Echelon Corporation Reports Record Revenues, 47% GrowthFinancial Results in Line with Analyst Expectations(Sunnyvale, CA - October 11, 2001) - Echelon Corporation (NASDAQ: ELON) today announced financial results meeting analysts' expectations for the third quarter ended September 30, 2001. Revenues for the quarter ended September 30, 2001 were $18.0 million, an increase of 47% over revenues of $12.2 million for the same period in 2000. Net earnings for the quarter ended September 30, 2001 were $757,000, or $0.02 per share on a fully diluted basis, based on a weighted average of 41,526,000 common shares outstanding, compared to net earnings of $128,000, or $0.00 per share on a fully diluted basis, based on a weighted average of 39,483,000 common shares outstanding for the third quarter of 2000. "We are very pleased with our results this quarter, the fifth consecutive quarter in which we have shown a profit," said M. Kenneth Oshman, Echelon's chairman and chief executive officer. "While we see the effects of the ongoing worldwide economic slowdown on many customers in our core business, our project with Enel S.p.A continues to go very well and has begun its ramp into volume deployments which we expect to accelerate over the coming months and quarters. We are confident in our business and remain excited about our prospects." Revenues for the nine-month period ended September 30, 2001 were $44.5 million, an increase of 22% over revenues of $36.3 million for the same period one year ago. Net earnings for the nine-month period ended September 30, 2001 were $817,000, or $0.02 per share on a fully diluted basis, based on a weighted average of 41,273,000 common shares outstanding, compared to a net loss of $1.0 million, or $0.03 per share, based on a weighted average of 34,342,000 common shares outstanding for the same period in 2000. Gross margin for the quarter ended September 30, 2001 was 48.8%, compared with 60.3% for the same period in 2000. Gross margin for the nine-month period ended September 30, 2001 was 54.4%, compared with 60.0% for the same period in 2000. Total operating expenses for the quarter ended September 30, 2001 were $9.5 million, compared to $8.0 million for the same period in 2000. Following are some highlights from the quarter's significant events as reported in previously issued press releases: Fleetwood Enterprises, the nation's largest manufacturer of recreational vehicles and a leading producer and retailer of manufactured housing, unveiled a "smart" recreational vehicle (RV) that uses LonWorks® technology as the brains in its "Mobile RV Information System." The vehicle was showcased at the Family Motor Coach Association's (FMCA) 38th Annual Summer Grand International Convention. Designed in conjunction with Intel® Solution Services, the pre-production home on wheels networks a variety of devices inside and outside the RV to provide users with enhanced comfort and safety features. Echelon announced that Samsung Electronics has begun commercial installations of smart, LonWorks based home appliances. The installation, the first of its kind to take place in the Korean market, began with 100 apartments in a residential complex in Suji, Kyonggi Province, South Korea. The networks use Echelon's ANSI/EIA 709.2 compliant power line transceivers and the company's LNS™ network operating system to connect air conditioners, refrigerators, washing machines, microwave ovens and gateways to each other and to the Internet. Echelon and Shenzen Kaifa Technology Co., Ltd., a subsidiary of China's Great Wall Technology Company, Ltd. (GWT), announced that they had entered into a letter of intent to jointly incorporate Echelon's products and technology into Great Wall Broadband Network's (GWBN's) broadband network infrastructure. GWBN, also a subsidiary of GWT, is one of China's largest broadband access providers and Internet service providers, with over 400,000 active subscribers, 1 million connected residential units, and contracts to connect more than 15 million additional residential units to its broadband network. GWBN plans to have more than 30 million customers connected to its broadband network by the year 2005 and, in addition to Internet access, plans to offer LonWorks based home control, utility metering, and other value-added services to its customers. Echelon announced several changes to its management team. Effective in mid-September, Ken Oshman became Echelon's chairman and CEO, turning the title of president over to Bea Yormark who became president and COO. Frits Bruggink has assumed Ms. Yormark's previous role as senior vice president of marketing and sales. Also reporting to Ms. Yormark are Russell Harris, who joined Echelon in September as senior vice president of operations and Peter Mehring, senior vice president of engineering, who has led Echelon's engineering organization since March of 1998. Echelon announced that its board of directors had authorized a stock repurchase program of up to 2,000,000 shares of the Company's Common Stock within a period of two years from the date of the first purchase under such program, in accordance with Rule 10b-18 and other applicable laws, rules and regulations. Echelon selected A.G. Edwards & Sons as the broker/dealer to assist Echelon in repurchases made by the Company in connection with the stock repurchase program. Echelon purchased 265,000 shares of stock during the quarter as part of the repurchase program. For those interested in further discussion regarding this release, Echelon's
management will participate in a conference call today at 2:00 pm PDT.
To access the conference call, dial About Echelon Corporation Echelon Corporation is the creator of the LonWorks platform, the world's most widely used standard for connecting everyday devices such as appliances, thermostats, air conditioners, electric meters, and lighting systems to each other and to the Internet. Echelon's hardware and software products enable manufacturers and integrators to create smart devices and systems that lower cost, increase convenience, improve service, and enhance productivity, quality, and safety. Thousands of companies have developed and installed more than 16 million LonWorks based devices into homes, buildings, factories, trains, and other systems worldwide. The protocol underlying LonWorks networks and the signaling used by Echelon's power line and free topology transceivers have both been adopted as standards by the American National Standards Institute (ANSI). Echelon is also a founding member of the LonMark® Interoperability Association, an open industry forum of hundreds of leading manufacturers, integrators, and users dedicated to promoting the use of interoperable LonWorks devices. More information is available at http://www.LonMark.org. Further information regarding Echelon can be found at http://www.echelon.com. From October 23-24, Echelon and Messe Frankfurt GmbH are holding LonWorld™
2001, the world's premier conference and trade show devoted solely to
the LonWorks industry, in Frankfurt, Germany. Further information is available
at http://www.LonWorldexpo.com. # # # Echelon, LonWorks, and the Echelon logo are trademarks of Echelon Corporation registered in the United States and other countries. LNS, LonWorld, and Bringing the Internet to Life are trademarks 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 or subsequent product deployment 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, risks relating to the development of markets for Echelon's products and services and the ability of those products and services to meet customer and consumer expectations, 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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