ANOTHER VERSION OF EARNINGS!
Tuesday July 27, 4:10 pm Eastern Time
Company Press Release
Excel Switching Corporation Announces Record Second Quarter Results
Revenues of $43.2M Strongest in Company History
HYANNIS, Mass.--(BUSINESS WIRE)--July 27, 1999--Excel Switching Corporation (Nasdaq:XLSW - news), a leading provider of open voice and data switching platforms for telecommunications networks worldwide, today announced second quarter results for the period ending June 30, 1999. These results reflect a 40% increase in revenues over the corresponding period in 1998 and a 16% increase over the first quarter of 1999.
For the second quarter of 1999, revenue increased to $43.2 million from $30.8 million for the second quarter of 1998. Pro forma net income for the second quarter of 1999 increased to $6.4 million or $0.16 per diluted share from $5.4 million or $0.13 per diluted share for the same period in 1998. Pro forma net income and pro forma diluted earnings per share for the second quarter of 1999 increased 19% and 23%, respectively, from the second quarter of 1998. Pro forma net income and pro forma diluted earnings per share exclude one time charges for merger related expenses discussed below. Actual net income for the second quarter of 1999, which includes the one-time merger related expenses, was $4.3 million or $0.10 per diluted share.
Revenues for the first six months of 1999 increased 39% to $80.6 million from $57.9 million for the first six months of 1998. Pro forma net income for the first six months of 1999 increased to $11.9 million or $0.29 per diluted share from $9.3 million or $0.23 per diluted share for the same period in 1998. Pro forma net income and pro forma diluted earnings per share for the first six months of 1999 increased 28% and 26%, respectively, from the same period in 1998. Actual net income for the first six months of 1999, including the one-time merger related expenses, was $9.8 million or $0.24 per diluted share.
On May 10, 1999, Excel Switching Corp. completed the acquisition of RAScom, Inc. This acquisition has been accounted for as a ''pooling of interests'' and, accordingly, these financial results for 1998 and 1999 reflect the combined operations of Excel and RAScom. During the quarter, Excel also incurred one-time merger related charges of approximately $2.1 million, or approximately $0.06 per diluted share, net of the effect of income tax.
''We are very pleased to report Excel's strong financial results,'' said Robert Madonna, Excel's President and CEO. ''Our record quarterly revenues are particularly important because they reflect Excel's continued penetration of the domestic and international infrastructure markets, as well as the continued strength of our OEM based Open Network Platform business. Contributing to this revenue growth is a group of new products including Exchange Plus, EXS Media Gateway, and VDAC, that have broadened our customer base, not only in traditional wireline and wireless networks, but also in emerging New World IP-based networks. Together with the recently announced EXS RAServer, these products support Excel's strategic expansion into the converging voice and data network infrastructure markets.''
In Q2 1999, Excel introduced the EXS RAServer, a full-featured remote access server for the converging voice and data markets. This product is designed to enable carriers to deliver bundled services, including voice, data and video on a single channel by combining the functions of a remote access concentrator, router, SS7 gateway and circuit switch into a single, compact system. EXS RAServer is designed to address the increasing demand for carrier solutions that can merge voice and data with innovative service offerings.
Also in this quarter, Excel established an office in Miami, giving the company greater access to opportunities in this important international gateway city. With this office, Excel intends to expand its presence in Florida, Latin America and the Caribbean and to support its existing customer base and partner network.
About Excel
Excel Switching Corporation is a leading provider of open voice and data switching platforms for telecommunications networks worldwide. Excel designs, manufactures, and delivers a family of open, programmable, carrier-class voice and data switches and gateways that address the complex infrastructure and enhanced service needs of network providers. Excel's products are currently deployed in telecommunications networks worldwide. Visit Excel's website at xl.com.
Note to Investors:
This release contains statements that are ''forward looking.'' Such statements are subject to risks and uncertainties that could cause actual results to differ significantly from expectations. Factors that might cause such a difference include, but are not limited to, those relating to fluctuations in quarterly results of operations, Excel's highly competitive market; risks associated with Excel's concentrated product family and new product introductions; evolving market for telecommunications services and rapid technological change; possible delayed or lengthy sales cycles; risks relating to acquisitions; risks associated with integrating RAScom's product offerings and key personnel; risks associated with international sales; dependence on and concentration of relationships with customers, application developers, original equipment manufacturers and systems integrators; Excel's dependence on its proprietary rights; risks associated with current patent litigation with Cisco Systems, Inc., and other risks identified in the Company's Securities and Exchange Commission filings including those risks identified in the section entitled ''Risk Factors'' of the Company's Annual Report for the year ended December 31, 1998 on Form 10-K, the Company's Quarterly Report for the quarter ended March 31, 1999 on Form 10-Q, the Company's Report on Form 8-K, dated May 10, 1999 and filed with the Commission on May 25, 1999 and as amended by the Company's Report on Form 8-K/A, dated May 10, 1999 and filed with the Commission on July 23, 1999. Product and service names used within are trademarks, registered trademarks and service marks of their respective owners.
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Excel Switching Corporation
Consolidated Condensed Statements of Income
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 31, June 28, June 31, June 28,
1999 1998 1999 1998
Revenues $43,218 $30,807 $80,558 $57,912
Cost of revenues 13,689 9,881 25,906 19,003
Gross profit 29,529 20,926 54,652 38,909
Operating expenses:
Engineering, research
& development 9,590 5,904 18,112 11,444
Selling and marketing 6,398 4,923 12,094 9,964
General and administrative 4,791 2,949 8,299 5,857
Merger related costs 2,075 -- 2,075 --
Total operating expenses 22,854 13,776 40,580 27,265
Income from operations 6,675 7,150 14,072 11,644
Other income, net 1,306 1,482 2,514 3,199
Income before provision
for income taxes 7,981 8,632 16,586 14,843
Provision for income taxes 3,661 3,246 6,796 5,587
Net income (A) $ 4,320 $ 5,386 $ 9,790 $ 9,256
Basic earnings per share $ 0.12 $ 0.15 $ 0.26 $ 0.26
Diluted earnings per share (B) $ 0.10 $ 0.13 $ 0.24 $ 0.23
Basic shares outstanding 35,620 33,178 35,454 33,005
Diluted shares outstanding 41,202 40,139 41,158 40,061
(A) Excluding one-time charges for merger related expenses, net
income for Q2 99 and the first six months of 1999 would have been
$6.4m and $11.9m, respectively.
(B) Excluding one-time charges for merger related expenses,
diluted earnings per share for Q2 99 and for the first six months of
1999 would have been $0.16 and $0.29, respectively.
Excel Switching Corporation
Consolidated Condensed Balance Sheets
(in thousands)
Jun. 30, Dec. 31,
1999 1998
Current assets:
Cash and marketable securities $ 114,656 $ 120,456
Accounts receivable, net 47,749 31,425
Inventories 12,822 6,800
Deferred tax asset 7,608 8,534
Other current assets 5,004 2,325
Total current assets 187,839 169,540
Property & equipment, net 24,747 19,753
Deferred tax asset 7,781 7,642
Intangibles and other 10,215 10,468
$ 230,582 $ 207,403
Current liabilities:
Current maturities of
long-term obligations $ 4,213 $ 3,408
Accounts payable 8,187 4,922
Accrued expenses 17,361 20,135
Deferred revenue 2,174 1,047
Accrued income taxes 5,160 6,052
Recourse obligation 5,771 _
Total current liabilities 42,866 35,564
Long-term obligations 3,958 4,858
Redeemable convertible preferred stock _ 20,315
Stockholders' equity:
Common stock 366 342
Addition paid-in capital 130,097 102,165
Deferred compensation (654) (747)
Accumulated other comprehensive income (18) 143
Retained earnings 53,967 44,763
Total stockholders' equity 183,758 146,666
$ 230,582 $ 207,403
Contact:
Excel Switching Corporation
Karen Steele, Investor Relations, (508) 862-3292 |
