3Com Announces Record Revenues and Earnings for Second Fiscal Quarter.SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--Dec. 19, 1996--Data networking leader 3Com Corporation (Nasdaq: COMS COMS 3Com Corporation (stock symbol) COMS Certified Orientation and Mobility Specialist COMS Continuous Opacity Monitoring Systems COMS City of Manchester Stadium (UK) ) today announced record revenues and earnings for its second fiscal quarter of fiscal 1997, ended Nov. 30, 1996. For the quarter, sales increased 46% from the second fiscal quarter a year ago, to $820.3 million. Net income of $105.6 million, or $.56 per share, included a non-tax deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). charge of $6.6 million associated with the acquisition of OnStream Networks OnStream Networks was a Santa Clara, California-based supplier of Circuit Emulation Service (CES) based Asynchronous Transfer Mode (ATM) solutions. They used the AAL1gator designed by Network Synthesis and acquired by Integrated Telecom Technology (later acquired by Inc., a leading supplier of broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). and ATM access products and concentrators. Excluding non-recurring charges in both years, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income in the second quarter of fiscal 1997 was a record $112.2 million, or $.60 per share, compared to $65.6 million, or $.37 per share, posted in the year-ago quarter, representing growth of 62% in pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share. The acquisition of OnStream Networks, which closed during the quarter has been accounted for as a pooling-of-interests transaction that increased shares and options outstanding by 3.8 million. Results for the first quarter of fiscal 1997 have been restated for this acquisition. "Our record performance reflects three important accomplishments," said Eric ERIC Educational Research Information Clearinghouse ERIC Educational Resources Information Center ERIC ERISA Industry Committee ERIC Epidemiologic Research and Information Center (Durham, NC) Benhamou, 3Com's chairman and chief executive officer. "One, we have strengthened our leadership position and gained market share at the edge of the network; two, we have seen mounting acceptance of our standards-based approach to solving networking bottlenecks in the core of the data network, which has led to a number of new account wins with our High Function CELLplex(TM) and ONcore(R) product lines; three, we have markedly enhanced our status and reputation in the industry as well as strengthened our financial performance. Our success in these three areas contributed to our 16% sequential One after the other in some consecutive order such as by name or number. growth in revenues during the quarter. "Over the last two years, 3Com has made significant investments in research and development, in strategic acquisitions, in an expanded end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. sales force for the enterprise and carrier markets, and in volume manufacturing and distribution," continued Benhamou. "Now, these investments have provided us with a combination of capabilities that make 3Com uniquely qualified as a strategic vendor and partner. This in turn has led to our strengthened position in the industry." Sales of systems products, including switches, hubs hubs - hub , internetworking internetworking - The interconnection of two or more networks, usually local area networks so that data can pass between hosts on the different networks as though they were one network. This requires some kind of router or gateway. , and remote access products were $460.7 million for the quarter, an increase of 41% compared to the same quarter a year ago. Sales of network adapters A printed circuit board that plugs into the bus of both user machines (clients) and servers in a local area network (LAN). Also commonly called a "network interface card" (NIC) or "LAN card," the network adapter transmits data onto the network and receives data from the network. increased 55% from the year-ago period, to $353.2 million. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. recent reports from industry analysts IDC and the Dell'Oro Group, during the quarter ending Sept., 3Com increased its market share in several important segments of the local area networking (LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. ) market, including network interface cards (NICs), shared Ethernet Refers to the traditional Ethernet topology in which all stations share the total bandwidth of the network. Whether connected via a common cable (10Base5, 10Base2) or a hub (10Base-T), transmission is on a first-come, first-served basis. hubs, and Ethernet switches A device that connects clients and servers to each other in an Ethernet network. See switched Ethernet. . 3Com is the worldwide market share leader in NICs. According to IDC, in the first half of 1996 3Com held 40% of the market for Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer NICs, a market share many times larger than its nearest competitor. According to reports from the Dell'Oro Group, during the September September: see month. quarter 3Com passed Intel as the share leader in Fast Ethernet An earlier name for 100Mbps Ethernet. See 100Base-T. (networking) Fast Ethernet - A version of Ethernet developed in the 1990s(?) which can carry 100 Mbps compared with standard Ethernet's 10 Mbps. It requires upgraded network cards and hubs. NICs, a small but rapidly growing segment of the overall market. During the first half of 1996 3Com became the worldwide market share leader in shared media hubs See digital media hub. . 3Com is also the number two provider of LAN switching
LAN switching is a form of packet switching used in local area networks. Switching technologies are crucial to network design, or to that minority of LANs that are used outside the home. products, and the leader in many segments including desktop switching, where 3Com holds over 40% of the market, according to the Dell'Oro Group. As a measure of 3Com's position in the industry, in a survey of 165 value added resellers See VAR. (company) value added reseller - (VAR, or "value added retailer") A company which sells something (e.g. computers) made by another company (an OEM) with extra components added (e.g. specialist software). conducted by the publication VARBusiness, 3Com's switches and router router Portable electric power tool used in carpentry and furniture making that consists of an electric motor, a base, two handle knobs, and bits (cutting tools). A router can cut fancy edges for shelving, grooves for storm windows and weather stripping, circles and ovals products were named best in the industry, ahead of the offerings of other large data networking suppliers. 3Com's products earned first place rankings in several categories including multi-protocol support, price per port, reliability and technical support. During the quarter, the company began shipments of a number of new products, including new switching modules for the LANplex(R) line of High Function switches, the CELLplex line of ATM switches, the ONcore Integrated System. In November November: see month. , 3Com began shipments of new ATM wide-area network access products acquired through OnStream Networks. In addition, 3Com shipped new additions to its SuperStack(TM) II line of stackable products, including the SuperStack II Desktop Switch, priced at just $120 per port. The company also introduced Fast IP, 3Com's strategy for providing IP switching Switching TCP/IP packets at high speed. Ipsilon's IP Switch started the trend and various vendors followed suit with different approaches, including Cisco's tag switching and 3Com's Fast IP. The goal was to switch IP packets faster than traditional router-based layer 3 forwarding. across all types of network backbone backbone: see spinal column. The part of a network that handles the major traffic. It employs the highest-speed transmission paths in the network and may also run the longest distances. technologies, including Ethernet, Fast Ethernet, Gigabit Ethernet An Ethernet standard that transmits at 1 Gbps. Used mostly to connect high-end workstations and servers as well as for network backbones, Gigabit Ethernet transmits full duplex from point to point using switches and half duplex in a shared environment (CSMA/CD) using a hub. , FDDI (Fiber Distributed Data Interface) Often pronounced "fiddy," it was a LAN and MAN access method that had its heyday in the mid-1990s. FDDI was an ANSI standard token passing network that transmitted 100 Mbps over optical fiber up to 10 kilometers. , Token Ring A local area network (LAN) access method developed by IBM. Conforming to the IEEE 802.5 standard, Token Ring uses a token ring access method and connects up to 255 nodes in a star topology at 4, 16 or 100 Mbps. , and ATM. Fast IP combines the control-policy function of routing with the wire-speed forwarding performance of switching. This news release, other than the historical financial information, may consist of forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties, including, but not limited to, quarterly fluctuations in results, the timely availability of new products, the impact of competitive products and pricing, and the other risks detailed from time to time in the company's SEC reports, including the report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended Nov. 30, 1996. Actual results may vary materially. 3Com Corporation has helped more than 42 million people gain access to critical information through high speed networks. Designed to serve large enterprises, service providers, small offices and homes, 3Com products provide a scalable architecture to meet the immediate and long term connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. needs of today's user. With research and development on three continents, 3Com is one of the data networking industry's largest and fastest growing companies. The company's innovative marketing, engineering, sales and support simplify communication, optimize optimize - optimisation network reliability and protect customer investments. For further information, visit 3Com's World Wide Web site at http://www.3Com.com or call 1-800-NET-3COM. -0- Note to Editors: 3Com, LANplex, and ONcore are registered trademarks of 3Com Corporation. CELLplex and SuperStack are trademarks of 3Com Corporation. All other trademarks are property of their respective holders. -0-
3Com Corporation
Consolidated Statements of Income
(Unaudited. In thousands, except per share data.)
Quarter Ended Six Months Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1996 1995 1996 1995
Sales $820,296 $563,544 $1,530,436 $1,060,833
Cost of Sales 371,306 266,719 697,953 502,269
Gross margin 448,990 296,825 832,483 558,564
Operating expenses:
Sales and marketing 164,086 118,920 306,756 221,131
Research and
development 80,228 56,082 151,121 107,630
General and
administrative 35,558 22,902 65,596 43,843
Acquisition-related
charges 6,600 69,000 6,600 69,000
Total operating
expenses 286,472 266,904 530,073 441,604
Operating income 162,518 29,921 302,410 116,960
Other income - net 4,788 1,930 7,721 3,183
Income before taxes 167,306 31,851 310,131 120,143
Income tax provision 61,737 15,506 112,990 46,377
Net income $105,569 $ 16,345 $197,141 $ 73,766
Earnings per share
Primary $ 0.57 $ 0.09 $ 1.07 $ 0.42
Fully-diluted $ 0.56 $ 0.09 $ 1.06 $ 0.42
Shares used in computing per share amount:
Primary 186,215 176,319 184,556 175,077
Fully-diluted 187,137 176,396 185,154 175,459
Net income for the quarter and six months ended November 30, 1996
included a charge of approximately $6.6 million for merger costs
associated with the acquisition of OnStream Networks, Inc.
(OnStream). Excluding this charge, proforma net income was $112.2
million ($.60 per share) and $203.7 million ($1.10 per share) for the
quarter and six months ended November 30, 1996, respectively.
Net income for the quarter and six months ended November 30, 1995
included a charge of approximately $69.0 million for merger costs
associated with the acquisition of Chipcom Corporation (Chipcom).
Excluding this charge, proforma net income was $65.6 million ($.37
per share) and $123.0 ($.70 per share) for the quarter and six months
ended November 30, 1995, respectively.
3Com Corporation
Consolidated Balance Sheets
(In thousands)
Nov. 30, 1996 May 31, 1996
ASSETS (unaudited)
Current Assets:
Cash, cash equivalents
& temporary investments $ 742,378 $ 499,337
Accounts receivable 463,029 359,182
Inventories 235,353 241,018
Other 182,445 140,174
Total current assets 1,623,205 1,239,711
Property and equipment - net 309,032 246,652
Deposits & other assets 48,889 38,754
Total $1,981,126 $1,525,117
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 177,275 $ 120,211
Other accrued liabilities 252,964 211,620
Income taxes payable 131,463 82,690
Total current liabilities 561,702 414,521
Long-term debt 110,225 110,000
Other long-term obligations 4,512 5,492
Noncurrent deferred income taxes 28,950 16,299
Shareholders' Equity:
Common stock 712,320 597,452
Unamortized restricted stock grants (4,963) (4,487)
Notes receivable on common stock (139) --
Retained earnings 560,071 379,358
Unrealized gain on available-for-sale
securities 9,082 7,159
Accumulated translation adjustments (634) (677)
Total shareholders' equity 1,275,737 978,805
Total $1,981,126 $1,525,117
Note to editors/analysts: To provide some visibility onto
calendar-year results, the following schedules are statements of
income for 3Com Corporation for the 12-month period ending November
30, 1996 and November 30, 1995.
3Com Corporation
Consolidated Statements of Income
(Unaudited. In thousands, except per share data.)
Twelve Months Ended
Nov. 30, 1996 Nov. 30, 1995
Sales $2,796,704 $1,962,848
Cost of sales 1,292,530 918,596
Gross margin 1,504,174 1,044,252
Operating expenses:
Sales and marketing 561,394 400,518
Research and development 276,598 200,717
General and administrative 119,148 80,197
Purchased in-process technology 52,353 7,900
Acquisition-related charges & other 7,550 75,100
Total operating expenses 1,017,043 764,432
Operating income 487,131 279,820
Other income - net 11,326 4,710
Income before taxes 498,457 284,530
Income tax provision 197,228 108,107
Net income $ 301,229 $ 176,423
Net income per share:
Primary $ 1.66 $ 1.02
Fully-diluted $ 1.66 $ 1.02
Shares used in computing per share amount:
Primary 181,257 173,389
Fully-diluted 181,820 173,786
Net income for the twelve months ended November 30, 1996 included
a charge of approximately $52.4 million for purchased in-process
technology associated with the acquisition of AXON Networks, Inc., a
charge of approximately $6.6 million for merger costs associated with
the acquisition of OnStream and a charge of approximately
$1.0 million for a litigation settlement.
Excluding these charges, proforma net income was $360.8 million
($1.98 per share) for the twelve months ended November 30, 1996. Net
income for the twelve months ended November 30, 1995 included a
charge of approximately $75.1 million for merger costs associated
with the acquisitions of Chipcom, Sonix Communications Ltd., and
Primary Access Corporation, and a charge of $7.9 million for
purchased in-process technology associated with Chipcom's acquisition
of DSI ExpressNetworks, Inc.
Excluding these charges, proforma net income was $236.7 million
($1.36 per share) for the twelve months ended November 30, 1995.
3Com Corporation
Consolidated Statements of Income
Q1'97 Restated for OnStream
(Unaudited. In thousands, except per share data.)
Quarter Ended
Nov. 30, 1996 Aug. 31, 1996
Sales $820,296 $710,140
Cost of sales 371,306 326,647
Gross margin 448,990 383,493
Operating expenses:
Sales and marketing 164,086 142,670
Research and development 80,228 70,893
General and administrative 35,558 30,038
Acquisition-related charges 6,600 --
Total operating expenses 286,472 243,601
Operating income 162,518 139,892
Other income - net 4,788 2,933
Income before taxes 167,306 142,825
Income tax provision 61,737 51,253
Net income $105,569 $ 91,572
Earnings per share:
Primary $ 0.57 $ 0.50
Fully-diluted $ 0.56 $ 0.50
Shares used in computing per share amount:
Primary 186,215 182,897
Fully-diluted 187,137 183,171
Net income for the quarter ended November 30, 1996 included a
charge of approximately $6.6 million for merger costs associated with
the acquisition of OnStream. Excluding this charge, proforma net
income was $112.2 million ($.60 per share).
3Com Corporation
Condensed Consolidated Balance Sheets
August 31, 1996 Restated for OnStream
(Unaudited. In thousands.)
Nov. 30, 1996 Aug. 31, 1996
ASSETS
Current Assets:
Cash, cash equivalents
& temporary investments $ 742,378 $ 582,071
Accounts receivable 463,029 420,659
Inventories 235,353 230,524
Other 182,445 158,903
Total current assets 1,623,205 1,392,157
Property and equipment - net 309,032 269,661
Deposits & other assets 48,889 40,022
Total $1,981,126 $1,701,840
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 177,275 $ 112,054
Other accrued liabilities 252,964 244,039
Income taxes payable 131,463 106,267
Total current liabilities 561,702 462,360
Long-term debt 110,225 110,994
Other long-term obligations 4,512 5,599
Noncurrent deferred income taxes 28,950 22,638
Shareholders' Equity:
Common stock 712,320 645,505
Unamortized restricted stock grants (4,963) (4,144)
Notes receivable on common stock (139) (348)
Retained earnings 560,071 454,500
Unrealized gain on available-for-sale
securities 9,082 5,257
Accumulated translation adjustments (634) (521)
Total shareholders' equity 1,275,737 1,100,249
Total $1,981,126 $1,701,840
-0- CONTACT: 3Com Investor Relations Investor relations The process by which the corporation communicates with its investors. Bill Slakey, 408/326-1286 Bill_Slakey@3Com.com or 3Com Public Relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most Leslie Davis Leslie A. Davis was an American diplomat and wartime US consul to Harput, Ottoman Empire from 1914 to 1917, who witnessed the Armenian Genocide. Witnessing the Armenian Genocide , 408/764-7187 Leslie Leslie (Gaelic, derived from a surname meaning 'garden of hollies,'grey fortress, or'garden by the pool')[1] can refer to any of the following: Places in Scotland:
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