Cabletron Announces Strong Third Quarter Financial Results; Four Subsidiaries Combined Accelerate Profitability.Business/Technology Editors ROCHESTER, N.H.--(BUSINESS WIRE)--Dec. 20, 2000 Visit the Cabletron Investor Relations Investor relations The process by which the corporation communicates with its investors. web site at: http://www.cabletron/investor/, where the third quarter results conference call transcript and PowerPoint presentation will be posted. A replay of the conference call is available by dialing (858) 812-6440; use reservation number 17283630. The replay is available through January 3rd. Cabletron Systems, Inc. (NYSE NYSE See: New York Stock Exchange : CS) and its subsidiary companies, Aprisma Management Technologies Aprisma Management Technologies was created after Cabletron Systems was broken up into 5 smaller pieces, as the business unit to continue the highly successful SPECTRUM network management suite. It was acquired in early 2005 by Concord, which in turn was acquired by Computer Associates. , Enterasys Networks This article or section contains information about scheduled or expected future events. It may contain tentative information; the content may change as the event approaches and more information becomes available. , GlobalNetwork Technology Services and Riverstone Networks Riverstone Networks, was a provider of networking switching hardware based in Santa Clara, California. Originally part of Cabletron Systems, and based on an early acquisition of YAGO, it was one of the many Gigabit Ethernet startups in the mid 1990's. , today reported financial results for the third quarter of fiscal year 2001. "The combined revenues of the four subsidiaries were $265 million which surpassed our expectations in the third quarter," said Piyush Patel, 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 Chairman of Cabletron Systems. "Cabletron achieved a sequential quarterly growth rate of 10%, or a compound annual growth rate of 47%. Clearly, our value proposition continues to resonate res·o·nate v. res·o·nat·ed, res·o·nat·ing, res·o·nates v.intr. 1. To exhibit or produce resonance or resonant effects. 2. with customers and drive demand in the marketplace. We see customers adopting our proven solutions to effectively reduce operating costs operating costs npl → gastos mpl operacionales and generate additional revenue." Cabletron's subsidiary companies achieved 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 of $0.04 per share, or $6.9 million, for the quarter ended December 2, 2000, marking the eighth consecutive quarter in which Cabletron has met or exceeded Wall Street's expectations. "Our profitability continues to improve," continued Patel. "This success is a clear indication of the quality of our customers and a direct result of the focused execution of our transformation strategy." Cabletron Pro Forma Financial Results Four Operating Companies operating company A business that engages in transactions with outsiders. . Excluding the company's non-core business segment, combined revenues for the four operating companies increased to $265.3 million in the third quarter (ended December 2, 2000) compared to $241.1 million in the second quarter (ended September 2, 2000), a growth rate of 10.1% for the quarter. Individual Company Results
Cabletron Systems Inc. Quarterly Revenue
($ in thousands)
Three Months Ended
Sequential
Q3 FY2001 Q2 FY2001 Quarterly Growth
(Unaudited) Dec. 2, 2000 Sept. 2, 2000
Aprisma $ 19,672 $ 17,346 13%
Enterasys 205,813 190,672 8%
GNTS 13,039 12,498 4%
Riverstone 26,784 20,554 30%
Operating Company
Revenue 265,308 241,070 10%
Aprisma Management Technologies is a leader in the rapidly growing infrastructure management market. Aprisma's core product is the award winning SPECTRUM management software. Aprisma is capitalizing on its proven ability to guarantee performance and availability of key business services within carrier and enterprise networks. Aprisma had revenues of $19.7 million in the quarter, compared with revenues of $17.3 million in Q2. This represents a sequential quarterly growth rate of approximately 13.4%. This result compares to $13.1 in Q3 of fiscal 2000, reflecting a year-over-year growth rate of approximately 50%. --Important customer wins during the quarter include Deutsche Telekom Deutsche Telekom AG (ISIN: DE0005557508, FWB: DTE, NYSE: DT, LSE: DEU, TYO: 9496 ) (abbreviated DTAG) is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Germany and in the EU. , Europe's largest telecommunications company See telecom company. , UPC (Universal Product Code) The standard bar code printed on retail merchandise, which is administered by GS1 US, Brussels, Belgium and Lawrenceville, NJ (www.gs1.org). , Scientific Atlanta, Qwest and SG Cowen. --Aprisma announced a dramatic expansion of its product line capabilities to include the latest generation of optical and broadband networking gear. This cutting edge technology expands Aprisma's footprint in the fast growing optical and metro aggregation markets, providing unrivaled visibility into carrier voice, video and data infrastructures. Enterasys Networks is a provider of enterprise network solutions required to serve emerging bandwidth-intensive enterprise and e-business applications, including converged voice and video, distributed supply chain management, and e-commerce. Enterasys solutions are deployed in some of the world's most complex enterprise networks. Enterasys had revenues of $205.8 million in the quarter, compared with revenues of $190.7 million in Q2. This represents a sequential quarterly growth rate of approximately 8%. This result compares to $172.1 million in Q3 of fiscal 2000, reflecting a year-over-year growth rate of 20%. --Key customer wins during the quarter included: Toshiba, EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. , Corning, Kelloggs, Glaxo-Wellcome, Cornell University Cornell University, mainly at Ithaca, N.Y.; with land-grant, state, and private support; coeducational; chartered 1865, opened 1868. It was named for Ezra Cornell, who donated $500,000 and a tract of land. With the help of state senator Andrew D. , and Nissan. --Enterasys maintained its leadership in chassis based Layer-3 market share in 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. Dell'Oro Group. Year -over- year, Layer 3 revenue grew in excess of 89%. --Enterasys also launched the industries first holistic security solution, Secure Harbour, to attack the rapidly growing security market which analysts predict to reach $5-7 billion by 2004. --Enterasys also launched a new Toronto New Toronto (tərŏn`tō), part of metropolitan Toronto, S Ont., Canada, on Lake Ontario. R&D facility to focus on security and VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. solutions. GlobalNetwork Technology Services or GNTS GNTS Global Network Technology Services is a network consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a that delivers network infrastructure solutions to optimize application availability and network performance. Specifically, GNTS provides network infrastructure services, IT infrastructure management services, security, and infrastructure outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. . GNTS has over 425 consultants in Asia-Pacific, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Europe, and 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. . GNTS had revenues of $13.0 million in the quarter, compared with revenues of $12.5 million in Q2. This represents a sequential quarterly growth rate of approximately 4%. This result compares to $6.8 million in Q3 of fiscal 2000, reflecting a year-over-year growth rate of over 91%. --By targeting 300 blue-chip accounts globally, GNTS saw its engagement size increase by 40%. The list of blue chip accounts include Mastercard, British Telecommunications, SG Cowen, Rogers Cable Rogers Cable Inc., a subsidiary of Rogers Communications Inc., is Canada's largest cable television service provider with about 2.25 million television customers, and over 930,000 Internet subscribers, in Southern Ontario, New Brunswick and Newfoundland and Labrador. and Glaxo Wellcome. --GNTS also won a major virtual private network implementation at AT&T that allows AT&T to provide secure connectivity to their mobile workforce. Riverstone Networks is a leading provider of metropolitan area Internet infrastructure solutions focused on converting commodity bandwidth into profitable services for carriers and service providers. Riverstone had revenues of $26.8 million in the quarter, compared with revenues of $20.6 million in Q2. This represents a sequential quarterly growth rate of approximately 30%. This result compares to $5.0 million in Q3 of fiscal 2000, reflecting a year-over-year growth rate of over 430%. --Riverstone announced a global multi-year strategic alliance with Tellabs for the delivery of voice and data services over cable and TDM networks A network that transmits data in dedicated end-to-end circuits comprising 64 Kbps digital channels. TDM networks evolved from the analog voice networks of the telephone companies. . --Riverstone also announced a partnership with Sonus Networks for the delivery of carrier class Voice over IP. --Riverstone has over 150 customers including AT&T, British Telecom The telephone and communications carrier that provides services in Great Britain and Northern Ireland. It used to be a division of the British Post Office, but was privatized in 1984 under Margaret Thatcher's administration. , Cable & Wireless, Earthlink, MCI (1) (Media Control Interface) A high-level programming interface from Microsoft and IBM for controlling multimedia devices. It provides commands and functions to open, play and close the device. (2) (Microwave Communications Inc. Worldcom, Sonera Solutions, Telecom Italia Telecom Italia is formerly a partially state-owned Italian telco. It was once known as SIP, and it has the largest user base in Italy. Telecom Italia also owns shares in Telecom Argentina and Telecom Personal, fixed and cellular networks in Argentina. , Time Warner, and UUNet. --Riverstone has made significant progress with the SEC filing and plans to proceed with its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. at the beginning of next year, market conditions permitting.
Pro Forma Condensed Statements for Continuing Operations
(in thousands, except per share data)
Three Months Ended
Q3 FY2001 Q2 FY2001 Q3 FY2000
(Unaudited) Dec. 2, Sept. 2, Nov. 30,
2000 2000 1999
Newco Subsidiaries $ 265,308 $ 241,070 $ 196,973
Non-core business
and intercompany eliminations (16,369) 20,364 174,680
Sales 248,939 261,434 371,653
Net income (loss) $6,948 $1,827 ($20,767)
Net income (loss ) per
common share--basic $0.04 $0.01 ($0.12)
Net income (loss) per
common share--diluted $0.04 $0.01 ($0.12)
Weighted avg. number of
common shares - Basic 184,844 184,186 180,504
Weighted avg. number of
common shares - Diluted 190,630 190,771 180,504
Earnings before interest,
taxes, depreciation
and amortization (EBITDA) $18,654 $8,758 ($14,555)
Note: Pro forma results for the periods ended December 2, 2000, September 2, 2000 and November 30, 1999, exclude the amortization of goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. related to purchase acquisitions of $3.7 million, $20.8 million, and $7.5 million ($4.4 million, $16.4 million and $5.2 million, net of tax), respectively. The amortization of intangible assets for the quarter ended September 2, 2000 includes the write-off of $14.1 million ($12.0 million, net of tax) of goodwill that was remaining from the NetVantage acquisition. Pro forma results excludes inventory and margin related charges that resulted from the discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of non-core businesses of $12.9 million ($8.9 million, net of tax) and $17.2 million ($10.7 million, net of tax), in the quarter ended September 2, 2000. Pro forma selling, general and administrative expenses excludes $6.7 million and $10.9 million ($7.1 million and $8.8 million, net of tax), in the quarters ended December 2 and September 2, 2000, respectively, primarily for asset impairments, consulting and professional fees which were due to the transformation of the company. Pro forma stock based compensation, in the quarter ended December 2, 2000, excludes $3.5 million ($4.2 million, net of tax) of charges related to the issuance of stock options to non-employees and stock options granted with exercise prices below the fair market value on the date of grant. Pro forma other income, net, in the quarter ended December 2, 2000, excludes $23.4 million ($26.8 million, net of tax) related to the write-off of additional assets that were related to the Company's DNPG division, income of $9.3 million ($11.6 million, net of tax) related to the sale of shares of Efficient Networks common stock and income of $3.4 million ($4.3 million, net of tax) related to a realized gain Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. on the sale of a minority stock investment. Pro forma other income, net, in the quarter ended September 2, 2000, excludes $118.9 million ($74.8 million, net of tax) related to the write-off of the Company's DNPG division, $7.4 million ($4.5 million, net of tax) related to the sale of an equity investment and $9.9 million ($7.6 million, net of tax) related to the write-off of certain investments. Pro forma other income, net, in the quarter ended November 30, 1999 excludes $39.1 million ($25.8 million, net of tax) related to the transitioning of the Company's relationship with Compaq, $38.0 million, and a realized gain on the sale of a minority stock investment, $1.1 million. Cabletron Consolidated Results
Condensed Statements of Operations
(in thousands, except per share data)
Three Months Ended
Q3 FY2001 Q2 FY2001 Q3 FY2000
(Unaudited) Dec. 2, Sept. 2, Nov. 30,
2000 2000 1999
Net Sales $248,939 $261,434 $371,653
Cost of Sales 124,996 139,191 195,403
Gross Profit 123,943 122,243 176,250
Operating expenses:
R&D 35,145 34,970 44,716
Selling, general
and administrative 112,860 118,217 103,822
Amortization of certain
acquired intangible 3,739 20,772 7,473
assets
Stock based compensation 3,540 0 0
Special charges 0 0 0
Operating income (loss) (31,341) (51,716) 20,239
Interest income, net 9,002 8,760 4,152
Other income, net (10,702) (121,415) 39,082
Income(loss) from operations
before income
taxes (33,041) (164,371) 63,473
Income tax expense (benefit) 596 (53,499) 20,875
Net income (loss) ($32,445) ($110,872) $42,598
Dividend of Series A and
Series B Preferred
Shares (3,007) (16,854) 0
Net income (loss) to
common stockholders ($35,452) ($127,726) $42,598
Net income (loss) per
common share - basic ($0.19) ($0.69) $0.24
Net income (loss) per
common share - diluted ($0.19) ($0.69) $0.22
Weighted avg. number of
common shares - Basic 184,844 184,186 180,504
Weighted avg. number of
common shares -Diluted 184,844 184,186 189,561
Cost of sales excludes stock based compensation of $0.1 million, R&D excludes stock based compensation of $1.0 million and selling, general & administrative expenses excludes stock based compensation of $2.4 million for the quarter ended December 2, 2000. The prior quarters cost of sales and selling, general and administrative expenses have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current year presentation. The September 2, 2000 dividend of Series A and Series B Preferred Shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. amount has been restated due to final valuation of the securities issued.
Condensed Balance Sheets
(in thousands)
as of
(Unaudited) Dec. 2, Feb. 29, Nov. 30,
2000 2000 1999
Assets
Current Assets:
Cash $251,763 $350,980 $238,929
Short-term investments 238,205 221,981 123,629
Accounts receivable (net) 171,342 228,372 195,230
Inventories (net) 89,025 85,016 178,529
Deferred income taxes 84,107 82,813 86,331
Other current assets 97,792 38,211 37,837
Total Current Assets 932,234 1,007,373 860,485
Investments 413,678 1,903,858 187,485
Property plant & equipment (net) 93,294 124,992 152,854
Intangible assets (net) 43,677 130,284 173,837
Long-term deferred income taxes 179,450 0 147,739
Total Assets $1,662,333 $3,166,507 $1,522,400
Liabilities and Stockholders'
Equity:
Accounts payable $97,078 $117,631 $57,917
Other current liabilities 384,189 441,574 295,579
Total Current Liabilities 481,267 559,205 353,496
Deferred income taxes 0 459,863 11,473
Total Liabilities 481,267 1,019,068 364,969
Minority interest 9,131 0 0
Redeemable preferred stock 70,966 0 0
Stockholders' equity 1,100,969 2,147,439 1,157,431
Total Liabilities and
Stockholders' Equity $1,662,333 $3,166,507 $1,522,400
This release may contain projections or other 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. regarding future financial performance of the Company or other future events and circumstances. Such forward-looking statements by their nature involve risks and uncertainties and actual results or events could differ materially. We direct you to documents filed by the Company with the Securities and Exchange Commission by the Company, specifically, the Company most recent annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , and the Company's other reports on Form 10-Q Form 10-Q See 10-Q. and Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . These reports identify important risks that could, among other things, cause actual results and events to differ from the forward-looking statements contained herein. These risks include, risks associated with the Company's plan to transform its business by transferring a significant portion of the Company's operating assets Operating Assets Another term for working capital. and related liabilities to four new operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Riverstone Networks, Aprisma, GlobalNetwork Technology Services and Enterasys Networks. As well as risks associated with competitive conditions, margin pressures as a result of product shifts, greater use of distributors and resellers and increased expenses, limited management resources, the Company's acquisition strategy, volatility in the stock markets, technological changes, intellectual property protection and related issues, dependence on suppliers and contract manufacturers, potential volatility in operating results, among others. The risks are described in detail in the Company's SEC reports and we urge you to read them carefully. Certain statements in this news release may constitute forward-looking statements and actual results could differ materially. Factors that could cause actual results to differ include general competitive conditions including pricing pressures, and changing market dynamics. For a detailed discussion of the general risks and uncertainties related to the company's business, please refer to the Company's annual report on Form 10-K for fiscal 2000. About Cabletron Systems Cabletron Systems is a holding company for four of the most innovative, customer-focused organizations in the telecommunications and networking industry: Aprisma Management Technologies is the leader in service level intelligence software and provider of multi-vendor management solutions that meet the service-level requirements of network, enterprise and service provider customers. Visit Aprisma on the Internet at http://www.aprisma.com Enterasys Networks is a new kind of company, singularly focused on providing global business communication solutions to enterprise customers. By optimizing customer solutions to support converged voice, video and data, Enterasys Networks creates solid foundations for the seamless deployment of emerging business-critical applications. Visit Enterasys on the Internet at http://www.enterasys.com GlobalNetwork Technology Services is one of the largest independent network-consulting firms in the world. GNTS provides network infrastructure solutions that optimize application availability and network performance to enterprise and service provider clients. Visit GNTS on the Internet at http://www.globalnts.com Riverstone Networks is a leading developer of routers and switches that enable metropolitan service providers, 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 content and application providers to turn raw bandwidth into profitable services. Visit Riverstone on the Internet at www.riverstonenet.com. |
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