Ascend Communications Reports Second Quarter 1998 Financial Results
Business Wire - July 14, 1998 16:47
ALAMEDA, Calif.--(BUSINESS WIRE)--July 14, 1998--Ascend Communications, Inc. (NASDAQ:ASND) today reported financial results for the second quarter ended June 30, 1998. Second quarter net sales were $327.4 million and net income was $59.1 million ($0.29 per share on a diluted basis). Compared to first quarter 1998 results, this represents sequential growth in net sales and net income of 7.3% and 12.8%, respectively.
Commenting on the Company's second quarter performance, Mory Ejabat, president and chief executive officer of Ascend said, "I am pleased with our second quarter performance, attaining record revenues for the quarter. In addition, we showed good growth in our international markets and we were able to bring to market key products and services. Our ability to show continued sequential growth over the last three quarters is, I believe, an indication of the strength of our organization and the success we are having delivering the products and services that network service providers worldwide require."
Commenting on the rapid migration to the IP-centric New Public Network, Mory Ejabat said, "While most of the initial focus was on data applications and, in particular, the Internet, we have seen a rapid evolution take place. Rather than focusing exclusively on data applications, today's large service providers are deploying networks that will support the integration of voice, video and data. It is this convergence that is today driving the demand to integrate key new technologies, such as SS7 and Voice over IP, into the New Public Network."
Mr. Ejabat said, "We continue to invest in bringing new products and services to market. This quarter we shipped our first SS7 gateway. Used in conjunction with MAX access products, the Ascend SS7 gateway and our Voice over IP capability will allow Telcos, CLECs and ISPs to relieve congestion on the public switched telephone network, provide new services to end users, and facilitate the integration of voice, fax and data traffic networks. We also shipped our GX 550 ATM Switch in volume this quarter, with the product making a strong contribution to the quarter."
Commenting on the outlook for the remainder of 1998, Mr. Ejabat said, "We continue to see strong growth in our North American markets, both for our Access and our Core Systems products, with the effects of deregulation driving increased competition among the service providers. In particular, we see the CLECs remaining strong for the near-to-mid term. We also see strength in many of our international markets, though, like others, we continue to remain cautious about much of Asia Pacific, and Japan in particular."
This release, other than historical financial information, may consist of forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. For instance, factors which could cause results to differ from future events include the rate of development of new and enhanced technology, the timely introduction and market acceptance of new products, competitive pricing actions and marketing programs, among others. Readers are referred to the documents filed by Ascend Communications with the S.E.C., specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements.
ASCEND COMMUNICATIONS, INC.
COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
Net Sales $327,355 $311,693 $632,469 $604,433
Cost of Sales 117,119 108,677 226,929 211,064
-------- --------- --------- ---------
Gross Profit 210,236 203,016 405,540 393,369
Operating Expenses:
Research and Development 46,443 40,221 87,431 74,889
Sales and Marketing 67,724 59,876 135,063 113,117
General and
Administrative 9,717 9,455 19,761 18,544
Purchased Research
and Development -- -- -- 231,100
Cost of Mergers -- 150,271 -- 150,271
-------- -------- ------- --------
Total Operating Expenses 123,884 259,823 242,255 587,921
Operating Income (Loss) 86,352 (56,807) 163,285 (194,552)
Interest Income, Net 5,923 6,302 10,887 11,578
--------- -------- ------- -------
Income (Loss)
Before Income Taxes 92,275 (50,505) 174,172 (182,974)
Provision (Benefit)
for Income Taxes 33,190 (1,668) 62,715 29,104
--------- --------- -------- --------
Net Income (Loss) $59,085 ($48,837) $111,457 ($212,078)
========= ========= ======== =========
Net Income (Loss)
Per Share - Basic $0.30 ($0.26) $0.58 ($1.13)
========= ========= ========= =========
Net Income (Loss)
Per Share - Diluted $0.29 ($0.26) $0.55 ($1.13)
========= ========= ========= =========
Number of Shares
Used in Per Share
Calculation - Basic 194,755 188,386 193,802 187,099
========== ========= ========== =========
Number of Shares
Used in Per Share
Calculation - Diluted 206,625 188,386 203,886 187,099
========== ========= ========== =========
ASCEND COMMUNICATIONS, INC.
COMBINED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(IN THOUSANDS)
June 30, Dec. 31,
1998 1997
----------- -----------
ASSETS
Current assets:
Cash, Cash Equivalents
and Short Term Investments $363,129 $475,427
Accounts Receivable, Net 268,954 234,183
Inventories, Net 131,902 99,637
Other Current Assets 125,581 105,340
----------- ----------
Total Current Assets 889,566 914,587
Investments 340,701 101,212
Furniture, Fixtures and Equipment,
Net 139,759 114,351
Other Assets 20,203 7,744
------------ ----------
Total Assets $ 1,390,229 $ 1,137,894
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable
and Accrued Liabilities $ 202,638 $ 168,638
------------ ------------
Total Current Liabilities 202,638 168,638
Stockholders' Equity:
Common Stock 196 191
Additional Paid in Capital 985,328 878,455
Retained Earnings 202,067 90,610
----------- -----------
Total Stockholders' Equity 1,187,591 969,256
----------- -----------
Total Liabilities
and Stockholders' Equity $ 1,390,229 $ 1,137,894
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