Madge Networks N.V. Announces Revenue Growth in Second Quarter 1999 Results.AMSTERDAM, Netherlands--(BUSINESS WIRE)--July 20, 1999-- Madge Networks Madge Networks NV. founded by Robert Madge and best known for its work with Token Ring, was a global leader and pioneer of high speed networking solutions in the mid 1990s, and also made significant contributions to technologies such as Asynchronous Transfer Mode (ATM) and Ethernet. N.V. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NM: MADGF), a global network solutions provider, today announced results for its second fiscal quarter 1999.(1) Madge reported revenues of US$53.3 million for the second fiscal quarter, an increase of $4.5 million or 9 per cent compared to continuing revenues of $48.8 million for the first quarter of 1999. Continuing revenues for the second quarter of 1998 were $63.2 million. The net loss of $10.1 million, or $(0.25) per share, for the quarter compared to a net profit from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $2.2 million, or $0.05 per share, for the second quarter of fiscal 19982. For the second quarter Madge reported revenues of $9 million from its Managed Network Services division. The Enterprise Network Products division, which includes Token Ring A local area network (LAN) access method developed by IBM. Conforming to the IEEE 802.5 standard, Token Ring uses a token ring access method and connects up to 255 nodes in a star topology at 4, 16 or 100 Mbps. and video networking products, achieved reported revenues of $44 million. Madge continued working with its product distribution partners during the second quarter to improve supply chain efficiency, and reduced channel inventories by an estimated $4.5 million. Madge continued to invest in its Managed Network Services business but finished the quarter with cash and cash equivalents of $71 million, a net utilization of only $4 million during the quarter. Madge launched its services business globally in May following nine months of build out and operations set-up, providing managed network services to over 30 countries. Madge's managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality portfolio ranges from mission-critical voice networking and managed private data networking to premium service Virtual Private Networks (VPNs) and full service web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. . This blend of traditional and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the services is designed to meet existing needs of enterprises which operate in a mission-critical environment, while giving them a flexible migration path towards Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (IP) networking. Also noteworthy during the quarter was Madge's formal entry into the burgeoning Application Service Provider (ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). ) market through the announcement of its working relationship with Engage Technologies (www.engage.com) to deliver a new generation of profile driven Internet marketing See Internet advertising. solutions in Europe. In a revenue share arrangement, Engage's online advertising management solutions are backed up by Madge's mission critical Complex Web Hosting Service A web hosting service is a type of Internet hosting service that allows individuals and organizations to provide their own websites accessible via the World Wide Web. Web hosts are companies that provide space on a server they own for use by their clients as well as providing for delivery of highly targeted and scalable web advertising services to European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. blue chip organizations and new media marketing companies. The Enterprise Network Products division consolidated Madge's leading position in the Token Ring switching market, shipping a record 54,000 switch ports -- a sequential increase of 15 per cent. High Speed Token Ring moved into the mainstream, with sales of more than 11,000 adapters in only the second quarter of shipment. Robert Madge Robert Madge is an entrepreneur and technologist. In the 1980s, he founded Madge Networks, a pioneer of high speed networking technology. He is currently the President of IDTrack, a European Association for identification and traceability of goods based on technologies such as RFID. , chairman 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. , Madge Networks N.V., said "I'm pleased to report the increase in our revenues and the underlying progress of the business. This quarter has been of great significance for Madge. Our traditional business area is stable, and with our managed network services business we are well-placed to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the growing demand for Internet services. During the quarter we launched our Internet portfolio and added 41 new direct customers, and we are beginning to make a name for ourselves in terms of the reliability and guaranteed service level of our offerings." About Madge Networks N.V. Founded in 1986, Madge Networks (NASDAQ: MADGF) is a global managed network services and product solutions provider specializing in mission-critical enterprise needs. The company's goal is to optimize optimize - optimisation the implementation of enterprises' voice, video and data networks with the ultimate aim of converging con·verge v. con·verged, con·verg·ing, con·verg·es v.intr. 1. a. To tend toward or approach an intersecting point: lines that converge. b. all networking needs on Internet Protocol (IP) solutions. The company's main business centers are at Wexham Springs, United Kingdom and Eatontown, New Jersey Eatontown is a Borough in Monmouth County, New Jersey, United States. As of the United States 2000 Census, the borough population was 14,008. What is now Eatontown was originally incorporated as Eatontown Township . Madge Networks N.V., a company organized under the laws of the Netherlands, is the parent company of Madge Networks. Information about Madge's complete range of products and services can be accessed on the World Wide Web at www.madge.com Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and Statement Investors should take note that certain statements in this press release are forward-looking and may not give full weight to all of the potential risks (e.g., changing technologies, difficulties in new product development and introduction, competition, global economic conditions, and changed resource allocation resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs resulting from these and other factors). 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. in this press release include statements which refer to HSTR HSTR Harry S Truman National Historic Site (US National Park Service) HSTR High Speed Token Ring moving into mainstream, leading position, well placed to capitalize on growing demand and other statements which are not completely historical. These statements may differ materially from actual future actions, events or results. For more information on risk factors, please refer to Madge's SEC filings on Form 20F and Form 6-K. Madge, the Madge logo, Madge net and Smart DeskStream are trademarks, and in some jurisdictions may be registered trademarks of Madge Networks or its affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. . -0-
Madge Networks N.V.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
June 30, Dec 31,
1999 1998
Assets
Current assets:
Cash, cash equivalents,
and short-term investments $ 71,329 $130,494
Accounts receivable, net 45,063 38,966
Inventories 7,772 11,474
Prepaid expenses and
other current assets 14,364 13,884
Total current assets 138,528 194,818
Investments, property and
equipment, net 72,059 30,174
Total assets $210,587 $224,992
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $ 96,776 $ 90,661
Income taxes payable 16,641 13,228
Short term borrowings 4,332 3,811
Total current liabilities 117,749 107,700
Long-term obligations 2,871 899
Total liabilities 120,620 108,599
Shareholders' equity 89,967 116,393
Total liabilities and
shareholders' equity $210,587 $224,992
Madge Networks N.V.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands)
Results of Continuing Group Results
Operations (Incl. Discontinued
Operations)
Three months ended Three months ended
June 30, June 30,
1999 1998 1999 1998
Net sales $ 53,342 $ 63,185 $ 53,342 $ 87,296
Cost of sales 30,018 31,678 30,018 43,388
Gross profit 23,324 31,507 23,324 43,908
Operating expenses:
Sales & marketing 18,320 15,366 18,320 21,902
Research & development 8,995 9,438 8,995 13,727
General and
administrative 6,341 3,708 6,341 5,622
Total operating expenses 33,656 28,512 33,656 41,251
Income (loss) from
operations (10,332) 2,995 (10,332) 2,657
Net interest income
(expense) 596 (95) 596 295
Income (loss) before tax (9,736) 2,900 (9,736) 2,952
Income tax provision
(benefit) 402 720 402 720
Net income (loss) $(10,138) $ 2,180 $(10,138) $ 2,232
Earnings per share
Basic $ (0.25) $ 0.05 $ (0.25) $ 0.05
Diluted $ (0.25) $ 0.05 $ (0.25) $ 0.05
Weighted Average Shares Outstanding
Basic 40,535 45,619 40,535 45,619
Diluted 40,535 46,063 40,535 46,063
Madge Networks N.V.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands)
Results of Continuing Group Results
Operations (Incl. Discontinued
Operations)
Six months ended Six months ended
June 30, June 30,
1999 1998 1999 1998
Net sales $102,156 $128,960 $102,156 $177,873
Cost of sales 57,918 65,673 57,918 90,179
Gross profit 44,238 63,287 44,238 87,694
Operating expenses:
Sales & marketing 35,530 30,884 35,530 43,514
Research & development 18,370 18,366 18,370 26,746
General and
administrative 10,209 7,364 10,209 10,992
Total operating expenses 64,109 56,614 64,109 81,252
Income (loss) from
operations (19,871) 6,673 (19,871) 6,442
Net interest
income (expense) 1,658 (204) 1,658 315
Income (loss) before tax (18,213) 6,469 (18,213) 6,757
Income tax provision
(benefit) 402 1,468 402 1,468
Net income (loss) $(18,615) $ 5,001 $(18,615) $ 5,289
Earnings per share
Basic $ (0.44) $ 0.11 $ (0.44) $ 0.12
Diluted $ (0.44) $ 0.11 $ (0.44) $ 0.12
Weighted Average Shares Outstanding
Basic 41,863 45,499 41,863 45,499
Diluted 41,863 45,645 41,863 45,645
(1) For the purposes of presentation, the Company has indicated its fiscal quarters within the year as ending on the calendar month end, whereas, in fact, the Company operates on the basis of thirteen-week financial quarters. 2 Results from Continuing Operations exclude Madge's Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer Division Lannet, disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of in the third quarter 1998 and Non-Recurring charges incurred in the year to December 1998. |
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