Bay Networks Reports Record Level Revenue for Fiscal 1998.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)--July 20, 1998--Bay Networks, Inc. (NYSE NYSE See: New York Stock Exchange :BAY) today reported results for its fourth fiscal quarter and its fiscal year ended June June: see month. 27, 1998. For its fourth fiscal quarter of 1998, the company reported revenue of $618.3 million, an increase of 13.0% from the preceding quarter and an increase of 13.9% for the corresponding quarter of the preceding year. Net income for the fourth quarter was $20.6 million, or $0.09 per share; these results include a charge of $7.0 million for in-process research and development charges related to the acquisitions of Netwave Technologies, Inc. and Phase2 Networks, Inc., both of which were completed during the fourth fiscal quarter. Excluding these charges, pro-forma net income and related pro-forma income per share in the fourth quarter were $27.6 million and $0.12, respectively. Bay Networks reported record revenue for fiscal year 1998 of $2,411.7 million, a 15.2% increase compared to revenue of $2,093.1 million for fiscal year 1997. Net loss and loss per share for fiscal year 1998 were $(34.8) million and $(0.16), respectively. Fiscal year 1998 results included charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc write-offs of in-process research and development and the cumulative effect of a change in accounting principle. Excluding these charges, net income and earnings per share for fiscal year 1998 were $145.7 million and $0.65 respectively. For fiscal year 1997 net loss and loss per share were $(285.0) million and $(1.46), respectively. The fiscal year 1997 results included charges relating to merger and acquisition activities, business alignment Alignment is the adjustment of an object in relation with other objects, or a static orientation of some object or set of objects in relation to others.
The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when . Excluding these charges, fiscal year 1997 net income and earnings per share were $118.6 million and $0.59, respectively. "We had a strong finish to fiscal 1998 as indicated by the 13% sequential One after the other in some consecutive order such as by name or number. growth we achieved in the fourth quarter," said Dave House Dave House is a singer/songwriter from South East England. He first started performing as a solo artist in 2003 after the break up of his old band Lucky Thirteen. Despite other band projects his solo performances remain some of the most successful work he's done. , chairman, 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. and president of Bay Networks. "Revenue from North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. hit record levels reflecting robust 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. demand. At the same time, channel inventories continue to be at healthy levels." "New products contributed more than 55% of revenue for the third consecutive quarter. Switching products, which grew 87% year-over-year, fueled this performance. The Accelar family of routing switches See layer 3 switch. delivered strong sequential growth again this quarter. We introduced several key products and initiatives, including the introduction of the Versalar 15000 and the establishment of the Bay Networks Open Routing Division. The Versalar 15000 is a new class of product that provides 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. (ISPs) with unprecedented IP Class of Service (CoS) features and an extremely high concentration of dedicated connections. The Bay Networks Open Routing Division will license and sell a portable version of Bay Networks Routing Services (BayRS(tm)) technology," continued House. "We believe that the work we accomplished over the past fiscal year - specifically, re-energizing the product line, strengthening the product development cycle, and implementing major steps in our Adaptive Networking strategy - positions the Company for continued growth," concluded House. About Bay Networks Bay Networks - Where Information Flows(tm). Bay Networks, Inc. (NYSE:BAY) is a leader in the worldwide networking market, providing a complete line of products that serve corporate enterprises, service providers and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. carriers. The company offers frame and ATM switches, routers, shared media, remote and Internet Access See how to access the Internet. solutions, IP services and network management applications, all integrated by Bay Networks' Adaptive Networking strategy. With headquarters in Santa Clara, California Santa Clara, California (IPA: /ˌsæntəˈklærə/) , founded in 1777 and incorporated in 1852, is a city in Santa Clara County, in the U.S. state of California. , Bay Networks markets its products and services around the world, providing 7x24-support coverage. For additional information visit the company's World Wide Web site at http//www.baynetworks.com or call 800-8-BAYNET. This 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. These statements may differ materially from actual future events or results. For instance, factors, which could cause results to differ from future events, include the rate of adoption of new technology, competitive pricing actions and marketing programs, among others. Readers are referred to the documents filed by Bay Networks with the S.E.C., including the most recent reports on Forms 10-K and 10-Q and the preliminary proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. material filed July July: see month. 2, 1998, describing the agreement and plan of merger by and among Bay Networks, Northern Telecommunications Limited and Nortel See Nortel Networks. Sub. These documents identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. NOTE TO EDITORS: Bay Networks is a registered trademark and Bay Networks - Where Information Flows and Accelar are trademarks of Bay Networks, Inc. -0-
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
June 27, June 30, June 27, June 30,
1998 1997 1998 1997
Revenue $618,326 $542,976 $2,411,702 $2,093,060
Cost of sales 326,220 279,864 1,225,114 1,074,886
Gross profit 292,106 263,112 1,186,588 1,018,174
Operating expenses:
Research and development 90,032 73,022 350,779 269,835
Sales and marketing 148,558 128,428 556,893 537,676
General and administrative 25,922 21,726 101,046 87,841
In-process research and
development 6,974 148,513 168,406 356,699
Restructuring/severance
charges -- -- -- 32,188
Total operating expenses 271,486 371,689 1,177,124 1,284,239
Income (loss) from
operations 20,620 (108,577) 9,464 (266,065)
Net interest income and
other 9,384 3,782 37,999 17,936
Income (loss) from
continuing operations
before income taxes and
cumulative effect of a
change in accounting
principle 30,004 (104,795) 47,463 (248,129)
Provision for income taxes 9,371 13,243 70,195 36,913
Income (loss) from
continuing operations
before cumulative effect
of a change in accounting
principle 20,633 (118,038) (22,732) (285,042)
Cumulative effect of a
change in accounting
principle, net of tax -- -- 12,018 --
Net income (loss) $20,633 $(118,038) $(34,750) $(285,042)
Earnings (loss) per
share amounts:
Income (loss) from
continuing operations
before cumulative
effect of a change in
accounting principle:
Basic earnings (loss)
per share $0.09 $(0.59) $(0.10) $(1.46)
Diluted earnings (loss)
per share $0.09 $(0.59) $(0.10) $(1.46)
Cumulative effect of a
change in accounting
principle:
Basic earnings per share $ -- $ -- $0.06 $ --
Diluted earnings per share $ -- $ -- $0.06 $ --
Net income (loss):
Basic earnings (loss)
per share $0.09 $(0.59) $(0.16) $(1.46)
Diluted earnings (loss)
per share $0.09 $(0.59) $(0.16) $(1.46)
Weighted average common
shares 222,452 200,299 216,025 194,745
Dilutive potential common
shares 228,656 200,299 216,025 194,745
Condensed Consolidated Balance Sheets
(In thousands)
June 27, June 30,
1998 1997
Assets
Cash and cash equivalents $416,753 $529,962
Short-term investments 342,440 105,180
Accounts receivable, net 337,656 277,860
Inventories 166,831 144,468
Deferred income taxes 130,994 121,596
Other current assets 55,383 69,351
Total current assets 1,450,057 1,248,417
Investments 205,081 146,367
Property and equipment, net 255,676 241,069
Goodwill 116,568 113,811
Other assets 80,897 16,382
Total assets $2,108,279 $1,766,046
Liabilities and Stockholders' Equity
Accounts payable $151,141 $117,596
Accrued expenses 220,334 201,266
Accrued income taxes 24,554 39,269
Deferred revenue 68,699 62,678
Total current liabilities 464,728 420,809
Long-term debt 91,995 109,995
Stockholders' equity 1,551,556 1,235,242
Total liabilities and
stockholders' equity $2,108,279 $1,766,046
For the Three Months Ended June 27, 1998
Pro Forma (w/o In-Process Research & Development)
(In thousands, except per share amounts)
Pro Forma In-Process In-Process As
Operations Phase2 Netwave Reported
Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended
Jun. 98 Jun. 98 Jun. 98 Jun. 98
Revenue 618,326 100.0% - - 618,326 100.0%
Cost of
sales 326,220 52.8% - - 326,220 52.8%
Gross
profit 292,106 47.2% - - 292,106 47.2%
Operating
expenses:
Research
and
development 90,032 14.6% - - 90,032 14.6%
Sales and
marketing 148,558 24.0% - - 148,558 24.0%
General and
administra-
tive 25,922 4.2% - - 25,922 4.2%
In-process
research
& development 0 0.0% 710 6,264 6,974 1.1%
Total
operating
expenses 264,512 42.8% 710 6,264 271,486 43.9%
Income (loss)
from
operations 27,594 4.5% (710) (6,264) 20,620 3.3%
Net interest
income and
other 9,384 1.5% - - 9,384 1.5%
Income (loss)
before
provision
for
income
taxes 36,978 6.0% (710) (6,264) 30,004 4.9%
Provision
for income
taxes 9,371 1.5% - - 9,371 1.5%
Net income
(loss) 27,607 4.5% (710) (6,264) 20,633 3.3%
Weighted
average
common
shares 222,452 222,452 222,452 222,452
Dilutive
potential
common
shares 228,656 228,656 228,656 228,656
Basic
earnings
(loss) per
share $0.12 ($0.00) ($0.03) $0.09
Diluted
earnings
(loss) per
share $0.12 ($0.00) ($0.03) $0.09
For the Fiscal Year Ended June 27, 1998
Pro Forma (w/o Cumulative Effect of Change in Accounting Principle and
In-Process Research & Development)
(In thousands, except per share amounts)
Cumulative
Effect of
Change in
Pro Forma Accounting In-Process In-Process
Operations Principle Phase2 Netwave
Year Ended Qtr. Ended Qtr. Ended Qtr. Ended
Jun. 98 Dec. 97 Jun. 98 Jun. 98
Revenue 2,411,702 100.0% - - -
Cost of sales 1,225,114 50.8% - - -
Gross profit 1,186,588 49.2% - - -
Operating expenses:
Research and
development 350,779 14.5% - - -
Sales and marketing 556,893 23.1% - - -
General and
administrative 101,046 4.2% - - -
In-process research
& development - 0.0% - 710 6,264
Total operating
expenses 1,008,718 41.8% - 710 6,264
Income (loss)
from operations 177,870 7.4% - (710) (6,264)
Net interest income
and other 37,999 1.6% - - -
Income (loss)
before provision
for income taxes
and cumulative
effect of change
in accounting
principle 215,869 9.0% - (710) (6,264)
Provision for
income taxes 70,195 2.9% - - -
Income (loss)
before cumulative
effect of change
in accounting
principle 145,674 6.0% - (710) (6,264)
Cumulative effect
of change in
accounting-principle - 0.0% 12,018 - -
Net income (loss) 145,674 6.0% (12,018) (710) (6,264)
Weighted average
common shares 216,025 216,025 216,025 216,025
Dilutive potential
common shares 224,746 216,025 216,025 216,025
Basic earnings
(loss) per share $0.67 ($0.06) ($0.00) ($0.03)
Diluted earnings
(loss) per share $0.65 ($0.06) ($0.00) ($0.03)
In-Process In-Process In-Process As
Netsation New Oak NetICs Reported
Qtr. Ended Qtr. Ended Qtr. Ended Year Ended
Mar. 98 Mar. 98 Sep. 97 Jun'98
Revenue - - - 2,411,702 100.0%
Cost of sales - - - 1,225,114 50.8%
Gross profit - - - 1,186,588 49.2%
Operating expenses:
Research and
development - - - 350,779 14.5%
Sales and marketing - - - 556,893 23.1%
General and
administrative - - - 101,046 4.2%
In-process research
& development 7,920 146,120 7,392 168,406 7.0%
Total operating
expenses 7,920 146,120 7,392 1,177,124 48.8%
Income (loss)
from operations (7,920) (146,120) (7,392) 9,464 0.4%
Net interest
income and other - - - 37,999 1.6%
Income (loss)
before provision
for income taxes
and cumulative
effect of change
in accounting
principle (7,920) (146,120) (7,392) 47,463 2.0%
Provision for
income taxes - - - 70,195 2.9%
Income (loss)
before cumulative
effect of change
in accounting
principle (7,920) (146,120) (7,392) (22,732) -0.9%
Cumulative effect
of change in
accounting
principle - - - 12,018 0.5%
Net income
(loss) (7,920) (146,120) (7,392) (34,750) -1.4%
Weighted average
common shares 216,025 216,025 216,025 216,025
Dilutive
potential
common shares 216,025 216,025 216,025 216,025
Basic earnings
(loss) per
share ($0.03) ($0.68) ($0.03) ($0.16)
Diluted earnings
(loss) per
share ($0.03) ($0.68) ($0.03) ($0.16)
CONTACT: Bay Networks, Inc.
Sandra Toms, 408/495-1181 (IR)
stoms@baynetworks.com
OR
Mike Deshaies, 408/495-3292
mdeshaies@baynetworks.com
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