Echelon Corporation's First Quarter 2001 Financial Results Meet ExpectationsCompany Reports Third Consecutive Profitable Quarter(Sunnyvale, CA - April 12, 2001 ) - Echelon Corporation (NASDAQ: ELON) today announced financial results for the first quarter, 2001, meeting analysts' expectations. Revenues for the quarter ended March 31, 2001 were $12.6 million, an increase of 10% over revenues of $11.4 million for the same period in 2000. Net profit for the quarter ended March 31, 2001 was $22,000, or $0.00 cents per share, based on a fully diluted weighted average of 40,916,000 common shares outstanding, compared to a net loss of $651,000, or $0.02 per share for the first quarter of 2000, based on a weighted average of 33,651,000 common shares outstanding. Gross margin for the quarter ended March 31, 2001 was 61.9%, compared with 58.4% for the same period in 2000. Total operating expenses for the quarter ended March 31, 2001 were $10.0 million, compared to $7.6 million for the same period in 2000. "We are very pleased with our performance this quarter, meeting analyst expectations that had never been altered to account for the previously announced $475,000, or $0.01 per share, settlement of patent litigation - a terrific accomplishment in the face of economic softness worldwide," said M. Kenneth Oshman, Echelon's chairman, president and chief executive officer. "Our planned projects, particularly the work we are doing with Enel SpA, are going well as both Echelon and Enel continue to meet our mutual commitments to the timely and successful roll-out of the project. The market trends we see today are beginning to reward open systems in commercial buildings, industrial applications, energy management and home networking. We believe that these trends show that Echelon is in exactly the right position to satisfy the networking needs of these systems of everyday devices, providing applications and benefits limited only by the imagination of device manufacturers and system integrators. We are moving forward with partners to develop intelligent appliances and devices inside the home and continue to make good progress with home gateway and infrastructure suppliers such as Home Director, IBM, and Sun." The first quarter was notable for the advancement made by Echelon in terms of customer products, partnerships, and installations. The following are some of the highlights: At the January International Consumer Electronics Show, Echelon's LonWorks® platform figured prominently in a number of home networking systems. Both Sun Microsystems and Home Director demonstrated LonWorks products that communicated with one another and via a residential gateway based on the Open Services Gateway Initiative (OSGi) specification using a pre-release of Echelon's LonWorks Network Access Bundle software. IBM also distributed a pre-release of the software as part of its WebSphere™ Everyplace Suite Embedded Edition preview CD-ROM. Samsung, one of the world's largest manufacturers of home appliances, had an hourly stage show featuring an intelligent washing machine, microwave oven, and air-conditioning unit that used Echelon's LonWorks platform and power line transceiver products to communicate with one another and over the Internet. Invensys, the world's leading supplier of controls for appliance manufacturers, announced an expanded relationship with Echelon that broadens Invensys' commitment to the LonWorks platform from commercial buildings into homes. The company displayed a networked oven utilizing a Trimline™ appliance controller that communicates over the existing in-home power wiring using Echelon's power line transceivers. Invensys also announced that it is working with Echelon to enable Invensys' ControlServer2 residential gateway with LonWorks technology. Additionally, Monster Cable Products, Inc. and Echelon announced a preliminary agreement to create home theater and home control solutions based on LonWorks technology and Monster Cable's range of PowerCenter™ products. In January at the International Air Conditioning Heating Refrigerating Exposition, Echelon's Open System Alliance program gained significant industry support as Invensys Building Systems and the field offices of CSI Control Systems International (recently acquired by TAC AB) joined the program and Circon Systems Corporation announced its intent to join. Collectively, these companies have over 700 sales offices worldwide that will be eligible to be co-branded as Echelon OSA members. Cummins Inc. also announced the latest release of its LonWorks based PowerCommand® products that provide standby and prime-rated power generation systems. Additionally, Echelon announced that it had signed Engenuity Systems of Arizona to be its first North American distributor of system products. In February, Echelon completed its first acquisition when it acquired ARIGO Software GmbH located in Beckum, Germany. Founded in 1996, ARIGO specialized in LonWorks power line devices, gateways, and Web-enabled connectivity products. The acquisition adds world-class LonWorks engineering talent with expertise in creating end-user products to the Echelon team. In March at domotechnica 2001, the world's largest exposition for household appliances, Sampo Corporation, one of Taiwan's leading manufacturers of home appliances and consumer electronics, announced a new family of smart kitchen appliances built on the LonWorks platform. The product family, which includes an air conditioner, air purifier, dehumidifier, fan, fire detector, gas detector, outlet controller, motion sensor, Internet refrigerator, and home server, uses Echelon's PLT-22 Power Line Transceiver to connect the devices to each other and to the Internet. Sampo introduced the products into the Taiwan market under its own brand in December 2000 and will subsequently release them into the European market where it has an established business as a private-label, OEM supplier. For those interested in further discussion regarding this release, Echelon's management will participate in a conference call at 2:00 P.M. PDST today, April 12, 2001. To access the conference call, dial (888) 799-1348 (toll-free) any time after 1:50 P.M. PDST. The call will be available live today and for playback on the Investor Relations section of Echelon's Web site (www.echelon.com) through April 19, 2001. About Echelon Corporation Echelon Corporation (NASDAQ: ELON) is the world leader in networking everyday devices. The company offers a comprehensive line of hardware and software products for automating building, home industrial, transportation, and utility applications using LonWorks networks, and international, cross-industry, open standard for interoperable device networks. Echelon is Bringing the Internet to LifeT by linking the millions of everyday devices connected with LonWorks networks to the Internet. Echelon is based in Sunnyvale, California, with international offices in China, France, Germany, Japan, Korea, The Netherlands, and the United Kingdom. Further information can be found at http://www.echelon.com. # # # Echelon, LonWorks, LonMark®, the LonMark logo, and the Echelon logo are trademarks of Echelon Corporation registered in the United States and other countries. Bringing the Internet to Life is a trademark of Echelon Corporation. Other marks belong to their respective holders. This press release may contain statements relating to future plans, events or performance. Such statements may involve risks and uncertainties, including risks associated with uncertainties pertaining to the timing and level of customer orders, demand for products and services, risks that the R&D activities with Enel are not successful, do not meet their target dates, or are terminated, or that the contemplated transactions are challenged by third parties, risks that our development projects with other parties are not successful, the development of markets for Echelon's products and services, the integration of ARIGO's operations with Echelon's, and other risks identified in Echelon's SEC filings. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Echelon undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The financial statements that follow should be read in conjunction with
the notes set forth in Echelon's Form 10-Q when filed with the Securities
and Exchange Commission. ECHELON CORPORATION
ECHELON CORPORATION
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