Ascend Communications Reports Fourth Quarter And Year End 1998 Financial Results.ALAMEDA Alameda (ăləmē`də, –mā`də), city (1990 pop. 76,459), Alameda co., W central Calif., on an island just off the eastern shore of San Francisco Bay; settled 1850, inc. as a city 1884. , Calif.--(BUSINESS WIRE)--Jan. 19, 1999--Ascend Communications, Inc. (Nasdaq:ASND ASND A Streetcar Named Desire (play) ), a leader in wide area networking (WAN) and Intelligent Networking (IN) solutions for providers and users of the next-generation public network, today reported financial results for the fourth quarter ended December 31, and for the year 1998. Fourth quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $475.9 million and 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 for the fourth quarter was $69.8 million ($0.31 per share, diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), excluding one-time charges related to the acquisition of Stratus stratus: see cloud. (Stratus Technologies, Maynard, MA, www.stratus.com) A manufacturer of fault-tolerant computers founded in 1980. It supports both the VOS and FTX Unix operating systems on its XA/R line of i860-based systems. Computer, Inc. as discussed below. Compared with the fourth quarter 1997, these pro forma results represent a 63% increase, including the Carrier Signaling Group of Stratus, over net sales of $292.5 million and a 47% increase over net income of $47.6 million ($0.24 per share, diluted). For the year, net sales were $1.479 billion, a 27% increase over net sales of $1.167 billion in 1997. Pro forma net income, which excludes the effect of one-time charges related to purchased research and development discussed below, was $247.3 million ($1.18 per share, diluted) for 1998. These results represent a 17% increase over pro forma net income of $211.2 million ($1.06 per share, diluted) in 1997. During the fourth fiscal quarter 1998, Ascend completed the acquisition of Stratus Computer, Inc. and took a one-time charge of $267.0 million, as a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of purchased research and development. Commenting on the Company's fourth quarter results, Mory Ejabat, president and chief executive officer of Ascend said, "We are pleased to report strong revenue performance in Ascend's fourth quarter. Our Core Systems Division showed strong growth in sales as service providers continue building out next-generation frame relay A high-speed packet switching protocol used in wide area networks (WANs). Providing a granular service of up to DS3 speed (45 Mbps), it has become popular for LAN to LAN connections across remote distances, and services are offered by most major carriers. and ATM backbone networks A backbone network provides a path for the exchange of information between different LANs or subnetworks.[1] A backbone can tie together diverse networks in the same building, in different buildings in a campus environment, or over wide areas. . The newly integrated Carrier Signaling Group from Stratus also provided a boost to revenues this quarter by posting better than expected sales." Continuing, Mr. Ejabat said: "This year has been an exciting year for Ascend. As we tightened up our focus on delivering proven next-generation technologies, such as our "smart core" GX 550 ATM switch and our award winning Max TNT TNT: see trinitrotoluene. TNT in full trinitrotoluene Pale yellow, solid organic compound made by adding nitrate (−NO2) groups to toluene. remote access concentrator 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. , we began to see the benefits pay off. 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. independent industry reports, Ascend has gone from the third position earlier in the year to the number one market position in ATM to service providers worldwide. In addition, such industry reports reconfirm re·con·firm tr.v. re·con·firmed, re·con·firm·ing, re·con·firms To confirm again, especially to establish or support more firmly: reconfirmed the reservations. Ascend's undisputed number one market share position in worldwide remote access concentration." This year Ascend announced a number of new next-generation technologies and services to meet the increasing demands of the rapidly growing service provider market. The Ascend Signaling Gateway A network device that converts control signals from one format to another. For example, a SIGTRAN signaling gateway converts SS7 signals of the PSTN to SIGTRAN for transport over IP. Contrast with media gateway. See SIGTRAN. (ASG ASG Assign ASG Allen Systems Group (Naples, FL) ASG Abu Sayyaf Group (terrorist group) ASG Associated Student Government ASG Area Support Group ASG Adaptive Services Grid ASG Assistant Secretary General ) is one of those exciting technologies announced this year. This product, in conjunction with the award-winning Max TNT, bridges the gap between existing voice and data networks and provides a seamless migration path from traditional circuit-switched networks to a new packet-based integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. architecture, called the Next-Generation Public Network. Many service providers have chosen to standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. on Ascend's next-generation technologies and services to assist them in building new cost-effective, integrated network architectures. Ascend is proud to have in its portfolio of customers an impressive and growing list of blue-chip service providers worldwide. Continuing, Mory Ejabat said: "We are pleased to close this exciting year with an announcement of our pending merger with Lucent Technologies, Inc. This merger is subject to both shareholder and various regulatory approvals." Ascend's strength in carrier-class data services, IP, Frame Relay and ATM, combined with Lucent's expertise in optical networking Communications between computers, telephones and other electronic devices using light. An optical network is far more reliable and has far greater potential transmission capacity than networking in the electrical domain. See optical fiber. , communications systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. and business telephone systems, make for a powerful combination. About Ascend Communications Ascend Communications, Inc. (Nasdaq:ASND) develops, manufactures, sells and services wide area networking solutions for telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. carriers, Internet service providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. and corporate customers worldwide. For more information about Ascend and its products, please visit the Ascend Web site at www.ascend.com, or send e-mail to info@ascend.com. For Investor Relations Investor relations The process by which the corporation communicates with its investors. , please call our communications hotline at 800/648-3059 or 760/704-4423 (outside the U.S. & Canada). Additional investor information can also be accessed on our Web site at http://www.ascend.com/662.html. Ascend is headquartered at One Ascend Plaza, 1701 Harbor Bay Parkway Bay Parkway refers to the following roads and transit stations: Roads
This release, other than historical financial information, contains 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. The results or events predicted in these statements may differ materially from actual future events or results. For instance, factors which could cause actual events or results to differ from anticipated events or results include the rate of development of new and enhanced technology by Ascend and its competitors, the integration of new businesses, the introduction and market acceptance of new products by Ascend and its competitors, competitive pricing actions and marketing programs, among others. Readers are referred to the documents filed by Ascend Communications with the Securities and Exchange Commission, specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. -0-
Ascend Communications, Inc.
Combined Consolidated Statements of Operations, Unaudited
(In Thousands, Except Per Share Data)
Quarter Ended Year Ended
December 31 December 31
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
Net Sales $ 475,867 $ 292,547 $ 1,478,682 $ 1,167,352
Cost of sales 183,598 105,325 543,971 413,570
-------- -------- -------- --------
Gross profit 292,269 187,222 934,711 753,782
Operating expenses:
Research and
development 75,386 40,401 216,235 155,996
Sales and marketing 94,429 69,513 302,045 249,129
General and
administrative 26,061 8,248 78,864 35,267
Purchased research
and development 266,953 -- 266,953 231,100
Cost of mergers -- -- (18,279) 150,271
-------- -------- -------- --------
Total operating
expenses 462,829 118,162 845,818 821,763
-------- -------- -------- --------
Operating income (loss) (170,560) 69,060 88,893 (67,981)
Interest income, net 10,939 5,290 28,102 23,029
-------- -------- -------- --------
Income (loss) before
income taxes (159,621) 74,350 116,995 (44,952)
Provision for income
taxes 37,566 26,774 136,649 79,422
-------- -------- -------- --------
Net income (loss) $ (197,187) $ 47,576 $ (19,654) $(124,374)
======== ======== ======== ========
Net income (loss) per
share - Basic $ (0.92) $ 0.25 $ (0.10) $ (0.66)
======== ======== ======== ========
Net income (loss) per
share - Diluted $ (0.92) $ 0.24 $ (0.10) $ (0.66)
======== ======== ======== ========
Number of shares used
in per share
Calculation - Basic 214,299 190,375 199,291 189,129
======== ======== ======== ========
Number of shares used
in per share
Calculation - Diluted 214,299 198,461 199,291 189,129
======== ======== ======== ========
Ascend Communications, Inc.
Combined Consolidated Balance Sheets, Unaudited
(In Thousands)
Dec. 31, Dec. 31,
1998 1997
--------- ---------
ASSETS
Current assets:
Cash, cash equivalents and investments $ 679,955 $ 475,427
Accounts receivable, net 390,103 234,183
Inventories 197,896 99,637
Other current assets 209,117 105,340
--------- ---------
Total current assets 1,477,071 914,587
Investments 494,387 101,212
Furniture, fixtures and equipment, net 282,260 114,351
Other assets 277,760 7,744
--------- ---------
Total assets $ 2,531,478 $ 1,137,894
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 426,286 $ 168,638
Total current liabilities 426,286 168,638
Other long-term liabilities 11,048 --
Stockholders' equity:
Common stock 220 191
Additional paid-in capital 2,022,968 878,455
Retained earnings 70,956 90,610
--------- ---------
Total stockholders' equity 2,094,144 969,256
--------- ---------
Total liabilities and
stockholders' equity $ 2,531,478 $ 1,137,894
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