Foundry Reports Second Quarter Results and Tenth Profitable Quarter.Business Editors/High Tech WritersSAN 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)--July 25, 2001 Landmark Quarter For Launching New Products and Features; Profitability Continues For The Tenth Consecutive Quarter 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), today reported financial results for its second quarter ended June 30, 2001. Net revenue for the second quarter was $88.6 million, which compares to $88.8 million reported for the same period last year. 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 second quarter of 2001, 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 $8.3 million or $0.07 per diluted share, compared to pro forma net income of $23.9 million or $0.19 per diluted share in the second quarter of 2000. This marks the tenth consecutive quarter of profitability for the Company. Net revenue for the first six months of 2001 was $171.1 million, which compares to $158.8 million reported for the first six months of 2000. Pro forma net income for the first six months of 2001 was $13.6 million or $0.11 per diluted share, compared to pro forma net income of $43.7 million or $0.34 per share for the same period in 2000. During the second quarter, Foundry successfully introduced more products and features than any other quarter in the history of the Company. During the period, the Company debuted its third generation JetCore ASIC (Application Specific Integrated Circuit) Pronounced "a-sick." A chip that is custom designed for a specific application rather than a general-purpose chip such as a microprocessor. chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). , demonstrated its MPLS (1) (MultiProtocol Lambda Switching) The earlier name for GMPLS. See GMPLS. (2) (MultiProtocol Label Switching) A standard from the IETF for including routing information in the packets of an IP network. Draft-Martini, introduced its 10 Gigabit Ethernet An Ethernet standard that transmits at 1 Gbps. Used mostly to connect high-end workstations and servers as well as for network backbones, Gigabit Ethernet transmits full duplex from point to point using switches and half duplex in a shared environment (CSMA/CD) using a hub. products for 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. , MAN, and WAN, and delivered its second generation platform for the NetIron product. The Company also experienced increased sales activity in the Asia-Pacific region with customers such as China Telecom and WIDE (Widely Integrated Distributed Environments) of Japan. These customers were among the new customers that chose the scalability, availability, and performance leadership of Foundry's solutions. "It is the tremendous effort, dedication, and commitment of every Foundry employee that has allowed us to execute on our core fundamentals and maneuver through the challenges of the current market environment," 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. , 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 Foundry Networks. "We have also clearly benefited from our product and customer diversification initiatives, introducing many new products and adding over 300 new customers worldwide, with significant wins in metropolitan area networks (MAN). Foundry remains focused on intelligently building our organization, and delivering the highest degree of customer satisfaction as we aggressively pursue global opportunities." Second Quarter Highlights: -- On June 25, 2001, Foundry delivered an industry leading Ethernet stackable, the FastIron 4802. -- On June 25, 2001, Foundry announced technology breakthrough and industry leading features with third generation JetCore ASIC chipset. -- On June 7, 2001, Foundry and Adam Net teamed up to support the largest Internet exchange in Japan. -- On June 5, 2001, Lucent Technologies and Foundry joined forces to accelerate the development of Optical Ethernet Metropolitan Area Networks. -- On June 4, 2001, Foundry demonstrated Multi-Protocol Label Switching (MPLS) Draft-Martini at SuperComm 2001. -- On May 16, 2001, Foundry announced a complete suite of standards-based 10 Gigabit Ethernet products for high performance LAN, MAN and WAN. -- On May 15, 2001, Foundry appointed new Vice President of Customer Support to further extend customer service leadership. -- On May 7, 2001, Foundry and Applied Innovation demonstrated Optical Gigabit Ethernet solution for Metropolitan Area Ethernet network. -- On May 7, 2001, Foundry delivered bandwidth provisioning, accounting, and billing for metro service providers with new Velocity Management module. -- On May 1, 2001, Foundry demonstrated multivendor Multi Protocol Label Switching (MPLS) for IP traffic engineering. -- On April 5, 2001, Foundry was named a 2001 finalist by Network Computing for Well-Connected Award. Business Outlook "We continue to have strong confidence in the resilient, long term demand for networking products and the Company's growth potential," noted Mr. Johnson. "However, because the macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. picture for the technology sector in the short term remains cloudy, we will not be providing financial guidance for the current quarter." Conference Call Foundry Networks will host a conference call today to further discuss these results at 2:00 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT . The call can be accessed via a webcast at www.foundrynet.com. A Web replay will also be available after the call at this same Web address. About Foundry Networks Foundry Networks, Inc. (Nasdaq: FDRY) is a leader in high-performance, end-to-end switching and routing solutions, including Internet routers (1) A router in the Internet that forwards IP packets between local, regional and national providers. Same as "IP router." (2) (InterNet Router) Macintosh software from Apple that internetworks different access methods (LocalTalk, EtherTalk, TokenTalk, etc. , Layer 3 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 management switches. Foundry products are installed in the world's largest ISPs, including 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 ). Foundry products are also installed in large enterprise, entertainment, pharmaceutical and manufacturing companies as well as search engines, e-commerce sites, universities and government organizations. Some of these customers include: 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, Yahoo! (NASDAQ: YHOO YHOO Yahoo! Inc. (NASDAQ symbol) ), Incyte Pharmaceuticals (NASDAQ: INCY), 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 or visit our web site at www.foundrynetworks.com. Note to Editors: Foundry Networks, ServerIron, BigIron, FastIron, IronWare, and NetIron are trademarks of Foundry Networks, Inc. All other trademarks are the sole property of their respective holders. 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 a statement by Bobby Johnson regarding the Company's long term growth potential and demand for technology products. The forward looking statements in this press release are subject to a number of risks and uncertainties, including the strength of the overall economy and the high-technology arena in particular, continued demand for Internet related equipment and acceptance of Foundry's current and future products, Foundry's ability to introduce new and superior products and predict future industry standards. Actual results could differ materially from those projected in our forward looking statements. Investors should review the risk factors described in more detail in our 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 most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. available from Foundry or from the SEC at www.sec.gov. Foundry assumes no obligation to update the forward looking statements contained in this press release.
FOUNDRY NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
-------- -------- -------- --------
Revenue, net $ 88,569 $ 88,790 $171,120 $158,805
Cost of revenue 41,318 30,472 80,206 55,317
-------- -------- -------- --------
Gross profit 47,251 58,318 90,914 103,488
-------- -------- -------- --------
Operating expenses:
Research and development 8,251 6,393 16,151 10,334
Sales and marketing 23,266 15,028 48,083 25,121
General and administrative 5,095 2,070 11,042 3,888
Amortization of deferred
stock compensation 833 1,581 1,968 3,533
-------- -------- -------- --------
Total operating expenses 37,445 25,072 77,244 42,876
-------- -------- -------- --------
Income from operations 9,806 33,246 13,670 60,612
Interest income, net 2,304 2,700 5,169 4,741
-------- -------- -------- --------
Income before provision
for income taxes 12,110 35,946 18,839 65,353
Provision for income taxes 4,602 13,492 7,159 24,813
-------- -------- -------- --------
Net income $ 7,508 $ 22,454 $ 11,680 $ 40,540
======== ======== ======== ========
Basic net income per share $ 0.06 $ 0.21 $ 0.10 $ 0.38
======== ======== ======== ========
Weighted average shares used
in computing basic net
income per share 117,324 109,420 116,457 107,041
======== ======== ======== ========
Diluted net income per share $ 0.06 $ 0.18 $ 0.09 $ 0.32
======== ======== ======== ========
Weighted average shares
used in computing diluted
net income per share 126,241 126,640 125,448 126,760
======== ======== ======== ========
FOUNDRY NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2001 2000
--------- ---------
(unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $ 189,706 $ 168,429
Short-term investments 70,218 83,816
Accounts receivable, net 68,968 64,573
Inventories 50,801 51,593
Deferred tax assets 14,397 13,715
Prepaids and other current assets 2,794 10,693
--------- ---------
Total current assets 396,884 392,819
Property and equipment, net 6,489 4,866
Other long-term assets 4,297 781
--------- ---------
$ 407,670 $ 398,466
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,480 $ 20,432
Accrued payroll and related benefits 10,210 11,130
Accrued warranty 2,999 2,841
Other accrued liabilities 6,740 5,642
Deferred support revenue 10,287 13,405
--------- ---------
Total current liabilities 38,716 53,450
--------- ---------
Stockholders' equity:
Common stock and additional paid-in
capital 272,944 263,245
Note receivable from stockholder (3,270) (3,270)
Deferred stock compensation (3,021) (5,580)
Retained earnings 102,301 90,621
--------- ---------
Total stockholders' equity 368,954 345,016
--------- ---------
$ 407,670 $ 398,466
========= =========
(1) Derived from audited financial statements
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