Please note that full year revenues and earnings are at an all time record high, as quoted by Bob Stanzione.
"It is critical to recognize that full year revenues and earnings for
1999 will be at all-time record levels, exceeding last years levels by
approximately 50%."
ANTEC ANNOUNCES FOURTH QUARTER EARNINGS WILL NOT MEET EXPECTATIONS;
RESTRUCTURING TO IMPROVE OPERATIONS
DULUTH, Ga., Dec 29, 1999 /PRNewswire via COMTEX/ -- ANTEC
Corporation (Nasdaq: ANTC) today announced that revenues for the fourth
quarter are expected to exceed analysts' consensus estimates, however,
it now appears that earnings for the quarter will not meet the
consensus expectations of $.30 per share. In addition, the Company
indicated that it will incur a restructuring charge in the fourth
quarter of approximately $16 million in connection with certain
organizational realignments and discontinued product lines.
"We continue to be pleased with the growing revenue momentum of the
business," said Bob Stanzione, ANTEC President & CEO, "but as December
comes to a close it has become apparent that the overall gross margin
levels for the current period will not allow us to meet analyst's
earnings expectations. While revenues for the fourth quarter will post
a healthy increase over the third quarter and will be almost twice the
level of the fourth quarter of 1998, earnings per share could be $.10
to $.15 below current consensus estimates, before unusual charges. This
shortfall is largely caused by lower margin levels."
The Company indicated that the unexpected reduction in gross margin
levels was caused by several factors as discussed below:
* Margins for certain products were lower than anticipated. This has been
caused largely by higher R&D and manufacturing costs associated with a
number of new product introductions. Specifically, the ramp up during
the fourth quarter of the new Total Systems Powering (TSP) family of
power supplies, enclosures and generators, the new modular Pedestal
amplifier and node, the new 870MHz mini-bridgers and line extenders and
the Proteus Scalable Optical Node and Micro Node products. These new
products have all been well received by customers, but have had limited
production in the quarter. Although this bodes well for 2000, customers
have rapidly shifted demand from ANTEC's traditional UCF and SL power
supplies and limited bandwidth, RF & Optical products to these newer
products. The limited output for new products coupled with the
surprising decline and uneven demand for our traditional products have
caused higher than planned unabsorbed overhead, material costs and other
factory inefficiencies, which have negatively impacted margins for these
products. Finally, margins for these products have been adversely
impacted by the cost of resolving field reliability issues for customers
that had purchased products previously designed and sold by acquired
companies. The Company believes these reliability issues have been
largely resolved in 1999 and should no longer significantly impact our
results.
* Traditional infrastructure products have experienced a late year volume
fall off coupled with an adverse product mix within the product group,
favoring lower margin products, principally fiber optic cable.
* Cornerstone Cable Telephony and Data product revenues continued its
strong growth and became a larger percentage of our business. However,
during the quarter, AT&T unexpectedly shifted its order mix from Host
Digital Terminals (HDT's) to Voice Ports and software. Although this
move towards Voice Ports is a positive shift indicating the impending
ramp up of cable telephony services, ANTEC's higher margin HDT
installation service revenues decreased in the fourth quarter. As AT&T's
telephony rollout gains momentum in 2000, Cornerstone products are
expected to provide increasing profitability for ANTEC.
"We are taking immediate action to correct these issues," continued
Stanzione, "and we are reorganizing along several lines. First, in
connection with our TRW Supply Chain initiative, we are establishing a
new Supply Chain Organization focused on new demand planning procedures
linking sales forecasts, factory loading, purchasing, industrial
engineering, inventory control, shipping and customer service. This
should enable us to streamline production and delivery and dramatically
improve factory planning and efficiencies in response to changing
customer demand for our products. Second, we are closing our New Jersey
molding facility and transferring its work to our Southwest
manufacturing complex. In addition, we will consolidate the remaining
support functions, currently housed in New Jersey, including inside
sales, product management, customer service and certain engineering
functions, to Georgia. Finally, in connection with the customer demand
shift to new TSP powering products and Scalable and Micro Node
products, we are discontinuing certain older product lines that are not
consistent with our focus on two-way, high speed internet, voice and
video communications equipment. This discontinuation affects the UCF
and SL powering products and includes a narrowing of our RF and optical
products to meet the continuing customer demand shift to our newer
products. Strategically, these moves to exit certain areas coupled with
our new Cable Telephony, high-speed internet, optical transmission,
powering and infrastructure products, place ANTEC squarely in front of
the very high growth opportunities presented by the ever increasing
demand for bandwidth," said Stanzione.
The Company announced that these actions are being taken concurrently
with this announcement and will be fully implemented early in 2000 and
that these actions should enable the Company to reverse the fall in
gross margin experienced in this quarter. As a result of these actions
the Company will recognize a one time reorganization charge of
approximately $16 million in the fourth quarter of which approximately
$10 million relates to inventory adjustments associated with the
product rationalization decisions discussed above. These one time
inventory adjustments will be reflected in cost of sales in the fourth
quarter. Approximately $2.5 million of the charge relates to
anticipated severance costs and approximately $3.0 million of the
charge relates to facility shutdown and other costs. It is anticipated
that, in addition, approximately $1.6 million of relocation and fixed
asset depreciation expenses, to be incurred in connection with the New
Jersey facility closure, will be recognized in 2000 (primarily during
the first two quarters) as these expenses can not be included in
reorganization charges under SEC guidelines and interpretations.
"It is critical to recognize that full year revenues and earnings for
1999 will be at all-time record levels, exceeding last years levels by
approximately 50%. The fundamental drivers of growth in our industry
and within ANTEC continue to be very strong and, in fact, are
increasing in intensity," concluded Stanzione. "The recent FCC decision
to, for the first time, allow incumbent telephone companies to compete
in the long distance markets will accelerate competition in the local
loop for increased bandwidth to support a wide variety of internet
information transport services over hybrid fiber coax networks. ANTEC
has, with our partner Nortel Networks and through our joint venture
company, Arris and the Cornerstone family of voice and data products,
the most complete arsenal of products for our customers to compete for
the rapidly growing internet, voice and video transport market.
Although disappointed in the margin results this quarter, we have now
made these important decisions which I plan to move aggressively to
implement. I am confident that the actions we are taking today will
deliver improved operating results in 2000 and for many years beyond."
A conference call to discuss this announcement with ANTEC management
has been scheduled for 1:30 PM EST on December 29th, 1999. You may
access this call by dialing 800-683-1535 and identifying Jim Bauer as
the moderator of the call.
ANTEC Corporation (http://www.antec.com ) is an international
communications technology company serving the broadband information
transport industries. ANTEC specializes in the manufacturing, materials
management and distribution of products for hybrid fiber/coax broadband
networks, as well as the design and engineering of these networks.
Headquartered in Duluth, Georgia, ANTEC has sales offices in Europe,
Asia/Pacific and Latin America; major offices in Duluth, Georgia and
Denver, Colorado; and manufacturing facilities in Juarez, Mexico, El
Paso, Texas, Tinton Falls, New Jersey and Rock Falls, Illinois.
Forward Looking-Statements:
Statements made in this press release, including those relating to:
* the amount and timing of the restructuring related charges and costs;
* the effectiveness and timing of the changes expected to be implemented,
including the supply chain reorganization effort and the discontinuing
of certain product lines;
* the time frame for closing and consolidating the New Jersey facility and
eliminating employee positions, including the amount of cost related to
the relocation and fixed asset depreciation to be charged as incurred;
* expectations for the fourth quarter, for 2000 and beyond,
are forward-looking statements. These statements involve risks and
uncertainties that may cause actual results to differ materially from
those set forth in these statements. Among other things,
* the expected restructuring and related charges and costs are estimates
based on certain assumptions which management believes to be reasonable
at this time;
* the improvements provided by the supply chain reorganization and the
discontinuance of certain product lines are based on certain assumptions
which management believes to be reasonable at this time;
* the timing of the closing of the New Jersey facility and the elimination
of employee positions are subject to contractual obligations and the
ability and timeliness of moving operations to both the Southwest and
Georgia.
Expectations for the fourth quarter as well as for the year 2000 do not
reflect actual results and are based on preliminary estimates as well
as certain assumptions which management believes to be reasonable at
this time, including the volume and product mix of sales. In addition
to the factors set forth elsewhere in this release, our business is
dependent upon general economic conditions as well as competitive
technological, and regulatory developments and trends specific to our
industry and customers. These conditions and events could be
substantially different than we believe or expect and these differences
may cause actual results to differ materially from the forward looking
statements we have made, or the results, which could be expected to
accompany such statements. Specific factors, which could cause such
material differences, include the following:
* design or manufacturing defects in the Company's products which could
curtail sales and subject the Company to substantial costs for removal,
replacement and reinstallation of such products;
* unanticipated manufacturing or product development problems; an
inability to absorb or adjust costs in response to lower than anticipated
sales volumes;
* unanticipated costs or inefficiencies from the ongoing consolidation of
certain activities;
* loss of key management, sales or technical employees; and
* decisions, by the Company's larger customers, to cancel contracts or
orders as they are entitled to do or not enter into new contracts or
orders with the Company because of dissatisfaction, technological or
competitive changes, changes in control or other reasons.
The above list is representative of the factors which could affect the
Company's forward looking statements and is not intended as an all
encompassing list of such factors. In providing forward-looking
statements, the Company is not undertaking any obligation to update
publicly or otherwise these statements, whether as a result of new
information, future events or otherwise.
SOURCE ANTEC Corporation
(C) 1999 PR Newswire. All rights reserved.
prnewswire.com
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CONTACT: Jim Bauer, Investor Relations of ANTEC Corporation,
847-439-4444, or jim.bauer@antec.com
WEB PAGE: antec.com |
