(BSNS WIRE) Ascend Communications Reports Fourth Quarter 1997 Financial
Ascend Communications Reports Fourth Quarter 1997 Financial Results
Business Editors
ALAMEDA, Calif.--(BUSINESS WIRE)--Jan. 20, 1998--Ascend
Communications, Inc. (NASDAQ:ASND) 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."
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*T
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
========== ==========
*T
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.
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