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EXHIBIT 99.1
INVESTOR CONTACT
Christine Munson
Chief Financial Officer
Gadzoox Networks, Inc.
408. 351.6191
[email protected]
PRESS CONTACT
Dominique Pheiffer
Corporate Communications Mgr.
Gadzoox Networks, Inc.
408.361.6143
[email protected]
GADZOOX NETWORKS REPORTS RESULTS FOR FIRST FISCAL QUARTER 2001
SAN JOSE, CA - July 13, 2000 - Gadzoox Networks, Inc. (NASDAQ:ZOOX) a leading
provider of SAN (storage area network) products, today reported results for the
first quarter of fiscal 2001 ended June 30, 2000. For the quarter, the Company
reported net revenues of $9.0 million, compared with net revenues of $9.2
million for the quarter ended June 30, 1999. As previously reported, revenues in
the June 2000 quarter were lower due to a reduction of orders from distribution
channel partners who are experiencing lower than expected movement of inventory
to end users. In addition, based on sales data provided by distribution channel
partners for June 2000, the Company increased its sales return reserves. As a
result, substantially all of the Company's net revenues were derived from sales
to OEM customers. Net revenues from the sales of the Company's Capellix switch
products, which have been primarily sold through the distribution channel,
reported net revenues for June 2000 quarter of 1.8 million or 21% compared to $7
million or 47% in March 2000 quarter.
Gross margins were 42% for the quarter ended June 30, 2000 compared with 41% for
the quarter ended June 30, 1999. The Company reported a net loss of $9.4 million
for the quarter ended June 30, 2000 compared with a net loss of $3.5 million for
the quarter ended June 30, 1999. The Company's pro-forma net loss per share for
the quarter ended June 30, 2000 was $0.35, including one-time charges for merger
and other costs, compared with a pro-forma net loss per share of $0.18 for the
quarter ended June 30, 1999.
"The quarter's behind us," said Gadzoox Networks President and CEO Bill Sickler.
"While we are disappointed with the results in the distribution channel, we are
already moving to address issues in this area. Our OEM sales were strong during
the June 2000 quarter, and we anticipate that this will continue in the quarters
ahead. We continue to make good progress with our technology, products, and
partners."
SMARTSAN SYSTEMS ACQUISITION
During the quarter, the Company completed the acquisition of SmartSAN Systems,
Inc. a leader in router technology. Gadzoox Networks recorded a one-time charge
of approximately $1.2 million for merger and other costs. In addition, the
Company issued 239,000 shares of common stock and agreed to issue an additional
109,000 shares of common
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stock pursuant to the exercise of SmartSAN stock options outstanding at the time
of the acquisition. The acquisition has been accounted for using the pooling of
interest method of accounting. Accordingly, the Company has restated the results
of the quarter ended June 30, 1999 (year ago quarter) to include, on a proforma
unaudited basis, approximately $243,000 of SmartSAN expenses.
PRODUCTS AND TECHNOLOGY
During the quarter, Gadzoox Networks introduced its Axxess product line. Axxess
is a powerful new family of products for Networked Storage Pooling that brings
different vendors' storage systems together in a single, scalable,
cost-effective storage resource. The Company also announced its Geminix family
of routers, which provide SAN connectivity for legacy disk arrays and tape
libraries.
ABOUT GADZOOX NETWORKS, INC.
Gadzoox Networks, Inc. (NASDAQ: ZOOX) is a leader in SAN (storage area network)
products. The Company provides networking solutions for enterprise storage with
scalable, managed SAN solutions based on Gadzoox' Fibre Channel hubs, routers,
switches and management products. Serving as modular building blocks, Gadzoox'
products are designed to address the growth in enterprise data through the
evolving capabilities of SANs. Gadzoox is an ISO 9001 certified Company. Gadzoox
corporate headquarters is located at: 5850 Hellyer Avenue, San Jose, CA 95138.
For more information, visit the company's Web site at WWW.GADZOOX.COM or call
888.423.3222.
The statements in this news release relating to future events or predictions
(including statements about future OEM sales) involve known and unknown risks
and uncertainties which may cause Gadzoox' actual results in future periods to
be materially different from any performance suggested in this release. Such
factors include, but may not necessarily be limited to, fluctuations in customer
demand, both in timing and in volume, the fact that the SAN market is new and
evolving, the Company's dependence on a limited number of products, a
significant portion of which are sold to a limited number of partners including
OEM and distribution channel partners, the abilitiy or willingness of our
partners to sell our products, market acceptance of new products, including but
not limited to Capellix, Geminix and Axxess, and the timing of such acceptance,
the Company's dependence on its contract manufacturer, competition in the
Company's industry and the timing of new technology, product introductions and
the Company's ability to effectively and efficiently integrate the SmartSAN
products into the existing Gadzoox product line. In the context of forward
looking information provided in this news release, reference is made to the
discussion of risk factors detailed in the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 2000, as well as subsequent filings.
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GADZOOX NETWORKS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
June 30, June 30,
2000 1999
-------- --------
<S> <C> <C>
Net revenues $ 9,002 $ 9,211
Cost of revenues 5,223 5,414
-------- --------
Gross margin 3,779 3,797
-------- --------
Operating expenses:
Research and development 5,519 4,163
Sales and marketing 5,727 1,888
General and administrative 1,484 764
Merger and acquisition costs 1,169 --
Amortization of deferred compensation 168 322
-------- --------
Total operating expenses 14,067 7,137
-------- --------
Loss from operations (10,288) (3,340)
Total other income (expense), net 885 (139)
-------- --------
Net Loss $ (9,403) $ (3,479)
======== ========
Basic net loss per share $ (0.35) $ (0.62)
======== ========
Weighted average shares used in computing
basic net loss per share 27,112 5,626
======== ========
Pro forma basic net loss per share $ (0.35) $ (0.18)
======== ========
Weighted average shares used in computing
pro forma basic net loss per share 27,112 19,533
======== ========
</TABLE>
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GADZOOX NETWORKS, INC.
CONDENSED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30,
2000
---------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 28,029
Short-term investment 32,125
Accounts receivable, net 12,388
Inventories 10,204
Prepaid expenses and other current assets 3,736
---------
Total current assets 86,482
Property and equipment, net 7,197
Other assets 1,459
---------
$ 95,138
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of note payable $ 99
Current portion of capital lease obligations 1,415
Accounts payable 7,944
Compensation related accruals 1,748
Deferred revenue and other 5,988
---------
Total current liabilities 17,194
Capital lease obligations, net of current portion 1,008
---------
Total liabilities 18,202
---------
Stockholders' equity:
Common stock 139
Additional paid-in capital 130,303
Deferred compensation (971)
Accumulated deficit (52,535)
---------
Total stockholders' equity 76,936
---------
$ 95,138
=========
</TABLE>
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(Note to editor: Gadzoox and the Gadzoox logo are registered trademark of
Gadzoox Networks, Inc. Bitstrip, Denali, Gibraltar, Ventana, SANtools and
Capellix are trademarks of Gadzoox Networks, Inc. All other trademarks are
property of their respective owners.)
