DSC Reports 1997 Fourth Quarter and Full-Year Results
PR Newswire, Monday, January 26, 1998 at 16:21
DALLAS, Jan. 26 /PRNewswire/ -- DSC Communications Corporation
(NASDAQ:DIGI) announced today record revenue for the 1997 fourth quarter and
full year. Fourth quarter 1997 net income, excluding unusual items, nearly
doubled from the same period of 1996.
Revenue for the 1997 fourth quarter and full year of $445.1 million and
$1.6 billion, respectively, grew 14 percent from $390.6 million and
$1.4 billion for the same 1996 periods.
Excluding unusual items, net income for the fourth quarter and full year
of 1997 was $34.8 million, or $0.30 per share (diluted) and $99.2 million, or
$0.83 per share (diluted), respectively, compared to $17.5 million, or
$0.15 per share (diluted) and $52.0 million, or $0.45 per share (diluted) in
the same 1996 periods. Fourth quarter 1997 results include the impact of
Celcore operations from the date of its acquisition. Celcore is a GSM mobile
switch manufacturer acquired by DSC in the 1997 fourth quarter.
Including the unusual items, the company had a net loss for the 1997
fourth quarter of $37.6 million, or $0.32 per share, and net income of
$48.9 million, or $0.41 per share for the full year of 1997 as compared to net
income of $17.5 million, or $0.15 per share, and a net loss of $7.6 million,
or $0.07 per share in the same 1996 periods.
The unusual items in the 1997 fourth quarter included a gain of
$126.0 million (after-tax $80.0 million, or $0.68 per share) from the
settlement of litigation, a charge for in-process R&D related to the
acquisition of Celcore, for which there was no tax effect, of $135.0 million
(after-tax $1.15 per share), and a write-down of assets of $22.0 million
(after-tax $17.4 million or $0.15 per share) related to the disposition of a
business.
Unusual items for the 1997 full year also included first and second
quarter gains of $35.5 million (after-tax $0.18 per share) from the sales of
stock received from a litigation settlement. In 1996, the company recorded
third quarter special charges of $96.0 million, (after-tax $0.51 per share).
The growth in revenue in the 1997 fourth quarter was due to increases in
each of the company's core product groups, including increases in Litespan(R)
deliveries, higher volumes from switching products and a record level of
revenue from the company's next-generation digital cross-connect, the iMTN(R).
Operating income for the fourth quarter of 1997, excluding the unusual
items, was $60.2 million compared to $30.8 million in the same 1996 period.
This improvement was primarily the result of higher revenue levels and an
increase in gross margin as a percentage of revenues to 43 percent from
38 percent in the 1996 fourth quarter. The gross margin improvement was due
to a number of factors, including higher revenue levels, a shift in the
product mix and increased software content.
DSC Chairman and Chief Executive Officer, James L. Donald said, "It is a
pleasure to report financial results which are once again in line with
financial community expectations for revenues and earnings. While the
addition of our new GSM cellular switch business was, as expected, modestly
dilutive in the fourth quarter, we look for it to improve in 1998 and be a
contributor to the bottom line by year end.
"Other areas of our business were at record or near-record sales levels.
These include our European transmission business which had a revenue level
close to $41 million, our Litespan family of digital loop carrier systems at
$160 million and transmission product revenue of approximately $70 million,
including $17 million associated with the company's iMTN digital cross-
connect."
Donald went on to say that, "The progress demonstrated in the quarter was
very encouraging. We are addressing the operational issues within our control
and are hopeful that our industry conditions will remain stable and provide
improving business opportunities through the year ahead."
DSC Communications is a global provider of advanced telecommunications
products, including digital switching, transmission, access and network
management systems. DSC's integrated network solutions support voice, data
and broadband services, such as intelligent networking, wireless and switched
digital video applications. DSC had 1997 annual revenues of approximately
$1.6 billion and is active in more than 60 countries worldwide. For more
information about DSC and its products, please visit the company's web site at
dsccc.com.
Litespan and iMTN are registered trademarks of DSC Communications
Corporation.
"Safe Harbor" statement under the Private Securities Litigation Reform Act
of 1995:
Except for the historical information contained herein, the matters
discussed herein, including the matters relating to future performance, are
forward looking statements that are dependent upon a number of risks and
uncertainties that could cause actual results to differ materially from those
in the forward looking statements. These risks and uncertainties include, but
are not limited to, economic conditions, product demand and industry capacity,
competitive products and pricing, manufacturing efficiencies, research and new
product development, protection of intellectual property, patents, and
technology, ability to attract and retain highly qualified personnel,
quarterly fluctuations from factors such as a shift in products delivered
including the amount of software content and the impact of sales price
changes, availability of components and critical manufacturing equipment,
facility construction and startups, the regulatory and trade environment, and
other risks indicated from time to time in the company's filings with the
Securities and Exchange Commission.
DSC COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1996 1997 1996
Revenue $445,105 $390,560 $1,575,479 $1,380,891
Cost of revenue
Special charges related to
inventories and associated
assets --- --- --- 82,500
Other 251,790 240,358 913,207 843,247
251,790 240,358 913,207 925,747
Gross profit 193,315 150,202 662,272 455,144
Operating costs and expenses:
Research and product
development 70,237 54,767 252,089 210,091
Selling, general and
administrative 59,635 62,147 232,220 233,576
Special charges for excess
facilities and equipment --- --- --- 13,500
Asset write-down 22,000 --- 22,000 ---
In-process research and
development 135,000 --- 135,000 ---
Other operating costs 3,221 2,510 10,930 10,020
Total operating costs
and expenses 290,093 119,424 652,239 467,187
Operating income (loss) (96,778) 30,778 10,033 (12,043)
Interest income 10,308 5,237 27,148 24,146
Interest expense (14,734) (6,549) (34,068) (26,355)
Other income (expense), net 125,039(A) (1,163) 159,053(A) 2,066
Income (loss) before
income taxes 23,835 28,303 162,166 (12,186)
Income tax expense (benefit) 61,405(B) 10,755 113,303(B) (4,631)
Net income (loss) $(37,570) $17,548 $48,863 $(7,555)
Basic income (loss) per share $(0.32) $0.15 $0.42 $(0.07)
Diluted income (loss) per share $(0.32) $0.15 $0.41 $(0.07)
Average shares used in basic
computation 117,800 116,806 117,358 116,108
Average shares used in
diluted computation 117,800 118,702 119,496 116,108
(A) Includes a $126 million net gain from a litigation settlement.
(B) The high income tax expense relative to income (loss) before income
taxes results primarily from the non-deductibility for income tax
purposes of substantially all of the $135 million in-process R&D
charge and the $22 million asset write-down. Exluding such impact,
the effective income tax rate for the fourth quarter and full year
1997 was 36.5% and 37%, respectively.
DSC COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
1997 1996
(Unaudited)
Assets
Cash and cash equivalents $277,200 $155,101
Marketable securities 340,642 178,938
Receivables 436,093 411,947
Inventories 374,247 343,566
Deferred income taxes 79,879 61,086
Other current assets 86,969 52,240
Total current assets 1,595,030 1,202,878
Property and equipment, net 443,610 403,596
Capitalized software development costs 72,341 51,634
Cost in excess of net assets of
businesses acquired, net 159,594 146,025
Other assets 168,940 121,522
Total assets $2,439,515 $1,925,655
Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities $439,715 $399,850
Current portion of long-term debt 32,602 33,072
Total current liabilities 472,317 432,922
Long-term debt 629,206 274,602
Noncurrent liabilities 122,172 70,495
Shareholders' equity 1,215,820 1,147,636
Total liabilities
and shareholders' equity $2,439,515 $1,925,655
SOURCE DSC Communications Corporation
-0- 01/26/98
/CONTACT: Terry Adams, 972-519-4358, or Michael Haase, 972-519-6855, both
of DSC Communications Corporation/
/Web site: dsccc.com
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