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 CERRITOS, Calif., April 19 /PRNewswire/ -- PairGain Technologies (NASDAQ: PAIR) today reported record revenue and pretax income for its first quarter 1994. Chief Executive Officer Charles S. Strauch commented on the strength of PairGain's balance sheet and operating margins. "We finished the quarter with over $53 million in cash -- almost a $4 million increase over the previous period. Pretax margins were 22 percent -- reflecting continuing control of costs and expenses. We are very pleased with our financial results."
 Three Months Ended
 3/31/94 3/31/93
 Revenue $12,482 $7,448
 Pretax income $2,754 $1,486
 Net income - as reported $1,620 $1,486
 - fully taxed $1,620 $877
 Earnings per share - as reported $.11 $.11
 - fully taxed $.11 $.08
 In comparing the three months ended March 31, 1994, with prior periods, it should be noted the company utilized all of its net operating loss carryforwards in 1993, resulting in a lower effective tax rate for those prior periods. It should also be noted that the number of shares used in computing earnings per share has increased as a result of the company's initial public offering in September 1993.
 PairGain continues to dominate the domestic High-bit-rate Digital Subscriber Line (HDSL) market by maintaining its position as the primary source for systems approved and shipped into five of the seven Regional Bell Operating Companies (RBOCs) and all but one of the major independent telcos. This position was secured in spite of the introduction of a number of competitive HDSL solutions over the last six months. The company believes that, in combination with its licensee, Alcatel, it has captured over 85 percent of the available market thus exceeding its own estimates made at the time of its initial public offering in September 1993. Strauch stated: "PairGain's strategy from the start has been to be the dominant player with a full line of competitively priced HiGain products. We believe that we have achieved that goal continuing to reduce our cost and expand the product line."
 The company recently introduced a new generation of its standard HiGain product, a new line of high density products which fit more compact repeater bays and its new HiGain Doubler -- a remote HDSL product which doubles the reach of a standard HiGain system. This product now allows the telco to deploy a fiber quality T1 line out to 5 miles at a fraction of the cost of a single T1 fiber optic or standard repeatered line. Strauch said, "It is only a matter of time before the industry recognizes that our technology will allow them to implement, at substantial savings in time and money, fiber quality digital services, including video, in suburban and rural America. There is still $100 billion of embedded copper in the United States and very little infrastructure in many countries around the world. Today's `hype' is in the fiber information highway, but the off-ramps to that highway will be in copper for a long time to come. That's where PairGain's new product focus will continue to be." The company also indicated that it is developing a new product line using its basic technology which will be specifically aimed at international markets.
 PairGain also continues to broaden its Campus product line which serves the private networks. The private network domestic sales force is now fully deployed, and a regional manager was added in Canada during the first quarter. The Campus product line still constitutes a relatively small percentage of PairGain's revenue.
 PairGain designs, manufactures and markets systems which allow telecommunications carriers and private networks to more efficiently and quickly deploy high-speed digital service to end users over the large existing infrastructure of unconditioned copper wires. PairGain's HiGain and Campus systems provide fiber quality transmission over the last mile in both the public and private telephone networks.
 Condensed Consolidated Statement of Income
 (In thousands, except per share data)
 Three Months Ended
 March 31,
 1994 1993
 Product sales $11,911 $6,422
 Technology fees & royalty income 571 1,026
 Total revenue 12,482 7,448
 Cost of sales 7,101 3,615
 Gross profit 5,381 3,833
 Operating expenses:
 Research & development 1,192 842
 Selling & marketing 1,122 745
 General & administrative 967 676
 Total operating expense 3,281 2,263
 Operating income 2,100 1,570
 Interest income (expense), net 654 (84)
 Income before income taxes 2,754 1,486
 Provision for income taxes 1,134 164
 Net income $1,620 $1,322
 Net income per share $.11 $.11
 Number of shares used in
 per share computation 15,305 11,565
 Condensed Consolidated Balance Sheets
 (In thousands)
 March 31, Dec. 31,
 1994 1993
 Current assets:
 Cash and short-term investments $53,496 $49,920
 Accounts receivable 5,575 5,450
 Inventory 9,484 10,499
 Other current assets 72 39
 Total current assets 68,627 65,908
 Property and equipment 2,487 2,265
 Other assets 24 30
 Total assets $71,138 $68,203
 Liabilities and Shareholders' Equity:
 Current liabilities $4,376 $2,967
 Long-term debt --- ---
 Shareholders' equity 66,762 65,236
 Total liabilities and
 shareholders' equity $71,138 $68,203
 -0- 4/19/94
 /CONTACT: Chuck Strauch or Howard Flagg of PairGain Technologies, 310-404-8811/

CO: PairGain Technologies ST: California IN: CPR SU: ERN

LS-JL -- LA056 -- 8213 04/19/94 20:00 EDT
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Publication:PR Newswire
Date:Apr 19, 1994

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