Tuesday January 20, 4:31 pm Eastern Time
Company Press Release
Ascend Communications Reports Fourth Quarter 1997 Financial Results
ALAMEDA, Calif.--(BUSINESS WIRE)--Jan. 20, 1998--Ascend
Communications, Inc. (NASDAQ:ASND - news) today reported financial
results for the fourth quarter ended December 31, 1997. Fourth
quarter net sales were $292.5 million and net income was $47.6
million ($0.24 per share on a diluted basis). Compared to third
quarter 1997 results, this represents sequential growth in net sales
and net income of 8% and 19%, respectively.
Compared with the fourth quarter 1996, these results represent a 2%
increase over net sales of $287.8 million and a 26% decrease versus
net income of $64.5 million ($0.32 per share on a diluted basis).
For the year, net sales were $1.167 billion, a 31% increase over net
sales of $890.3 million in 1996. Net income for 1997 was $211.2
million or $1.06 per share (on a diluted basis), before the effect of
one-time charges related to purchased research and development and
costs of mergers, which combined, reduced net income by $335.5
million for the year. Excluding these one-time charges, results for
1997 represent an 8% increase over net income of $195.1 million or
$0.99 per share (on a diluted basis), before after tax charges of
$11.2 million related to costs of mergers in 1996.
Commenting on the Company's fourth quarter performance, Mory Ejabat,
president and chief executive officer of Ascend said, ''We are
pleased to be reporting our fourth quarter financial results, which
showed sequential growth in both net sales and net income in spite of
weakness in key Asia Pacific markets. We saw broad growth in North
America, with particular strength from our large Carrier and ISP
customers. We also saw solid growth for our Access product in Europe.
Even in Asia Pacific there were several bright spots, the most
notable being China, which saw strong quarter-over-quarter growth.''
Ejabat continued, ''We saw particular strength from our Core Systems
Group during the fourth quarter. In Frame Relay, we experienced
weaker demand in Asia Pacific but still showed modest growth overall
driven by stronger RBOC demand. We also saw an acceleration in our
ATM business, driven by both increased demand from existing customers
as well as key wins from new customers. We have seen our ATM products
gain broad market acceptance as ATM continues to emerge as the
backbone technology of choice.''
Commenting on the Company's performance for the year, Mr. Ejabat
said, ''1997 was a year of transition for Ascend. We entered the year
as the leading supplier of remote access solutions. Through a
combination of acquisitions and in-house R&D, we now go into 1998 as
a broad-based supplier of wide-area networking products. A critical
part of our strategy was the acquisition of Cascade Communications,
which formed the nucleus of our Core Systems Group.''
Ejabat continued, ''Just as important as the financial results, we
are seeing the results of our continued investments in our people and
infrastructure. We now have customer support centers on four
different continents. We have also continued to lead the industry in
bringing to market leading-edge network solutions. We have received
rapid market acceptance of our GX550 ATM platform, the industry's
first ''Smart Core'' ATM switch. We have also shipped over two-
million 56Kbps modem ports worldwide and the MAX TNT continues to be
the only product of its type in volume production.''
Looking forward into 1998, Ejabat said, ''Ascend has product
leadership in both the access concentration and backbone networking
markets. We have solidified our position as a key supplier of
networking products to the large ISP's and Carriers worldwide. We see
this as key going into 1998 as these same ISP's and Carriers emerge
as the major providers of Internet and VPN-type services to both
consumers and corporations.''
Ascend Communications, Inc.
Condensed Consolidated Statements of Operations, Unaudited
(In Thousands, Except Per Share Data)
Quarter Ended Dec. 31, Year Ended Dec. 31,
1997 1996 1997 1996
---------- --------- ---------- -----------
Net Sales $292,547 $287,791 $1,167,352 $890,273
Cost of Sales 105,325 99,609 413,570 311,745
---------- --------- ----------- -----------
Gross Profit 187,222 188,182 753,782 578,528
Operating Expenses:
Research and
Development 40,401 29,608 155,996 93,669
Sales and
Marketing 69,513 50,958 249,129 156,286
General and
Administrative 8,248 8,332 35,267 29,855
Purchased Research
and Development -- -- 231,100 --
Cost of Mergers -- -- 150,271 13,900
---------- ----------- ----------- -----------
Total Operating
Expenses 118,162 88,898 821,763 293,710
Operating Income
(Loss) 69,060 99,284 (67,981) 284,818
Interest Income,
Net 5,290 4,831 23,029 17,186
----------- ----------- ----------- -----------
Income (Loss)
Before Income
Taxes 74,350 104,115 (44,952) 302,004
Provision for
Income Taxes 26,774 39,627 79,422 118,114
----------- ----------- ----------- -----------
Net Income
(Loss) $47,576 $64,488 ($124,374) $183,890
=========== =========== =========== ==========
Net Income
(Loss) Per Share
- Basic $0.25 $0.35 ($0.66) $1.03
=========== =========== =========== ===========
Net Income
(Loss) Per Share
- Diluted $0.24 $0.32 ($0.66) $0.94
=========== =========== =========== ===========
Shares Used in Per
Share Calculation
- Basic 190,375 181,860 189,129 178,630
=========== =========== =========== ===========
Shares Used in Per
Share Calculation
- Diluted 198,461 199,120 189,129 196,246
=========== =========== =========== ===========
Ascend Communications, Inc.
Condensed Consolidated Balance Sheets, Unaudited
(In Thousands)
Dec. 31, Dec. 31,
1997 1996
---------- -----------
ASSETS
Cash, Cash Equivalents and Short-Term $475,427 $485,470
Investments
Accounts Receivable, Net 234,183 185,094
Inventories 99,637 68,544
Other Current Assets 105,340 68,233
---------- ----------
Total Current Assets 914,587 807,341
Investments 101,212 35,771
Furniture, Fixtures and Equipment, Net 114,351 73,046
Other Assets 7,744 5,969
---------- ----------
Total Assets $1,137,894 $922,127
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $168,638 $154,894
---------- ----------
Total Current Liabilities 168,638 154,894
Stockholders' Equity:
Common Stock 191 182
Additional Paid In Capital 878,455 533,515
Retained Earnings 90,610 233,536
---------- ----------
Total Stockholders' Equity 969,256 767,233
---------- ----------
Total Liabilities and Stockholders' Equity $1,137,894 $922,127
========== ==========
This release, other than historical financial information, may consist of forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. For instance, factors which could cause results to differ from future events include the rate of development of new and enhanced technology, the timely introduction and market acceptance of new products, competitive pricing actions and marketing programs, among others. Readers are referred to the documents filed by Ascend Communications with the S.E.C., specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements.
About Ascend Communications
Ascend Communications, Inc. develops, manufactures, and sells wide area networking solutions for telecommunications carriers, Internet service providers, and corporate customers worldwide. For more information about Ascend and its products, please visit the Ascend web site at ascend.com, or e-mail info@ascend.com.
Ascend is headquartered at One Ascend Plaza 1701 Harbor Bay Parkway Alameda, California 94502 Phone: 800/ASCEND4 Fax: 510/814-2300 E-mail: info@ascend.com |
