C-COR.net Reports Record Fourth Quarter and Record Fiscal Year
Results, Adopts Shareholder Rights Plan
Wednesday August 18, 8:03 am Eastern Time
Company Press Release
SOURCE: C-COR.net
STATE COLLEGE, Pa., Aug. 18 /PRNewswire/ -- C-COR.net (Nasdaq: CCBL - news) today
reported financial results for its fourth quarter and fiscal year ended June 25, 1999. Net sales in the
fourth quarter were a record $57.1 million, an increase of 52% over those of the fourth quarter of the
previous year. Gross margins of 26.7% in the quarter produced earnings per diluted share from
continuing operations of $.45, setting a record for quarterly earnings.
Record annual revenues of $171.3 million represent a 13% increase when compared to the previous
fiscal year. Much of the strength in fiscal year 1999 came as a result of the momentum gained by
increased demand from customers for C-COR.net's products and services, culminating in the
company's record performance in the fourth quarter. For the fiscal year, income from continuing
operations of $10.5 million was up 43% when compared to fiscal year 1998, and earnings per diluted
share from continuing operations of $1.10 were up 41% over fiscal year 1998.
During the fiscal year, the company recorded a gain on disposal of a discontinued business segment of
$0.4 million, net of applicable income tax, or $0.04 per diluted share. Net income for fiscal year 1999
was $10.9 million, or $1.14 per diluted share as compared to $8.2 million, or $0.88 per diluted share for
fiscal year 1998.
For fiscal year 1999, gross margin percentage improved to 24.6% from 22.7% for fiscal year 1998.
The following other financial indicators also reflect the positive results. Sales orders booked during
fiscal year 1999 were in excess of $200 million, a record for C-COR.net, and book-to-bill for the fiscal
year was 1.17. Backlog of orders at June 25, 1999, was $52.8 million.
Commenting on the quarter and fiscal year, David A. Woodle, President and CEO of C-COR.net,
stated, ``We are pleased to report our financial results for fiscal year 1999. The numbers reflect a
growing acceptance of our Navicor(TM) RF amplifiers and fiber optic nodes and an increase in
demand for network design and activation services. Looking ahead, we believe that we have
established a firm foundation for the future. We began implementing a solid strategic plan which we
believe has placed us in an excellent position to serve HFC broadband network operators throughout
the entire network life cycle. Our merger with Convergence.com Corporation and the proposed merger
with Silicon Valley Communications, Inc. are expected to enhance our ability to help network operators
as they integrate Internet and high-speed data over networks and implement advanced fiber optics in
headends for added performance, speed and capacity.'
C-COR.net is also providing the combined results of operations of C-COR.net (``C-COR'),
Convergence.com Corporation (``Convergence'), and Silicon Valley Communications, Inc. (``SVCI')
on a pro forma, unaudited basis. The previously announced merger with Convergence.com Corporation
closed on July 9, 1999, and C-COR.net anticipates that the previously announced merger with Silicon
Valley Communications, Inc. will close in the quarter ending September 24, 1999. Both mergers will be
accounted for on a pooling of interest basis and, therefore, the historical financial results of the
companies will be combined as if they had always been a single entity.
The financial results of Convergence.com Corporation and Silicon Valley Communications, Inc. for the
year ending June 25, 1999, reflect the fact that both companies were investing in technology and
infrastructure and incurred costs in excess of their revenues. In the case of Convergence.com
Corporation, this investment included the establishment of a state-of-the-art network operations center
in Suwanee, Georgia, that is capable of supporting a large customer base going forward. In the case of
Silicon Valley Communications, Inc., the investment included development of a product line of fiber
optic based distribution equipment designed to meet the needs of broadband communication network
operators.
These acquisitions significantly broaden the products and services that can be offered by C-COR.net
to its customers. Moreover, there are cost savings opportunities as the three companies are merged, as
well as opportunities to leverage C-COR.net's existing infrastructure.
In the quarter ending September 24, 1999, C-COR.net anticipates recording a one-time charge related
to the business combinations. This charge, currently estimated at $3.5 to $4.5 million, will cover the
transaction costs as well as employee severance payments and a write-off of assets related to existing
fiber optic products that will become obsolete and be replaced by the Silicon Valley Communications
product line.
The Board of Directors of C-COR.net yesterday declared a dividend distribution of one Preferred
Share Purchase Right for each outstanding share of its Common Stock payable to shareholders of
record on August 30, 1999. Each Right will entitle shareholders to buy one one-hundredth of a share of
newly created Series A Junior Participating Preferred Stock of the company at an exercise price of
$150.00. Generally, the Rights will be exercisable if a person or group (an Acquiring Person) hereafter
acquires or commences a tender offer or exchange offer for 20% or more of the Common Stock of
the company and shares of Preferred Stock purchasable upon exercise of the Rights will be entitled to
a preferential quarterly dividend, voting rights and a stipulated return in the event of any merger or
similar transaction. If C-COR.net is acquired after a person or group becomes an Acquiring Person,
each Right will entitle its holder to purchase, at the Right's exercise price, a number of shares of
Common Stock of the Acquiring Person having a market value at that time of twice the Right's
exercise price. The Rights are designed to assure that all shareholders of the company receive fair and
equal treatment in the event of any proposed takeover of the company. The Rights distribution is not
taxable to shareholders.
C-COR.net, founded over 45 years ago, designs and manufactures robust, high-quality network
distribution products for and provides technical services in support of two-way hybrid fiber/coax (HFC)
networks. C-COR.net's headquarters is in State College, Pennsylvania, with production facilities in
State College and Tipton, Pennsylvania; and Tijuana, Mexico. C-COR.net maintains offices in Toronto,
Canada; Almere, The Netherlands; and Hong Kong. C-COR.net's common stock is listed in the
Nasdaq National Market under the symbol CCBL. C-COR.net's web site is c-cor.com .
C-COR.net was named to Forbes Magazine's 200 Best Small Companies in America List (1998).
Some of the information presented in this announcement, including, but not limited to the company's
expectations in connection with the mergers with Convergence.com and Silicon Valley
Communications, Inc. and in connection with the company's strategic plan, constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the
Company believes that its expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors which could cause actual results to differ from expectations
include the ability to consummate the merger with Silicon Valley Communications, Inc. and integrate
Convergence.com's and Silicon Valley Communication's businesses, the timing of orders received from
customers; the gain or loss of significant customers; changes in the mix of products sold; changes in
the cost and availability of parts and supplies; fluctuations in warranty costs; new product development
activities; the Company's ability to implement its strategies of product, service, and global market
expansion; economic conditions affecting domestic and international markets; regulatory changes
affecting the telecommunications industry, in general, and the Company's operations, in particular;
competition and changes in domestic and international demand for the Company's products; the
Company's ability to assess the risks of the year 2000 issue, with respect to its operations, and resolve
them in a timely manner; and other factors which may impact operations and manufacturing. For
additional information concerning these and other important factors which may cause the Company's
actual results to differ materially from expectations and underlying assumptions, please refer to the
reports filed by the Company with the Securities and Exchange Commission.
Consolidated Statements of Operations
(in thousands of dollars except share and per share amounts)
Thirteen Weeks Ended
Increase
June 25, June 26, (Decrease)
1999 1998 Percent
NET SALES $57,074 $37,646 52%
Cost of sales 41,841 28,386 47%
Sales and administration 5,157 3,745 38%
Research and product
development costs 2,812 2,119 33%
Provision for
restructuring costs 0 625 (100%)
Other expense 258 86 200%
50,068 34,961 43%
Income from continuing
operations before
income taxes 7,006 2,685 --
Income tax expense 2,619 712 --
Income from continuing
operations 4,387 1,973 --
DISCONTINUED OPERATIONS:
Gain on disposal of discontinued business segment,
less applicable income
tax expense 93 565 --
Net Income $4,480 $2,538 --
Net income per share - (Basic):
Continuing operations $0.48 $0.22 --
Discontinued operations
Gain on disposal 0.01 0.06 --
Total $0.49 $0.28 --
Net income per share - (Diluted):
Continuing Operations $0.45 $0.21 --
Discontinued Operations
Gain on Disposal 0.01 0.06 --
Total $0.46 $0.27 --
Weighted average number of
common shares outstanding
Basic 9,163,000 9,154,000 --
Diluted 9,725,000 9,420,000 --
Consolidated Statements of Operations
(in thousands of dollars except share and per share amounts)
Fifty-Two Weeks Ended
Increase
June 25, June 26, (Decrease)
1999 1998 Percent
NET SALES $171,281 $152,144 13%
Cost of sales 129,124 117,557 10%
Sales and administrative 16,545 15,020 10%
Research and product
development 9,038 7,459 21%
Provision for
restructuring costs 0 625 (100%)
Other expense 380 719 (47%)
155,087 141,380 10%
Income from continuing
operations before
income taxes 16,194 10,764 --
Income tax expense 5,739 3,447 --
Income from continuing
operations 10,455 7,317 --
DISCONTINUED OPERATIONS:
Gain on disposal of discontinued business segment,
less applicable
income tax expense 397 928 --
Net Income $10,852 $8,245 --
Net income per share - (basic):
Continuing operations $1.15 $0.80 --
Discontinued operations
Gain on disposal 0.04 0.10 --
Total $1.19 $0.90 --
Net income per share - (diluted):
Continuing operations $1.10 $0.78 --
Discontinued operations
Gain on disposal 0.04 0.10 --
Total $1.14 $0.88 --
Weighted Average Number of
Common Shares Outstanding
Basic 9,137,000 9,148,000 --
Diluted 9,498,000 9,401,000 --
Consolidated Balance Sheets
(in thousands of dollars)
June 25, June 26,
1999 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $2,940 $2,313
Marketable securities 445 356
Receivables 28,479 19,404
Inventories 21,415 17,375
Deferred taxes 3,908 2,797
Property held for sale, net 1,281 0
Other 1,763 2,468
Net current assets of
discontinued operations 433 0
TOTAL CURRENT ASSETS 60,664 44,713
PROPERTY, PLANT, AND EQUIPMENT, NET 24,541 27,751
INVESTMENT 5,000 0
INTANGIBLE ASSETS, NET 1,123 1,295
OTHER LONG-TERM ASSETS 2,336 1,759
TOTAL $93,664 $75,518
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $11,523 $5,784
Accrued liabilities 14,001 10,245
Current portion of long-term debt 759 854
Net current liabilities of
discontinued operations 0 517
TOTAL CURRENT LIABILITIES 26,283 17,400
LONG-TERM DEBT, less current portion 3,633 5,513
DEFERRED TAXES 1,092 1,374
OTHER LONG-TERM LIABILITIES 1,329 1,041
SHAREHOLDERS' EQUITY 61,327 50,190
TOTAL $93,664 $75,518
Quarterly Results of Operations
(unaudited, in thousands of dollars except per share amounts)
First Second Third Fourth
1999 Quarter Quarter Quarter Quarter 1999
Net sales $33,216 $36,847 $44,144 $57,074 $171,281
Gross profit 7,591 9,108 10,225 15,233 42,157
Income from
continuing
operations 1,381 1,882 2,805 4,387 10,455
Discontinued
operations 288 16 -- 93 397
Net income 1,669 1,898 2,805 4,480 10,852
Net income per share - (basic):
Continuing
operations $0.15 $0.21 $0.31 $0.48 $1.15
Discontinued
operations 0.03 0.00 0.00 0.01 0.04
Net income
per share $0.18 $0.21 $0.31 $0.49 $1.19
Net income per share - (diluted):
Continuing
operations $0.15 $0.20 $0.30 $0.45 $1.10
Discontinued
operations 0.03 0.00 0.00 0.01 0.04
Net income
per share $0.18 $0.20 $0.30 $0.46 $1.14
Combined Pro Forma (Unaudited)
Results of Operations
Fiscal Year 1999
(in thousands of dollars except share and per share amounts)
1999 C-COR Convergence SVCI 1999
Net sales $171,281 $6,635 $5,509 $183,425
Gross profit 42,157 1,782 693 44,632
Income (loss) from
continuing operations 10,455 (2,516) (9,527) (1,588)
Discontinued operations 397 -- -- 397
Net income (loss) 10,852 (2,516) (9,527) (1,191)
Net income (loss)
per share - (basic):
Continuing operations $1.15 -- -- $(0.13)
Discontinued operations 0.04 -- -- 0.03
Net income (loss) per share $1.19 -- -- $(0.10)
Net income (loss) per share - (diluted):
Continuing operations $1.10 -- -- $(0.13)
Discontinued operations 0.04 -- -- 0.03
Net income (loss) per share $1.14 -- -- $(0.10)
Weighted average
common shares:
Basic 9,137 -- -- 12,169
Diluted 9,498 -- -- 12,169
Combined Pro Forma (Unaudited)
Quarterly Results of Operations
(in thousands of dollars except share and per share amounts)
First Second Third Fourth
1999 Quarter Quarter Quarter Quarter 1999
Net sales $34,654 $39,651 $47,291 $61,829 $183,425
Gross profit 7,527 9,599 10,878 16,628 44,632
Income (loss)
from continuing
operations (1,353) (1,255) 370 650 (1,588)
Discontinued
operations 288 16 -- 93 397
Net income (loss) (1,065) (1,239) 370 743 (1,191)
Net income (loss)
per share - (basic):
Continuing
operations $(0.11) $(0.10) $0.03 $0.05 $(0.13)
Discontinued
operations 0.02 0.00 0.00 0.01 0.03
Net income (loss)
per share $(0.09) $(0.10) $0.03 $0.06 $(0.10)
Net income (loss)
per share - (diluted):
Continuing
operations $(0.11) $(0.10) $0.03 $0.05 $(0.13)
Discontinued
operations 0.02 0.00 0.00 0.01 0.03
Net income (loss)
per share $(0.09) $(0.10) $0.03 $0.06 $(0.10)
Weighted average
common shares:
Basic 12,195 12,137 12,144 12,198 12,169
Diluted 12,195 12,137 12,719 13,156 12,169
SOURCE: C-COR.net |
