hursday January 29, 4:04 pm Eastern Time
Company Press Release
PairGain Reports 1997 Sales Increase of 37 Percent
Net Income Rises 44 Percent Before Merger Expenses
TUSTIN, Calif.--(BUSINESS WIRE)--Jan. 29, 1998--PairGain Technologies Inc. (Nasdaq:PAIR - news) Thursday reported 1997 revenues
of $282.3 million, a 37 percent increase over 1996 revenues of $205.5 million.
Net income for 1997 was $50.3 million, or 67 cents per share, on a diluted basis, excluding merger expenses of $2.6 million related to the
February 1997 acquisition of AVIDIA Systems. Including merger expenses, net income for 1997 was $47.6 million, or 63 cents per share on a
diluted basis.
Net income in 1996, which included a $2.5 million recovery related to 1995 unauthorized trading losses, was $34.9 million, or 47 cents per
share, on a diluted basis.
Gross margin in 1997 increased to 49.5 percent from 48.2 percent in 1996. Operating income in 1997, excluding merger expenses, was $74.4
million, or 26 percent of revenues, compared with $51.5 million, or 25 percent of revenues in 1996.
Revenues for the fourth quarter ended Dec. 31, 1997, were $74.5 million, up from $63.1 million in the comparable 1996 period. Gross margin
in the quarter increased to 49.8 percent from 49.3 percent in Q4 1996.
Operating expenses represented 25 percent of sales in Q4 1997 and 21 percent in Q4 1996, reflecting the company's previously stated position
to increase resources in engineering and sales. Net income in the fourth quarter of 1997 was $12.7 million, or 17 cents per share, on a diluted
basis, compared with $12.9 million and 17 cents per share, ($11.4 million or 15 cents per share excluding recovery from unauthorized trading
activity) in the fourth quarter of 1996.
PairGain generated $62 million cash in 1997, ending the year with total cash and short-term investments of over $176 million. Assets continue
to be managed aggressively, with inventory turnover increasing to 4.7 in 1997 vs. 4.1 for 1996, and accounts receivable days at 43 as of Dec. 31,
1997. The average revenue per employee increased to $432,000 in 1997 from $399,000 in 1996.
In January 1998, PairGain announced the industry's first single chip DMT ADSL (Discrete Multi-Tone Asymmetric Digital Subscriber Line)
processor. The company's FALCON chip will support full-rate ADSL and ''splitterless'' ADSL, or G.lite, a standard under development by
the International Telecommunication Union.
Recently, PairGain joined major PC and telecom industry leaders including Compaq, Intel, Microsoft and the five regional Bell operating
companies in the formation of the Universal ADSL Working Group, a body aimed at accelerating the adoption and availability of high-speed
Internet access to the mass market via a DMT ADSL-based solution.
PairGain's FALCON chip is the lowest power, most integrated DMT ADSL solution available today. The FALCON chip is capable of
transmitting data, video and voice at rates of over 8 Mbps downstream and 1 Mbps upstream, all over a single telephone line.
PairGain plans to integrate its FALCON chip into several of its own product lines, including a next-generation xDSL access system that will
be capable of supporting thousands of subscribers and DMT ADSL-based Megabit Modems for consumers. PairGain also intends to license its
DMT ADSL technology directly to select strategic partners. Product announcements will occur in coming months.
PairGain designs, manufactures and markets systems which allow telecommunications carriers and organizations with private communications
networks to more efficiently and quickly deploy high-speed digital services to end users over the large existing infrastructure of unconditioned
copper wires. PairGain's HiGain and Campus systems are marketed under the trademark CopperOptics, indicating their ability to provide fiber
quality transmission over the ''last mile'' in both public and private telephone networks.
Except for the historical information contained herein, the matters discussed in the announcement are forward-looking statements which
involve risk and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the
company's operations, markets, products, services and prices and other factors discussed in the company's filings with the Securities and
Exchange Commission.
PairGain Technologies Inc.
Condensed Consolidated Income Statements
(In thousands, except per share data)
Quarter Ended Twelve Months Ended
12/31/97 12/31/96 12/31/97 12/31/96
(Unaudited) (Unaudited)
Revenues $ 74,510 $ 63,135 $ 282,325 $ 205,505
Cost of goods sold 37,436 32,003 142,571 106,518
Gross margin 37,074 31,132 139,754 98,987
Research and
development 9,595 5,748 31,982 19,512
Selling and
marketing 6,199 4,735 22,808 17,585
General and
administrative 2,903 2,879 10,583 10,364
Merger expenses -- -- 2,642 --
Total operating expenses 18,697 13,362 68,015 47,461
Operating income 18,377 17,770 71,739 51,526
Interest and other
income, net 2,048 1,172 6,204 3,698
Settlement income related
to unusual trading
losses -- 2,500 -- 2,500
Income before
income taxes 20,425 21,442 77,943 57,724
Provision for
income taxes 7,679 8,548 30,306 22,816
Net income $ 12,746 $ 12,894 $ 47,637 $ 34,908
Earnings per common share
Basic $ 0.19 $ 0.20 $ 0.70 $ 0.54
Diluted $ 0.17 $ 0.17 $ 0.63 $ 0.47
Average shares
outstanding
Basic 68,874 65,940 67,991 64,247
Diluted 75,458 75,390 75,225 73,768
-0-
PairGain Technologies Inc.
Condensed Consolidated Balance Sheets
(In thousands)
12/31/97 12/31/96
Assets
Cash and cash equivalents $ 111,602 $ 48,416
Short-term investments 64,983 65,779
Accounts receivable, net 35,429 23,888
Inventory, net 30,538 26,149
Other current assets 19,074 13,857
Total current assets 261,626 178,089
Total long-term assets 20,793 16,915
Total assets $ 282,419 $ 195,004
Liabilities & Stockholders' Equity
Accounts payable and accruals $ 46,902 $ 37,408
Bank line of credit -- --
Total current liabilities 46,902 37,408
Total long-term liabilities -- --
Total stockholders' equity 235,517 157,596
Total liabilities and
stockholders' equity $ 282,419 $ 195,004 |
