SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
OCTOBER 14, 1994
AST RESEARCH, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-13941 95-3525565
(Commission File Number) (IRS Employer Identification No.)
16215 ALTON PARKWAY
IRVINE, CALIFORNIA 92718
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(714) 727-4141
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Exhibit Index on Page 2 Page 1 of 5
<PAGE>
ITEM 5. OTHER EVENTS
On October 14, 1994, the Company announced that it expects first quarter fiscal
year 1995 revenues to be approximately $495 million and projected a net loss for
the quarter of $39 to $40 million. The Company also announced that it will be
consolidating its mobile computing manufacturing and closing its Fountain
Valley, California manufacturing facility February 1, 1995. A copy of the press
release is attached as Exhibit 99 to this Report, and is incorporated herein by
this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
Exhibit Sequential
Number Description Page No.
- - ------- ----------- ----------
<C> <S> <C>
99 Press release issued by the Registrant on October 14, 1994, announcing 3-5
fiscal first quarter revenue of approximately $495 million and the
closing of its Fountain Valley, California manufacturing facility
February 1, 1995.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AST Research, Inc.
_______________________________________
(Registrant)
By Bruce C. Edwards
Executive Vice President
and Chief Financial Officer
Date: October 18, 1994
Page 2 of 5
FOR IMMEDIATE RELEASE
Media Contact: Donna Kather
(714) 727-7943
Analyst Contact: Misty Ohmart
(714) 727-7728
AST LOWERS FIRST QUARTER REVENUE ESTIMATE,
PROJECTS NET LOSS RANGE
COMPANY TO CLOSE CALIFORNIA MANUFACTURING FACILITY
IRVINE, Calif., Oct. 14, 1994 -- AST Research Inc. (ASTA-NASDAQ) today announced
that it expects first quarter fiscal year 1995 revenues to be lower than earlier
anticipated. The company first described manufacturing issues such as component
constraints and product development delays in a press release on Aug. 31. These
issues continued into September, along with additional deeper than anticipated
price reductions to maintain product flow amidst severe industry price cutting,
which severely impacted the company's first quarter gross margins and may also
impact the company's second quarter performance.
AST anticipates fiscal first quarter revenue to be approximately $495
million. A net loss for the quarter of $39 to $40 million is also expected,
which will result in a net loss per share of between $1.20 and $1.25. The
company has received a waiver on its $300 million committed bank revolving
credit agreement, which covers potential defaults due to its first quarter loss.
AST plans to release its first quarter financial results on
Oct. 27, 1994.
AST also announced today that it will be consolidating its mobile computing
manufacturing and closing its Fountain Valley, Calif. manufacturing facility
Feb. 1, 1995.
The closing of AST's Fountain Valley facility will impact approximately 440
employees who perform manufacturing-related functions for the company's mobile
computers and multiprocessor servers. The company will immediately eliminate
approximately 100 positions at Fountain Valley as well as additional positions
-more-
AST Lowers First Quarter Revenue Estimate
2-2-2
companywide over the next few weeks. The actions result in a combined workforce
reduction of approximately 10 percent of AST's global workforce of 6,900.
"We must take aggressive actions and redefine our business model to remain
competitive in the market," stated Jim Schraith, AST president and chief
operating officer. "We will make changes in the organization and management
structure to reduce costs, and improve product development processes, quality
and product availability.
"Moving forward, AST will refocus on four core areas: customers, products,
distribution channels and geographic regions. We will maximize our resources
toward mainstream products and markets; deliver a competitive set of products
and services; optimize our use of the indirect distribution channel; and
concentrate on established, rapidly growing geographic regions. Details of
these plans will be rolled out over the next several weeks."
RE-BALANCING GLOBAL OPERATIONS
In light of the competitive environment and AST's current operating
conditions, AST analyzed its worldwide manufacturing operations and found that
it could improve its operating efficiency by consolidating mobile computer
manufacturing in Taiwan. AST has a subsidiary in Taiwan, which currently serves
as an AST mobile computer manufacturing center. Mobile computer distribution
for the Americas will be centralized in the company's Fort Worth, Texas
manufacturing center. AST's full range of desktops and servers are also
manufactured and distributed in Fort Worth.
EMPLOYEE TRANSITION PROGRAMS
AST has a comprehensive employee transition program established for
impacted employees. The program includes:
Salary continuance -- Impacted employees will be given salary continuance in
accordance with company policy.
Job Assistance Center -- AST offers a Job Assistance Center at its Fountain
Valley site that offers employees assistance in interviewing skills, resume
writing and job training.
Outplacement Task Team -- An Outplacement Task Team is networking with other
area companies to help place affected employees and offer external
outplacement services to help employees find new jobs.
-more-
AST Lowers First Quarter Earnings Estimate
3-3-3
Benefit continuance -- Continuance of medical benefits are extended through
the salary continuance period and then are available under the federal COBRA
program.
"We have always been proud of our California manufacturing operations,"
commented Safi Qureshey, AST co-founder, chairman and chief executive officer.
"Market dynamics forced us to make this difficult decision to position AST for
long-term success."
CORPORATE BACKGROUND
AST shipped 1.43 million computers worldwide during fiscal year 1994 (ended
July 2, 1994), including 1.16 million desktops and 268,000 notebooks. The
company's manufacturing facilities are located in Fort Worth, Texas; Limerick,
Ireland; Tianjin and Dongguan, China; Taiwan and Hong Kong.
AST Research Inc. is ranked number 287 on the Fortune 500 list of America's
largest industrial companies and is one of the world's leading personal computer
manufacturers. The company develops PC products ranging from portable systems
to superservers. AST, a $2.367 billion company, is represented in 100
countries and operates 43 subsidiaries and sales offices worldwide. Corporate
headquarters is located at 16215 Alton Parkway, P.O. Box 57005, Irvine, Calif.
92619-7005.
Telephone: (714) 727-4141 or (800) 876-4278. Fax: (714) 727-9355.
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