[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
Dear Symbolics Customer:
On January 28, 1993 Symbolics announced that it filed for Chapter 11 reorganization.
Although progress had been made to financially restructure the company, our Board of
Directors determined that this action was necessary to execute a reorganization plan.
We intend to reorganize as quickly as possible under the Federal Bankruptcy Code
process and emerge as an economically viable company.
During the reorganization we will continue to serve our customers in the United
States and around the world without interruption. Symbolics UK subsidiary, Symbolics Ltd.,
has not filed for Chapter 11 reorganization and is conducting business as usual.
The liquidity problems that led us to take this step resulted from our poor
financial results for the quarter ending December 31, 1992, which saw revenues
drop 29 percent from the previous quarter. These results forced us to look at
the fundamentals of our business including its markets and its competitiveness,
and to formulate a new plan for the company. Symbolics has been long constrained
by the legacies of past business decisions: long term leases, financing quarter
to quarter losses, and expenses associated with products that need additional
investment to meet the changing needs of our customers. Filing for Chapter 11
gives the company the opportunity to make the changes we believe will bring it
back as a vital and competitive player in expanding markets.
Our overall goal is to maintain Symbolics as a going concern so it can:
*Allow our customers to benefit from continued use of our technology,
*Continue to support our installed software and hardware customers,
*Provide opportunities for our employees, and
*Maximize the recovery for each class of creditor.
We believe that we can maximize opportunities for our employees, our customers
and the recovery for all classes of our creditors if we remain in business with
a renewed focus on our core markets with software products and services that
conform to industry standards. The reorganization plan that will be submitted
to the courts contemplates:
*Porting Genera to standard platforms,
*Marketing and supporting our value added products such as Statice and Joshua,
*Providing hardware and software service to our customers, and
*Evolving Symbolics into a software and services company.
This plan will allow us to withdraw gradually over the next two years from the
business of manufacturing, assembling, selling and shipping proprietary computer
systems, and to migrate our customers to standard platforms without loss of
performance or functionality. The resulting cash savings can then be directed to
software development. This is a fundamental change to the companys business model,
and we believe that the reorganization plan will make these changes possible.
EVENTS LEADING UP TO THE FILING
Over the past two years we have been working with key customers on large projects.
In recent quarters this business has accounted for nearly 10 percent of our revenues.
Though we delivered consistently on all the milestones and passed all the acceptance
tests for performance and reliability, late in December we were notified by one of
these customers that they have decided to scale back one of our major projects. The
reasons for the decision were economic. Like many companies, our customers are also
feeling the pinch imposed by the slow economy and they look for ways to defer expenses
and push off projects. Unfortunately, our project was one of those sacrificed for
the sake of budget tightening.
This decision had an indirect effect on another project that was also important to
our revenue. During the last six months we have been negotiating with a potential
business partner regarding funding for a major development project. In late December
we were informed of their decision not to fund the project, which meant we will
continue the project without additional investment.
These lost business opportunities came at an unfortunate time. As the quarter came
to a close, product revenues fell sharply. The U.S. graphics revenue was off as a
result of competitive pressures and a general slowdown in the graphic arts industry.
U.S. Genera sales and service revenue followed the same trend and also declined from
the previous quarter. One of the bright spots in the revenue picture was the UK
subsidiary, which achieved its best revenue results in many quarters.
The overall decline in revenue during the last quarter left the company with lower
cash reserves and forced us to reduce our work force. While this was a necessary step,
it was not sufficient to cover the shortfall. In order to keep the company operational
so that we can continue to serve our customers and make the changes that we believe
will lead Symbolics to recovery, we have sought the protection of the bankruptcy
courts. This was a difficult decision, but we are convinced that it offers the
best opportunity for the company to focus its resources on its core business,
invest in its product line and to return the company to the position of
technological leadership it has always occupied in the industry.
As we start the new year, we also enter a new period for Symbolics. My overall
goal is to maintain the Symbolics tradition of encouraging the evolutionary
use of our technology by our customers and users. In the United States, a
Chapter 11 reorganization is a formal legal process fora company to continue
operations while it reorganizes its financial affairs. For Symbolics this means
we can get relief from the legacies of past business decisions that have
constrained the company, and devote our resources to evolving our product line.
Near term product plans include the release of Genera 8.3, and the ported
version of Genera on a 64 bit standard hardware platform.
On behalf of our employees, I appreciate the loyal support you have provided
us in the past. I ask for your continued support as we reorganize Symbolics
for the future.
Kenneth J. Tarpey
President & CEO