Newbridge Networks Announces Financial Results
for Third Quarter Fiscal 1999
Record Order and Revenue Growth In ATM and IP Product Line
KANATA, ONTARIO--Newbridge Networks Corporation (NYSE: NN - news; TSE: NNC - news) today announced its
financial results for the third quarter of fiscal 1999, which ended January 31, 1999. Revenue for the third quarter was $451
million, an increase of 26 percent comp ared with revenue of $359 million for the third quarter of fiscal 1998. This is
consistent with the preliminary estimate of revenue indicated in the Company's pre-announcement of February 4, 1999.
Fully diluted earnings per share for the quarter were 64 cents under Canadian GAAP. Diluted earnings per share under U.S.
GAAP were U.S.43 cents. This compares with a loss of 82 cents per share under Canadian GAAP (U.S.68 cents) in the
third quarter of
fiscal 1998. Net earnings for the quarter, excluding non-recurring items, were 26 cents, or U.S.17 cents, compared with
earnings of 10 cents per share (U.S.7 cents) in the third quarter of fiscal 1998.
Operating expenses were $195 million, a decrease of $3 million compared with the previous quarter. The Company's cash
balance increased by $168 million in the quarter to $929 million. The overall book-to-bill ratio was greater than one, driven
by recor d order intake for wide area network (WAN) asynchronous transfer mode (ATM) and Internet protocol (IP)
products.
''This was a good news - and not so good news - quarter,'' said Alan Lutz, President and Chief Operating Officer,
Newbridge Networks. ''While we are disappointed in not meeting analysts' consensus expectations, in examining the
quarter, it is important to note that the Company's future growth engine - ATM and IP products - delivered strong
performances. ATM equipment orders increased by more than 45 percent compared with the preceding quarter, while
ATM revenue grew by more than 35 percent sequentially.
The ATM and IP market offers huge growth and we are focused intently on this market with our broad customer base of
over 300 service providers throughout the world."
''Earlier today we announced the appointment of Satjiv Chahil to the position of Executive Vice President, Global
Marketing, a key new position on the Newbridge leadership team. I am confident this new team - which includes six new
executive vice presidents - is now solidly positioned to lead the Company forward,'' continued Mr. Lutz.
''Equally important, the Newbridge product portfolio is significantly enhanced and expanded, with major new product
solutions in ATM and IP being introduced this year. Our customers throughout the world are responding enthusiastically to
the Company's pr oduct direction. We will be providing further details in the coming weeks on a broad slate of new
multiservice ATM and IP products.
''In conclusion, we now have the people, the products, the focus and the will to drive for success.''
This news release may include certain forward-looking statements that involve risks and uncertainties. Actual results may
differ materially from results indicated in any forward-looking statements. The Company cautions that, among other things, in
view o f the rapid technological changes in the networking industry, if technologies or standards supported by the
Company's products or common carrier service offerings based on the Company's products become obsolete or fail to gain
widespread commercial accep tance, the Company's business may be adversely affected. Additional information identifying
risks and uncertainties is contained in the Company's most recent Form 10-Q quarterly report and Form 10-K annual
report filed with the SEC.
Newbridge Networks designs, manufactures, markets and services networking solutions to organizations in more than 100
countries. The Company leverages its relationship with a growing family of Newbridge Affiliate companies and strategic
alliances with Si emens and 3Com Corporation to deliver seamless, end-to-end solutions. Newbridge customers include the
world's 300 largest telecommunications service providers and more than 10,000 corporations, government organizations
and other institutions. Founded i n 1986, the Company employs more than 6,000 people on six continents. News and
information are available at www.newbridge.com.
Newbridge, logo are registered trademarks of Newbridge Networks Corporation.
Management will be hosting a conference call on Tuesday, February 23rd at 5:00 p.m. (Eastern Standard Time).
Should you wish to listen to this teleconference calling from within North America please call 800-553-2720. International
callers please dial 303-267-1001. Please call in 10 minutes prior to the start of the call. An instant replay of the call will b e
available for 48 hours. To access the instant replay within North America please dial 800-625-5288; international callers
please dial 303-804-1855 passcode 459068.
Newbridge Networks Corporation
Condensed Consolidated Statements of Earnings
(Canadian dollars in thousands, except per share data)
Fiscal quarters ended
January 31, February 1,
1999 1998
----------- -----------
Sales $450,753 $358,520
Cost of Sales 187,962 144,813
----------- -----------
Gross Margin 262,791 213,707
Expenses
Selling, general
and administrative 129,630 120,082
Research and development 65,191 66,308
Layer 2 Switching end of life -- --
Asia Pacific resource relocation -- --
Restructuring costs -- 181,444
Amortization of purchased
research and development -- 26,381
----------- -----------
Income from operations 67,970 (180,508)
Net gain on investments 116,182 47,960
Other expense (863) (516)
----------- -----------
Earnings before income taxes
and non-controlling interest 183,289 (133,064)
Provision for income taxes 62,019 9,457
Non-controlling interest 1,151 1,762
----------- -----------
Net earnings (loss) $120,119 $(144,283)
----------- -----------
----------- -----------
Earnings (loss) per share
Cdn. GAAP - basic 68 cents (82) cents
Cdn. GAAP - fully diluted 64 cents (82) cents
U.S. GAAP - basic - US$ 44 cents (68) cents
U.S. GAAP - diluted - US$ 43 cents (68) cents
Weighted average number of shares
Basic - Cdn. GAAP and U.S. GAAP 177,596 175,376
Fully diluted - Cdn. GAAP 199,951 175,376
Diluted - U.S. GAAP 182,030 175,376
Newbridge Networks Corporation
Condensed Consolidated Statements of Earnings
(Canadian dollars in thousands, except per share data)
Three fiscal quarters ended
January 31, February 1,
1999 1998
----------- -----------
Sales $1,333,590 $1,225,427
Cost of Sales 553,848 465,344
----------- -----------
Gross Margin 779,742 760,083
Expenses
Selling, general
and administrative 393,500 367,341
Research and development 195,888 192,160
Layer 2 Switching end of life 37,928 --
Asia Pacific resource relocation 6,532 --
Restructuring costs -- 181,444
Amortization of purchased
research and development -- 26,381
----------- -----------
Income from operations 145,894 (7,243)
Net gain on investments 183,034 47,960
Other expense (7,409) (335)
----------- -----------
Earnings before income taxes
and non-controlling interest 321,519 40,382
Provision for income taxes 112,841 60,815
Non-controlling interest (275) 1,503
----------- -----------
Net earnings (loss) $ 208,953 $ (21,936)
----------- -----------
----------- -----------
Earnings (loss) per share
Cdn. GAAP - basic $1.18 (13) cents
Cdn. GAAP - fully diluted $1.16 (13) cents
U.S. GAAP - basic - US$ 78 cents (20) cents
U.S. GAAP - diluted - US$ 78 cents (20) cents
Weighted average number of shares
Basic - Cdn. GAAP and U.S. GAAP 176,814 174,338
Fully diluted - Cdn. GAAP 198,028 174,338
Diluted - U.S. GAAP 176,814 174,338
Reconciliation of Canadian to US GAAP Net Earnings and
Earnings Per Share
(Canadian dollars in thousands, except per share data)
Fiscal quarters ended
January 31, February 1,
1999 1998
----------- -----------
Net earnings (loss), Canadian GAAP $120,119 $(144,283)
Write-off of purchased R&D in process
upon acquisition of RadNet -- (52,762)
Add back amortization of RadNet
purchased R&D in process (Cdn. GAAP) -- 26,381
----------- -----------
Net earnings (loss), U.S. GAAP $120,119 $(170,664)
----------- -----------
----------- -----------
Earnings (loss) per share
U.S. GAAP - basic - US$ 44 cents (68) cents
U.S. GAAP - diluted - US$ 43 cents (68) cents
Weighted average number of shares
U.S. GAAP - basic 177,596 175,376
U.S. GAAP - diluted 182,030 175,376
Reconciliation of Canadian to US GAAP Net Earnings and
Earnings Per Share
(Canadian dollars in thousands, except per share data)
Three fiscal quarters ended
January 31, February 1,
1999 1998
----------- -----------
Net earnings (loss), Canadian GAAP $ 208,953 $ (21,936)
Write-off of purchased R&D in process
upon acquisition of RadNet -- (52,762)
Add back amortization of RadNet
purchased R&D in process (Cdn. GAAP) -- 26,381
----------- -----------
Net earnings (loss), U.S. GAAP $ 208,953 $ (48,317)
----------- -----------
----------- -----------
Earnings (loss) per share
U.S. GAAP - basic - US$ 78 cents (20) cents
U.S. GAAP - diluted - US$ 78 cents (20) cents
Weighted average number of shares
U.S. GAAP - basic 176,814 174,338
U.S. GAAP - diluted 176,814 174,338
Newbridge Networks Corporation
Condensed Consolidated Balance Sheets
(Canadian dollars in thousands)
January 31, April 30,
1999 1998
----------- -----------
Cash and cash equivalents $ 929,005 $ 499,278
Accounts receivable 436,230 428,527
Inventory 192,890 196,285
Property, plant and equipment 491,218 450,735
Goodwill 42,190 72,719
Other assets 392,234 319,281
----------- -----------
$2,483,767 $1,966,825
----------- -----------
----------- -----------
Accounts payable and accruals $ 344,833 $ 245,811
Income taxes 43,488 5,851
Long term obligations 411,742 387,447
Future tax obligations 120,473 71,197
Non-controlling interest 20,042 22,899
----------- -----------
940,578 733,205
Shareholders' equity 1,543,189 1,233,620
----------- -----------
$2,483,767 $1,966,825
----------- -----------
----------- -----------
Pro forma Condensed and Consolidated Statements of Earnings
Excluding Net Gain on Investments, Layer 2 Switching End of
Life, Asia Pacific Resources Relocation, Restructuring Costs
and Amortization of Purchased Research and Development
(Canadian dollars in thousands, except per share data)
Fiscal quarters ended
January 31, February 1,
1999 1998
----------- -----------
Sales $450,753 $358,520
Cost of Sales 187,962 144,813
----------- -----------
Gross Margin 262,791 213,707
Expenses
Selling, general
and administrative 129,630 120,082
Research and development 65,191 66,308
----------- -----------
Income from operations 67,970 27,317
Other expense (863) (516)
----------- -----------
Earnings before income taxes
and non-controlling interest 67,107 26,801
Provision for income taxes 19,796 7,910
Non-controlling interest 1,151 1,762
----------- -----------
Net earnings $ 46,160 $ 17,129
----------- -----------
----------- -----------
Earnings per share
Cdn. GAAP - basic 26 cents 10 cents
Cdn. GAAP - fully diluted 26 cents 10 cents
U.S. GAAP - basic - US$ 17 cents 7 cents
U.S. GAAP - diluted - US$ 17 cents 7 cents
Pro forma Condensed and Consolidated Statements of Earnings
Excluding Net Gain on Investments, Layer 2 Switching End of
Life, Asia Pacific Resources Relocation, Restructuring Costs
and Amortization of Purchased Research and Development
(Canadian dollars in thousands, except per share data)
Three fiscal quarters ended
January 31, February 1,
1999 1998
----------- -----------
Sales $1,333,590 $1,225,427
Cost of Sales 553,848 465,344
----------- -----------
Gross Margin 779,742 760,083
Expenses
Selling, general
and administrative 393,500 367,341
Research and development 195,888 192,160
----------- -----------
Income from operations 190,354 200,582
Other expense (7,409) (335)
----------- -----------
Earnings before income taxes
and non-controlling interest 182,945 200,247
Provision for income taxes 53,968 59,268
Non-controlling interest (275) 1,503
----------- -----------
Net earnings $ 129,252 $139,476
----------- -----------
----------- -----------
Earnings per share
Cdn. GAAP - basic 73 cents 80 cents
Cdn. GAAP - fully diluted 73 cents 80 cents
U.S. GAAP - basic - US$ 48 cents 57 cents
U.S. GAAP - diluted - US$ 48 cents 55 cents
Contact:
Newbridge Networks Corporation
John Lawlor
(613) 591-3600
E-Mail: jlawlor@newbridge.com
Website: www.newbridge.com
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