTER 2002 EVENTS TO DATE
* Andrea Electronics Corporation Generates $4 million in License Revenues
* Andrea Electronics Demonstrates Noise Reduction Technologies At Embedded
Systems Conference 2002
* Louis Libin and James M. Griffin Appointed to Andrea Electronics' Board
of Directors
* Andrea Electronics Corporation Announces Patent Issued For its Digital
Noise Canceling Technology
* Andrea Electronics Licenses Its PureAudio(R) Noise Reduction Technology
For Integration With Soundmax(R) PC Audio
KEY FOURTH QUARTER 2001 EVENTS
* Andrea Electronics Corporation Lands $1 Million Annual License Deal with
Leading Semiconductor Company
* Andrea Electronics' Array Microphone Demonstrated at Launch of
Windows XP
About Andrea
Electronics
Andrea Electronics
Corporation designs, develops and manufactures audio technologies
and equipment for enhancing applications that require high performance
and high quality voice input. The Company's patented Digital Super
Directional Array (DSDA), patented PureAudio, patented EchoStop
and patent-pending Directional Finding and Tracking Array (DFTA)
far-field microphone technologies enhance a wide range of audio
products to eliminate background noise and ensure the optimum performance
of voice applications. Applications for the Company's technologies
include: speech recognition programs, Internet telephony, video/audio
conferencing, automobile PCs, home automation systems, hand-held
devices and multiplayer online games, among others. Visit Andrea
Electronics' website at http://www.AndreaElectronics.com
or call 1-800-707-5779.
AT ANDREA ELECTRONICS
Richard A. Maue,
Chief Financial Officer
Lauren Rivera,
Marketing Communications Manager
800-442-7787
This press release
may contain ``forward-looking statements'' within the meaning of
the Private Securities Litigation Reform Act of 1995. The words
``anticipates,'' ``believes,'' ``estimates,'' ``expects,'' ``intends,''
``plans,'' ``seeks,'' variations of such words, and similar expressions
are intended to identify forward-looking statements. These statements
are not guarantees of future performance and involve matters that
are subject to certain risks, uncertainties and assumptions that
are difficult to predict, including economic, competitive, governmental,
technological and other factors, that may affect the business and
prospects of Andrea Electronics Corporation (the ``Company''). The
Company cautions investors about the following significant factors,
which, among others, have in some cases affected the Company's actual
results and are in the future likely to affect the Company's actual
results and could cause them to differ materially from those expressed
in any forward- looking statements: the rate at which Andrea Anti-Noise,
DSDA, DFTA and other Andrea technologies are accepted in the marketplace;
the competitiveness of Andrea Anti-Noise, DSDA, DFTA and other Andrea
products in terms of technical specifications, quality, price, reliability
and service; the sufficiency of the Company's funds for research
and development, marketing and general and administrative expenses;
infringement and other disputes relating to patents and other intellectual
property rights held or licensed by the Company or third parties;
the Company's continuing ability to enter and maintain collaborative
relationships with other manufacturers, software authoring and publishing
companies, and distributors; the emergence of new competitors in
the marketplace; the Company's ability to compete successfully against
established competitors with greater resources; the uncertainty
of future governmental regulation; the Company's ability to obtain
additional funds; and general economic conditions. No assurance
can be given that the Company will achieve any material sales or
profits from the products introduced in this release. These and
other similar factors are discussed under the heading ``Cautionary
Statement Regarding Forward-looking statements'' included in the
Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Company's Annual Report on Form 10-K
and in the Company's Annual Report to shareholders, and in documents
subsequently filed by the Company with the Securities and Exchange
Commission.
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
2001 2000 1999
SALES
Net Sales - Operating $10,258,875 $15,567,664 $17,112,487
Sales Returns
- Restructuring (337,499) -- --
NET SALES $9,921,376 $15,567,664 $17,112,487
COST OF SALES
Cost of sales - Operating 7,401,605 11,279,649 11,908,751
Cost of sales
- Restructuring 2,573,339 -- --
TOTAL COST OF SALES 9,974,944 11,279,649 11,908,751
Gross profit (53,568) 4,288,015 5,203,736
RESEARCH AND DEVELOPMENT
EXPENSES 3,462,340 4,694,116 3,399,666
RESTRUCTURING CHARGES 1,552,892 -- --
GENERAL, ADMINISTRATIVE
AND SELLING EXPENSES 8,724,784 9,373,025 8,954,805
Loss from operations (13,793,584) (9,779,126) (7,150,735)
OTHER INCOME (EXPENSE):
Interest income 193,087 416,393 246,882
Interest expense (51,746) (233,880) (306,843)
Rent and miscellaneous income 22,134 22,261 33,703
163,475 204,774 (26,258)
LOSS BEFORE PROVISION FOR
INCOME TAXES (13,630,109) (9,574,352) (7,176,993)
PROVISION FOR INCOME TAXES
-- -- --
Net loss (13,630,109) (9,574,352) (7,176,993)
PREFERRED STOCK
DIVIDENDS 564,604 351,209 195,843
NON-CASH CHARGE
ATTRIBUTABLE TO
BENEFICIAL CONVERSION
FEATURE 7,500,000 -- --
Net loss applicable
to common
shareholders $(21,694,713) $(9,925,561) $(7,372,836)
PER SHARE INFORMATION:
Net Loss Per Share
- Basic and Diluted $(1.43) $(.72) $(.56)
Shares used in
computing net loss
per share Basic and
Diluted 15,190,834 13,748,945 13,229,559
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