Newbridge Networks Announces Record Revenue for First Quarter Fiscal Year 2000
Continued Strong Growth in ATM Enables Company to Exceed Expectations
KANATA, Ontario, August 24, 1999 - Newbridge Networks Corporation today announced financial results for the first quarter of fiscal year 2000, ending August 1, 1999. Revenue for the quarter was $495 million, a record for the Company, and an increase of 8 percent over the previous quarter. Net earnings for the quarter were $47 million - 26½ per share basic and fully diluted under Canadian GAAP, or U.S. 18½ per share basic and diluted under U.S. GAAP - an increase of 50 percent compared with the previous quarter.
"This was a solid quarter," said Alan Lutz, president and chief operating officer, Newbridge Networks. "We said we were going to fix our supply line management issues and we largely have. We said we were going to achieve significant growth and we did. We said we were going to control expenditures and margins and we did. I want to thank all Newbridge employees for significantly improving our credibility with investors."
WAN packet revenue grew by more than 12 percent sequentially to reach $357 million in the quarter, representing 72 percent of total revenue and resulting in record WAN packet revenue. WAN packet revenue growth was driven by 16 percent sequential growth in the Company's flagship broadband multiservice platform and the industry's best selling ATM system, the MainStreetXpress 36170 Multiservices Switch. Sales of the 36170 switch were more than double that of the previous year's first quarter, as the platform continues to capture market share, growing at approximately twice the annual growth rate for the overall ATM WAN market.
There were approximately 140 customers for the MainStreetXpress 36170 system in the quarter - a record number of 36170 customers for any quarter - including 28 new customers. This brings the total number of customers for the platform to over 380. Customers include most of the largest service providers in the world. The Company has received strong interest from all clients in the 50 Gbit/sec and 320 Gbit/sec expanded versions of the 36170 Multiservices Switch. These systems are scheduled for trials later this fiscal year.
Company management continued to closely control operating expenses. First quarter operating expenses were $209 million, an increase of only $3 million from the prior quarter, despite the fact that the Company's common salary review date of May 1st resulted in an increase in payroll expenses in the quarter of approximately $12 million compared with the prior quarter.
"As we entered the quarter I stated that our objective was to achieve the revenue and earnings goals for the quarter - traditionally the lightest quarter of the fiscal year - without significantly diminishing the record level of backlog we had built," continued Mr. Lutz. "With the revenue and EPS numbers we posted, and a book-to-bill ratio of approximately one, we achieved this objective.
"We have implemented a great deal of change over the past year to strengthen Newbridge. Significant reorganization has been completed. New blood and fresh ideas have been injected into the Company through the addition of new executives to the leadership team. The product portfolio has been expanded and rejuvenated. The supply line management issues outlined at the beginning of the quarter have been largely rectified, eliminating the constraint on our ability to grow the business.
I believe we are well positioned to take advantage of the opportunities created by the rapidly expanding networking market. Client response to our broadband access products has been exceptional. Adding to our enthusiasm is early reaction to our differentiated IP services offering, and, in particular, our Digital Multimedia Distribution System."
This news release may include certain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from results indicated in any forward-looking statements. The Company cautions that, among other things, in view of the rapid technological changes in the networking industry, if technologies or standards supported by the Company's products or common carrier service offerings based on the Company's products become obsolete or fail to gain widespread commercial acceptance, the Company's business may be adversely affected. Additional information identifying risks and uncertainties is contained in the Company's most recent Form 10-Q quarterly report and Form 10-K annual report filed with the SEC.
Newbridge Networks designs, manufactures, markets and services wide area networking solutions for Internet service providers; local, long-distance, and wireless communications companies; cable television carriers; and corporate customers in more than 100 countries. The Company leverages its relationship with a growing family of Newbridge Affiliate companies and strategic alliances with numerous other networking companies to deliver complete, end-to-end solutions. Newbridge customers include the world's 350 largest telecommunications service providers and more than 10,000 corporations, government organizations and other institutions. Founded in 1986, the Company employs more than 6,000 people on six continents. News and information are available at www.newbridge.com.
For more information, contact Corporate Communications.
Newbridge and logo are registered trademarks of Newbridge Networks Corporation.
Newbridge Networks Corporation
Condensed Consolidated Statements of Earnings (unaudited)
(Canadian dollars in thousands, except per share data)
Fiscal quarters ended
August 1,
1999 August 2,
1998
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--------------------------------------------------------------------------------
Sales $ 495,070 $ 426,056
Cost of Sales 215,521 176,562
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--------------------------------------------------------------------------------
Gross Margin 279,549 249,494
Expenses
Selling, general and administrative 141,037 129,039
Research and development 67,621 67,156
Amortization of acquired intangiblest 2,745 927
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--------------------------------------------------------------------------------
Income from operations 68,146 52,372
Net gain on investments 3,512 -
Other expense (1,332) (1,598)
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--------------------------------------------------------------------------------
Earnings before income taxes and non-controlling interest 70,326 50,774
Provision for income taxes 21,705 14,978
Non-controlling interest 1,335 276
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--------------------------------------------------------------------------------
Net earnings (loss) $ 47,286 $ 35,520
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--------------------------------------------------------------------------------
Earnings loss per share
Cdn GAAP - basic $ 0.26 $ 0.20
Cdn GAAP - fully diluted $ 0.26 $ 0.20
U.S. GAAP - basic - US$ $ 0.18 $ 0.14
U.S. GAAP - diluted - US$ $ 0.18 $ 0.14
Weighted average number of shares
Basic - Cdn GAAP and U.S. GAAP 180,399 176,105
Fully diluted - Cdn GAAP 180,399 176,105
Diluted - U.S. GAAP 182,500 178,419
Newbridge Networks Corporation
Condensed Consolidated Balance Sheets (unaudited)
(Canadian dollars in thousands)
August 1,
1999 May 2,
1999
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--------------------------------------------------------------------------------
Cash and marketable securities $ 630,742 $ 879,694
Accounts receivable 560,204 472,811
Inventory 271,373 210,286
Property, plant and equipment 463,242 455,483
Goodwill 38,939 40,022
Other assets 557,834 412,328
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--------------------------------------------------------------------------------
$ 2,522,334 $ 2,470,624
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--------------------------------------------------------------------------------
Accounts payable and accruals $ 365,955 $ 391,991
Income taxes 85,488 16,853
Long term obligations 392,620 386,890
Future tax obligations 54,277 123,088
Non-controlling interest 24,348 22,583
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--------------------------------------------------------------------------------
922,688 941,405
Shareholders' equity 1,599,646 1,529,219
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--------------------------------------------------------------------------------
$2,522,334 $ 2,470,624
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Supplementary Condensed and Consolidated
Statements of Earnings (unaudited)*
(Canadian dollars in thousands, except per share data)
Fiscal quarters ended
August 1,
1999 August 2,
1998
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sales $ 495,070 $ 426,056
Cost of Sales 215,521 176,562
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Gross Margin 279,549 249,494
Expenses
Selling, general and administrative 141,037 129,039
Research and development 67,621 67,156
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Income from operations 70,891 53,299
Other expense (1,332) (1,598)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings before income taxes and non-controlling interest 69,559 51,701
Provision for income taxes 20,520 14,978
Non-controlling interest 1,335 276
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--------------------------------------------------------------------------------
Net earnings $ 47,704 $ 36,447
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--------------------------------------------------------------------------------
Earnings per share
Cdn. GAAP - basic $ 0.26 $ 0.20
Cdn. GAAP - fully diluted $ 0.26 $ 0.20
U.S. GAAP - basic - US$ $ 0.18 $ 0.14
U.S. GAAP - diluted - US$ $ 0.18 $ 0.14
* Supplementary earnings exclude the impact of amortization of acquired intangibles, net gain on investments, and non-recurring |
