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NORTHERN TELECOM REPORTS RECORD ORDERS, REVENUES, AND EARNINGS

 TORONTO, Jan. 26 /PRNewswire/ -- Northern Telecom today reported record orders, revenues, and earnings for both the fourth quarter and the year 1992.
 NORTHERN TELECOM
 Summary
 Fourth quarter 1992 1991 Percent
 change
 Orders (in billions) US$2.84 US$2.31 +23
 Revenues (in billions) 2.54 2.31 +10
 Net earnings (in millions) 253 204 +24
 Earnings per share 1.02 .83 +23
 Fourth Quarter 1992 vs. 1991
 For the fourth quarter of 1992, Northern Telecom recorded revenues of US$2.54 billion, an increase of 10 percent over the US$2.31 billion for the same period in 1991. Net earnings applicable to common shares increased 24 percent to US$253 million compared with US$204 million. Earnings per common share increased 23 percent to US$1.02 from US$.83. Order input for the fourth quarter also rose 23 percent to US$2.84 billion from the US$2.31 billion recorded in the prior year.
 1992 VS. 1991
 For the year 1992, Northern Telecom revenues were US$8.41 billion, an increase of three percent over the US$8.18 billion reported for 1991. Net earnings applicable to common shares increased eight percent to US$536 million, compared with US$497 million. Earnings per common share increased seven percent to US$2.17 from US$2.03. Order input for 1992 rose 14 percent to US$9.16 billion from US$8.05 billion a year earlier. Order backlog at year end was a record US$3.58 billion, 19 percent over the US$3.02 billion backlog at Dec. 31, 1991.
 Dr. Paul G. Stern, chairman and chief executive officer, said: "Northern Telecom's strong performance in the fourth quarter has enabled us to achieve very satisfactory results for 1992. We have established new records in orders, sales and earnings, while laying the foundation for long-term success by introducing new products, penetrating new markets, and forging several important alliances. This has been achieved in the face of a weak global economy in 1992.
 "Although competitive pricing pressures in our central office switching business led to lower gross profit margins, we were able to offset this with tight cost controls. In addition, we are pleased with the double digit growth in order input and the yearend backlog. We continue to invest heavily in research and development in order to provide customers with leading edge, cost effective telecommunications products and services."
 Geographic Revenues
 The fourth quarter reflects strong revenue growth in the United States, as deferrals of anticipated business in the first half of the year were recovered. Canadian revenues reflected a small increase. International revenues showed good growth in the fourth quarter on the strength of large percentage gains in Asia Pacific and the Caribbean and Latin American markets, offset by lower European revenues which were adversely impacted by currency exchange.
 For the year, both Canada and the United States showed growth while international revenues were flat. Asia Pacific revenues showed strong growth, but were offset by Europe which was unfavorably impacted by the divestiture of non-strategic businesses of STC and weak economic conditions.
 Product Line Revenues
 Revenues for the fourth quarter reflected strong percentage gains over 1991 in central office switching, transmission and business communications systems and terminals. Cable and outside plant was essentially flat.
 For the year, revenue gains were achieved versus 1991 in all product lines, except central office switching which was essentially flat. The largest percentage gain was in cable and outside plant which was led by submarine cable systems. Other revenues were down due to the divestitures of non-strategic STC businesses when compared with 1991.
 SG&A
 For the fourth quarter of 1992, SG&A expenses decreased to US$445 million from US$459 million in the fourth quarter of 1991, and decreased as a percentage of revenues to 17.5 percent from 19.9 percent. Selling, general, and administrative expenses for the year were US$1.56 billion, compared with US$1.60 billion a year earlier. As a percentage of revenues, these expenses were 18.5 percent for the year, compared with 19.5 percent in 1991.
 Research and Development
 Research and development expenses totaled US$231 million in the fourth quarter, compared with US$246 million in 1991, or 9.1 percent of revenues, compared with 10.7 percent last year. Spending on research and development in 1992 was US$931 million, compared with US$948 million in 1991. These expenses represented 11.1 percent of revenues for the year, compared with 11.6 percent in 1991.
 Chairman's Discussion
 Commenting on Northern Telecom's strategic direction and performance highlights for 1992, Dr. Stern said: "We are on the path to becoming a truly global enterprise. Four years ago, our business outside of North America was only eight percent of revenues. Today, that figure is 25 percent, and we expect to increase it in the future.
 "In Western Europe, through an acquisition, a strategic alliance and joint ventures, we have built solid presence in the U.K., France, Spain, and Turkey. We are also developing beneficial relationships in the emerging markets of Eastern Europe.
 "We have strengthened our leadership in the Caribbean, and have built a competitive position in Mexico and Central and South America -- markets expected to expand rapidly later in this decade.
 "In the Pacific Rim, we have made breakthroughs in Japan, China and Australia, while gaining entry into the markets of many other nations. Most notably yesterday's announcement of a US$270 million contract for DMS-10 equipment from NTT reaffirms our dedication to high quality standards and our position as NTT's largest foreign supplier.
 "In Canada, successful trials for personal communications systems (PCS) were conducted and the world's first digital cellular network was put into commercial service by AGT Cellular utilizing Northern Telecom equipment. We also received the largest contract in Northern Telecom history - a US$913 million agreement with Bell Canada for switching modernization.
 "In the United States, Northern Telecom was awarded several long-term contracts for switching and a major US$250 million contract for FiberWorld products with MCI. Recently we announced a partnership with Bell Atlantic to sell and service private telecommunications systems in the mid-Atlantic region.
 "Our product lines have never been stronger -- nor more diverse. We widened the portfolio in 1992, as the FiberWorld, VISIT and Companion product families were rolled out in the public, private, and wireless markets. Meanwhile, the capabilities of our flagship digital switching system products resulted in long-term contracts with Bell Canada, NTT, MCI, Pacific Bell, and others. Yesterday, Pacific Bell announced an award of four million lines for our digital switching systems -- an encouraging sign that our products will continue to meet the evolving needs of our largest customers. Our Meridian and Norstar private systems are pacesetters worldwide, and the DPN data communications system remains the global leader among banks, airlines, and other industries.
 "Wireless systems are pivotal to our future and we have made solid progress. To better position ourselves in the rapidly expanding global cellular markets, we formed a joint venture with Motorola to cover the Americas and a partnership with Matra to address the global GSM market. In addition, we purchased NovAtel's radio assets. Currently, Northern Telecom offers the world's largest capacity cellular switch along with the world's first dual mode radio unit. With the launch of our Companion products, we are demonstrating leadership in the PCS revolution.
 "Our performance during the fourth quarter of 1992, and over the year, is cause for pride and encouragement -- but not for complacency. Much of the world economy is still gripped by uncertainty and recession. Although some early signs of recovery are welcome, we remain, nonetheless, cautiously optimistic with respect to 1993."
 Northern Telecom's common shares are listed on the New York, Toronto, Montreal, Vancouver, London, and Tokyo stock exchanges.
 NORTHERN TELECOM LIMITED
 Fourth Quarter Consolidated Result
 (Unaudited, U.S. dollars, millions except per share figures)
 Periods ended Three months Year
 Dec. 31 1992 1991 (B) 1992 1991(B)
 Revenues $2,540.5 $2,306.5 $8,408.9 $8,182.5
 Cost of revenues 1,502.5 1,300.7 5,006.2 4,760.8
 Gross profit 1,038.0 1,005.8 3,402.7 3,421.7
 Selling, general and
 administrative expense 444.9 458.7 1,559.4 1,596.2
 Research and development
 expense 230.7 246.1 930.5 948.3
 Goodwill amortization 8.4 14.8 51.5 46.2
 Operating earnings 354.0 286.2 861.3 831.0
 Investment and other
 income (net) 51.7 49.1 112.2 100.2
 Interest expense
 Long-term debt (31.2) (33.8) (114.5) (140.7)
 Other (25.7) (18.5) (102.7) (80.3)
 Earnings before
 income taxes 348.8 283.0 756.3 710.2
 Provision for income
 taxes 93.2 75.0 208.0 195.3
 Net earnings 255.6 208.0 548.3 514.9
 Dividends on preferred
 shares 2.5 3.8 11.9 18.4
 Net earnings applicable
 to common shares $ 253.1 $ 204.2 $ 536.4 $496.5
 Earnings per common
 share(A) $ 1.02 $ .83 $ 2.17 $ 2.03
 Dividends declared per
 common share $ .09 $ .08 $ .34 $ .32
 Effective tax rate
 (as a percent) 26.7 26.5 27.5 27.5
 (A) -- Based on weighted
 average number of
 common shares
 outstanding
 (millions) 248.0 245.4 247.1 244.6
 (B) -- Restated to conform with current year's presentation
 -0- 1/26/93
 /CONTACT: Tom Tropea or Gary Brandt of Northern Telecom Limited, 416-566-3178, or 416-566-3098/
 (NT)


CO: Northern Telecom ST: Ontario IN: TLS SU: ERN

TS -- NY023 -- 8982 01/26/93 10:08 EST
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