Earnings:
SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 20, 1998--Bay
Networks Inc. (NYSE:BAY.N) today reported results for its 1998 second
fiscal quarter ended December 27, 1997.
The company reported record level revenue of $644.9 million, an
increase of 25.3% from the corresponding quarter of the prior year.
Net income for the second quarter was $47.5 million, or $0.22 per
share; these results include a charge of $12.0 million, net of tax,
to recognize a change in accounting principle for certain information
technology costs under a consensus reached by the Emerging Issues
Task Force (EITF 97-13), a subcommittee of the Financial Accounting
Standards Board (FASB), which was effective immediately.
The new principle clarifies which information technology costs
may be capitalized. Excluding this charge, income from continuing
operations and related basic income per share in the second quarter
were $59.5 million and $0.28, respectively. This compares to results
from the quarter a year ago when Bay Networks reported a net loss of
$(172.9) million or a loss of $(0.90) per share.
"We are very pleased with these results, especially with the 7.3%
sequential revenue growth we achieved over our first quarter
performance, which was our previous record revenue level," said Dave
House, chairman, president and CEO of Bay Networks. "Our switching
business recorded the highest growth rate and, as a result, is now
the largest source of revenue for Bay Networks. As expected, the
Accelar family of routing switches began shipping in December. Bay
Networks is the first major vendor to ship routing switches, which
dramatically reduce the cost of building corporate networks. We are
also the first to ship routing switches with Gigabit capability."
"These results endorse the strength of our Adaptive Networking
strategy. Customers are actively embracing the process of
IP-optimizing existing networks, networks that are invisible to
users, worry-free for network managers, and strategic for their
businesses. During the second quarter, we unveiled our IP Services
strategy, which helps our customers build and optimize
mission-critical, 'business-class' Internet applications in an
integrated and standards-based manner. We believe Adaptive
Networking positions Bay Networks for continued success in the
networking industry," concluded House.
About Bay Networks
Bay Networks -Where Information Flows. Bay Networks, Inc.
(NYSE: BAY.N) is a leader in the worldwide networking market, providing
a complete line of products that serve corporate enterprises, service
providers and telecommunications carriers. The company offers frame
and ATM switches, routers, shared media, remote and Internet Access
solutions, IP services and network management applications, all
integrated by Bay Networks' Adaptive Networking strategy. With
headquarters in Santa Clara, California, Bay Networks markets its
products and services around the world, providing 7x24-support
coverage. For additional information visit the company's World Wide
Web site at baynetworks.com or call 800-8-BAYNET.
This release, other than historical financial information, may
consist of forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual
future events or results. For instance, factors which could cause
results to differ from future events include the rate of adoption of
new technology, the scope and timeliness of new product offerings,
and competitive pricing actions, among others. Readers are referred
to the documents filed by Bay Networks with the S.E.C., specifically
the most recent reports on Forms 10-K and 10-Q, which identify
important risk factors which could cause actual results to differ
from those contained in the forward-looking statements.
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Note to Editors: Bay Networks is a registered trademark of Bay
Networks, Inc. Accelar and "Where Information Flows," are
trademarks of Bay Networks, Inc.
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Bay Networks, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
Dec. 27, Dec. 31,
1997 1996
Revenue $ 644,914 $ 514,537
Cost of sales 313,097 284,876
Gross profit 331,817 229,661
Operating expenses:
Research and development 89,343 68,569
Sales and marketing 136,472 151,515
General and administrative 24,942 26,430
In-process research and development -- 165,538
Total operating expenses 250,757 412,052
Income (loss) from operations 81,060 (182,391)
Net interest income and other 9,052 5,284
Income (loss) from continuing operations
before income taxes and cumulative effect
of a change in accounting principle 90,112 (177,107)
Provision (benefit) for income taxes 30,641 (4,223)
Income (loss) from continuing operations
before cumulative effect of a change in
accounting principle 59,471 (172,884)
Cumulative effect of a change in accounting
principle, net of tax 12,018 --
Net income (loss) $ 47,453 $ (172,884)
Earnings per share amounts:
Income (loss) from continuing operations
before cumulative effect of a change in
accounting principle:
Basic earnings per share $ 0.28 $ (0.90)
Diluted earnings per share $ 0.27 $ (0.90)
Cumulative effect of a change in accounting
principle:
Basic earnings per share $ 0.06 $ --
Diluted earnings per share $ 0.05 $ --
Net income (loss):
Basic earnings per share $ 0.22 $ (0.90)
Diluted earnings per share $ 0.22 $ (0.90)
Weighted average common shares 213,054 192,119
Weighted average common shares
and equivalents 224,804 192,119
Six Months Ended
Dec. 27, Dec. 31,
1997 1996
Revenue $ 1,246,194 $ 1,037,191
Cost of sales 607,985 534,791
Gross profit 638,209 502,400
Operating expenses:
Research and development 170,270 123,523
Sales and marketing 272,362 279,730
General and administrative 49,351 46,005
In-process research and development 7,392 208,186
Total operating expenses 499,375 657,444
Income (loss) from operations 138,834 (155,044)
Net interest income and other 17,707 11,309
Income (loss) from continuing operations
before income taxes and cumulative effect
of a change in accounting principle 156,541 (143,735)
Provision (benefit) for income taxes 55,740 23,524
Income (loss) from continuing operations
before cumulative effect of a change in
accounting principle 100,801 (167,259)
Cumulative effect of a change in accounting
principle, net of tax 12,018 --
Net income (loss) $ 88,783 $ (167,259)
Earnings per share amounts:
Income (loss) from continuing operations
before cumulative effect of a change in
accounting principle:
Basic earnings per share $ 0.48 $ (0.88)
Diluted earnings per share $ 0.46 $ (0.88)
Cumulative effect of a change in
accounting principle:
Basic earnings per share $ 0.06 $ --
Diluted earnings per share $ 0.05 $ --
Net income (loss):
Basic earnings per share $ 0.42 $ (0.88)
Diluted earnings per share $ 0.41 $ (0.88)
Weighted average common shares 211,271 190,194
Weighted average common shares
and equivalents 224,064 190,194
Condensed Consolidated Balance Sheets
(In thousands) Dec. 27, June 30,
1997 1997
Assets
Cash, cash equivalents & short-term
investments $ 773,445 $ 635,142
Accounts receivable, net 312,903 277,860
Inventories 148,454 144,468
Deferred income taxes 133,890 121,596
Other current assets 48,619 69,351
Total current assets 1,417,311 1,248,417
Investments 216,967 146,367
Property and equipment, net 224,001 241,069
Goodwill 101,479 113,811
Other assets 31,755 16,382
Total assets $ 1,991,513 $ 1,766,046
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 347,889 $ 318,862
Accrued income taxes 15,942 39,269
Deferred revenue 65,978 62,678
Total current liabilities 429,809 420,809
Long-term debt 98,744 109,995
Stockholders' equity 1,462,960 1,235,242
Total liabilities and
stockholders' equity $ 1,991,513 $ 1,766,046
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CONTACT: Bay Networks
Sandra Toms, 408/495-1181 (IR)
stoms@baynetworks.com
Mike Deshaies, 408/495-3292
mdeshaies@baynetworks.com (Corporate Communications)
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED EARNINGS
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