Quarterly report for AudioDev AB (publ.) 1 January - 31 March, 2001

Quarterly report for AudioDev AB (publ.) 1 January - 31 March, 2001 (Figures in parentheses refer to the period January-March 2000.) Poor net sales but substantial increase in volume of orders 2001 Jan-Mar 2000 Jan-Mar Change % Net sales, SEK M 29.6 57.8 -49 Operating income, SEK M 1.9 18.2 -90 - as % of invoicing 6.4 31.5 - Income before tax, SEK M 1.7 18.0 -94 - as % of invoicing 5.7 31.1 - Volume of orders, SEK M 103.5 58.7 +76 Net sales fell by 49 per cent to SEK 29.6 (57.8) million. Operating income fell by 90 per cent to SEK 1.9 (18.2) million. In March, AudioDev signed an agreement with DCA Inc. to supply test equipment for DVD discs for Xbox, the Microsoft game platform. This is regarded as a prestige order which will be of significant sales value in the future. The Group expects to fulfil its financial goals during 2001. AudioDev's operations AudioDev is one of the world's leading manufacturers of test equipment for optical media such as CDs and DVDs. The test equipment is marketed under the CATS name, a well-established brand in the industry. AudioDev is currently the manufacturer with the broadest market coverage, enjoying a significant presence in Europe, the USA and Asia. AudioDev offers the widest range of products in the market with test equipment for all optical formats. Customers include Microsoft, EMI, Warner, Sonopress, Pioneer, Ritek and Moser Baer. The company has 109 employees, with its head office in Malmö and three wholly owned subsidiaries in Sweden, the USA and Hong Kong. Market and products Market demand was poor during the first quarter of 2001, a situation anticipated in the press release of annual earnings figures. This decline was due, in part, to a fall in demand for test equipment for CD-R testers and a weakening in the general investment climate. Also, the demand for DVD-testers has been low during the first quarter. In March, however, the intake of orders has increased. The market for test equipment is characterised by incremental levels of demand and a sales graph which, consequently, shows a less than gradual upward trend. Periods of high demand are interspersed with periods of quieter activity. This pattern applies irrespective of optical format, and can result in net sales and the intake of orders appearing as they did in the last quarter. This is perfectly normal for this branch of industry and the long-term development of the company is not expected to be affected. During the first quarter, on the DVD side, AudioDev launched DVD Pro R/RW, an advanced tester for the DVD-R and DVD-RW recording formats. During the first quarter of the year, AudioDev signed an exclusive agreement with DCA Inc. to supply test equipment for game discs for Xbox, the Microsoft game platform due to be launched later this year. In March, AudioDev opened a new test centre in Guangzhou, China. This is AudioDev's third test centre, the other two being located in Sweden and the USA. The decision to open a test centre in China was chiefly a result of the strong demand for this type of service in the region. In addition, AudioDev has a great deal of confidence in China as a leading market in optic media and the company is therefore concentrating on maintaining the strong position we already enjoy in this market. Order intake and volume During the period, the intake of orders amounted to SEK 88 million and the volume of orders, at the close of the period, amounted to SEK 103 million. An initial major order relating to Xbox is included in the reported volume of orders at the end of the first quarter. Net sales Net sales fell during the first quarter of the year, compared with the corresponding period last year, by 49 per cent to SEK 29.6 (57.8) million. Sales in the North American market have been extremely weak during the period but are expected to grow strongly during the remainder of the year. Sales in the Asian market corresponded to 39 (43) per cent of net sales, while the European market, including OEM (original equipment manufacturer) sales, amounted to 40 (31) per cent. Sales in the North American market totalled 12 (24) per cent. Other markets corresponded to 9 (2) per cent of net sales. Operating income and margin Operating income fell and totalled SEK 1.9 (18.2) million. The operating margin was reduced as a consequence of poor net sales during the period and amounted to 6.4 (31.5) per cent. Investments During the first three months of 2001, investments of SEK 2.7 (0.4) million were made in tangible fixed assets. Financial position and liquidity As at 31 March, liquid assets totalled SEK 119.0 (28.9) million and the equity/assets ratio was 87.9 (41.5) per cent. At the close of the period, Group shareholders' equity amounted to SEK 247.2 (53.2) million. Disposable liquid assets, including unutilised credit commitments, amounted to SEK 119.0 (52.9) million. Cash flow Operating capital continued to increase during the period. Accounts payable, trade, fell and are now at a normal level. Accounts receivable, trade, increased chiefly as a result of the fact that most of AudioDev's invoicing in the Asian market is against letters of credit involving long terms of credit due to accreditation practices. As a consequence of the large proportion of letters of credit and advance invoicing, credit risk is considered to be small. Stock levels stabilised during the period, while cash flow from operating activities amounted to SEK -27.7 (6.7) million. A programme of measures was initiated to reduce the amount of capital tied-up in operating capital. Personnel During the period, the number of employees increased by 11 to 109. The Parent Company Parent Company net sales totalled SEK 35.2 (60.2) million. Operating income amounted to SEK 8.8 (21.8) million. Investments in tangible fixed assets of SEK 1.5 (0.4) million were made in the first three months of 2001. Disposable liquid assets, including unutilised credit, amounted to SEK 114.2 (15.9) million. Future prospects Despite a weak first quarter it is the boards opinion that the long-term financial goals of the Group will be achieved in 2001. Financial reports AudioDev's half-yearly report for 2001 will be submitted on 21 August 2001. Other information This quarterly report has not been audited by the company's accountants. Malmö, 8 May, 2001 Jan Barchan President and CEO For further information, please contact: Jan Barchan, Chief Executive Officer Tel: +46 40 690 49 49 e-mail: jan.barchan@audiodev.com Björn Pysander, Chief Financial Officer Tel: +46 40 690 49 42 e-mail: bjorn.pysander@audiodev.com ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/08/20010508BIT01000/bit0001.doc http://www.bit.se/bitonline/2001/05/08/20010508BIT01000/bit0001.pdf http://www.bit.se/bitonline/2001/05/08/20010508BIT01000/bit0001.xls Tables