3Com announces record revenues for fourth quarter and fiscal 1997.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, 1997--Global networking leader 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) ) today announced record revenues for the fourth quarter and fiscal year ended May 31, 1997. For the quarter, sales of $829.9 million increased 26% from the fourth quarter of fiscal 1996. Net income for the quarter was $89.2 million, or $0.48 per share. Year-ago net income included a pre-tax charge of $53.3 million, or $0.30 per share, primarily for purchased in-process technology. Excluding these non-recurring items, net income increased 8% from $82.5 million, or $0.46 per share, posted in the same quarter a year ago. "Our fourth quarter caps another year of growth in 3Com's revenues, earnings, market share and competitive stature stature /sta·ture/ (stach´ur) the height or tallness of a person standing.stat´ural stat·ure n. The height of a person. stature the height of an animal in the standing position. ," said Eric Benhamou, 3Com chairman and chief executive officer. "Our business is being driven by customer requirements for complete networking systems consisting of best in class products, both for the local area and wide area network." "This is an exciting period for 3Com," continued Benhamou. "In addition to posting record sales for the quarter, we have made many of the decisions necessary to expedite ex·pe·dite tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. the integration of 3Com and 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. . We have transitioned to a new organization and completed the business plan for the new company. Shortly, customers and shareholders will begin to see the benefits of our broader product line, stronger distribution channels, and increased market coverage." On June 12, 3Com Corporation and U.S. Robotics Corporation announced the completion of the merger of the two companies, which was first announced on February 26. The transaction, which was approved by shareholders of both companies on June 11, is the largest business combination in the history of the networking industry. Shareholders of U.S. Robotics received 1.75 shares of 3Com stock for each share of U.S. Robotics stock they held. Financial results of U.S. Robotics are not reflected in this press release. 3Com will report results of the combined companies, on a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. basis, beginning in the first quarter of fiscal 1998, ending August 31, 1997. Fourth quarter sales of systems products including switches, hubs, internetworking, and remote access products were $473.0 million, an increase of 20% 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 35% from the year-ago period, to $349.6 million. Based on market analyst reports published during the quarter, the combination of 3Com and U.S. Robotics now holds the number one or two worldwide market share position in network interface cards, PC modems, LAN switches A network device that cross-connects clients, servers and network devices. Also known as a "frame switch," stand-alone LAN switches are common in all Ethernet networks. A four-port switch is also typically built into a wired or wireless router for homes and small business (see wireless , shared media hubs See digital media hub. , and 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. . Sales for the year were a record $3.1 billion, a 35% increase from $2.3 billion in fiscal 1996. Net income of $374.0 million, or $2.01 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. Excluding non-recurring items in both years, net income for fiscal 1997 increased 36% to $380.6 million, or $2.05 per share. During the quarter, the company announced a number of new products, including the industry's first end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. 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. system, the SuperStack II Hub 100, OfficeConnect remote access products, and TranscendWare software modules for virtual LANs Also called a "VLAN," it is a logical subgroup within a local area network that is created via software rather than manually moving cables in the wiring closet. It combines user stations and network devices into a single unit regardless of the physical LAN segment they are attached to and , virtual private networks and service level agreements. 3Com also signed ten new PC partners to the Network Ready program, established an OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and agreement with NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. to market 3Com workgroup solutions and LAN switches, and formed a technology alliance with TIBCO TIBCO The Information Bus Company , Inc. to improve network performance of "push computing computing - computer " within intranets. In June, 3Com introduced the Fast EtherLink XL CardBus PC Card, the world's fastest network PC Card-performing with throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. up to 31% faster than its competitors while requiring less than half the power, and announced that it is offering a breakthrough 10/100 Mbps 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 network interface chip for NetPCs and other "thin clients." The company also announced the SuperStack II Switch 3000 10/100, which offers scalable, 10/100/1000 Mbps Ethernet performance, combining shared or switched media with migration options to new technologies including Gigabit Ethernet and ATM. This news release, other than 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 3Com's Form 10-Q Form 10-Q See 10-Q. for the quarter ended February 28, 1997 and U.S. Robotics Form 10-Q for the quarter ended March 30, 1997. Actual results may vary materially. About 3Com Corporation 3Com Corporation enables individuals and organizations worldwide to communicate and share information and resources at anytime from anywhere. As 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 supplier 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 more than 100 million customers worldwide. With global reach and local touch, the company gives enterprises, network service providers and carriers, small businesses and consumers the most 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 new World Wide Web site at http://www.3Com.com or call 1-800-NET-3COM. -0- Note to Editors: 3Com, SuperStack, OfficeConnect, and Fast EtherLink are registered trademarks of 3Com Corporation. TranscendWare and Network Ready are a trademarks of 3Com Corporation. U.S. Robotics is a registered trademark of U.S. Robotics Corporation. All other trademarks are property of their respective holders. -0-
3Com Corporation
Consolidated Statements of Income
(In thousands, except per share data)
Quarter Ended Year Ended
May 31, May 31, May 31, May 31,
1997 1996 1997 1996
(Unaudited)
Sales $829,892 $660,266 $3,147,106 $2,327,101
Cost of Sales 396,081 309,758 1,452,350 1,096,846
Gross margin 433,811 350,508 1,694,756 1,230,255
Operating expenses:
Sales and marketing 176,999 131,822 659,573 475,769
Research and development 92,755 65,647 335,266 233,107
General and administrative 32,473 28,025 129,952 97,395
Purchased in-process
technology -- 52,353 -- 52,353
Acquisition-related charges
and other -- 950 6,600 69,950
Total operating expenses 302,227 278,797 1,131,391 928,574
Operating income 131,584 71,711 563,365 301,681
Other income - net 6,655 1,862 20,889 6,788
Income before taxes 138,239 73,573 584,254 308,469
Income tax provision 49,075 44,075 210,304 130,615
Net income $ 89,164 $ 29,498 $ 373,950 $ 177,854
Earnings per share:
Primary $ 0.48 $ 0.17 $ 2.02 $ 1.01
Fully-diluted $ 0.48 $ 0.16 $ 2.01 $ 1.00
Shares used in
computing per share
amount:
Primary 184,934 178,537 185,316 176,517
Fully-diluted 186,549 179,103 186,019 176,972
Net income for the quarter ended May 31, 1996 included a charge
of approximately $52.4 million for purchased in-process technology
associated with the acquisition of AXON Networks, Inc. (AXON) and a
charge of approximately $1.0 million for a litigation settlement.
Excluding these charges, pro forma net income was $82.5 million
($.46 per share) for the quarter ended May 31, 1996. Net income for
the year ended May 31, 1997 included a charge of approximately
$6.6 million for merger costs associated with the acquisition of
OnStream Networks, Inc. Excluding this charge, pro forma net income
was $380.6 million ($2.05 per share) for the year ended May 31, 1997.
Net income for the year ended May 31, 1996 included a charge of
approximately $52.4 million for purchased in-process technology
associated with the acquisition of AXON, a charge of approximately
$69.0 million for merger costs associated with the acquisition of
Chipcom Corporation, and a charge of approximately $1.0 million for a
litigation settlement. Excluding these charges, pro forma net income
was $280.0 million (1.58 per share) for the year ended May 31, 1996.
3Com Corporation
Condensed Consolidated Balance Sheets
(In thousands)
May 31, 1997 May 31, 1996
ASSETS
Current Assets:
Cash, cash equivalents
and temporary cash
investments $ 889,942 $ 499,337
Trade receivables 523,501 359,182
Inventories 228,754 241,018
Other 189,086 140,174
Total current assets 1,831,283 1,239,711
Property and equipment - net 377,349 246,652
Deposits & other assets 57,643 38,754
Total $2,266,275 $1,525,117
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 148,846 $ 120,211
Accrued and other liabilities 279,263 211,620
Income taxes payable 168,942 82,690
Total current liabilities 597,051 414,521
Long-term debt 110,000 110,000
Other long-term obligations 5,391 5,492
Deferred income taxes 36,323 16,299
Shareholders' Equity:
Common stock 784,685 597,452
Unamortized restricted
stock grants (5,165) (4,487)
Retained earnings 736,881 379,358
Unrealized net gain on
available-for-sale securities 2,320 7,159
Accumulated translation
adjustments (1,211) (677)
Total shareholders' equity 1,517,510 978,805
Total $2,226,275 $1,525,117
3Com Corporation
Consolidated Statements of Income
(Unaudited. In thousands, except per share data.)
Quarter Ended
Aug. 31, Nov. 30, Feb. 28, May 31,
1996 1996 1997 1997
Sales $710,140 $820,296 $786,778 $829,892
Cost of Sales 326,647 371,306 358,316 396,081
Gross margin 383,493 448,990 428,462 433,811
Operating expenses:
Sales and marketing 142,670 164,086 175,818 176,999
Research and
development 70,893 80,228 91,390 92,755
General and
administrative 30,038 35,558 31,883 32,473
Acquisition-related
charges -- 6,600 -- --
Total operating
expenses 243,601 286,472 299,091 302,227
Operating income 139,892 162,518 129,371 131,584
Other income - net 2,933 4,788 6,513 6,655
Income before taxes 142,825 167,306 135,884 138,239
Income tax provision 51,253 61,737 48,239 49,075
Net income $ 91,572 $105,569 $ 87,645 $ 89,164
Earnings per share:
Primary $ 0.50 $ 0.57 $ 0.47 $ 0.48
Fully-diluted $ 0.50 $ 0.56 $ 0.47 $ 0.48
Shares used in
computing per share
amount:
Primary 182,897 186,215 187,215 184,934
Fully-diluted 183,171 187,137 187,218 186,549
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 Networks, Inc. Excluding this charge,
pro forma net income was $112.2 million ($.60 per share).
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_Davis@3Com.com |
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