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Newbridge Networks Announces Results for Fiscal 1998 and
Senior Management Appointments
KANATA, Ontario, June 2, 1998 -- Newbridge Networks
Corporation today announced financial results for the
Company's fiscal fourth quarter and year ended April 30,
1998 and key senior management appointments to further
strengthen the Company.
Revenue for the fourth quarter of fiscal 1998 was $395
million, an increase of $36 million or 10% compared with
third quarter revenue of $359 million. Revenue for the
fiscal year ended April 30, 1998 was $1,621 million, an
increase of 18 percent compared with the prior fiscal year.
Excluding one-time charges in the quarter, pro forma net
earnings for the fourth quarter of fiscal 1998 were $32
million, an increase of $15 million from the level of pro
forma net earnings generated by the Company in the previous
quarter. Pro forma fully diluted earnings per share for the
quarter were 18›, in accordance with Canadian GAAP, which,
in U.S. currency, were 13›, translated at the average
exchange rate for the quarter of $0.7011, as reported by the
Federal Reserve Bank of New York.
One-time charges in the quarter included $3 million
associated with the proposed settlement of the securities
class action lawsuit, which was commenced after the first
quarter of fiscal 1994.
Under Canadian GAAP, a one-time charge in the quarter was
associated with the amortization of $26 million related to
research and development in process associated with the
acquisition of Radnet Ltd., which was jointly acquired by
Newbridge and Siemens during the third quarter of fiscal
1998. Under U.S. GAAP, the R&D in process was completely
written off in the third quarter. Therefore, under Canadian
GAAP, fully diluted earnings per share were 2›, while,
diluted earnings per share in U.S. currency were 12›,
calculated in accordance with U.S. GAAP.
Summary financial statements, as well as pro forma net
earnings and a reconciliation of net earnings between
Canadian and U.S. GAAP for the fourth quarter and fiscal
year 1998, are provided in the attached financial tables.
Pro forma net earnings for the year, which exclude the
impact of one-time gains and charges, were $171 million (98›
per share basic and 96› per share fully diluted), under
Canadian GAAP. Pro forma net earnings per share for fiscal
1998 in U.S. currency, calculated in accordance with U.S.
GAAP, were 70› basic and 69› diluted. Net loss for the
fiscal year 1998, after one-time gains and charges, was $18
million (10› per share basic and fully diluted), under
Canadian GAAP, and U.S. 7› per share primary and diluted,
under U.S. GAAP.
Order intake exceeded shipments in the fourth quarter. This
was the seventh consecutive quarter in which book-to-bill
was greater than one. Backlog was the highest ever recorded
in the Company's history.
Packet-based products overall achieved record revenue in the
quarter and accounted for 62 percent of total Company
revenue. Packet-based product revenue was driven by
double-digit percentage growth on a sequential basis and
record revenue for wide area network (WAN) packet products.
Both frame relay and ATM * including the VIVID* switched
routing solution * achieved strong growth in revenue. WAN
ATM revenue in the fourth quarter of fiscal 1998 * led by
the Company*s flagship platform and the industry*s best
selling ATM system, the MainStreetXpress* 36170
Multiservices Switch ----* was more than double the level
achieved in the previous year's fourth quarter. WAN packet
revenue for fiscal 1998 was approximately 70 percent higher
than in fiscal 1997.
Revenue for the MainStreetXpress 36170 Multiservices Switch
achieved record levels again in the quarter and for the full
year, resulting in record ATM revenue for both the quarter
and the year. This was the tenth consecutive record quarter
of ATM revenue, coinciding with volume commercial
availability of the MainStreetXpress 36170 platform. Fiscal
1998 revenue and order intake for the MainStreetXpress 36170
system were both approximately three times higher than in
fiscal 1997.
There were approximately 80 customers for the product in the
quarter * including another 15 new customers -- and more
than 100 new customers during the year, as the product
strengthened its position as the leading ATM system for the
wide area network. The total number of customers for the
MainStreetXpress 36170 Multiservices Switch is now over
260. Sales of the frame relay capability on the
MainStreetXpress 36170 system increased by approximately 50
percent sequentially in the fourth quarter, as carriers
around the world continue to migrate frame relay and other
traffic onto the unifying Newbridger ATM multiservices
platform.
"The ATM market is extremely robust, not only in the wide
area network space, as expected, but for high capacity and
highly manageable campus backbone networks in the enterprise
environment as well," said Terence Matthews, Chairman and
Chief Executive Officer, Newbridge Networks. "In wide area
networks the Newbridge-Siemens broadband multiservices
solution delivers the benefits of ATM, such as scalability,
flexibility, exceptional availability and reliability, and
guaranteed quality of service to provide a cost-effective
and efficient multiservices architecture for combining
Internet Protocol (IP) and other packet-based traffic with
voice, video and other applications.
"Leading telecommunications and Internet service providers
are redesigning their networks around ATM. They require a
solution that is capable of evolving gracefully to protect
their investment in their installed base of networking
equipment. They want the most comprehensive and
technologically advanced solution for this migration path.
The Newbridge-Siemens broadband multiservices solution is
tailor-made for their needs.
"In addition, forward-planning global Fortune 1000
corporations, research institutes, leading healthcare
organizations and other *power users* are installing
ATM-based Layer 3 switched routing solutions in their
enterprise network backbones to overcome the problems
associated with legacy routers. Newbridge coined the term
"switched routing" when we introduced the VIVID solution
more than three years ago. Clearly, this Layer 3 solution
was ahead of its time, as the market at that time was just
heating up for Layer 2 LAN switching equipment. We are now
seeing market support for the product, as revenue and order
intake for the VIVID system continued to grow in the fourth
quarter, increasing by approximately 20 percent and 35
percent, respectively, on a sequential basis."
Sales of time division multiplexing (TDM) products increased
sequentially in the quarter, in line with management's
expectations. The installed base of Newbridge networking
nodes is now more than 200,000 as the Company solidifies its
global leadership position in this market.
"Fiscal 1998 was a year of advancement," continued Mr.
Matthews. "I am proud of the Newbridge management team and
all Newbridge employees. We faced some challenges during
the year; we met these challenges head on, made some tough
decisions * which are proving to be good decisions * and we
are now in a strong position to move forward. Our unswerving
commitment to research and development in both Newbridge and
the growing family of Affiliate companies has enabled us to
deliver powerful new products and enhancements across our
entire family of networking products. Throughout fiscal 1998
we introduced a considerable number of new products. These
products have significantly improved the Company's position
to capitalize on the growing opportunities in the dynamic
networking industry.
"I am pleased to announce today key senior management
appointments designed to further strengthen the Company.
The Newbridge senior management team is one of the most
experienced, stable and cohesive, not only in the networking
industry, but throughout the business world. Newbridge has
benefited over the last eight years from two exceptionally
strong presidents, Peter Sommerer and Peter Charbonneau.
These individuals, in conjunction with their senior
management colleagues and the entire Newbridge workforce,
have led our Company to a position today as a recognized
global leader in the networking industry.
"Peter Charbonneau has been appointed a Vice Chairman of
Newbridge Networks. During his tenure as President and
Chief Operating Officer, Peter has put in place the business
processes and disciplines to position the Company for its
next phase of growth. He is an extremely solid business
professional and an outstanding ambassador for Newbridge
with all of the Company*s external stakeholder groups.
Peter will play an even greater role in strengthening
relations with our key global customers and other
stakeholders. Peter will also be heavily involved in a
broad range of business development activities, including
developing and managing the strategic direction for the
Chairman*s Executive Council, which operates at a senior
level with our major customer organizations, chairing the
Newbridge Investment Committee, and managing and leveraging
relations with the growing family of Newbridge Affiliate
companies.
"Peter Sommerer will continue to leverage his extensive
experience, spanning some 30 years in the industry, to focus
on the Company*s internetworking strategy. His mandate is
to drive the Newbridge IP internetworking solution, which is
enabled by the Carrier Scale Internetworking (CSI) and VIVID
architectures.
"Alan Lutz is joining the Company, effective today, as
President and Chief Operating Officer. Alan has a
distinguished career in the telecommunications and
networking industry, including successful assignments as
Group General Manager for Compaq Computer*s strategically
important Communication Products business unit; Executive
Vice President and President of Unisys Corporation*s
Computer Systems Group; and Senior Vice President and
President of Nortel*s Switching Networks Group, Nortel*s
largest product group.
"While recognizing the tremendous value in the stability and
cohesiveness of the senior management team, we also
recognize the value in periodically adding to the team
proven, experienced performers from the industry who bring
with them fresh ideas and new perspectives, and, of course,
a track record of success. Alan represents such an
individual and we welcome him to the Newbridge team.
"Newbridge senior management has been considerably
strengthened with today*s announcement that Alan has joined
the team. The networking industry offers significant
opportunities for business growth. Newbridge is extremely
well positioned to capitalize fully on these opportunities."
This news release may include certain forward-looking
statements that involve risks and uncertainties. Actual
results may differ materially from results indicated in any
forward-looking statements. The Company cautions that, among
other things, in view of the rapid technological changes in
the networking industry, if technologies or standards
supported by the Company's products or common carrier
service offerings based on the Company's products become
obsolete or fail to gain widespread commercial acceptance,
the Company's business may be adversely affected. Additional
information identifying risks and uncertainties is contained
in the Company's most recent Form 10-Q quarterly report and
Form 10-K annual report filed with the SEC.
Newbridge Networks (NYSE: NN; TSE: NNC) designs,
manufactures, markets and services networking solutions to
organizations in more than 100 countries. Newbridge
leverages its relationship with 15 Affiliate companies and
strategic alliances with Siemens and 3Com Corporation to
deliver seamless, end-to-end solutions. Newbridge customers
include the world*s 250 largest telecommunications service
providers and more than 10,000 corporations, government
organizations and other institutions. Founded in 1986, the
Company employs more than 6,000 people on five continents.
News and information are available at www.newbridge.com.
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