Excel Switching Corporation Announces Fourth Quarter and Full Year Results; Fourth Quarter Revenues up 41%.HYANNIS, Mass.--(BUSINESS WIRE)--Jan. 27, 1999--Excel Switching Corporation (Nasdaq:XLSW XLSW Excel Switching (former stock symbol; now delisted) ), a leading provider of open switching platforms for telecommunications networks A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. worldwide, today announced its fourth quarter and year end results for the period ending December 31, 1998. For the fiscal year 1998 revenue increased 39% to $123.3 million from $88.7 million for the fiscal year 1997. 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, which excludes one-time charges for acquired in-process research and development discussed below, increased to $27.8 million or $0.71 per share in 1998 from $18.6 million or $0.54 per share in 1997. Pro forma net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for 1998 increased 49% and 31%, respectively, from 1997. Actual net income for 1998 was $21.7 million or $0.55 per share. For the fourth quarter of 1998 revenue increased 41% to $36.9 million from $26.1 million for the fourth quarter of 1997. Pro forma net income, excluding the one-time charges, increased to $8.4 million or $0.21 per share in the fourth quarter of 1998 from $6.0 million or $0.16 per share for the same period in 1997. Pro forma net income and diluted earnings per share for the fourth quarter of 1998 increased 38% and 31%, respectively, from the same period of 1997. Actual net income for the fourth quarter of 1998 was $2.2 million or $0.06 per share. In the fourth quarter of 1998, Excel acquired XNT Systems, Inc. and Quantum Telecom Solutions, Inc. and incurred one-time charges of $7.5 million, or approximately $0.15 per share net of the effect of income tax, for acquired in-process research and development. "We are very pleased with our results for Q4 and fiscal 1998," said Robert Madonna, Excel's president 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 growth continues to be driven primarily by the broadening of our customer base and further expansion into infrastructure markets. Excel's One Architecture open, distributed system See distributed computing. distributed system - A collection of (probably heterogeneous) automata whose distribution is transparent to the user so that the system appears as one local machine. is a platform on which service providers can stay ahead of the fast paced changes resulting from convergence of voice and data. We continue to extend our product capabilities to enable integration of new technologies that are emerging." In the fourth quarter, Excel continued to see growth in key strategic areas including: Expanded presence in the network infrastructure market CallPlus, a New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. based Competitive Local Exchange Carrier (CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) ), chose Excel's ONE Architecture system to provide tandem switching A telephone central office switch that links telco end offices together and does not connect to the customer directly. Also called a "Class 4 switch" or "TDM switch," a tandem switch is a computer that is specialized for TDM-based, circuit-switched telephone calls. for its telecommunications services. 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. CallPlus, Excel's programmable and flexible switching solution enabled them to pass network testing in four days versus the up to six month timeframe typically required by traditional switches. Continued strength as enhanced services platform Lucent Technologies Octel Messaging Division (NYSE NYSE See: New York Stock Exchange : LU) intends to integrate Excel's ONE Architecture Expandable Switching System (EXS EXS Expandable Switching System (Lucent) EXS Executed Schedule ) into a future enhanced voice messaging Using voice mail as an alternative to electronic mail, in which voice messages are intentionally recorded, not because the recipient was not available. services platform. The EXS solution will allow carriers to customize their offerings by providing additional services on Lucent's enhanced services platform, allowing carriers to generate additional revenue while providing more value-added services to customers. Acquisitions to strengthen product functionality Excel acquired XNT Systems, Inc. a supplier of intelligent switch control and comprehensive call processing In telecommunication, the term call processing has the following meanings:
see fixed costs. for Excel customers. Increased presence in international markets Excel entered into a Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. (MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. ) with KDD KDD Knowledge Discovery and Data Mining (International Conference) KDD Knowledge Discovery in Databases KDD Kokusai Denshin Denwa (Japan) KDD Key Distribution Device Network Systems (KDD-NS), a telecommunications systems integrator and wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of KDD, Japan's leading telecommunications carrier. Under the agreement, KDD-NS intends to market and resell solutions based on Excel's ONE Architecture system, as well as implementing the EXS solution to provide tandem switching and enhanced services for telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. , including its parent company KDD. About Excel Excel Switching Corporation is a leading provider of open switching platforms for telecommunications networks worldwide. Excel develops, manufactures, markets and supports a family of open, programmable, carrier-class switches that address the complex enhanced services and wireless and wireline infrastructure needs of network providers. Excel's products are currently deployed in telecommunications networks in 60 countries throughout the world. Visit Excel's website at http://www.xl.com. Note to Investors: This release may contain statements which are "forward looking," and is subject to risks and uncertainties that could cause actual results to differ significantly from expectations including without limitation statements regarding the broadening of Excel's customer base and the expansion into the infrastructure market. Factors that might cause such a difference include, but are not limited to, those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc : fluctuations in results of operations; inconsistencies in growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. from period to period; concentration of customers within market segments; management of growth; dependence on and concentration of relationships with application developers, original equipment manufacturers and systems integrators; length of sales cycle; risk of new product introductions; dependence on proprietary rights; acquisitions; and other risks identified in the Company's Securities and Exchange Commission filings including those risks identified in the section entitled "Risk Factors" of the Company's Annual Report for the year ended December 27, 1997 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. , as amended. There can be no assurance that the Company's current gross, operating and net income margins will be sustainable in future quarterly periods. -0-
Excel Switching Corporation
Consolidated Condensed Statements of Income
(in thousands, except per share data)
Three Months Ended Year Ended
Dec. 31, Dec. 27, Dec. 31, Dec. 27,
1998 1997 1998 1997
Revenues $ 36,896 $ 26,102 $123,258 $ 88,727
Cost of revenues 10,841 7,777 35,603 26,631
Gross profit 26,055 18,325 87,655 62,096
Operating expenses:
Engineering, research
& development 7,256 3,825 22,679 13,260
Selling and marketing 4,066 3,734 15,906 11,486
General and administrative 3,244 1,935 11,069 7,949
Acquired in-process
research 7,459 -- 7,459 --
Total operating
expenses 22,025 9,494 57,113 32,695
Income from
operations 4,030 8,831 30,542 29,401
Other income, net 1,456 1,010 6,127 1,392
Income before
provision for
income taxes 5,486 9,841 36,669 30,793
Provision for income
taxes 3,285 3,796 14,979 12,177
Net income (A) $ 2,201 $ 6,045 $ 21,690 $ 18,616
Basic earnings per share $ 0.07 $ 0.20 $ 0.65 $ 0.65
Diluted earnings
per share (B) $ 0.06 $ 0.16 $ 0.55 $ 0.54
Basic shares outstanding 33,834 30,761 33,216 28,756
Diluted shares outstanding 39,635 36,816 39,242 34,361
(A) Excluding one-time charges for acquired in-process research
and development, net income for Q4 98 and 1998 would have been $8.4m
and $27.8m, respectively.
(B) Excluding one-time charges for acquired in-process research
and development, diluted earnings per share for Q4 98 and 1998 would
have been $0.21 and $0.71, respectively.
Excel Switching Corporation
Consolidated Condensed Balance Sheets
(in thousands)
Dec. 31, Dec. 27,
1998 1997
Current assets:
Cash and marketable securities $ 118,096 $ 114,897
Accounts receivable, net 30,912 12,843
Inventories 5,404 4,740
Prepaid and deferred taxes 7,461 5,748
Prepaid expenses and other 2,013 1,298
Total current assets 163,886 139,526
Property & equipment, net 18,438 10,168
Intangibles and other 16,458 -
$ 198,782 $ 149,694
Current liabilities:
Current maturities of
long-term obligations $ 3,408 $ 4,213
Accounts payable 5,100 4,177
Accrued expenses 16,874 11,156
Deferred revenue 1,047 -
Accrued income taxes 6,052 3,606
Total current liabilities 32,481 23,152
Deferred income taxes - 519
Long-term obligations 4,858 108
Stockholders' equity:
Common stock 340 326
Addition paid-in capital 101,864 88,134
Deferred compensation (526) (491)
Unrealized gain (loss) on investments 107 (20)
Retained earnings 59,658 37,966
Total stockholders' equity 161,443 125,915
$ 198,782 $ 149,694
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