The whole thing looks a whole lot better than expected..
ROCHESTER, N.H., Mar 29, 2000 (BUSINESS WIRE) --
Cabletron Pro Forma EPS increases 650% Year-over-Year While Building
Balance Sheet to $2.5 Billion in Cash and Investments
Cabletron Systems, Inc. (NYSE:CS), a holding company for infrastructure
companies focused on the new Internet economy, today reported financial results
for the fourth quarter and fiscal year ended February 29, 2000.
"We are very pleased with our results for the fourth quarter, the fifth
consecutive quarter Cabletron has met or surpassed Wall Street expectations,"
said Piyush Patel, Cabletron CEO and chairman. "Our business metrics have
continued to greatly improve and our balance sheet is the strongest it has ever
been. The total profitability and operating metric ratios for Cabletron in the
past fiscal year will rank comfortably with America's top corporations. We are
now in a position of strength that allows us to accelerate the transformation of
Cabletron into a holding company and four separate entities focused on building
the Internet Infrastructure."
Net sales for the fourth quarter of fiscal 2000 were $381.8 million, compared
with $371.7 million in the prior quarter and $345.1 million in the fourth
quarter of fiscal 1999. Net sales year-over-year increased by approximately
10.6%.
On a pro forma basis, net income increased to $28.1 million or $0.15 per diluted
share, compared to pro forma net income of $22.0 million, or $0.12 per diluted
share, in the prior quarter. The pro forma net income for the fourth quarter of
fiscal 1999 was $3.8 million or $0.02 per diluted share for year-over-year EPS
growth of 650.0%.
Including other income and all charges, actual net income for the quarter ended
February 29, 2000, was $431.2 million or $2.23 per diluted share. This compares
to actual net income of $42.6 million or $0.22 per diluted share for the
previous quarter and actual net loss of $12.7 million or $0.07 per diluted share
in the same period last year. The quarter ended February 29, 2000 contains
$697.0 million ($421.6 million, net of tax) related to realized gain from the
sale of its FlowPoint division and subsequent sale of a portion of its holdings
in publicly traded equities.
For full details on the Company's results, see the financial table accompanying
this release.
Pro Forma Condensed Statements of Operations
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
Q4 FY2000 Q3 FY2000 Q4 FY1999 FY 2000 FY 1999
(Unaudited) Feb. 29, Nov. 30, Feb. 28, Feb. 29, Feb. 28,
2000 1999 1999 2000 1999
Sales $ 381,768 $ 371,653 $ 345,073 $ 1,459,593 $ 1,411,279
Net income
(loss) $ 28,143 $ 21,993 $ 3,823 $ 69,917 ($ 9,460)
Net income
(loss)
per share
--basic $ 0.15 $ 0.12 $ 0.02 $ 0.39 ($ 0.06)
Net income
(loss)
per share
--diluted $ 0.15 $ 0.12 $ 0.02 $ 0.37 ($ 0.06)
Weighted ave
number of
common
shares
- Basic 182,497 180,504 172,161 177,541 167,432
Weighted ave
number of
common
shares
- Diluted 193,132 189,561 181,342 188,618 167,432
Earnings (loss)
before interest,
taxes,
depreciation and
amortization
(EBITDA) $ 52,316 $ 46,682 $ 23,079 $ 160,142 $ 49,802
Note: Pro forma results for the periods ended February 29, 2000, November 30,
1999 and February 28, 1999, exclude the amortization of intangible assets
related to purchased acquisitions, special charges, other income, net and
certain other charges incurred as a result of the manufacturing divestiture. The
tax effect of all adjustments has also been excluded. One-time charges included
in operating results related to the manufacturing divestiture that were excluded
from the pro forma calculations, include $5.2 million of inventory costs and
$4.7 million of personnel costs which were reflected in cost of sales and SG&A,
respectively, during the quarter and twelve months ended February 29, 2000. The
twelve months ended February 29, 2000 also excludes $15.2 million related to
inventory write-offs related to the discontinuations of several product lines.
The Corporate Transformation
During the fourth quarter of fiscal 2000, Cabletron announced its plans to
transform the company into a holding company from which it would launch four
separate companies. The companies, which will focus on high growth segments
within the Internet infrastructure market, are Aprisma Management Technologies,
Enterasys Networks, Riverstone Networks and GlobalNetwork Technology Services.
As a holding company, Cabletron Systems will work with each company on
completing a successful subsidiary initial public offering. It is the intention
of Cabletron to then spin off these companies to shareholders. The holding
company will then focus on incubation investments that are currently in
Cabletron's portfolio as well as new growth investment opportunities.
On February 24, 2000, Cabletron announced that Silver Lake Partnership agreed to
invest up to $200 million to propel Cabletron and the four newly-launched
subsidiary companies into their high growth markets--service provider,
e-business enterprise, professional services and infrastructure management. The
principals of Silver Lake, which include Jim Davidson, Glenn Hutchins, Dave
Roux, and the partners of Integral Capital Partners, whose general partners
include Roger McNamee, John Powell, and the partners of Kleiner, Perkins,
Caufield and Byers, have extensive experience investing in, managing, and
financing, the rapid growth of technology companies.
Investment Update
Cabletron completed its sale of its FlowPoint division to Efficient Networks in
exchange for 13.5 million shares of Efficient Networks stock in December. Also
during the quarter, Cabletron monetized approximately 2.0 million shares as part
of Efficient's secondary offering. The value of the remaining 11.5 million
shares owned by Cabletron was $1.7 billion on February 29th.
Manufacturing
Cabletron also announced during the fourth quarter, the divestiture of its
manufacturing and repair services operations to globally recognized Flextronics
International. The terms of contract, which commenced on March 1, 2000, include
Flextronics acquiring manufacturing-related assets and certain inventories for
approximately $90 million.
Flextronics has hired Cabletron's worldwide manufacturing workforce of
approximately 1,000. Additionally Flextronics will continue to supply product
through Cabletron's former plant locations in Rochester, NH and Limerick,
Ireland.
"In today's Internet economy, successful companies execute with agility and
decisiveness," said Patel. "The four subsidiary businesses we have created are
leaders in their respective markets with cutting-edge technology and visionary
leaders. As a holding company, Cabletron Systems will unleash additional
shareholder value through guiding these subsidiary companies to even higher
levels of excellence."
About Cabletron Systems
Cabletron Systems is a holding company for infrastructure companies focused on
the new Internet economy.
Aprisma Management Technologies is a leading provider of intuitive multi-vendor
management solutions that meet the service level requirements of enterprise and
service provider customers. Aprisma pioneered the field of intelligent network
management with its flagship SPECTRUM(R) software suite.
Enterasys Networks is a network solutions provider singularly focused on
enterprise-class customers. By optimizing enterprise network solutions for
e-business applications, and by providing global 24x7 service and support,
Enterasys provides a competitive advantage to its customers.
Riverstone Networks is focused on emerging content and infrastructure service
provider markets. Starting from the customer premise, across the metro network,
into the hosting center and WAN backbones, Riverstone networking equipment
e-nables an end-to-end service-rich infrastructure.
GlobalNetwork Technology Services (GNTS) is one of the largest independent
network-consulting firms in the world. With consultants in more than 66
locations spanning the globe, GNTS provides solutions that optimize application
availability and performance to enterprise and service provider clients.
Listed on the New York Stock Exchange as CS, Cabletron is an S&P 500 index
company. Cabletron's web site can be reached on the Internet at
cabletron.com
Certain statements in this news release may constitute forward-looking
statements and actual results could differ materially. Factors that could cause
actual results to differ include general competitive conditions including
pricing pressures, and changing market dynamics. For a detailed discussion of
the general risks and uncertainties related to the company's business, please
refer to the Company's annual report on Form 10-K for fiscal 1999.
Condensed Statements of Operations
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
Q4 FY2000 Q3 FY2000 Q4 FY1999 FY 2000 FY 1999
(Unaudited) Feb. 29, Nov. 30, Feb. 28, Feb. 29, Feb. 28,
2000 1999 1999 2000 1999
Net Sales $ 381,768 $ 371,653 $ 345,073 $ 1,459,593 $1,411,279
Cost of Sales 210,402 199,136 193,197 817,844 811,350
Gross Profit 171,366 172,517 151,876 641,749 599,929
Operating expenses:
R&D 42,302 44,716 50,759 184,614 210,393
Selling,
general and
administrative 104,654 100,089 97,455 400,544 418,254
Amortization of
certain acquired
intangible assets 6,819 7,473 8,352 29,121 27,978
Special charges (2,640) 0 17,570 21,096 234,920
Operating income
(loss) 20,231 20,239 (22,260) 6,374 (291,616)
Interest income,
net 6,535 4,152 3,676 18,587 15,089
Other income, net 684,951 39,082 0 734,060 0
Income (loss) from
operations before
income taxes 711,717 63,473 (18,584) 759,021 (276,527)
Income tax expense
(benefit) 280,528 20,875 (5,845) 294,750 (31,136)
Net income
(loss) $ 431,189 $ 42,598 ($ 12,739) $ 464,271 ($ 245,391)
Earnings (loss)
per share
- basic $ 2.36 $ 0.24 ($ 0.07) $ 2.62 ($ 1.47)
Earnings (loss)
per share
- diluted $ 2.23 $ 0.22 ($ 0.07) $ 2.46 ($ 1.47)
Weighted ave.
number of common
shares - Basic 182,497 180,504 172,161 177,541 167,432
Weighted ave.
number of common
shares - Diluted 193,132 189,561 172,161 188,618 167,432
Condensed Balance Sheets
(in thousands)
as of
(Unaudited) Feb. 29, Nov. 30, Feb. 28,
2000 1999 1999
Assets
Current Assets:
Cash and short-term
investments $ 572,961 $ 362,558 $ 273,354
Accounts receivable (net) 228,372 195,230 216,793
Inventories (net) 85,016 178,529 229,512
Deferred income taxes 82,903 86,331 60,252
Other current assets 26,711 37,837 60,510
Total Current Assets 995,963 860,485 840,421
Investments 1,903,858 187,485 202,984
Property plant &
equipment (net) 124,992 152,854 188,479
Intangible assets (net) 130,284 173,837 199,419
Deferred income taxes 0 147,739 135,197
Total Assets $3,155,097 $1,522,400 $1,566,500
Liabilities and
Stockholders' Equity:
Accounts payable $ 89,453 $ 57,917 $ 121,580
Other current liabilities 458,342 295,579 347,896
Total Current Liabilities 547,795 353,496 469,476
Deferred income taxes 459,863 11,473 7,191
Total Liabilities 1,007,658 364,969 476,667
Stockholders' equity 2,147,439 1,157,431 1,089,833
Total Liabilities and
Stockholders' Equity $3,155,097 $1,522,400 $1,566,500
Distributed via COMTEX. |
