BURLINGTON, N.J., May 21 /PRNewswire/ -- Franklin Electronic Publishers, Inc. (NYSE: FEP) today announced that it expects to report substantial losses both for its fiscal year and fourth quarter ended March 31, 1999. The expected fourth quarter loss results primarily from non-cash charges and other unusual or non-recurring losses, including the reduction of the carrying value of inventory and certain other assets, the previously announced writedown of the account receivable due from Service Merchandise, Inc., and severance and other costs related to the restructuring of the Company's management. Additionally, the Company expects to post an operating loss for the quarter as expenses incurred in the quarter were based on the anticipation that sales would be comparable to last year's March quarter sales. While the Company will report record sales for the 1999 fiscal year, sales for the fourth quarter were approximately 11% lower than the record fourth quarter sales of $21,828,000 last year. The reduced sales reflect lower sales of the Company's core reference products and products in the REX line. The lower reference sales had been expected, given the Company's introduction of a new, improved line of reference products at the January 1999 Consumer Electronics Show, which line will begin to ship later in the June 1999 quarter. The Company also announced that gross margins in the June quarter are anticipated to be lower than last year's as the Company implements its transition into new models and new product lines. The Company's restructured management team is in the process of making substantial reductions in operating expenses, the effect of which will not have an impact until the second half of the fiscal year. Arnold D. Levitt, who was named as the Company's Interim Chief Financial Officer and Treasurer two weeks ago, stated that, due to the recent management changes at the Company, the audited year-end and fourth quarter results will be delayed until late in the month of June, 1999. Franklin Electronic Publishers, Inc. (NYSE: FEP), the exclusive source for REX(R) PC-Card organizer products, is the worldwide market leader in handheld electronic books, including the popular BOOKMAN(R) series. The Company is also the exclusive producer and distributor of ROLODEX(R) Electronics brand personal information management products. Franklin has sold more than 20,000,000 electronic books and currently publishes more than 200 titles, including dictionaries and bilingual dictionaries; encyclopedias; Bibles; entertainment titles; education and tutorial publications; and medical reference works. Franklin products, available in sixteen languages, are sold in 45,000 retail outlets worldwide and through catalogs and the Internet. More information about Franklin can be found at http://www.franklin.com. The Company has sales and distribution subsidiaries in the United Kingdom, France, Germany, the Benelux countries, Canada, Australia, and Mexico and production management offices in Tokyo and Hong Kong. ROLODEX(R) is a registered trademark of Berol Corporation, a subsidiary of Newell Rubbermaid, Inc. Other product and company names herein may be trademarks of their respective owners. Except for the historical information contained herein, the matters discussed throughout this release, including, but not limited to, those that are stated as Franklin's belief or expectation or preceded by the word "should" are forward looking statements that involve risks to and uncertainties in Franklin's business, including, among other things, the timely availability and acceptance of new electronic reference products, organizers, and computer companion products, changes in technology, the impact of competitive electronic products, the management of inventories, Franklin's dependence on third party component suppliers and manufacturers, including those that provide Franklin-specific parts, and other risks and uncertainties that may be detailed from time to time in Franklin's reports filed with the Securities and Exchange Commission.  