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MELVILLE,
N.Y., April 14 /PRNewswire-FirstCall/ -- Andrea Electronics
Corporation (Amex: AND) announced today that net sales for
the year ended December 31, 2002, were approximately $7.2
million versus $9.9 million in the prior year. Net loss applicable
to common shareholders for the year ended December 31, 2002
was approximately $21.1 million, or $1.12 per share on a diluted
basis, versus net loss applicable to common shareholders of
approximately $21.7 million, or $1.43 per share on a diluted
basis, for the year ended December 31, 2001. For the fourth
quarter ended December 31, 2002, net sales were approximately
$2.3 million, versus $1.8 million in the same period in 2001.
Net loss applicable to common shareholders for the three months
ended December 31, 2002, was approximately $14.0 million or
$0.69 per share on a diluted basis, compared to a net loss
applicable to common shareholders of approximately $6.8 million,
or $0.42 per share on a diluted basis, for the three months
ended December 31, 2001.
Three Months Ended Twelve Months Ended
(In thousands, except
per share
information) 12/31/02 12/31/01 12/31/02 12/31/01
Net Revenues $2,303 $1,751 $7,243 $9,921
Restructuring Charges,
including cost
of sales $ -- $(4,126) $ -- $(4,126)
Loss From Operations $(1,387) $(6,673) $(6,424) $(13,794)
Loss Before Provision
for Income Taxes and
Cumulative Effect of
Change in Accounting
Principle $(1,384) $(6,647) $(6,400) $(13,630)
Provision for
Income Taxes(1) -- -- (1,806) --
Loss Before Cumulative
Effect of Change In
Accounting Principle (1,384) (6,647) (8,206) (13,630)
Cumulative Effect of
Change in Accounting
Principle (12,459) -- (12,459) --
Net Loss (13,843) (6,647) (20,665) (13,630)
Non-Cash Charge
Attributable to
Beneficial Conversion
Feature -- -- -- 7,500
Preferred Stock
Dividend 109 134 467 565
Net Loss Attributable
to Common
Shareholders $(13,952) $(6,781) $(21,132) $(21,695)
PER SHARE INFORMATION:
Net Loss Per Share
before cumulative
effect of change
in accounting
principle for
goodwill - Basic and
Diluted $(0.08) $(0.42) $(0.46) $(1.43)
Cumulative effect of
change in accounting
principle for
goodwill - Basic
and Diluted (0.61) -- (.66) --
Net Loss Attributable
to Common
Shareholders - Basic
and Diluted $(0.69) $(0.42) $(1.12) $(1.43)
Common Shares Used in
Computing Per Share
Data - Basic and
Diluted 20,320,427 16,047,091 18,851,317 15,190,834
(1) During the third quarter 2002, the Company increased its valuation
allowance against its previously recorded net deferred tax assets by
$1.8 million, effectively creating a valuation allowance, or reserve,
to be 100% of the Company's then existing $17.4 million of gross
deferred tax assets.
Factors that
contributed to the net loss for the fourth quarter ended December
31, 2002 included decreasing levels of net revenues, significant
investments in research and development activities primarily associated
with the Company's efforts in developing digital signal processing
(DSP) based microphone technologies, significant general operating
and overhead expenses related to marketing the Company's DSP products
and technologies, particularly to the automotive telematics and
PC communications markets, and intangible amortization expense.
In addition, the Company completed its impairment testing during
the fourth quarter 2002 in accordance with a new accounting pronouncement,
Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" (FAS 142). The Company recorded an impairment
charge of approximately $12.5 million as a cumulative effect of
a change in accounting principle in accordance with this new pronouncement
and reduced goodwill to zero. Furthermore, the loss applicable to
common shareholders for the three months ended December 31, 2002,
includes the effect of approximately $109 thousand in preferred
stock dividends.
Research and
development expenses for the year ended December 31, 2002 increased
5% to $3,642,550 from $3,462,340 for the year ended December 31,
2001. The substantial amount of research and development is a reflection
of our efforts to develop and commercialize DSP microphone and audio
technologies, coupled with, to a lesser extent, efforts in Aircraft
Communication product technologies and Andrea Anti-Noise headset
products. We believe that continued research and development spending
should provide Andrea with a competitive advantage, however, as
part of our overall effort to conserve cash, we intend to reduce
the relatively high levels of such expenses during fiscal 2003.
General, administrative
and selling expenses decreased approximately 36% to $5,577,579 for
the year ended December 31, 2002 from $8,724,784 for the year ended
December 31, 2001. These decreases are primarily due to cost reduction
efforts, as well as our adoption, on January 1, 2002, of FAS 142.
Under FAS 142, goodwill and intangible assets with indefinite lives
are no longer amortized but are reviewed for impairment from time
to time. The adoption of this pronouncement, in addition to the
aforementioned charge described above, resulted in a decrease of
$1,128,187 in amortization expense for 2002 when compared to the
prior year. With respect to 2003, as a result of the sale of our
Aircraft Communications Products segment on April 11, 2002, as well
as our overall effort to conserve cash, we believe that selling,
general and administrative expenses will decline substantially.
KEY FIRST QUARTER 2003 EVENTS TO DATE
* Andrea Electronics Sold its Aircraft Communications Products Division
* Andrea Electronics Launches USB Audio Peripheral
* EDN Magazine Selects Andrea Electronics' PureAudio Noise Reduction
Algorithm as One of 2002's Top 100 Products
* Ford Selects Andrea Electronics' Microphone Array for Inclusion in
Demonstration Vehicle at the North American International Auto
Show 2003
KEY FOURTH QUARTER 2002 EVENTS
* Marconi Selects Andrea Electronics to Provide Audio Technologies for
Virtual Presence Communications System
* NASA Selects Andrea's Digital Microphone Technologies
* Andrea Electronics' Microphone Array Selected for OnStar System in
Cadillac XLR
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 www.AndreaElectronics.com
or call 1-800-707-5779.
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
For the Years Ended December 31,
2002 2001 2000
REVENUES
Net Product Revenues from
Operations $6,289,315 $10,258,875 $15,567,664
License Revenues 953,356 -- --
Revenues 7,242,671 10,258,875 15,567,664
SALES RETURNS - RESTRUCTURING -- (337,499) --
Net Revenues 7,242,671 9,921,376 15,567,664
COST OF SALES - OPERATING 4,446,121 7,401,605 11,279,649
COST OF SALES - RESTRUCTURING -- 2,573,339 --
Cost of sales 4,446,121 9,974,944 11,279,649
Gross margin (deficit) 2,796,550 (53,568) 4,288,015
RESEARCH AND DEVELOPMENT
EXPENSES 3,642,550 3,462,340 4,694,116
RESTRUCTURING CHARGES -- 1,552,892 --
GENERAL, ADMINISTRATIVE AND
SELLING EXPENSES 5,577,579 8,724,784 9,373,025
Loss from operations (6,423,579) (13,793,584) (9,779,126)
OTHER INCOME (EXPENSE):
Interest income 3,448 193,087 416,393
Interest expense (10,967) (51,746) (233,880)
Rent and miscellaneous
income 31,257 22,134 22,261
23,738 163,475 204,774
LOSS BEFORE PROVISION FOR
INCOME TAXES AND
CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING
PRINCIPLE FOR GOODWILL (6,399,841) (13,630,109) (9,574,352)
PROVISION FOR INCOME TAXES 1,806,615 -- --
Loss before cumulative
effect of change in
accounting principle
for goodwill (8,206,456) (13,630,109) (9,574,352)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE
FOR GOOWILL (12,458,872) -- --
Net loss (20,665,328) (13,630,109) (9,574,352)
NON-CASH CHARGE ATTRIBUTABLE
TO PREFERRED STOCK
BENEFICIAL CONVERSION FEATURE -- 7,500,000 --
PREFERRED STOCK DIVIDENDS 466,695 564,604 351,209
Net loss attributable
to common
shareholders $(21,132,023) $(21,694,713) $(9,925,561)
PER SHARE INFORMATION
Net loss Per Share before
cumulative effect of change
in accounting principle
for goodwill - Basic and
Diluted $(.46) $(1.43) $(.72)
Cumulative effect of change
in accounting principle
for goodwill - Basic and
Diluted $(.66) $ -- $ --
Net Loss Per Share - Basic and
Diluted $(1.12) $(1.43) $(.72)
Shares used in computing
net loss per share - Basic
and Diluted 18,851,317 15,190,834 13,748,945
AT ANDREA ELECTRONICS
CORP.
Richard Maue
Chief Financial Officer
(800) 442-7787
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