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)
APRIL 25, 1995
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 9
ITEM 5. OTHER EVENTS
The Registrant's earnings press release for the year and quarter ended April 1,
1995 dated April 25, 1995 is attached as Exhibit 99 to this Report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
<C> <S> <C>
99 Press release issued by the Registrant on April 25, 1995, 3-9
announcing earnings for the year and quarter ended April 1,
1995.
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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: April 25, 1995
Page 2 of 9
FOR IMMEDIATE RELEASE
Media Contact: Emory Epperson
(714) 727-7958
Analyst Contact:Misty Ohmart
(714) 727-7728
AST REPORTS THIRD QUARTER RESULTS
IRVINE, Calif., April 25, 1995 -- AST Research Inc. (ASTA-NASDAQ) today
announced revenues of $670.2 million for the third quarter of fiscal year 1995,
ended April 1, 1995, representing a 13 percent increase over revenues of $591.3
million recorded during the third quarter of fiscal year 1994. Revenues for the
first nine months of fiscal year 1995 were up slightly over last year at $1.8
billion.
AST reported a net loss of $7.2 million, representing a net loss per share
of 22 cents during the third quarter of fiscal year 1995, compared to a net
income of $13.2 million and fully-diluted earnings per share of 38 cents during
the prior year period.
"Third quarter revenues were at near record levels and rose sequentially
after seasonally-brisk sales in the second quarter," said Safi Qureshey, AST
chairman and chief executive officer. "Our increased revenue level, coupled
with a significant reduction in our net loss, indicates we are making progress
in our return to profitability."
AST shipped a total of 400,000 units worldwide during the third quarter of
fiscal year 1995, representing a 20 percent gain over the prior year quarter.
The quarter's total was comprised of 351,000 desktops and 49,000 notebooks, with
Pentium-based systems representing 37 percent of desktop system revenues. For
the first nine months of fiscal year 1995, the company has shipped more than 1.1
million systems.
International sales of $333.4 million recorded during the third quarter of
fiscal year 1995 were 43 percent higher than the prior fiscal year period, while
North American sales decreased six percent to $336.8 million. Record revenues
of $245.0 million were reached in the European region, representing a 52 percent
increase over last year's third quarter, while Asia/Pacific sales increased 27
percent to $72.0 million.
AST was recognized as one of the fastest-growing top-ten PC manufacturers
in Western Europe according to the latest reports from International Data Corp.
According to DIA Stelacon, a Swedish market research firm, the company replaced
Compaq as the No. 1 market share holder in Sweden during the first quarter of
calendar year 1995. AST expanded its global presence into the consumer retail
markets throughout the European and Asia Pacific regions and also maintained its
No. 1 market share positions in China according to Dataquest and the Middle East
according to IDC.
In North America, consumer retail channel revenue performance increased 74
percent for the third quarter of fiscal year 1995 as compared to the prior year
period. IDC reported AST as Canada's fastest-growing PC manufacturer and A.C.
Nielsen placed AST over Apple and IBM as Canada's second-largest PC supplier in
the Nov. - Dec., 1994 period. IDC also ranked AST as the No. 1 market share
holder in the Canadian consumer retail market.
At April 1, 1995, total cash and cash equivalents were $67.5 million, with
short-term borrowings at $100.0 million. Total inventory was $354.7 million, up
slightly from $351.4 million at December 31, 1994. Accounts receivable
totaled $465.0 million, which represented 62 days sales outstanding.
THIRD QUARTER HIGHLIGHTS
Increased revenues and unit shipments during the third quarter resulted
from continued improvements in AST's worldwide operations model, which includes
manufacturing, component procurement, supply/demand planning and new product
introduction functions. Volume increased 35 percent over the previous quarter
at the company's Fort Worth production facility, representing a 58 percent
increase in units built per employee, with output gains of 49 percent achieved
at AST Ireland. The company also successfully completed transition of all
mobile systems production to Taiwan.
"We are continuing to make headway in improving our internal processes
through diligent focus on cost reductions, product development, quality and
product and component availability," said Jim Schraith, AST president and chief
operating officer. "With greater cross-functional teamwork in all areas,
strides have been made toward achieving on-time product introductions, just-in-
time component procurement and accurate supply/demand planning."
New products shipped during the third quarter included the feature-packed
Ascentia 910N and 810N notebook systems, which gives users one of the industry's
longest battery life and largest color displays. The Ascentia 910 received
several industry performance honors, including Best Buy awards from PC World and
BYTE and a Recommended Seal from PC Digest. Also introduced were enhanced
models to the Advantage! family of multimedia PCs for the consumer retail market
and the high-power Premmia MX P/75 mid-range business desktop.
The company also solidified executive management within its desktop, server
and mobile product divisions, complementing efforts realized during the previous
two quarters in strengthening leadership and structure for its three operating
regions. Operations in the Americas, Europe and Asia Pacific regions have been
decentralized, to provide greater efficiencies and cost controls. Work is also
underway to phase in changes to the company's new product introduction process,
which will involve reengineering processes and communications between
manufacturing, supply/demand planning, component procurement, finance and the
product division groups.
During the third quarter, AST entered into an agreement providing for an
investment by Samsung Electronics Co., Ltd., of up to 40.25 percent in AST, as
well as other strategic relationships, including component supply and joint
procurement. Since the announcement of the agreement on Feb. 27, Samsung has
issued and extended until June 1 its tender offer to purchase 5.82 million
shares of outstanding AST stock. The agreement has also passed review from the
Federal Trade Commission concerning the Hart-Scott-Rodino antitrust act.
OUTLOOK
"Our intense focus on manufacturing, new product introduction processes and
component procurement is improving our supply and allowing us to better fulfill
demand for our desktop, notebook and server systems," said Qureshey. "While we
have made progress over the last three quarters, we are continuing our efforts
to expand operational efficiency, realize further cost reductions and expand
demand creation to return to a market share growth position. These
improvements, coupled with our new relationship with Samsung Electronics, are
intended to solidify AST's position as a leading supplier of personal computers
throughout the world."
CORPORATE BACKGROUND
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 45 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.
# # #
AST RESEARCH, INC
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
April 1, July 2,
1995 1994
(Unaudited)
<S> <C> <C>
Assets:
Cash and cash equivalents $ 67,464 $ 153,118
Accounts receivable, net 465,022 326,057
Inventories 354,702 333,729
Other current assets 49,461 53,063
Total current assets 936,649 865,967
Property and equipment, net 103,126 103,441
Other assets 66,993 68,904
Total assets $ 1,106,768 $ 1,038,312
Liabilities and shareholders' equity:
Current liabilities $ 569,325 $ 431,493
Long-term debt 216,282 215,294
Deferred income taxes and other non-current liabilities 6,241 7,571
Total liabilities 791,848 654,358
Common stock and additional capital 142,150 141,747
Retained earnings 172,770 242,207
Total shareholders' equity 314,920 383,954
Total liabilities and
shareholders' equity $ 1,106,768 $ 1,038,312
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AST RESEARCH, INC.
Computation of Net Income (Loss) per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Unaudited) (Unaudited)
April 1, April 2, April 1, April 2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Shares used in computing primary
earnings (loss) per share:
Weighted average shares of
common stock outstanding 32,376 32,103 32,364 31,784
Effect of stock options treated as
common stock equivalents under
the treasury stock method 0 977 0 728
Weighted average common and common
equivalent shares outstanding 32,376 33,080 32,364 32,512
Net income (loss) $ (7,234) $ 13,214 $ (69,437) $ 39,379
Net income (loss) per share - primary $ (0.22) $ 0.40 $ (2.15) $ 1.21
Shares used in computing fully diluted
earnings (loss) per share:
Weighted average shares of common
stock outstanding 32,376 32,103 32,364 31,784
Effect of stock options treated
as equivalents under the treasury
stock method 0 983 0 805
Shares assumed issued on
conversion of Liquid Yield
Option Notes 0 4,093 0 1,649
Weighted average common and common
equivalent shares outstanding 32,376 37,179 32,364 34,238
Net income (loss)
Net income (loss) - primary earnings per
share $ (7,234) $ 13,214 $ (69,437) $ 39,379
Adjustment for interest on LYONs, net
of tax 0 890 0 1,066
Adjusted net income (loss) - fully diluted
earnings (loss) per share $ (7,234) $ 14,104 $ (69,437) $ 40,445
Net income (loss) per share - fully diluted $ (0.22) $ 0.38 $ (2.15) $ 1.18
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AST RESEARCH, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Unaudited) (Unaudited)
April 1, April 2, April 1, April 2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 670,176 $ 591,349 $ 1,805,781 $ 1,782,769
Cost of sales 583,234 490,243 1,615,222 1,481,197
Gross profit 86,942 101,106 190,559 301,572
Selling and marketing 58,934 50,031 169,347 145,124
General and administrative 22,913 19,968 67,665 57,256
Engineering and development 9,016 9,579 27,566 30,226
Operating income (loss) (3,921) 21,528 (74,019) 68,966
Other expense, net (5,121) (1,506) (12,777) (9,300)
Income (loss) before taxes (9,042) 20,022 (86,796) 59,666
Provision (benefit) for taxes (1,808) 6,808 (17,359) 20,287
Net income (loss) $ (7,234) $ 13,214 $ (69,437) $ 39,379
Net income (loss) per share:
Primary $ (0.22) $ 0.40 $ (2.15) $ 1.21
Fully diluted $ (0.22) $ 0.38 $ (2.15) $ 1.18
Shares used in computing net income (loss) per share:
Primary 32,376 33,080 32,364 32,512
Fully diluted 32,376 37,179 32,364 34,238
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