THIS ALMOST LOOKS TO GOOD TO BE TRUE...AM I MISSING SOMETHING? WHY DID THIS STOCK TANK TODAY?? American Power Conversion Announces Record Sales and Earnings for the Fourth Quarter and Full Year 1997
PR Newswire - February 09, 1998 16:01
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10th consecutive year of record revenues
Full Year Revenues Up 24 Percent; Net Income Up 32 Percent
Fourth Quarter Revenues Up 20 Percent; Net Income Up 24 Percent
WEST KINGSTON, R.I. Feb. 9 /PRNewswire/ -- American Power Conversion
Corporation (Nasdaq: APCC) today announced record sales and earnings for the
quarter and the year ended December 31, 1997. For the full year 1997, APC
reported its tenth consecutive year of record revenues.
Sales for the fourth quarter of 1997 were a record $251.7 million, up 20
percent from $210.1 million in the fourth quarter of 1996. Earnings for the
fourth quarter of 1997 were a record $37.4 million ($.39 per share), up 24
percent versus $30.2 million ($.32 per share) in the fourth quarter of 1996.
Sales for the twelve months ended December 31, 1997 were $873.4 million,
up 24 percent from $706.9 million in 1996. Earnings for the year were $121.8
million ($1.27 per share), up 32 percent versus $92.4 million ($.98 per share)
in 1996.
"We are particularly pleased with our record fourth quarter and full year
1997 financial results, which were accomplished in a very challenging global
business environment," commented Rodger B. Dowdell Jr., president and CEO. "In
addition to achieving solid earnings and revenue growth, APC ended the year
with its strongest and most liquid balance sheet in the Company's history."
At year end, APC's cash and cash equivalents position was $270.1 million,
up 76 percent over 1996, while inventories were reduced by 20 percent from
last year's levels to $104.2 million.
(Note: Earnings per share amounts represent diluted earnings per share as
defined within the Statement of Financial Accounting Standards No. 128.)
Business and Relationship Update
"As well as achieving outstanding financial results, 1997 was a year of
tremendous success on a variety of business fronts for APC," explained
Dowdell. "During the year we forged several exciting new strategic business
alliances and partnerships; introduced the revolutionary new Symmetra(TM)
Power Array(TM) product family; successfully acquired Systems Enhancement
Corporation, a leading supplier of power management software and accessories;
and added new international production capacity in the Philippines and
Ireland.
"Today's leading information technology vendors are aiming to provide
global users with 'best-of-breed' solutions for their systems. APC's product
breadth and reliability in both hardware and software solutions, coupled with
our comprehensive global presence and industry-leading financial health, make
a strong case for partnering with APC," commented Dowdell. "We have been very
pleased with the strategic business alliances and partnerships we formed
during the year. 1997 marked the firm establishment of APC as the
uninterruptible power supply (UPS) of choice for many leading technology
suppliers."
Some highlights from the year in this arena include: HP's selection of APC
as the "UPS Vendor of Choice" for HP's NetServer systems; IBM's designation of
APC as the "UPS Vendor of Choice" for IBM's Netfinity Rack systems; Sun
Microsystem's selection of APC as the "UPS of Choice" for its Netra NFS
servers; Intel's inclusion of PowerXtend(TM) plug-in software with Intel's
LANDesk Server Manager products; Gateway 2000 reselling APC UPS and surge
solutions with its PC products; and Dell Computer reselling APC UPS and surge
solutions for its server and workstation products.
During the fourth quarter, APC's power management software strengths were
again recognized when Intel began bundling APC's PowerXtend(TM) plug-in
software with its LANDesk Server Manager products. APC is the only UPS vendor
to have desktop management interface (DMI) compliant power management
software, making it the only power protection manufacturer to integrate with
Intel LANDesk Server Manager v3.0 products.
"Intel and APC engineers have worked together to develop a cohesive power
and server management software product specifically designed to protect all
Intel-architecture servers," said Bert DuMars, product marketing engineer of
Intel's Systems Management Divison. "We recognize the need for power
protection and are pleased to offer our customers comprehensive power
solutions from APC."
"1997 also continued APC's expansion into new market segments. Most
notable was the introduction of the Symmetra Power Array, an innovative,
scalable and redundant solution for the 4 to 16kVA market segment. It is the
first technology of its kind in the power protection industry and APC's first
entry into the above 5kVA market space," said Dowdell. "Shipments of Symmetra
began in the third quarter, 1997 and we continue to ramp production and
shipments of the product going forward into 1998."
In fact, earlier this month, APC announced that Siemens Business
Communication Systems, Inc. entered into an extended partnership agreement
under which Siemens will market and distribute an expanded array of power
protection products in the enterprise arena. APC has been a UPS business
partner of Siemens Business Communication Systems for nearly two years in the
0-5kVA market. This partnership now includes Symmetra for applications
requiring up to 16kVA power protection.
"Siemens is committed to providing reliable business communications
solutions globally to customers, and we are delighted to have an equally
global partner in APC," stated Monico Mallari, director of support services at
Siemens Business Communication Systems. "The expansion of this relationship
with APC will enable Siemens to now offer superior power protection solutions
to enterprise customers."
Business Outlook
"APC enters 1998 in the strongest financial condition in the Company's
history," concluded Dowdell. "We believe our business model is sound and we
are extremely well positioned with our most comprehensive product line ever.
This product line includes exciting and innovative product offerings ranging
from Symmetra on the high-end to the new SurgeStation(TM) SurgeArrest(R)
product on the low-end.
"Based on our current expectations and industry outlooks, we believe that
we can grow our full year 1998 revenue and net income in a range of 20 to 25
percent over 1997," continued Dowdell. "We expect that gross margins will be
in the mid-to low-40s as a percentage of revenue. Operating expenses, as
represented by marketing, selling, general & administrative and research &
development costs, are expected to be in the mid-20s as a percentage of
revenue. Gross margin and operating expenses in these ranges yield an
operating profit to sales percentage in the high teens.
"Additionally, the Company expects APC's 1998 quarterly growth rates for
revenue and net income to approximately fall in the 20 to 25 percent range,"
concluded Dowdell.
These are forward-looking statements based on current expectations that
involve a number of risks and uncertainties including those which are
described below under the heading "Safe Harbor Provision." While the Company
believes that it has a reasonable prospect of achieving these results in 1998,
it cannot provide any assurance that these expectations will actually be met.
Safe Harbor Provision
Statements contained in this press release which are not historical facts
may constitute forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. All forward-looking
statements are subject to risks and uncertainties which could cause actual
results to differ from those projected. The factors that could cause actual
results to differ materially include the following: the timely development and
acceptance of new products such as the Symmetra Power Array; ramp up and
expansion of manufacturing capacity; general economic conditions and growth
rates in the power protection industry and related industries, including but
not limited to the PC, server and networking industries; competitive factors
and pricing pressures; changes in product mix; changes in the seasonality of
demand patterns; inventory risks due to shifts in market demand; mergers and
acquisitions; component constraints and shortages; risk of nonpayment of
accounts receivable; the uncertainty of the litigation process including risk
of an unexpected, unfavorable result of current litigation; and the risks
described from time to time in the Company's filings with the Securities and
Exchange Commission.
American Power Conversion is a leader in the designing, manufacturing and
marketing of power protection equipment, including surge suppressors,
uninterruptible power supplies (UPS), power conditioning equipment and related
software for computer and computer related equipment. APC reported sales of
$873 million for the year ended December 31, 1997. The Company is
headquartered in West Kingston, RI, and its products are distributed
worldwide. |
