PictureTel Posts Operating Profit Before Special Charges in Second Quarter of 1998
Business Wire - July 22, 1998 08:22
ANDOVER, Mass.--(BUSINESS WIRE)--July 22, 1998--
Company Earns 3 Cents Per Share Before Special Charges, Which
Result in Overall Net Loss
PictureTel Corporation (Nasdaq:PCTL), the world leader in visual collaboration, today reported revenue of $104.6 million and net income of $1.2 million, or
$0.03 cents per diluted share, excluding special charges, for the second quarter, which ended on June 28, 1998 (see Exhibit D). With the special charges, the
company reported an overall net loss of $6.7 million, or ($0.17) per diluted share (see Exhibit A). The company's revenue in the second quarter rose more than
$3.5 million from the first quarter of 1998. In the second quarter of 1997, PictureTel had revenue of $118.0 million and a net loss of $4.9 million, or ($0.13) per
diluted share. This is the first quarter in which PictureTel has posted an operating profit, excluding special charges, since the first quarter of 1997.
The company said the operating profit before special charges in the second quarter was due to higher sequential revenues, continued tight expense management
and a favorable product mix. PictureTel said the charges of approximately $11.6 million before taxes were principally caused by a discontinued product line,
inventory write-offs, and a real estate disposition.
For the first six months of the year, PictureTel posted revenue of $205.6 million and a net loss of $8.9 million, or ($0.23) per diluted share, including $11.6 million
in special pre-tax charges (see Exhibit B). In the first six months of 1997, PictureTel had revenue of $239.9 million and a net loss of $2.9 million, or ($0.08) per
diluted share.
The company's balance sheet continued to strengthen in the quarter. PictureTel's cash position increased to $86.2 million compared with $82.5 million in the first
quarter of 1998 and $82.0 million at the end of 1997. Inventory was reduced to $36.7 million in the second quarter from $43.0 million in the first quarter of 1998
and $44.9 million at year-end 1997 (see Exhibit C).
Unit shipments of the Venue 2000(TM) value-line group videoconferencing system increased by approximately 20 percent in the second quarter of 1998 versus
the first quarter of 1998 and in a year-over-year comparison. Overall operating expenses, excluding special charges, declined by 7 percent quarter over quarter
and by 22 percent year over year.
Service revenue continued to rise in the second quarter to $15.2 million, which represents an increase of 8 percent over the first quarter of 1998 and 27 percent
over the second quarter of 1997.
"We have begun to make significant progress in our mission to return the company to sustained profitability and growth," said chairman and CEO Bruce R. Bond.
"Through increased product sales worldwide and continued control of expenses, we have achieved -- before special charges -- one of the first goals I established
when I joined PictureTel, a return to operating profitability."
PictureTel continues to be the overall world leader in videoconferencing market share and during the second quarter, it continued its commitment to delivering
innovative new products to help its thousands of global customers use visual collaboration to run their businesses more effectively. In particular, the company
introduced the next generation of multi-location conferencing technology with PictureTel 330(TM) NetConference multipoint server software. With PictureTel
330 -- for the first time -- multiple users are able to meet in virtual conference rooms and perform business-quality audio, video and data sharing over their
existing corporate Internet Protocol (IP) infrastructure or any IP network. During the quarter PictureTel also introduced new performance features for its
industry-leading Concorde 4500(TM) group videoconferencing system.
PictureTel today also announced it has signed a letter of intent to acquire Starlight Networks, Inc., a leading provider of streaming-media solutions for enterprise
communications. Starlight, which is based in Mountain View, Calif., is a privately held company with approximately 55 employees.
"Both PictureTel and Starlight are in the business of delivering high-quality visual-collaboration solutions to our customers," said Bond. "The combination of
PictureTel's interactive visual collaboration and Starlight's streaming expertise will enable our customers to extend the reach of their videoconferences by
delivering streaming video over the Internet/intranet and the ability to store and retrieve streamed content. This will help our customers with such mission-critical
applications as enterprise briefings, light distance-learning applications, and business television, which should, in turn, drive sales of our group, personal and server
systems and services."
Over the next several weeks, PictureTel and Starlight will complete negotiations, finalize all details of the acquisition and execute a definitive agreement, which will
be followed by the actual closing of the transaction. PictureTel will purchase Starlight Networks primarily with common stock and some cash. The purchase price
and other details were not announced. PictureTel expects to account for the transaction under the purchase method of accounting, the details of which have not
yet been determined. The transaction, when completed, is expected to dilute PictureTel earnings per share for the balance of fiscal 1998 and add to earnings per
share for fiscal 1999.
In its ongoing effort to strengthen its management team, the company named Frazer Hamilton to the newly created position of vice president of business
processes and quality. Hamilton reports to CEO Bruce Bond, with whom he has worked previously at ANS Communications and British Telecom.
Hamilton is responsible for ensuring that PictureTel is a world-class company for customers to do business with by simplifying processes so that PictureTel can
deliver the highest possible customer satisfaction.
PictureTel Corporation is the world leader in developing, manufacturing and marketing a full range of visual and audio collaboration solutions. The company's
systems meet customers' collaboration needs from the desktop to the boardroom. PictureTel also markets network conferencing servers and a comprehensive
portfolio of enterprise-wide services. Additional PictureTel information is available on the Internet at www.picturetel.com. PictureTel collaboration products and
services eliminate the barrier of distance, enabling people to be Anywhere Now(TM).
This release includes projections and other forward-looking statements about the company's revenues, earnings, and other measures of economic performance.
Actual results could differ materially from forecasts due to many factors such as, for example, competitive pressures, changes in technology and the difficulty of
forecasting in overseas markets and indirect channels. Additional information concerning risks that could cause actual results to differ is contained in the
company's annual report on Form 10K as filed with the SEC. The company undertakes no obligation to update publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
PictureTel is a registered trademark and PictureTel 330, Concorde 4500 and Anywhere Now are trademarks of PictureTel Corporation. Other brands or
products are trademarks or registered trademarks of their respective owners.
PICTURETEL CORPORATION Exhibit A
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
6/28/98 6/29/97
(Restated)
Revenues $104,582 $117,966
Cost of revenues 64,309 66,271
Gross margin 40,273 51,695
Operating expenses:
Research and development 14,617 20,424
Selling, general and
administrative 36,185 38,650
Total operating expenses 50,802 59,074
Loss from operations (10,529) (7,379)
Other income, net 558 476
Loss before taxes (9,971) (6,903)
Income tax benefit (3,283) (2,003)
Net loss $(6,688) $4,900)
Net loss per common share
- Basic $(0.17) $(0.13)
Net loss per common share
- Diluted $(0.17) $(0.13)
Weighted average number of
common shares outstanding
- Basic 38,306 37,636
Weighted average number of
common shares outstanding
- Diluted 38,306 37,636
Note: All periods include the impact of Multilink, Inc., which
was acquired on July 22, 1997, in a pooling of interests transaction.
PICTURETEL CORPORATION Exhibit B
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Six Months Ended
6/28/98 6/29/97
(Restated)
Revenues $205,628 $239,901
Cost of revenues 119,468 129,469
Gross margin 86,160 110,432
Operating expenses:
Research and development 31,517 41,358
Selling, general
and administrative 68,994 74,915
Total operating expenses 100,511 116,273
Loss from operations (14,351) (5,841)
Other income, net 1,330 1,771
Loss before taxes (13,021) (4,070)
Income tax benefit (4,167) (1,181)
Net loss $(8,854) $(2,889)
Net loss per common share
- Basic $(0.23) $(0.08)
Net loss per common share
- Diluted $(0.23) $(0.08)
Weighted average number of
common shares
outstanding - Basic 38,200 37,589
Weighted average number
of common shares outstanding
- Diluted 38,200 37,589
Note: All periods include the impact of Multilink, Inc., which
was acquired on July 22, 1997, in a pooling of interests transaction.
Exhibit C
PICTURETEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
6/28/98 12/31/97
Current assets:
Cash and marketable securities $86,183 $82,011
Accounts receivable, net 95,954 108,729
Inventories 36,651 44,901
Deferred taxes, net 16,499 15,615
Other current assets 9,732 6,803
Total current assets 245,019 258,059
Deferred taxes, net 19,389 16,106
Property and equipment, net 58,724 69,103
Capitalized software costs, net 4,176 2,368
Other assets 9,500 9,415
Total assets $336,808 $355,051
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowing - $186
Accounts payable 26,096 30,169
Accrued expenses 43,253 47,758
Current portion of capital leases 3,304 3,426
Deferred revenue 21,965 23,547
Total current liabilities 94,618 105,086
Capital lease obligations 20,731 22,000
Total liabilities 115,349 127,086
Total stockholders' equity 221,459 227,965
Total liabilities and
stockholders' equity $336,808 $355,051
Note: Period ended December 31, 1997 includes impact of financial
restatements on all prior periods. All periods include the
impact of Multilink, Inc., which was acquired on July 22, 1997,
in a pooling of interests transaction.
PICTURETEL CORPORATION Exhibit D
CONSOLIDATED STATEMENTS OF OPERATIONS
BEFORE AND AFTER SPECIAL CHARGES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended June 28, 1998
Without
As Special Special
Reported Charges Charges
Revenues $104,582 - $104,582
Cost of revenues 64,309 (6,808) 57,501
Gross margin 40,273 (6,808) 47,081
Operating expenses:
Research and
development 14,617 - 14,617
Selling, general
and administrative 36,185 (4,817) 31,368
Total operating
expenses 50,802 (4,817) 45,985
Income (loss)
from operations (10,529) (11,625) 1,096
Other income, net 558 - 558
Income (loss)
before taxes (9,971) (11,625) 1,654
Income tax
expense (benefit) (3,283) (3,720) 437
Net income (loss) $(6,688) $(7,905) $1,217
Net income (loss)
per common
share - Basic $(0.17) $(0.21) $0.03
Net income (loss)
per common share
- Diluted $(0.17) $(0.21) $0.03
Weighted average
number of
common shares
outstanding - Basic 38,306 38,306 38,306
Weighted average
number of
common shares
outstanding - Diluted 38,306 38,306 38,306
PICTURETEL CORPORATION Exhibit E
CONSOLIDATED STATEMENTS OF OPERATIONS
BEFORE AND AFTER SPECIAL CHARGES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Six Months Ended June 28, 1998
Without
As Special Special
Reported Charges Charges
Revenues $205,628 - $205,628
Cost of revenues 119,468 (6,808) 112,660
Gross margin 86,160 (6,808) 92,968
Operating expenses:
Research and
development 31,517 - 31,517
Selling, general
and administrative 68,994 (4,817) 64,177
Total operating expenses 100,511 (4,817) 95,694
Loss from
operations (14,351) (11,625) (2,726)
Other income, net 1,330 - 1,330
Loss before taxes (13,021) (11,625) (1,396)
Income tax benefit (4,167) (3,720) (447)
Net loss $(8,854) $(7,905) $(949)
Net loss per
common share - Basic $(0.23) $(0.21) $(0.02)
Net loss per
common share - Diluted $(0.23) $(0.21) $(0.02)
Weighted average
number of common shares
outstanding - Basic 38,200 38,200 38,200
Weighted average
number of common
shares outstanding -
Diluted 38,200 38,200 38,200
CONTACT: PictureTel Corporation
Kevin Flanagan, 978/292-5178
flanagank@pictel.com
or
Sterling Hager, Inc
Susanna Hinds, 617/926-6665
susanna@sterlinghager.com |
