Business Wire
U.S. ROBOTICS REPORTS RECORD REVENUES AND
EARNINGS FOR SECOND QUARTER; REVENUES UP
52%, EARNINGS UP 77%
SKOKIE, Ill.--(BUSINESS WIRE)--April 23, 1997--
--Second Quarter Revenues a Record $690.2 Million --
--Second Quarter Earnings, Including a Non-Recurring Benefit,
$91.5 Million or $.95 per Share --
U.S. Robotics Corporation (NASDAQ:USRX.O) today reported
record revenues and earnings for its fiscal second quarter ended
March 30, 1997.
Revenues for the second quarter of fiscal 1997 were a record
$690.2 million, an increase of 52% over the $454.5 million recorded
for the second quarter of fiscal 1996. Net earnings for the current
quarter were a record $91.5 million, an increase of 77% over the
$51.6 million recorded for the prior year quarter. Net earnings
per share for the current quarter were $.95 (based on 95.9 million
weighted average shares outstanding), compared to $.55 per share
(based on 94.2 million shares) for the prior year quarter.
Net earnings for the second quarter of fiscal 1997 included a
non-recurring tax benefit of $17.9 million associated with the
company's acquisition of Scorpio Communications, which closed in
the September quarter. Excluding the non-recurring tax benefit,
earnings for the quarter were $73.5 million or $.77 per share.
The company attributed the growth in revenues to continuing
strong demand for its products in all of the markets it serves
worldwide, noting that higher unit sales of both network systems
products and PC-related products were the primary reasons for the
increase over the prior year period. Revenues from sales of all the
company's network systems products totaled approximately $177 million
during the second quarter of fiscal 1997.
Gross margins increased to 49.1% of net sales in the current
quarter compared to 41.9% of net sales for the corresponding
period in 1996. This increase was due in part to strong margins on
initial shipments of the company's x2 native desktop modem products.
x2 (56Kbps) is a key technology breakthrough that enables Internet
and other on-line connections for downloading information at speeds
nearly twice as fast as those previously available with standard
modems over regular telephone lines. The increase in gross margins
also reflected reductions in manufacturing costs and changes in the
mix of products sold in each of the periods.
Operating expenses were $220.0 million or 31.9% of sales in the
current quarter, compared to $110.4 million or 24.3% of sales in the
corresponding period of 1996. The increase was reflected in each
major category of expense, consistent with the company's overall
growth, with the majority related to selling and marketing expenses.
Substantial expenses were incurred during the March 1997 quarter in
connection with the introduction of the company's x2 native products
and for selling and marketing programs designed to generate
continuing growth in revenues and market share. Also, the company
continued to make significant investments during the March 1997
quarter to expand its sales force worldwide.
Revenues for the second quarter of fiscal 1997 increased by
$44.8 million or 7% over the $645.4 million reported for the first
quarter ended December 29, 1996. Excluding the non-recurring tax
benefit, earnings for the second quarter increased by 7% to
$73.5 million from the $69.0 million posted for the December
quarter. Earnings per share, excluding the non-recurring tax
benefit, were $.77 per share (based on 95.9 million weighted
average shares outstanding), compared to $.72 per share (based
on 96.3 million shares) for the December quarter.
Revenues for the second quarter reflected continuing strong
end user demand for information access devices overall and the
impact of the introduction of the company's x2 native products.
Increased sales of network systems products and higher average
selling prices of x2 Sportster desktop modems were the primary
reasons for the growth in total revenues from the December quarter
level. International revenues for the quarter were $229.8 million
or 33% of total revenues, up from $193.5 million or 30% of total
revenues for the December quarter. International revenues from
sales of network systems products during the March quarter were
approximately $53 million.
Sales of modem products to end users by the company's North
American distribution channel customers increased during the second
quarter, continuing an established trend. Also, since x2 native
desktop modem products became available at retail in late February,
unit sales to end-user customers of x2 desktop modems as a percentage
of total North American desktop modem sales have steadily increased.
Gross margins increased to 49.1% of net sales in the March
quarter from 42.8% of net sales in the December quarter. This
increase was primarily due to strong margins on x2 native desktop
modem products as well as changes in product mix. Revenues
attributable to sales of network systems products increased as
a percentage of total revenues during the quarter.
Total operating expenses for the March quarter were
$220.0 million or 31.9% of sales, compared to $165.0 million or
25.6% of sales for the December quarter. The primary reasons for the
increase were higher employee-related costs stemming from a 6% rise
in the number of employees in selling, marketing and research and
development during the quarter, as well as increased expenses related
to the introduction of the company's x2 products and for other
selling and marketing programs designed to generate continuing growth
in revenues and market share. The company continued to make
substantial investments in building its worldwide sales force during
the March quarter, expanding it approximately 6% over and above the
25% increase in the previous two quarters, with the intent of further
increasing its revenues from sales of network systems products.
Revenues for the first six months of fiscal 1997 were
$1,335.6 million, an increase of 63% over the $819.3 million
for the corresponding period of the previous year. Excluding
the non-recurring tax benefit, earnings for the first six months
of fiscal 1997 were $142.6 million or $1.48 per share (based on
96.1 million weighted average shares outstanding), compared to
$93.3 million or $1.00 per share (based on 93.6 million shares)
for the first six months of fiscal 1996. Including the
non-recurring tax benefit, net earnings were $160.5 million
or $1.67 per share for the first six months of fiscal 1997.
Outlook
The following statements include forward-looking statements and
actual results may differ materially.
Commenting on the quarter, U.S. Robotics President and Chief
Operating Officer John McCartney said, "Demand continues to be strong
for our expanding portfolio of information access products, including
Total Control remote access servers and concentrators, Sportster
modems, Megahertz PC cards and PalmPilot connected organizers. In
addition, our x2 (56Kbps-capable) Technology is available now, and
is expected to have a widespread impact on Internet users by enabling
them to have a more satisfying online experience."
Mr. McCartney indicated that the company expects to complete
its pending merger with 3Com Corporation in June 1997 (subject to
stockholder approval and other closing conditions) and, in that
event, will not report separate results for the June quarter.
However, he added that the company expects demand for all of its
product lines to continue to grow during the remainder of the
company's current fiscal year as world-wide requirements for highly
integrated, cost-effective, end-to-end information access solutions
increase. Mr. McCartney stated that revenue growth during the
remainder of 1997 will depend to a large extent on the rapidity with
which its Internet and online service provider customers continue to
implement x2 Technology in their networks and the resultant consumer
and corporate demand for x2-enabled products. He also stated that,
although gross margins increased 6.3 percentage points during the
March quarter, the company expects gross margins to return over time
to levels more consistent with the company's results in recent
quarters.
The company's ability to achieve its revenue and profitability
objectives in fiscal 1997 will depend on many factors beyond the
company's control. These include the timing and market acceptance of
x2 and other new products and features announced and introduced by
the company and its competitors, and the extent to which the company
is successful in implementing its ongoing strategy of continuously
improving the performance/cost characteristics of its products
through improved designs and manufacturing efficiencies. Other
factors include rapid changes in technologies and standards relating
to information access and telecommunications.
The foregoing forward-looking statements involve a number of
risks and uncertainties. In addition to the factors discussed above,
among the other factors that could cause actual results to differ
materially are those listed in the company's most recent reports on
Form 10-K and Form 10-Q and set forth from time to time in other
documents filed by the company with the Securities and Exchange
Commission, including the preliminary proxy materials filed by the
company in connection with the pending transaction with 3Com.
U.S. Robotics is one of the world's leading suppliers of
products and systems that provide access to information. The
company designs, manufactures, markets and supports remote access
servers and concentrators, enterprise communications systems,
desktop/mobile client products and modems and telephony products
that connect computers and other equipment over analog, digital
and switched cellular networks, enabling users to gain access to,
manage and share data, fax, voice and multi-media information. Its
customers include Internet service providers, regional Bell operating
companies, inter-exchange carriers and a wide range of other large
and small businesses, institutions and individuals.
Financial statements follow.
-0-
*T
U.S. Robotics Corporation and Subsidiaries
Condensed Consolidated Statement of Earnings
(In thousands, except per share data)
(UNAUDITED)
Quarter Quarter
Ended Ended
03/30/97 % 03/31/96 %
--------------- -----------------
Net sales $690,184 100.0 $454,505 100.0
Cost of goods sold 351,234 50.9 264,188 58.1
-------- ----- -------- -----
Gross profit 338,950 49.1 190,317 41.9
Operating expenses
Selling and marketing 134,042 19.4 57,961 12.8
General and administrative 41,564 6.0 24,041 5.3
Research and development 44,434 6.5 28,378 6.2
-------- ----- -------- -----
Total operating expenses 220,040 31.9 110,380 24.3
Operating profit 118,910 17.2 79,937 17.6
Other income (expense) - net (2,023) (0.3) 1,345 0.3
-------- ----- -------- ----
fore income taxes 116,887 16.9 81,282 17.9
Income tax expense 25,428 3.6 29,677 6.5
-------- ----- -------- -----
Net earnings $ 91,459 13.3 $ 51,605 11.4
======== ========
Net earnings per share $ 0.95 $ 0.55 (A)
======== ========
Shares used in per share
calculation 95,944 94,168
======== ========
(A) Adjusted to reflect the two-for-one stock split in the form of
a 100% stock dividend paid on May 10, 1996.
U.S. Robotics Corporation and Subsidiaries
Condensed Consolidated Statement of Earnings
(In thousands, except per share data)
(UNAUDITED)
Six Months Six Months
Ended Ended
03/30/97 % 03/31/96 %
----------------- ----------------
Net sales $1,335,596 100.0 $819,317 100.0
Cost of goods sold 720,648 54.0 476,384 58.1
---------- ----- -------- -----
Gross profit 614,948 46.0 342,933 41.9
Operating expenses
Selling and marketing 234,792 17.6 105,751 12.9
General and administrative 71,582 5.3 41,666 5.1
Research and development 78,664 5.9 51,831 6.3
---------- ----- -------- -----
Total operating expenses 385,038 28.8 199,248 24.3
Operating profit 229,910 17.2 143,685 17.6
Other income (expense) - net (3,279) (0.2) 3,178 0.4
---------- ----- -------- -----
Earnings before income taxes 226,631 17.0 146,863 18.0
Income tax expense 66,143 5.0 53,613 6.5
---------- ----- -------- -----
Net earnings $ 160,488 12.0 $ 93,250 11.5
========== ========
Net earnings per share $ 1.67 $ 1.00 (A)
========== ========
Shares used in per share
calculation 96,139 93,568
======== ========
(A) Adjusted to reflect the two-for-one stock split in the form of
a 100% stock dividend paid on May 10, 1996.
U.S. Robotics Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(In thousands)
(UNAUDITED)
March 30, September 29,
1997 1996
------------ -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 49,888 $ 16,814
Accounts receivable - net 718,410 490,040
Inventories 155,823 185,855
Deferred income taxes 57,371 45,493
Prepaid expenses and other current
assets 13,694 12,407
---------- ----------
Total current assets 995,186 750,609
PROPERTY, PLANT EQUIPMENT - NET 346,613 276,591
DEFERRED INCOME TAXES 10,465 -
OTHER ASSETS 55,001 40,083
---------- ----------
$1,407,265 $1,067,283
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term
obligations $ 12,310 $ 12,174
Short-term obligations 60,700 32,500
Accounts payable 196,458 130,959
Accrued liabilities 175,725 138,747
Income taxes payable 43,474 19,324
---------- ---------
Total current liabilities 488,667 333,704
LONG-TERM OBLIGATIONS 55,066 54,044
DEFERRED INCOME TAXES - 7,665
STOCKHOLDERS' EQUITY
Common stock 893 882
Additional contributed capital 392,781 356,265
Retained earnings 472,980 312,492
---------- ----------
866,654 669,639
Cumulative translation adjustment
and other (3,122) 2,231
--------- ----------
Total stockholders' equity 863,532 671,870
---------- ----------
$1,407,265 $1,067,283
========== ==========
*T
--30--mjb/clv*
CONTACT: U.S. Robotics
Karen J. Novak (Media Only), 847/982-5244
C. David Hall (Investor Relations), 847/982-5162
KEYWORD: ILLINOIS
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED
TELECOMMUNICATIONS INTERACTIVE/MULTIMEDIA/INTERNET EARNINGS
URL: usr.com
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