Business is booming.
Lucent Technologies More Than Doubles Net Income And Earnings Per Share For Second Fiscal Quarter 1998, Excluding One-Time Charge
Business Wire - April 22, 1998 07:45
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MURRAY HILL, N.J.--(BUSINESS WIRE)--April 22, 1998--
REVENUES INCREASED 25 PERCENT ON CONTINUING OPERATIONS
Lucent Technologies today reported that net income more than doubled to $180 million or 14 cents a share(1) for the second fiscal quarter ended March 31, 1998, excluding a one-time charge associated with the January acquisition of Prominet Corporation, a leader in gigabit Ethernet intelligent networking. Net income for the year-ago quarter was $66 million or 5 cents a share.
The company's revenues for the quarter were $6.157 billion, an increase of 25 percent on continuing operations(2) and 19.6 percent on the consolidated business, compared with the year-ago quarter when revenues were $5.149 billion.
Including a one-time, after-tax charge of $157 million associated with the acquisition of Prominet, the company reported net income of $23 million for the quarter or 2 cents per share. The results for the quarter include a $33 million, pre-tax (or $21 million, after-tax) reversal of business restructuring charges, which were recorded in December 1995.
"We are pleased to report another strong quarter of double-digit, top-line growth while we continue investing in new technologies - both internally with Bell Labs and through acquisitions like Prominet and Hewlett-Packard's wireless broadband business," said Richard McGinn, Lucent Technologies' chairman and chief executive officer. "By aligning Bell Labs' R&D and technology from recent acquisitions with the needs of our customers, we are bringing leading communications networking technologies to market faster than ever before."
McGinn noted that during the quarter the company made major announcements in some of the fastest-growing markets of the communications networking industry:
-- In wireless, Lucent announced a $500 million exclusive
contract with PrimeCo and was selected by Advanced Radio
Telecom Corp. (ART) to build its wireless broadband data
network. Lucent's February acquisition of
Hewlett-Packard's wireless broadband division as well as
the ART announcement marked its entry into wireless
broadband;
-- In optical networking, Lucent unveiled its first two
WaveStar(tm) products, which deliver more capacity than
today's commercial fiber-optic systems and manage the
growth of data, voice and video traffic more simply and
efficiently;
-- In data networking, Lucent completed the acquisition of
Prominet, a leader in gigabit Ethernet intelligent
networking, and announced the PortMaster(R)4, a remote
access concentrator from another recent acquisition,
Livingston Enterprises. The PortMaster4 allows
network operators -- including public carriers, Internet
service providers, and large corporations -- to optimize
their networks for the growing variety of data
connections;
-- In semiconductors, Lucent introduced WildWire(tm), a new
digital subscriber line (DSL) chip set technology that
downloads data 30 times faster than today's analog
modems, and the DSP1609, a digital signal processor for
cordless phones, answering machines and Internet
appliances that is three times faster than competing
DSPs in the same price range.
Within Lucent Technologies, revenues for systems for network operators increased 24.7 percent to $3.654 billion, revenues for business communications systems increased 32.3 percent to $1.730 billion, and revenues for microelectronic products increased 14.6 percent to $705 million.
For the first six months of fiscal 1998, net income increased 41 percent to $1.304 billion or 99 cents per share, excluding one-time charges associated with the Livingston and Prominet acquisitions and a gain associated with the sale of Advanced Technology Systems. Revenues were $14.881 billion, an increase of 19.5 percent on continuing operations and 13.7 percent on the consolidated business versus the same period a year ago.
Review of Operations
SYSTEMS FOR NETWORK OPERATORS
Revenues increased by 24.7 percent over the year-ago quarter to $3.654 billion, led by sales of switching and wireless systems with associated software, optical networking systems, data networking systems for service providers - including those provided by the recently acquired Livingston Enterprises - as well as professional services.
Revenues were led by sales to RBOCs (Regional Bell Operating Companies), competitive local exchange carriers, wireless service providers and long distance carriers. The continued demand for data services and Internet access in businesses and residences contributed to the group's strong revenues.
Within the U.S., revenues increased 30 percent over the year-ago quarter. Revenues outside the U.S. increased about 8 percent and represented approximately 21 percent of the group's revenues.
BUSINESS COMMUNICATIONS SYSTEMS
Revenues increased 32.3 percent to $1.730 billion compared to the year-ago quarter. The group's results were primarily driven by sales of the Definity(R) Enterprise Communications Server to large businesses, sales of messaging systems - including those provided by the recently acquired Octel Communications, enterprise data networking systems, SYSTIMAX(R) networking systems, and services.
Within the U.S., revenues increased 26 percent over the year-ago quarter. Revenues outside the U.S. increased about 68 percent and represented approximately 19 percent of the group's revenues.
MICROELECTRONIC PRODUCTS
Revenues increased 14.6 percent over the year-ago quarter to $705 million, driven by sales of customized chips for communications and computing, including components for wireless telephones, local area networks, data networking and high-end computer workstations. Increased revenues from power systems, optoelectronic components and the licensing of intellectual property also contributed significantly to the group's revenues.
Within the U.S., revenues increased 23 percent over the year-ago quarter, led by sales to original equipment manufacturers. Revenues outside the U.S. increased about 7 percent and represented approximately 49 percent of the group's revenues.
COSTS AND EXPENSES
As a percentage of revenue, gross margin for the quarter improved to 44.2 percent from 42.1 percent in the year-ago quarter, reflecting a more favorable mix of products and services as well as improved management of costs.
Selling, general and administrative expenses (SG&A) accounted for 24.1 percent of revenues in the quarter, compared to 25 percent in the period a year-ago.
Research and development (R&D) spending(3) increased 25.9 percent over the year-ago quarter due to investments in high growth areas such as wireless, data networking, optical networking, switching and access, and microelectronics. As a percentage of revenues, quarterly R&D spending increased to 15.1 percent from 14.3 percent during the 1997 period.
Excluding the one-time charge, net income for the quarter was driven by revenue growth, higher gross margins, and by a decrease in the company's effective tax rate to 36 percent, compared to 38.1 percent in the year-ago quarter.
Lucent Technologies, headquartered in Murray Hill, N.J., designs, builds and delivers a wide range of public and private networks, communications systems and software, data networking systems, business telephone systems and microelectronic components. Bell Labs is the research and development arm for the company. For more information on Lucent Technologies, visit the company's web site at lucent.com
1 All earnings per share reported in this release are diluted EPS
figures and reflect the effect of a two-for-one stock split
effective April 1, 1998. On a pre-split basis, earnings per share
would have been 27 cents a share.
2 Includes revenues for Lucent's Systems for Network Operators,
Microelectronic Products and Business Communications Systems
businesses (including the recently acquired Octel Communications
and Livingston Enterprises), and excludes revenues from the
company's former Consumer Products business, which became part of
a venture owned by Lucent and Philips Electronics N.V.; and from
Lucent's Advanced Technology Systems and Custom Manufacturing
Services businesses, which the company sold.
3 Excludes a one-time charge of $157 million for in-process R&D
associated with the Prominet acquisition.
Second Fiscal Quarter Income Statement
(Unaudited; Millions of Dollars, except per share amounts)
For Three Months Ended
3/31/98 3/31/98(a) 3/31/97 Change(b)
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Revenues 6,157 6,157 5,149 19.6%
Costs 3,433 3,433 2,981 15.2%
Gross Margin 2,724 2,724 2,168 25.6%
Selling, General
and Administrative 1,487 1,487 1,287 15.5%
Research and Development 1,086 929 738 25.9%
Total Operating Expenses 2,573 2,416 2,025 19.3%
Operating Income 151 308 143 115.4%
Other Income, net 47 47 40 17.5%
Interest expense 74 74 77 (3.9%)
Income before income taxes 124 281 106 165.1%
Income tax expense 101 101 40 152.5%
Net Income 23 180 66 172.7%
Earnings per share-- Basic 0.02 0.14 0.05 180.0%
Earnings per share-- Diluted 0.02 0.14 0.05 180.0%
Effective tax rate (%) 81.5% 36.0% 38.1% (2.1)
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(a) Excludes one-time charge of $157 for purchased in-process R&D
related to the acquisition of Prominet.
(b) Change is between the three-month period ended 3/31/98, excluding
one-time charge related to the acquisition of Prominet, and the
corresponding 1997 period.
CONTACT: Bill Price
908-582-4820 (office)
201-823-2544 (home)
williamprice@lucent.com
or
Jeff Baum
908-582-7635 (office)
973-983-7086 (home)
jbaum@lucent.com |
