3Com Reports Fourth Quarter and Fiscal 1998 Results; Posts Sequential Sales Increase and Improved Operating Performance.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)--June 24, 1998--3Com Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :COMS COMS 3Com Corporation (stock symbol) COMS Certified Orientation and Mobility Specialist COMS Continuous Opacity Monitoring Systems COMS City of Manchester Stadium (UK) ), a leading global networking company, today reported financial results for its fourth fiscal quarter and year, ended May 31, 1998. For the quarter, sales of $1.375 billion increased 10 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from the previous quarter. Net income of $63.6 million, or $.17 per share, included an $8.4 million charge for purchased in-process technology associated with the Lanworks Technologies, Inc. (Lanworks) acquisition, and a net credit of $4.9 million related to past merger activities and the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of real estate. Excluding these items, 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 was $65.9 million, or $0.18 per share. For the quarter, sales of systems products including switches, hubs hubs - hub , remote access concentrators A remote access server that supports one or more T1/E1 lines, allowing multiple analog and ISDN calls to come in over one port from the telephone company. Remote access concentrators can handle much higher call densities than remote access servers. , routers and network management software totaled $671.3 million, an increase of 22 percent sequentially and eight percent from the same quarter a year ago. Client access product sales, which include network interface cards and modems, increased one percent sequentially and decreased six percent from the fourth quarter of fiscal 1997, to $704.2 million. "We have turned the corner and have begun to realize operating efficiencies and improved financial results," 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 chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our fourth quarter results reflect the success of our new product platforms and our commitment to continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. strengthening operational performance. We have entered fiscal 1999 with confidence and a solid foundation for future growth and continued success." Sales for the year were $5.4 billion compared to $5.6 billion in fiscal 1997. Excluding non-recurring items, pro forma net income for fiscal 1998 was $246.1 million, or $0.67 per share. Actual net income of $30.2 million, or $.08 per share, included a net charge of $253.7 million primarily related to U.S. Robotics (U.S. Robotics, Inc., Schaumburg, IL, www.usr.com) A modem manufacturer highly regarded for its quality products. The company manufactures its own chipsets (data pumps) and often leads with innovations. Its HST protocol was a high-speed, reliable protocol before V. merger-related activities and the disposition of real estate. In addition, net income for fiscal 1998 included a purchased in-process technology charge of $8.4 million associated with the acquisition of Lanworks. Excluding non-recurring items, pro forma net income for fiscal 1997 was $543.2 million, or $1.54 per share. Actual 1997 net income of $500.5 million, or $1.42 per share, included charges of $60.6 million and a related tax benefit of $17.9 million, or a net $0.12 per share, primarily related to the acquisition of Scorpio Scorpio, constellation: see Scorpius. Scorpio or Scorpius (Latin; “Scorpion”) In astronomy, the constellation lying between Libra and Sagittarius; in astrology, the eighth sign of the zodiac, governing approximately Communications, Ltd. During the year, 3Com made a series of significant news announcements regarding products and technology, services, alliances, customer wins and product awards. About 3Com 3Com Corporation enables individuals and organizations worldwide to stay more connected by communicating and sharing information and resources anytime, anywhere. As one of the world's preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae suppliers of data, voice and video communications technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry , 3Com has delivered networking solutions to nearly 200 million customers worldwide. The company provides large enterprise, small and medium enterprise, carriers and network service providers, and consumers comprehensive, innovative information access products and system solutions for building intelligent, reliable and high performance local and wide area networks. For further information, visit 3Com's World Wide Web site at http://www.3Com.com or the press site at http://www.3Com.com/pressbox. -0-
3Com Corporation
Consolidated Statements of Operations
(In thousands, except per share data.)
Quarter Ended Year Ended
May 31, May 31, May 31, May 31,
1998 1997 1998 1997
(Unaudited)
Sales $ 1,375,471 $ 1,371,743 $ 5,420,367 $ 5,606,077
Cost of Sales 777,203 743,341 2,961,164 2,918,966
Gross margin 598,268 628,402 2,459,203 2,687,111
Operating expenses:
Sales and
marketing 291,869 315,602 1,247,755 1,081,846
Research and
development 149,600 155,858 581,613 502,503
General and
administrative 66,210 80,165 268,115 249,941
Purchased in-process
technology 8,433 -- 8,433 54,000
Merger-related
charges (credits)
and other (4,910) -- 253,722 6,600
Total operating
expenses 511,202 551,625 2,359,638 1,894,890
Operating income 87,066 76,777 99,565 792,221
Other income
(expense), net 10,733 (1,820) 16,908 8,480
Income before
income taxes 97,799 74,957 116,473 800,701
Income tax
provision 34,231 33,170 86,259 300,168
Net income $ 63,568 $ 41,787 $ 30,214 $ 500,533
Net income
per share
Basic $ 0.18 $ 0.13 $ 0.09 $ 1.51
Diluted $ 0.17 $ 0.12 $ 0.08 $ 1.42
Shares used in computing
per share amount:
Basic 357,531 333,658 351,154 330,517
Diluted 368,130 352,835 360,262 353,269
Net income for the quarter ended May 31, 1998 included a charge
of $8.4 million ($0.02 per share) associated with the purchase of
Lanworks Technologies, Inc, and a net credit of $4.9 million ($0.01
per share) related to past merger activities and the disposition of
real estate. Excluding these charges and credits, net income for the
quarter ended May 31, 1998 was $65.9 million ($0.18 per share).
Net income for the year ended May 31, 1998 included a charge of
$8.4 million ($0.02 per share) associated with the purchase of
Lanworks Technologies, Inc. and a net charge of $253.7 million ($0.57
per share) associated with merger activities and the disposition of
real estate. Excluding these net charges, net income for the year
ended May 31, 1998 was $246.1 million ($0.67 per share). Net income
for the year ended May 31, 1997 included acquisition-related charges
of $60.6 million (approximately $0.17 per share) and a related tax
benefit of $17.9 million (approximately $0.05 per share). Excluding
these charges, net income for the year ended May 31, 1997 was $543.2
million ($1.54 per share).
3Com Corporation
Condensed Consolidated Balance Sheets
(In thousands)
May 31, 1998 May 31, 1997
ASSETS
Current Assets:
Cash and investments $ 1,076,078 $ 889,943
Accounts receivable, net 849,640 959,142
Inventories, net 644,771 554,718
Deferred income taxes 430,182 196,875
Other 134,001 115,058
----------- -----------
Total current assets 3,134,672 2,715,736
Property and equipment, net 858,779 731,301
Deposits and other assets 87,069 118,804
----------- -----------
Total assets $ 4,080,520 $ 3,565,841
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ -- $ 134,700
Accounts payable 332,992 308,581
Other accrued liabilities 661,303 516,976
Income taxes payable 177,612 168,942
Current long-term obligations 12,008 12,314
----------- -----------
Total current liabilities 1,183,915 1,141,513
Long-term obligations 35,878 163,945
Other long-term obligations 4,480 6,707
Deferred income taxes 48,752 25,332
Stockholders' Equity:
Common stock 1,730,676 1,183,926
Retained earnings 1,079,775 1,049,561
Unrealized gain on investments, net 827 2,320
Unamortized restricted stock grants (4,157) (5,165)
Accumulated translation adjustments 374 (2,298)
----------- -----------
Total stockholders' equity 2,807,495 2,228,344
Total liabilities and stockholders'
equity $ 4,080,520 $ 3,565,841
3Com Corporation
Consolidated Statements of Operations
(Unaudited. In thousands, except per share data.)
Quarter Ended
Aug. 31, Nov. 30, March 1, May 31,
1997 1997 1998 1998
Sales $ 1,597,516 $ 1,197,189 $ 1,250,191 $ 1,375,471
Cost of Sales 831,429 645,344 707,188 777,203
Gross margin 766,087 551,845 543,003 598,268
Operating expenses:
Sales and marketing 302,378 338,334 315,174 291,869
Research and
development 142,798 144,978 144,237 149,600
General and
administrative 62,865 71,265 67,775 66,210
Purchased in-process
technology -- -- -- 8,433
Merger-related charges
(credits) and other 269,787 (1,229) (9,926) (4,910)
Total operating expenses 777,828 553,348 517,260 511,202
Operating income (loss) (11,741) (1,503) 25,743 87,066
Other income (expense),
net 2,961 7,637 (4,423) 10,733
Income (loss) before
income taxes (8,780) 6,134 21,320 97,799
Income tax provision 42,453 2,113 7,462 34,231
Net income (loss) $ (51,233) $ 4,021 $ 13,858 $ 63,568
Net income (loss)
per share
Basic $ (0.15) $ 0.01 $ 0.04 $ 0.18
Diluted $ (0.15) $ 0.01 $ 0.04 $ 0.17
Shares used in computing
per share amount:
Basic 341,718 350,600 354,766 357,531
Diluted 341,718 365,085 366,116 368,130
Net income for the quarter ended August 31, 1997 includes a
charge of $269.8 million ($0.62 per share) for merger charges
associated with the merger with U.S. Robotics. Excluding this charge,
net income was $169.6 million ($.47 per share). Net income for the
quarter ended November 30, 1997 includes a net credit of $1.2 million
associated with the merger with U.S. Robotics. Excluding this net
credit, net income was $3.2 million ($0.01 per share). Net income for
the quarter ended March 1, 1998 included a net credit of $9.9 million
($0.02 per share) associated with the merger with U.S. Robotics.
Excluding this net credit, net income was $7.4 million ($0.02 per
share). Net income for the quarter ended May 31, 1998 included a
charge of $8.4 million ($0.02 per share) associated with the purchase
of Lanworks Technologies, Inc, and a net credit of $4.9 million ($0.01
per share) related to past merger activities and the disposition of
real estate. Excluding these charges and credits, net income for the
quarter ended May 31, 1998 was $65.9 million ($0.18 per share).
CONTACT: 3Com Investor Relations
Shirley Stacy, 408/326-6301
Shirley_Stacy@3Com.com
or
3Com Public Relations
Leslie Davis, 408/326-7187
Leslie_Davis@3Com.com
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