TUSTIN, Calif.--(BUSINESS WIRE)--Feb. 3, 2000--PairGain(R)
Technologies, Inc. (Nasdaq: PAIR.O), today reported 1999 revenues of
$224.9 million compared to $283.1 million in 1998. Net income for 1999
was $2.4 million, or $0.03 per share on a diluted basis, compared to
$39.5 million, or $0.53 per share on a diluted basis, for 1998.
Revenues for the fourth quarter ended December 31, 1999 were $51.6
million compared to $60.7 million in the same quarter of 1998. Net
income for the fourth quarter of 1999 was $1.3 million, or $0.02 per
share on a diluted basis, compared to $3.6 million, or $0.05 per share
on a diluted basis, in the fourth quarter of 1998.
Included in the fourth quarter of 1999 was a $5.5 million tax
benefit from the recognition of a previously incurred capital loss
carryforward. In addition, Q4 1999 earnings included a $2.5 million
charge related to a settlement agreement between the Company and a
third party to terminate a memorandum of understanding for a joint
technology development. Excluding these items, the Company would have
reported a loss of $0.05 per share for the fourth quarter of 1999.
Results for the full year of 1999 included several non-recurring
charges totaling $5.6 million related to various settlements the
Company was party to during the year and a $1.5 million write-off of a
long-term investment. Excluding these items, and the $5.5 million tax
benefit from the recognition of a capital loss carryforward, the
Company would have reported a loss of $0.01 per share for the full
year.
T1 access revenues were 50% of revenue in the fourth quarter of
1999 and 53% for the full year. Revenue from T1 access products
decreased 33% in 1999 compared to 1998, despite a 2% increase in unit
shipments. Revenues from the subscriber carrier product lines
comprised 28% of revenue for the fourth quarter and year ended
December 31, 1999. Included in subscriber carrier revenues are sales
of the Company's PG-Plus(R) product line which increased 75% over the
prior year quarter and were 64% higher in 1999 than in 1998. During
the fourth quarter of 1999, revenues from the Company's Avidia(R)
product line more than doubled over the prior quarter.
Revenues from shipments to customers outside of North America
were 14% of revenue for the full year 1999, compared to 12% in 1998.
Gross margins were 34.5% in Q4 1999, in line with 34.7% gross
margins in Q3 1999. Gross margins for the fourth quarter of 1998 were
42.0%. Gross margins for the full year of 1999 were 38.4% compared to
48.2% margins in 1998, a result of price erosion across all product
lines.
Operating expenses were $28.6 million in Q4 1999, including the
$2.5 million settlement charge, compared to $20.2 million during the
fourth quarter of 1998. Operating expenses were $102.5 million for the
year ended December 31, 1999, including $5.6 million of non-recurring
charges related to settlement agreements. Excluding these
non-recurring charges, operating expenses were $96.9 million for the
twelve months ended December 31, 1999, compared to $81.0 million for
1998. The increase in operating expenses resulted primarily from
additional engineering, product line management and service personnel
costs related to the Avidia product line.
Operating loss was $10.8 million in the fourth quarter of 1999
and $16.1 million for the twelve months ended December 31, 1999.
Excluding the non-recurring settlement charges, the Company's
operating losses were $8.3 million and $10.5 million for the quarter
and year ended December 31, 1999, respectively. Operating income in
1998 was $5.3 million for the fourth quarter and $55.5 million for the
year.
PairGain ended the year with total cash and short-term
investments of $191.6 million. Accounts receivable days outstanding
were 51 at December 31, 1999 and inventory turnover was 3.4. During
1999, the Company repurchased a total of 770,000 shares bringing the
total shares repurchased to 1,791,400.
PairGain Technologies, Inc.
PairGain is the leader in the design, manufacture, marketing and
sale of DSL networking systems. Service providers and private network
operators worldwide use PairGain's products to deploy DSL-based
services such as high-speed Internet, remote LAN access and enterprise
LAN extension.
For more than 10 years, PairGain has been recognized as a
technology leader and industry innovator of telecommunications
equipment. The Company offers the widest range of DSL-based systems
available. Product lines include HiGain Solitaire(TM) HDSL2 solutions,
HiGain(R) T1/E1 access systems, PG-FlexPlus(TM), PG-Flex(R) and
PG-Plus(R) subscriber carrier systems, the Avidia(R) System, Megabit
Modems(R) and Campus-HRS(TM) DSL access products. More than 1.7
million PairGain DSL nodes are installed in over 70 countries.
Additional information about the Company is available on the Internet
at www.pairgain.com.
Except for the historical information contained herein, matters
discussed in this announcement may constitute forward-looking
statements involving risk and uncertainties which could cause actual
results to differ materially from the Company's current expectations.
For example, although the Company believes that world telecom markets
will continue to grow, various factors including worldwide
recessionary forces could curb that expected growth. While the Company
believes that DSL technologies will continue to be employed in these
datacomm markets, the Company's business sector can be significantly
affected by rapid technological change and product obsolescence.
Finally, while the Company does not believe that pricing pressures in
certain of its product sectors will continue indefinitely, the Company
operates in a fiercely competitive environment and it is impossible to
predict when those pressures will relent. A more complete description
of the economic, competitive, governmental and technological factors
affecting the Company's operations, markets,products, services and
prices may be found in the Company's periodic Form 10-Q and Form 10-K
filings with the Securities and Exchange Commission.
*T
PairGain Technologies, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
12/31/99 12/31/98
Assets
Cash and cash equivalents $ 86,522 $ 131,923
Short-term investments 105,050 102,011
Accounts receivable, net 28,856 20,226
Inventory, net 40,285 34,320
Other current assets 29,267 18,712
Total current assets 289,980 307,192
Total long-term assets 35,101 21,328
Total assets $ 325,081 $ 328,520
Liabilities & Stockholders' Equity
Trade accounts payable $ 11,267 $ 6,358
Accrued expenses 19,089 27,002
Accrued income taxes - 16,119
Current portion of note payable 33 -
Total current liabilities 30,389 49,479
Note payable 1,735 -
Total liabilities 32,124 49,479
Total stockholders' equity 292,957 279,041
Total liabilities and stockholders' equity $ 325,081 $ 328,520
-0-
PairGain Technologies, Inc.
Condensed Consolidated Income Statements
(In thousands, except per share data)
Quarter Ended Twelve Months Ended
12/31/99 12/31/98 12/31/99 12/31/98
(Unaudited) (Unaudited)
Revenues$ 51,615 $ 60,679 $ 224,875 $ 283,100
Cost of revenues 33,831 35,182 138,463 146,569
Gross margin 17,784 25,497 86,412 136,531
Research and development 11,896 8,974 45,334 37,576
Selling and marketing 9,765 7,905 35,016 30,098
General and administrative 6,928 3,351 22,127 13,321
Total operating expenses 28,589 20,230 102,477 80,995
Operating (loss) income (10,805) 5,267 (16,065) 55,536
Write-off of long-term
investment - (1,500) (1,500) (1,500)
Interest and other
income, net 2,049 2,762 9,083 9,029
(Loss) income before
income taxes (8,756) 6,529 (8,482) 63,065
(Benefit from) provision
for income taxes (10,105) 2,930 (10,905) 23,566
Net income $ 1,349 $ 3,599 $ 2,423 $ 39,499
Earnings per common share
Basic $ 0.02 $ 0.05 $ 0.03 $ 0.56
Diluted $ 0.02 $ 0.05 $ 0.03 $ 0.53
Pro forma loss per common share
Basic $ (0.05) $ (0.01)
Diluted $ (0.05) $ (0.01)
Average shares outstanding
Basic 71,475 70,682 70,994 70,234
Diluted 76,482 74,257 75,668 74,802
*T
--30--KM/np* JS/np
CONTACT: PairGain Technologies Inc., Tustin
Kim Gower or Robert Price
714/832-9922
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS INTERNET
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