Here's the release:
FOR FURTHER INFORMATION PLEASE CONTACT:
Newbridge Networks Corporation
John Lawlor
(613) 591-3600
E-Mail: jlawlor@newbridge.com
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: NEWBRIDGE NETWORKS CORPORATION
TSE SYMBOL: NNC
NYSE SYMBOL: NN
AUGUST 25, 1998
Newbridge Networks Announces First Quarter Fiscal 1999
Results
KANATA, ONTARIO--Newbridge Networks today announced results for
the first quarter of fiscal year 1999, ending August 2, 1998,
which demonstrated that the Company's increased attention to
consistent financial performance and business growth is taking
effect. The Company delivered record revenue, order intake and
backlog in its core business in the quarter and met analysts'
consensus expectations for earnings.
Revenue for the quarter was $426 million, an increase of $31
million or 8 percent compared with the previous quarter. Revenue
from the Company's core business, which excludes UB Networks,
increased 12 percent sequentially. Net earnings for the quarter
were $36 million (20 cents per share basic and fully diluted,
Canadian GAAP). Diluted earnings per share in U.S. currency were
14 cents, calculated in accordance with U.S. GAAP.
Company management demonstrated improved financial control and
management in the quarter. The Company's quarter-end cash
position was $509 million, an increase of $10 million compared
with the previous quarter. Days of sales outstanding (DSOs)
improved 7 days from the previous quarter, while inventory
declined by $8 million. First quarter expenses increased by only
$5 million, despite the negative impact of foreign currency
exchange and the fact that the Company moved to a common salary
review date on May 1, 1998, which led to an increase in salary
expenses of approximately $9 million compared with the previous
quarter.
"In discussions I have had with members of the media and the
analyst and investment community, I indicated there would be
renewed attention within Newbridge to consistent growth in revenue
through increased market share in the Company's traditional
markets and successful penetration of new markets. As well, I
stated that we would bring greater focus on managing the business
closely, including the cost structure and balance sheet," said
Alan Lutz, President and Chief Operating Officer, Newbridge
Networks. "I believe the first quarter of fiscal 1999 represented
an initial step in that direction. A further objective is to
continue to improve the quality of the management team and the
focus and effectiveness of the entire organization. Our July 28th
announcement highlighting the Company's vision, goals, objectives
and organizational changes were positive moves in this regard, and
you can expect to hear of further progress in this area as we move
forward."
Order intake increased by 17 percent compared with the previous
quarter. Orders exceeded shipments in the quarter, resulting in a
positive book-to-bill ratio. This was the eighth consecutive
quarter in which book-to-bill was greater than one. Order intake
was driven by strong growth in orders received for the
MainStreetXpress(tm) 36170 Multiservices Switch, for which orders
increased almost 30 percent sequentially. All three geographic
sales regions - North and South America (NSA), Europe, Middle East
and Africa (EMA) and Asia Pacific Region (APR) - delivered higher
revenue, order intake and backlog, compared with the previous
quarter.
Packet-based product revenue reached $243 million in the quarter,
representing 57 percent of total Company revenue. Packet product
revenue was driven by sequential double-digit percentage growth
for wide area network (WAN) packet products, resulting in record
WAN packet revenue. Both frame relay and WAN ATM achieved strong
revenue growth in the quarter, with double-digit sequential
revenue growth. WAN ATM revenue was approximately 65 percent
higher than in the previous year's first quarter, led by the
Company's flagship ATM platform and the industry's best selling
ATM system, the MainStreetXpress 36170 Multiservices Switch.
The MainStreetXpress 36170 Multiservices Switch achieved record
revenue, order intake and backlog again in the first quarter of
fiscal 1999, resulting in record WAN ATM revenue, order intake and
backlog for the quarter. This was the eleventh consecutive
quarter of record WAN ATM revenue, a string which began with
volume commercial availability of the MainStreetXpress 36170
multiservices platform. Revenue growth for the MainStreetXpress
36170 platform was double digit sequentially and 75 percent
compared with the first quarter of fiscal 1998. Book-to-bill for
the product was significantly greater than one.
There were approximately 80 customers for the MainStreetXpress
36170 system in the quarter, including 20 new customers, bringing
the total number of customers for the product to over 280.
Customers include many of the largest service providers throughout
the world. Sales of frame relay capability on the
MainStreetXpress 36170 platform increased by approximately 50
percent sequentially and 75 percent year over year. Sales of
circuit emulation capability on the platform increased by almost
40 percent sequentially and almost 400 percent year over year, as
carriers around the world continue to migrate frame relay and
other traffic onto the unifying Newbridge(r) multiservices
platform.
Time division multiplexing (TDM) revenue rebounded strongly to
$183 million in the quarter, representing 22 percent sequential
growth. Order intake for TDM products increased 24 percent
sequentially, producing a book-to-bill ratio greater than one in
this product category as well. TDM orders were the highest ever
received in the first quarter of any fiscal year.
"Network managers want an 'evergreen' end-to-end networking
solution based on an open, standards-compliant architecture that
protects their investment in their installed base of networking
equipment and is flexible to meet their evolving needs," continued
Mr. Lutz. "The Newbridge product philosophy and direction has
been in lock-step with this market requirement from day one. With
some 300,000 Newbridge networking nodes installed in over 100
countries throughout the world and seamless interworking
capabilities among our TDM, X.25, frame relay, Internet Protocol
(IP) and ATM platforms, the Company is driving a unique
opportunity to deliver a powerful narrowband to broadband, circuit
and packet, voice and data integration capability over a
multi-service network architecture.
"In conclusion, I believe we made solid progress in the quarter.
We continue to invest in bringing new products and services to
market. This quarter, for example, we began to ship Release 3.1,
a major hardware and software enhancement for the industry-leading
MainStreetXpress 36170 platform. While it contributed modestly to
the financial results in the quarter, it is just now going into
volume shipment. We expect it to contribute much more
significantly as we move forward. We also announced our
high-density Digital Subscriber Line (DSL) line cards integral to
the MainStreetXpress 36170 system, offering unparalleled
scalability, manageability and support for value-added services.
We also made progress on the customer front, with major contract
announcements for the Company's multi-service and multi-access ATM
network solution and network and service management at AT&T,
Energis, NB Tel, Singapore Telecom, Telecom Eireann, IXNet,
MaxLink Communications and WIC Connexus."
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. The Company leverages its relationship with 16
Newbridge 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.
Newbridge, logo are registered trademarks of Newbridge Networks
Corporation.
MainStreetXpress is a trademark used by the Siemens / Newbridge
alliance for comprehensive solutions in broadband communication.
No agency relationship, partnership, or joint ownership of a legal
entity is to be inferred or implied by the term alliance.
/T/
Newbridge Networks Corporation
Condensed Consolidated Statements of Earnings
(Canadian dollars, amounts in thousands, except per share data)
Fiscal quarter ended
August 2, August 3,
1998 1997
-------- --------
Sales $426,056 $434,738
Cost of sales 176,562 160,730
-------- --------
Gross Margin 249,494 274,008
Expenses
Selling, general and administrative 129,039 123,857
Research and development 67,156 59,683
-------- --------
Income from operations 53,299 90,468
Other income (expense) (2,525) 553
-------- --------
Earnings before income taxes and
non-controlling interest 50,774 91,021
Provision for income taxes 14,978 27,034
Non-controlling interest 276 (367)
-------- --------
Net earnings $ 35,520 $ 64,354
-------- --------
-------- --------
Earnings per share
Cdn. GAAP - basic 20 cents 37 cents
Cdn. GAAP - fully diluted 20 cents 36 cents
U.S. GAAP - basic - US$ 14 cents 27 cents
U.S. GAAP - diluted - US$ 14 cents 26 cents
Weighted average number of shares
Basic - Cdn. GAAP and U.S. GAAP 176,105 172,964
Fully diluted - Cdn. GAAP 176,105 189,082
Diluted - U.S. GAAP 178,419 179,821
Newbridge Networks Corporation
Condensed Consolidated Balance Sheets
as at August 2, 1998 and April 30, 1998
(Canadian dollars in thousands)
August 2, April 30,
1998 1998
---------- ----------
Cash and cash equivalents $ 509,366 $ 499,278
Accounts receivable 431,183 428,527
Inventory 188,617 196,285
Property, plant and equipment 494,366 450,735
Goodwill 72,238 72,719
Other assets 345,133 319,281
---------- ----------
$2,040,903 $1,966,825
---------- ----------
---------- ----------
Accounts payable and accruals
$ 228,413 $ 245,811
Income taxes - 5,851
Long term obligations 399,299 387,447
Future tax obligations 74,223 71,197
Non-controlling interest 25,798 22,899
---------- ----------
727,733 733,205
Shareholders' equity 1,313,170 1,233,620
---------- ----------
$2,040,903 $1,966,825
---------- ----------
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