7/31 GSPN Announces Results for Second Quarter Net Revenues $75.9 Million,
Sequential Growth 144 Percent
Business Editors/High-Tech Writers
RED BANK, N.J.--(BUSINESS WIRE)--July 31, 2000--GlobeSpan, Inc.
(NASDAQ:GSPN), a leading provider of integrated circuit, software, and
system designs for digital subscriber line (DSL) applications, today
announced its results for the second quarter and six months ended June
30, 2000.
GlobeSpan reported net revenues of $75,901,000, an increase of
704.5% over net revenues of $9,434,000 for the second quarter of 1999,
and an increase of 144.4% from the net revenues of $31,060,000 for the
first quarter of 2000. Fully taxed, pro forma net income was
$7,886,000 or pro forma diluted earnings per common share of $0.11,
compared to a pro forma net loss of $2,364,000 or a pro forma basic
loss per share of $0.06 in the 1999 period.
Including acquisition related expenses, which include non-cash
compensation, amortization of intangible assets, non-cash interest
expense for the beneficial conversion feature for a convertible note
issued as merger consideration (which is measured by the price of our
common stock on the announcement of an acquisition and the conversion
price) and in process research and development, the reported net loss
for the second quarter ended June 30, 2000 was $88,700,000 or $1.42
basic loss per share. The reported net loss attributable to common
stockholders for the second quarter ended June 30, 1999 was $5,830,000
or $0.15 basic loss per share including a preferred stock deemed
dividend of $3,466,000.
For the six months ended June 30, 2000, net revenues totaled
$106,961,000, an increase of 491.8% over net revenues of $18,075,000
for the six months ended June 30, 1999. Including acquisition related
expenses, which include non-cash compensation, amortization of
intangible assets, non-cash interest expense for the beneficial
conversion feature for a convertible note issued as merger
consideration and in process research and development, the reported
net loss for the six months ended June 30, 2000 was $111,599,000 or
$1.84 basic loss per share. The reported net loss attributable to
common stockholders for the six months ended June 30, 1999 was
$9,699,000 or $0.25 basic loss per share including a preferred stock
deemed dividend of $3,466,000.
Results of Operations for the three months ended June 30, 2000
and 1999
Net Revenues. Our net revenues were $75.9 million and $9.4
million in the three months ended June 30, 2000 and 1999,
respectively. This amounts to an increase of 704.5%. This increase in
net revenues was primarily due to the increase in unit volume
shipments to existing customers, expansion of our customer base,
introduction of new products and, to a lesser extent, net revenues
from acquired businesses.
Cost of Sales and Gross Profit. Our gross profit was $46.5
million and $6.2 million in the three months ended June 30, 2000 and
1999, respectively. This amount represents an increase of 650.0%. Our
gross margin was 61.3% and 65.7% in the three months ended June 30,
2000 and 1999, respectively. The decrease in gross margin was related
to lower average selling prices due to increased unit volume shipped.
The increase in gross profit dollars was the result of higher net
revenues. We expect gross margins may decrease in the future due to a
number of factors, including pressures on average selling prices,
product mix and customer mix.
Research and Development. Our research and development expenses
were $23.2 million and $5.5 million in the three months June 30, 2000
and 1999, respectively. This amount represents an increase of 321.8%.
Research and development expenses represented 30.6% and 58.2% of net
revenues for the three months ended June 30, 2000 and 1999,
respectively. The increase in dollars is the result of the inclusion
of an acquisition completed during the three months ended June 30,
2000 and from an increase in development efforts in advance of
anticipated revenues from such efforts. In addition, we added new
personnel and related support from acquisitions and new hiring and
incurred higher amounts of non-recurring engineering expenses and
one-time licensing fees related to new products. The decrease in
research and development expense as a percentage of net revenues was
due to higher net revenues. Our research and development expense may
increase due to planned additional increases in personnel and related
support expenses, prototyping costs and depreciation resulting from
increased capital investment.
Selling, General and Administrative. Our selling, general and
administrative expense was $11.1 and $3.0 million for the three months
ended June 30, 2000 and 1999, respectively. This amount represents an
increase of 277.4%. Selling, general and administrative expense
represented 14.7% and 31.3% of net revenues for the three months ended
June 30, 2000 and 1999, respectively. The increase in dollars resulted
from the increase in sales, marketing and administrative personnel and
related expenses including expenses from our acquisition, increased
commissions and administrative costs. This decrease in the percentage
of selling, general and administrative expense as a percentage of net
revenues was due to higher net revenues. Our selling, general and
administrative expense may increase due to increases in personnel,
higher commissions and administrative costs.
Amortization of Intangible Assets. During the three months ended
June 30, 2000, we completed the acquisitions of T.sqware, Inc. on
April 27, 2000 and iCompression, Inc. on June 30, 2000. The increase
in dollar amount and percentage of amortization expense is the result
of our amortizing the intangible assets acquired. 6 Non-cash
Compensation. During the three months ended June 30, 2000, we granted
certain employees stock options at less than fair market value. The
deferred stock recorded is being amortized over the respective vesting
period of four years. The increase in the dollar amount and percentage
of non-cash compensation is the result of our amortizing the deferred
compensation.
In Process Research and Development. During the three months
ended June 30, 2000, our acquisitions, T.sqware and iCompression, each
had development projects not yet complete. The increase in dollars and
percentage of IPR&D is the result of our expensing the IPR&D acquired.
Interest Income (Expense), Net. Interest expense for the three
months ended June 30, 2000 was $1.2 million, offset by interest income
of $1.0 million for a net interest expense of $0.2 million. The
increase in interest expense was the result of higher borrowings and
interest on our convertible note. The increase in interest income was
the result of investment of excess cash balances. Interest expense for
the three months ended June 30, 1999 was $0.1 million and was the
result of interest on borrowings.
Interest Expense Non-cash. We are amortizing the beneficial
conversion feature of approximately $48.0 million, over our call
period through August 2000. The increase in the dollar amount and
percentage of interest expense non-cash is the result of our
amortization.
Results of Operations for the six months ended June 30, 2000 and 1999
Net Revenues. Our net revenues were $107.0 million and $18.1
million in the six months ended June 30, 2000 and 1999, respectively.
This amounts to an increase of 491.8%. This increase in net revenues
was primarily due to the increase in unit volume shipments to existing
customers, expansion of our customer base, introduction of new
products and, to a lesser extent, net revenues from acquired
businesses.
Cost of Sales and Gross Profit. Our gross profit was $66.1
million and $10.9 million in the six months ended June 30, 2000 and
1999, respectively. This amount represents an increase of 511.2%. Our
gross margin was 61.8% and 59.9% in the six months ended June 30, 2000
and 1999, respectively. The increase in gross margin was due to a
one-time termination charge related to the termination of a royalty
agreement with Paradyne Corporation in the six months ended June 30,
1999. Without this termination charge, our gross margins would have
decreased from 66.0% to 61.8%. The decrease in gross margin was
related to lower average selling prices due to increased unit volume
shipped. The increase in gross profit dollars was the result of higher
net revenues. We expect gross margins may decrease in the future due
to a number of factors, including pressures on average selling prices,
product mix and customer mix.
Research and Development. Our research and development expenses
were $34.1 million and $10.9 million in the six months June 30, 2000
and 1999, respectively. This amount represents an increase of 213.5%.
Research and development expense represented 31.9% and 60.2% of net
revenues for the six months ended June 30, 2000 and 1999,
respectively. The increase in dollars is the result of the inclusion
of acquisitions completed during the six months ended June 30, 2000
and from an increase in development efforts in advance of anticipated
revenues from such efforts. In addition, we added new personnel and
related support from acquisitions and new hiring and incurred higher
amounts of non-recurring engineering expenses and one-time licensing
fees related to new products. The decrease in research and development
expense as a percentage of net revenues was due to higher net
revenues. Our research and development expense may increase due to
planned additional increases in personnel and related support
expenses, prototyping costs and depreciation resulting from increased
capital investment.
Selling, General and Administrative. Our selling, general and
administrative expense was $17.4 and $5.9 million for the six months
ended June 30, 2000 and 1999, respectively. This amount represents an
increase of 195.6%. Selling, general and administrative expense
represented 16.2% and 32.5% of net revenues for the six months ended
June 30, 2000 and 1999, respectively. The increase in dollars resulted
from the increase in sales, marketing and administrative personnel and
related expenses including expenses from our acquisitions, increased
commissions and administrative costs. The decrease in the percentage
of selling, general and administrative expense as a percentage of net
revenues was due to higher net revenues. Our selling, general and
administrative expense may increase due to increases in personnel,
higher commissions and administrative costs.
Amortization of Intangible Assets. During the six months ended
June 30, 2000, we completed four acquisitions Ficon Technologies, Inc.
on January 31, 2000, asset purchase of the microelectronics group of
PairGain Technologies on February 24, 2000, T.sqware, Inc. and
iCompression, Inc. The increase in dollar amount and percentage of
amortization expense is the result of our amortizing the intangible
assets acquired.
Non-cash Compensation. During the six months ended June 30, 2000,
we exchanged our common stock with employee principals of an
acquisition which was considered compensation and we granted certain
employees stock options at less than fair market value. The deferred
stock recorded is being amortized over the respective vesting periods
of three and four years. The increase in the dollar amount and
percentage in non-cash compensation is the result of our amortizing
the deferred compensation.
In Process Research and Development. During the six months ended
June 30, 2000, our acquisitions, Ficon Technologies, Inc., T.sqware,
Inc. and iCompression, Inc., each had development projects not yet
complete. The increase in dollars and percentage of IPR&D is the
result of our expensing the IPR&D acquired.
Interest Income (Expense), Net. Interest expense for the six
months ended June 30, 2000 was $1.7 million offset by interest income
of $1.6 million for a net interest expense of $0.1 million. The
increase in interest expense was the result of higher borrowings and
interest on our convertible note. The increase in interest income was
the result of investment of excess cash balances. Interest expense for
the six months ended June 30, 1999 was $0.3 million and was the result
of interest on borrowings.
Interest Expense Non-cash. We are amortizing the beneficial
conversion feature of approximately $48.0 million, over our call
period through August 2000. The increase in the dollar amount and
percentage of interest expense, non-cash is the result of our
amortization.
About GlobeSpan
GlobeSpan, Inc. is based at 100 Schulz Drive, Red Bank, New
Jersey 07701 and can be reached by phone at + 1-732-345-7500 or at
www.globespan.net.
This press release contains forward-looking information within
the meaning of Section 21E of the Securities Exchange Act of 1934, and
is subject to the safe harbors created by this section. These
forward-looking statements concern, among other things, the future
market for DSL chipsets. The matters discussed in this news release
involve risks and uncertainties described from time to time in the
company's filings with the Securities and Exchange Commission,
particularly in the Risk Factors section relating to the rapid changes
in the DSL market, competition and limited protection of the company's
intellectual property set forth in the company's most recent Annual
Report on Form 10-K. The Company assumes no obligation to update the
forward-looking information contained in this press release.
*T
GLOBESPAN, INC
Statements of Operations Unaudited Pro Forma
(in thousands, except per share data)
Pro Forma Pro Forma
For three months For six months and
Ended June 30, Ended June 30,
2000 1999 2000 1999
Net revenues $ 75,901 $ 9,434 $ 106,961 $ 18,075
Cost of sales 29,353 3,236 40,833 6,137
Gross profit 46,548 6,198 66,128 11,938
Operating expenses
Research and
development 23,212 5,494 34,092 10,874
Selling, general
and administrative 11,134 2,950 17,375 5,878
Total operating
expenses 34,346 8,444 51,467 16,752
Income (loss) from
operations 12,202 (2,246) 14,661 (4,814)
Foreign exchange
gain 4 -- 4 --
Interest income
(expense), net 938 (118) 1,482 (300)
Income (loss) before
income taxes 13,144 (2,364) 16,147 (5,114)
Income tax
provision 5,258 -- 6,459 --
Net income (loss) $ 7,886 $ (2,364) $ 9,688 $ (5,114)
Basic earnings (loss)
per share Pro Forma $ 0.13 $(0.06) $0.16 $(0.13)
Diluted earnings
per share Pro Forma $ 0.11 $ -- $0.14 $ --
Weighted average shares
of common stock
outstanding used
in computing basic
earnings per share
Pro Forma 62,634 40,221 60,514 38,150
Weighted average shares
of common stock
outstanding used
in computing
diluted earnings
per share Pro Forma 72,105 -- 69,554 --
Note: Unaudited pro forma excluding acquisition related expenses
of amortization of intangibles, non-cash compensation, IPR&D and
non-cash interest expense.
GLOBESPAN, INC
Statements of Operations Unaudited
(in thousands, except per share data)
For three months For six months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Net revenues $ 75,901 $ 9,434 $ 106,961 $ 18,075
Cost of sales 29,353 3,236 40,833 6,137
Cost of sales
related to
termination charge -- -- -- 1,119
Gross Profit 46,548 6,198 66,128 10,819
Operating Expenses
Research and
development(exclusive
of non-cash compensation
of $3,560 and $5,440,
for the three and six
months ended June 30,
2000, respectively) 23,212 5,494 34,092 10,874
Selling, general and
administrative (exclusive
of non-cash compensation
of $2,972 and $4,541, for
the three and six months
ended June 30, 2000,
respectively) 11,134 2,950 17,375 5,878
Amortization of
intangible assets 27,009 -- 38,319 --
Non-cash compensation
expense 6,532 -- 9,981 --
In process research
and development 43,511 -- 44,854 --
Total operating
expenses 111,398 8,444 144,621 16,752
(Loss) from
operations (64,850) (2,246) (78,493) (5,933)
Foreign exchange
gain 4 -- 4 --
Interest income
(expense), net (184) (118) (75) (300)
Interest (expense),
non-cash (23,670) -- (33,035) --
Net (loss) (88,700) (2,364) (111,599) (6,233)
Preferred stock deemed
dividend and accretion -- (3,466) -- (3,466)
Net loss attributable
to common
stockholders $ (88,700) $(5,830) $ (111,599) $ (9,699)
Basic and fully diluted
(loss) attributable to
common stockholders
per share $ (1.42) $ (0.15) $ (1.84) $ (0.25)
Weighted average shares
of common stock
outstanding used in
computing basic and
fully diluted (loss)
per common share 62,634 40,221 60,515 38,151
Balance sheet data:
June 30, 2000 December 31, 1999
(unaudited)
Cash and cash equivalents
and short-term investments $ 73,297 $ 36,668
Accounts receivable, net 28,621 9,306
Inventories 19,824 10,656
Intangible assets, net 667,688 --
Total assets 813,940 70,991
Convertible note, long-term
borrowings and long-term
capital lease obligations 79,951 443
Stockholders' equity 671,668 55,433
*T
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--30--fap/ny* eb/ny
CONTACT: GlobeSpan, Inc.
Bob McMullan, 732/345-7558
KEYWORD: afxal NEW JERSEY
INDUSTRY KEYWORD: INTERNET NETWORKING TELECOMMUNICATIONS EARNINGS
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