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Wednesday January 21, 4:25 pm Eastern Time
Company Press Release
SOURCE: FORE Systems, Inc.
FORE Systems, Inc. Announces Third Quarter Financial
Results
PITTSBURGH, Jan. 21 /PRNewswire/ -- FORE Systems, Inc. (Nasdaq: FORE - news) today
announced financial results for its fiscal 1998 third quarter which ended December 31, 1997.
Revenue for the third quarter of fiscal 1998 totaled $122.1 million, or an increase of 11% from the
$109.7 million reported in the second quarter of fiscal 1998, which ended September 30, 1997. Net
income and earnings per share were $10.1 million and $.10 per share, respectively, an increase of
44% from the $7.0 million and $.07 per share reported during the second quarter of fiscal 1998.
Revenue, net income and earnings per share for the third quarter of fiscal 1997 were $ 112.6 million,
$12.8 million and $.13 per share, respectively.
Revenue for the nine-month period ended December 31, 1997 totaled $327.2 million, as compared
to revenue of $294.0 million reported for the same period during the previous fiscal year. Net
income and earnings per share, for this nine-month period, were $22.0 million and $.22 per share,
respectively, as compared to $37.6 million and $.38 per share reported during the comparable
year-ago period.
''Corporate enterprises and service providers continue to turn to FORE Systems for networks that
last,'' said Eric Cooper, chairman and chief executive officer of FORE Systems. ''These customers
are deploying an intelligent infrastructure with the flexibility and scalability to handle the networked
applications of today and tomorrow.''
''During the past quarter, we had a number of significant new product launches and further price
reductions,'' added Cooper. ''We also announced several strategic partnerships which allow FORE
to reach new markets and new prospects.''
Highlights of the quarter included the following:
FORE introduced the new TS-2800 Token Ring Access Switch (provides a direct
connection to an ATM backbone), the ForeRunnerHE(TM) 622 (an advanced ATM adapter
for high speed backbone-server connections), next-generation Series-D ATM network
modules, a new higher-performance switch control processor and a significant price reduction
of 622 Mbps (OC-12c) ATM switch ports.
FORE announced partnership agreements with Sphere Communications (joint sales and
marketing), Internet2 (building the next-generation networking infrastructure for the Internet)
and Philips Communication & Security Systems (OEM agreement to provide ATM
technology to Philips' worldwide security surveillance market). Also, Hewlett-Packard and
FORE began shipping HP's AdvanceStack Switch 2000 (a jointly-developed ATM solution).
FORE was selected to install high-performance customer networks for Tippett Studio
(creators of special effects for Starship Troopers), PSS/World Medical (distributor of
medical, diagnostic and imaging products), Gen-Probe and the Eau Claire, Wisconsin School
District.
The ForeRunner(R) ASX-1000 ATM Switch won Network Computing's ''Editor's Choice''
Award, receiving the highest performance rating among leading competitive products.
About FORE Systems
FORE Systems is a leading global supplier of enterprise and service provider communications
solutions, delivering networks based on an intelligent infrastructure designed to handle the networked
applications of today and tomorrow.
FORE's solutions deliver the reduced network complexity, increased capacity and unparalleled
flexibility and scalability necessary to build networks that last, Networks of Steel(TM). Thousands of
customers in hundreds of industries have entrusted the company with their networks.
For more information on FORE's Networks of Steel, call 888-404-0444 or visit the FORE
Systems' web site at www.fore.com. Investor Relations can be reached directly at 800-713-1734.
This press release contains forward-looking statements with respect to customers, prospects and
other matters. Please refer to the Annual Report on Form 10-K filed by FORE Systems with the
Securities and Exchange Commission in June, 1997 for a discussion of risks that could cause actual
results to differ materially from such statements.
FORE Systems, ForeRunner, ForeThought, ForeView and PowerHub are registered trademarks of
FORE Systems, Inc. StreamRunner, CellPath and ForeRunnerHE are trademarks of FORE
Systems, Inc. All other brand or product names are trademarks or registered trademarks of their
respective holders.
FORE SYSTEMS, INC.
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
(In thousands, except share and per-share data)
Three months ended Nine months ended
December 31, December 31,
1997 1996 1997 1996
Revenue $122,083 $112,645 $327,161 $294,021
Cost of sales 53,944 48,486 144,322 125,044
Gross profit 68,139 64,159 182,839 168,977
Operating expenses:
Research and development 17,765 14,846 50,802 38,655
Sales and marketing 32,577 25,417 92,016 65,638
General and administrative 6,182 4,790 16,686 13,071
Merger-related --- 1,747 --- 1,747
Total operating
expenses 56,524 46,800 159,504 119,111
Income from operations 11,615 17,359 23,335 49,866
Interest income, net 3,413 3,262 9,706 9,449
Other income (expense) 199 136 296 104
Income before provision
for income taxes 15,227 20,757 33,337 59,419
Provision for income taxes 5,177 7,918 11,335 21,836
Net income $10,050 $12,839 $22,002 $37,583
Net income per common
share $0.10 $0.13 $0.22 $0.38
Weighted average common
and common equivalent
shares outstanding 102,533,458 102,534,402 101,850,298 98,411,269
FORE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
(Unaudited)
December 31, March 31,
1997 1997
ASSETS
Current assets:
Cash and cash equivalents $129,157 $129,424
Short-term investments 176,616 170,258
Accounts receivable, net of allowance
for doubtful accounts of $7,498 at
December 31, 1997 and $4,090 at
March 31, 1997 97,613 84,997
Inventories 62,920 50,769
Deferred income taxes 31,006 29,296
Prepaid income taxes 8,641 19,153
Prepaid expenses and other
current assets 12,873 6,774
Total current assets 518,826 490,671
Fixed assets, net 66,884 47,906
Total assets $585,710 $538,577
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $35,098 $36,919
Accrued payroll and related costs 15,966 13,909
Other current liabilities 16,992 10,230
Accrued merger costs 2,274 4,869
Deferred revenue 25,333 18,471
Total current liabilities 95,663 84,398
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01 per share;
300,000,000 shares authorized; shares
issued: 99,864,873 at December 31, 1997
and 97,792,458 at March 31, 1997 419,958 405,768
Retained earnings 75,132 53,130
Treasury stock, at cost: 120,000 shares (3,248) (3,248)
Cumulative translation adjustment (215) 53
Valuation allowance for short-term
investments (1,580) (1,524)
Total stockholders' equity 490,047 454,179
Total liabilities and
stockholders' equity $585,710 $538,577
SOURCE: FORE Systems, Inc.
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