LARGO, Fla.--(BUSINESS WIRE)--Oct. 27, 1999--
Excellent Broadband Revenue Growth and Net Income
Performance Recorded for the Third Quarter
Paradyne Networks Inc. (Nasdaq:PDYN), a leader in broadband access systems, today reported excellent
third quarter performance for the quarter ended Sept. 30, 1999. Sales of broadband products reflected strong
growth with $40.5 million in revenues, a 55 percent increase over the same period in 1998. Broadband
revenues for the first nine months of 1999 were $110 million, a 57 percent increase over the same period in
1998.
Total company revenues for the third quarter were $57.8 million, a 9 percent increase over the same period
of 1998. The total company revenues for the first nine months of 1999 increased 15 percent to $162 million,
excluding $2.6 million of one-time royalty revenue, as compared to $140.6 million for the nine-month period
ended Sept. 30, 1998.
Excluding deferred stock compensation amortization, net income was $2.8 million or $0.09 per pro forma
diluted share for the third quarter of 1999. As reported, net income was $1.9 million or $0.06 per diluted share
for the third quarter of 1999. This compares to a net loss of $.3 million or $0.01 per share for the quarter
ended Sept. 30, 1998.
Net income, as reported, for the nine months ended Sept. 30, 1999 was $3.6 million or $0.12 per diluted
share, compared to a net loss of $2.9 million or a loss of $0.11 per share for the same period of the prior year.
Excluding one-time royalty and patent sales, deferred stock compensation, and restructuring charges, net
income for the nine-month period ended Sept. 30, 1999 was $1.5 million or $0.05 per pro forma diluted share,
compared to a net loss of $2.7 million or a loss of $0.11 per share.
"We exceeded our third quarter expectations in terms of revenue growth and net earnings attainment," said
Andy May, Paradyne's chief executive officer. "The third quarter results confirm that our strategy of
expanding our broadband business is working. Once again, for the second quarter in a row, more than 70
percent of our revenues came from broadband products. We were pleased with our narrowband revenues,
which increased sequentially and exceeded our expectations for the third quarter with revenues of $16.3
million."
In addition to the outstanding revenue and earnings performance in the quarter, Paradyne successfully
completed an initial public offering in July and a secondary offering in September. "Speaking for the entire
Paradyne team, we are excited about our overall accomplishments in the quarter and look forward to growing
the business even further," said May.
Highlights for the quarter include:
-- Shipments of the Hotwire(R)Digital Subscriber Line Access
Multiplexers (DSLAMs) were more than 1,100 for the quarter and
now exceed 3,900 systems with the capacity for over one million
lines.
-- Sprint chose Paradyne's entire family of FrameSaver(R) service
level management products as part of its network offerings.
FrameSaver Service Level Verifier (SLV) is available for
immediate use and resale to Sprint and its customers.
-- Choice One Communications Inc., in a deal valued at $15 million,
will provide Northeast markets with digital subscriber line (DSL)
services based exclusively on Paradyne's Hotwire product family
including MVL(TM) (Multiple Virtual Lines) systems.
-- Capital Explorations Corporation, a Competitive Local Exchange
Carrier (CLEC), will deploy DSL Internet access using Paradyne's
Hotwire DSL products. Interconnect agreements with BellSouth,
Sprint and GTE allow immediate rollout of services in Florida.
-- Northwest Airlines, the fourth largest airline in the world,
selected Paradyne's FrameSaver service level management solutions
for deployment at more than 1,000 Northwest Airlines' airports
and cargo locations.
-- ALTEC, an Athens-based group of 22 companies focused on the
information technology and telecommunication industries, chose to
distribute Paradyne's DSL-based Internet access and frame relay
service level management solutions to the Balkan Region. This
agreement marks the first deployment of DSL-based services in the
area.
-- A next-generation, standards-based DSLAM offering service
providers the ability to serve up to 40 percent more customers.
Paradyne's Hotwire GranDSLAM will offer the latest ATM switching
fabric to integrate delivery of toll-quality voice and high-speed
data services. The GranDSLAM supports the broadest range of
DSL-based network services, including IP, ATM, Frame Relay, TDM,
MAC and Voice over DSL (VoDSL) and will support a range of DSL
transport types. Its standards-based architecture will support
interoperability with third-party endpoints.
-- Immediate availability of Voice over DSL (VoDSL) service with
Paradyne's Hotwire DSL platform. Choice One Communications Inc.
and Network Access Solutions (NAS) will deploy market trials for
this VoDSL service.
-- IDC named Paradyne number one in market share based on revenues
in the category "WAN Demarcation Devices and Their Role in
Service Level Monitoring (SLM)".
ABOUT PARADYNE
Headquartered in Tampa Bay, Fla., Paradyne is a leading innovator, developer and manufacturer of
broadband network access products and technology. The company is recognized as a market leader in Digital
Subscriber Line, T1 and Service Level Management products. Paradyne markets its award-winning Hotwire
DSL and FrameSaver Service Level Management systems to Network Service Providers (NSPs) and
business customers. Paradyne also licenses ETC(R) and Tripleplay(TM) technology, and intellectual property
incorporated in the V.90 standard. For more information on Paradyne and its products, call
1-800-PARADYNE (U.S. and Canada), 727/530-8623 or visit www.paradyne.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this
press release regarding Paradyne Corporation's business which are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the forward-looking statements, see the company's
prospectus dated September 28, 1999.
Editors Note: MVL, NextEDGE, OpenLane, Tripleplay and TruePut are trademarks of Paradyne
Corporation. ACCULINK, COMSPHERE, ETC, Hotwire, FrameSaver, Paradyne, the Paradyne logo and
Performance Wizard are registered trademarks of Paradyne Corporation. All other service marks and
trademarks are the property of their respective owners.
Paradyne Networks, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
September 30, December 31,
1999 1998
(Unaudited)
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 61,081 $ 2,356
Accounts receivable, net 21,656 29,641
Income tax receivables 4,247 4,230
Inventories, net 19,231 16,997
Prepaid & other current assets 2,635 2,529
-------- --------
Total current assets 108,850 55,753
Property plant & equipment 15,675 16,103
Other Assets 2,407 3,207
-------- --------
Total assets $126,932 $ 75,063
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 13,377 $ 17,205
Current portion of debt 485 16,483
Payroll & benefit related liabilities 6,902 6,263
Other current liabilities 7,319 7,420
-------- --------
Total current liabilities 28,083 47,371
Long term liabilities 294 353
-------- --------
Total liabilities 28,377 47,724
Stockholders' equity 98,555 27,339
-------- --------
Total liabilities and stockholders'
equity $126,932 $ 75,063
======== ========
Paradyne Networks, Inc.
Condensed Consolidated Statements of Operations
(Thousands except per share amounts)
(Unaudited)
Three months Ended Nine months Ended
September 30, September 30,
1999 1998 1999 1998
Revenues:
Sales $ 56,749 $ 49,966 $ 159,882 $ 137,845
Services 897 573 1,788 1,601
Royalties 100 845 2,918 1,195
--------- --------- --------- ---------
Total Revenues 57,746 51,384 164,588 140,641
Total cost of sales 31,592 28,913 91,657 74,964
--------- --------- --------- ---------
Gross Margin 26,154 22,471 72,931 65,677
Operating expenses:
Research and
development 9,068 8,866 26,903 26,148
Selling, general &
administrative 13,932 13,612 41,590 41,675
Amortization of
deferred stock
compensation 1,254 1,389 0
Restructuring
charges 0 167 5 226
--------- --------- --------- ---------
Total operating
expenses 24,254 22,645 69,887 68,049
--------- --------- --------- ---------
Operating Income
(Loss) 1,900 (174) 3,044 (2,372)
Other (income)
expenses:
Interest, net (375) 394 317 1,433
Other, net (143) (129) (2,684) (61)
--------- --------- --------- ---------
Income (Loss) before
provision for
income tax 2,418 (439) 5,411 (3,744)
Provision (benefit)
for income tax 551 (100) 1,786 (857)
--------- --------- --------- ---------
Net Income (Loss) $ 1,867 ($ 339) $ 3,625 ($ 2,887)
========= ========= ========= =========
Average shares
outstanding
Basic 30,666 25,627 27,638 25,613
Diluted 32,494 25,627 29,466 25,613
Earnings per
common share
Basic $ 0.06 ($ 0.01) $ 0.13 ($ 0.11)
Diluted $ 0.06 ($ 0.01) $ 0.12 ($ 0.11)
Proforma diluted
net income
(loss) per
share (1) $ 0.09 ($ 0.01) $ 0.05 ($ 0.11)
Paradyne Networks, Inc.
Footnote To Condensed Consolidated Statements of Operations
(Thousands except per share amounts)
(Unaudited)
(1) Proforma diluted net income (loss) per share calculations exclude
the financial statement impact of deferred stock compensation and
restructuring charges, the sale and license of intellectual
property to Telogy Networks, Inc., and royalty revenues from the
termination of the Cooperative Development Agreement with
GlobeSpan Semiconductor Inc. in the respective periods as
follows:
Three months Ended Nine months Ended
September 30, September 30,
1999 1998 1999 1998
Net Income (Loss)
Before Excluding
Items To Normalize
Results $ 1,867 ($ 339) $ 3,625 ($2,887)
Increase (Decrease)
to Net Income:
Reduction of
One-Time Telogy
and Globespan
Royalty Revenues (2,618)
Elimination of
Fees in SG&A
Related to Telogy
and Globespan
Royalty Revenues 225
Exclusion of
Amortization of
Deferred Stock
Compensation 1,254 1,389
Elimination of
Restructuring
Charges 167 5 226
Reduction of Other
Income for the
Sale of
Intellectual
Property (2,975)
(Increase) Decrease
in Tax Provision
Related to Exclusions (286) (38) 1,806 (52)
------- ------- ------- -------
Adjustment to
Net Income (Loss) 968 129 (2,168) 174
Net Income (Loss)
After Excluding
Items To Normalize
Results $ 2,835 $ (210) $ 1,457 $(2,713)
======= ======= ======= =======
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CONTACT: Paradyne Networks Inc., Largo
Lesley Bateman, Investor Relations
727/530-8083
lbateman@paradyne.com
or
Pat Murphy, Chief Financial Officer
727/530-2256
pmurphy@paradyne.com
KEYWORD: FLORIDA
INDUSTRY KEYWORD: NETWORKING TELECOMMUNICATIONS EARNINGS
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