Foundry Networks Reports Record Results for Fiscal 2000; Company Reports 183% Revenue Growth and 185% Earnings Growth.Business Editors SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--Jan. 24, 2001 Foundry Networks Foundry Networks is a network system vendor selling high-end managed ethernet switches and routers. The company was founded in 1996 by Bobby R. Johnson, Jr. and is based in Santa Clara, California, USA. (TM), Inc. (Nasdaq: FDRY), a performance and total system leader for best-of-breed end-to-end broadband IP switching Switching TCP/IP packets at high speed. Ipsilon's IP Switch started the trend and various vendors followed suit with different approaches, including Cisco's tag switching and 3Com's Fast IP. The goal was to switch IP packets faster than traditional router-based layer 3 forwarding. and routing solutions, today reported its fourth quarter and year ended December 31, 2000 financial results. Revenues were $105.1 million in the fourth quarter of 2000, a 91% increase over the $55.1 million of revenues in the fourth quarter of 1999. 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 of 2000, excluding non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for amortization of deferred stock compensation, was $21.5 million or $0.17 per share, compared to pro forma net income of $15.5 million or $0.12 per share for the fourth quarter of 1999. Revenues were $377.2 million in the year ended December 31, 2000, a 183% increase over the $133.5 million of revenues in the year ended December 31, 1999. Pro forma net income for the year ended December 31, 2000, excluding non-cash charges for amortization of deferred stock compensation, was $93.6 million or $0.74 per share, compared to pro forma net income of $29.5 million or $0.26 per share for the year ended December 31, 1999. "We believe that all of our core markets - Layer 3 LAN Switching
LAN switching is a form of packet switching used in local area networks. Switching technologies are crucial to network design, or to that minority of LANs that are used outside the home. , Layer 4-7 Web Content Switching See Web switch. and Internet Routers - will continue to see sustained growth throughout 2001 and beyond," said Bobby Johnson
Bobby Johnson (b. Columbia, South Carolina) is the head football coach at Vanderbilt University. He became the Commodores' coach in December 2001 after leading Furman University to the Division I-AA national championship game. , Foundry'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. . "Foundry remains focused on extending its solutions in anticipation of our customers' needs. We shipped new products during the quarter that significantly enhance the performance, scalability, and reliability of our customers' networks." "Foundry continues to have excellent financial metrics," stated Tim Heffner, Foundry's Chief Financial Officer. "Gross margins remain among the highest in the industry, our customer base increased by 300 during the quarter to over 3000, and our revenue per employee continues to lead our competitors. We believe we are well positioned to further our success in our targeted markets." OUTLOOK For the first quarter ended March 31, 2001, Foundry believes revenue will be in the range of $100 million to $110 million. For the year ended December 31, 2001, Foundry believes revenue will be in the range of $475 million to $525 million. Foundry believes that gross margins will settle in the range of 60% to 62%, and believes that total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. will be in the range of 32% to 34% of revenue for the year. About Foundry Networks Foundry Networks, Inc. (NASDAQ: FDRY) is a performance and total system leader for end-to-end switching and routing solutions, including Internet routers, Layer 2/3 LAN switches, and Layer 4-7 Internet traffic Internet traffic is the flow of data around the Internet. It includes web traffic, which is the amount of that data that is related to the World Wide Web, along with the traffic from other major uses of the Internet, such as electronic mail and peer-to-peer networks. and content delivery switches. Foundry's 3,000+ customers include the world's premier ISPs and enterprises, portals, search engines, e-commerce sites and universities, along with the leading entertainment, pharmaceutical, government, financial, and manufacturing companies. Some of these customers include: AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. (NYSE NYSE See: New York Stock Exchange : AOL), EarthLink (NASDAQ: ELNK ELNK EarthLink, Inc. (stock symbol) ELNK Ethernet Link ), AT&T WorldNet, MSN (1) (MicroSoft Network) A family of Internet-based services from Microsoft, which includes a search engine, e-mail (Hotmail), instant messaging (Windows Live Messaging) and a general-purpose portal with news, information and shopping (MSN Directory). , and Cable & Wireless (NYSE: CWP CWP Coal workers' pneumoconiosis, see there ), Yahoo! (NASDAQ: YHOO YHOO Yahoo! Inc. (NASDAQ symbol) ), Incyte Genomics, Inc. (NASDAQ: INCY), The University of Washington, University of Washington, University of, at Seattle; state supported; coeducational; chartered and opened 1861 as the Territorial Univ. of Washington, renamed 1889. There are noted schools of medicine and engineering, and the university operates laboratories for the marine Miami, LucasFilm, U.S. Army, Air Force and Navy, NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. and NIH "Not invented here." See digispeak. NIH - The United States National Institutes of Health. . For more information about the company and its products, call 1.888.TURBO.LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. or visit www.foundrynetworks.com. Note to Editors: Foundry Networks, BigIron, and NetIron are trademarks of Foundry Networks, Inc. ServerIron is a trademark of Foundry Networks, Inc. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release 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. within the meaning of Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by that section. These forward-looking statements include the financial projections for the first quarter and fiscal year 2001, and statements by Bobby Johnson regarding Foundry's sales patterns, core markets, future growth, industry trends, and new products as well as statements by Tim Heffner regarding Foundry's financial metrics and future success in its targeted markets. The expected results described in this press release are subject to a number of risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by our forward-looking statements. These risks and uncertainties are discussed here and in more detail in our most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. and 1999 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. available from Foundry or from the SEC at www.sec.gov. These risks and uncertainties include continued demand for Internet related equipment and acceptance of Foundry's current and future products, the risks posed by rapid changes in technology including Foundry's ability to introduce new and superior products and predict future industry standards and the risk of delays in developing and releasing new products, the comparative quality of new products offered by Foundry's competitors in the intensely competitive networking market, and Foundry's ability to attract and retain skilled employees in an intensely competitive hiring market. Our business is also subject to the risks and uncertainties of loss, reduction, cancellation or delay in large purchases which we expect to receive from a few significant customers; any changes in economic conditions which affect the ability or desire of our customer base to make purchases of our products such as the ability of existing and potential customers to obtain outside financing or funding to make purchases of Foundry product; cancellations of orders and payment delays and defaults by customers who are unable to obtain outside financing or funding to make purchase of Foundry product; difficulties Foundry may have in offering vendor-financing programs for customers who wish Foundry to finance purchases of Foundry product and who may be otherwise unable to obtain outside financing (including administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. and threat of default by less credit-worthy customers). Our expected profit margins are subject to the risk of the erosion of selling prices due to competition and other factors which our industry has experienced and which we expect will continue in the future but whose magnitude is difficult to predict. In addition, we may experience substantial period-to-period fluctuations in future operating results due to the erosion of our average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. . Our projected operating expenses are subject to the risk that we incur actual expenses that we do not or cannot foresee or that we foresee but do not accurately evaluate. Foundry assumes no obligation to update the forward looking statements contained in this press release.
FOUNDRY NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
-------- -------- -------- --------
(unaudited)
Revenue, net $ 105,110 $ 55,139 $ 377,155 $ 133,522
Cost of revenue 39,475 21,347 134,328 56,612
-------- -------- -------- --------
Gross profit 65,635 33,792 242,827 76,910
-------- -------- -------- --------
Operating expenses:
Research and
development 7,971 3,213 27,499 9,037
Sales and
marketing 23,066 9,516 67,753 23,142
General and
administrative 3,629 1,851 10,493 4,532
Amortization of
deferred stock
compensation 1,269 2,313 6,185 9,463
-------- -------- -------- --------
Total operating expenses 35,935 16,893 111,931 46,174
-------- -------- -------- --------
Income from operations 29,700 16,899 130,896 30,736
Interest income, net 3,211 1,815 11,235 1,886
-------- -------- -------- --------
Income before
provision for
income taxes 32,911 18,714 142,131 32,622
Provision for
income taxes 12,556 4,922 54,010 9,750
-------- -------- -------- --------
Net income $ 20,355 $ 13,792 $88,121 $ 22,872
======== ======== ======= ========
Basic net income per
share $ 0.18 $ 0.14 $ 0.80 $ 0.42
======== ======== ======= ========
Weighted average
shares used in
computing basic
net income per
share 114,577 102,100 110,141 54,929
======== ======== ======= ========
Diluted net income per
share $ 0.16 $ 0.11 $ 0.69 $ 0.20
======== ======== ======= ========
Weighted average
shares used in
computing diluted
net income per
share 126,530 126,878 127,131 114,835
======== ======== ======= ========
FOUNDRY NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
2000 1999
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 168,429 $ 120,378
Short term investments 83,816 39,789
Accounts receivable, net 64,573 28,932
Inventories, net 51,593 16,743
Deferred tax assets 13,715 5,220
Prepaid expenses and
other current assets 11,474 1,340
--------- ---------
Total current assets 393,600 212,402
Property and equipment, net 4,866 1,096
--------- ---------
$ 398,466 $ 213,498
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 20,432 7,557
Income taxes payable -- 9,925
Accrued payroll and related benefits 11,130 4,138
Accrued warranty 2,841 2,092
Other accrued liabilities 5,642 4,013
Deferred revenue 13,405 4,169
--------- ---------
Total current liabilities 53,450 31,894
--------- ---------
Stockholders' equity:
Common stock 12 11
Treasury stock (4) (4)
Additional paid-in capital 263,237 191,623
Notes receivable from stockholders (3,270) (755)
Deferred stock compensation (5,580) (11,771)
Retained earnings 90,621 2,500
--------- ---------
Total stockholders' equity 345,016 181,604
--------- ---------
$ 398,466 $ 213,498
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