PictureTel Posts Net Profit of 4 Cents Per Share in Third Quarter, First Quarterly Net Profit Since Q1 1997
ANDOVER, Mass.--(BUSINESS WIRE)--Oct. 21, 1998--PictureTel Corporation (Nasdaq:PCTL - news), the world leader in visual collaboration, today reported revenue of $102.1 million and net income of $1.6 million, or $0.04 per share, for its third quarter ended on September 27, 1998. This marks the first time since the first quarter of 1997 that PictureTel has posted a net profit. In the second quarter of 1998, the company had an operating profit excluding special charges.
Revenue was down approximately 7 percent from last year's third quarter, when the company had $110 million in revenue and a net loss of $16.7 million, or $0.44 per share, including charges of approximately $12.7 million after tax.
For the first nine months of 1998, PictureTel's revenue was $307.7 million, off 12 percent from a year earlier, and the company had a net loss of $7.2 million, or $0.19 per share, compared to a net loss of $19.6 million, or $0.52 per share, for the first nine months of last year.
''Without approximately $7.9 million of net special charges in the second quarter of 1998, PictureTel would be profitable, year to date,'' said Bruce R. Bond, PictureTel's chairman and CEO. ''The company has made great strides and we have returned to profitability for the first time in more than a year. While we still have more work ahead of us, I believe we are on the road to sustained strong financial performance, our goal since I joined the company. In particular, we have made great progress in reducing operating expenses, which, along with a favorable product mix, helped us post a net profit in the third quarter.''
Third-quarter Accomplishments
Bond noted a number of important accomplishments during the quarter. For example, PictureTel announced its intent to purchase Starlight Networks, Inc., a leading provider of streaming-media solutions for enterprise communications, and expects to complete the acquisition in November. The company also added new features and functionality to its award-winning LiveLAN(TM) IP-based personal videoconferencing system, version 3.1, which includes higher-quality video with up to 30 frames per second -- the same transmission speed as broadcast television -- at network speeds of 384 Kbps and higher. In addition, PictureTel announced that its complete line of visual collaboration solutions, including videoconferencing clients, servers, gateways and management software, are year 2000 compliant. Year 2000 compliance is a key issue for businesses around the globe as the millennium approaches.
Executive Appointments
PictureTel has added three new members to its executive management team. Gary Bond joined the company in October as group vice president of product management and engineering. He is responsible for the development, management and engineering of PictureTel's group, desktop and compact videoconferencing systems, peripherals and server products. The company's product management and engineering organizations report to him. Jim Finnegan also joined PictureTel this month as vice president of engineering, reporting to Gary Bond. And today, in a separate release, the company announced the appointment of Art Fatum as vice president and chief financial officer.
The Power of Visual Collaboration
On October 20, PictureTel demonstrated the power of visual collaboration by conducting what it believes was the world's largest series of multi-network, multi-location conferences. More than 10,000 people at more than 250 sites around the world participated in the daylong global event.
Throughout the day, a total of seven conferences were conducted among sites on six continents using PictureTel visual collaboration systems operating over a variety of networks. During the event PictureTel introduced the world's first second-generation compact videoconferencing system, SwiftSite(TM) II, which has new features, functionality and flexibility and is even easier for customers to install and operate. SwiftSite II is the successor to the original SwiftSite, which has been the world's best-selling compact videoconferencing system since its introduction in 1996.
About PictureTel
PictureTel Corporation is the world leader in developing, manufacturing and marketing a full range of visual and audio collaboration solutions. The company's systems meet customers' collaboration needs from the desktop to the boardroom. PictureTel also markets network conferencing servers and a comprehensive portfolio of enterprise-wide services. Additional PictureTel information is available on the Internet at www.picturetel.com. PictureTel collaboration products and services eliminate the barrier of distance, enabling people to be Anywhere Now(TM).
This release includes projections and other forward-looking statements about the company's revenues, earnings, and other measures of economic performance. Actual results could differ materially from forecasts due to many factors such as, for example, competitive pressures, changes in technology and the difficulty of forecasting in overseas markets and indirect channels. Additional information concerning risks that could cause actual results to differ is contained in the company's annual report on Form 10K as filed with the SEC. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
PictureTel is a registered trademark and LiveLAN, SwiftSite and Anywhere Now is a trademark of PictureTel Corporation. Other brands or products are trademarks or registered trademarks of their respective owners.
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PICTURETEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
9/27/98 9/28/97
Revenues $ 102,058 $ 109,689
Cost of revenues 56,297 66,873
Gross margin 45,761 42,816
Operating expenses:
Research and development 14,451 19,250
Selling, general and administrative 30,214 45,222
Total operating expenses 44,665 64,472
Income (loss) from operations 1,096 (21,656)
Other income, net 1,293 (1,895)
Income (loss) before taxes 2,389 (23,551)
Income tax expense (benefit) 765 (6,836)
Net income (loss) $ 1,624 $ (16,715)
Net income (loss) per common share - Basic $ 0.04 $ (0.44)
Net income (loss) per common share - Diluted $ 0.04 $ (0.44)
Weighted average number of
common shares outstanding - Basic 38,376 37,803
Weighted average number of
common shares outstanding - Diluted 38,693 37,803
Note: All periods include the impact of Multilink, Inc., which
was acquired on July 22, 1997, in a pooling of interests transaction.
PICTURETEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine Months Ended
9/27/98 9/28/97
Revenues $ 307,685 $ 349,590
Cost of revenues 175,765 196,342
Gross margin 131,920 153,248
Operating expenses:
Research and development 45,968 60,608
Selling, general and administrative 99,207 120,137
Total operating expenses 145,175 180,745
Loss from operations (13,255) (27,497)
Other income, net 2,623 (124)
Loss before taxes (10,632) (27,621)
Income tax benefit (3,402) (8,017)
Net loss $ (7,230) $ (19,604)
Net loss per common share - Basic $ (0.19) $ (0.52)
Net loss per common share - Diluted $ (0.19) $ (0.52)
Weighted average number of
common shares outstanding - Basic 38,259 37,675
Weighted average number of
common shares outstanding - Diluted 38,259 37,675
Note: All periods include the impact of Multilink, Inc., which
was acquired on July 22, 1997, in a pooling of interests transaction.
PICTURETEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
9/27/98 12/31/97
(Unaudited)
ASSETS
Current assets:
Cash and marketable securities $100,194 $ 82,011
Accounts receivable, net 92,975 108,729
Inventories 30,793 44,901
Deferred taxes, net 16,490 15,615
Other current assets 10,420 6,803
Total current assets 250,872 258,059
Deferred taxes, net 19,260 16,106
Property and equipment, net 56,909 69,103
Capitalized software costs, net 6,190 2,368
Other assets 11,507 9,415
Total assets $344,738 $355,051
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowing $ 2,594 $ 186
Accounts payable 27,165 30,169
Accrued expenses 45,143 47,758
Current portion of capital leases 2,946 3,426
Deferred revenue 22,865 23,547
Total current liabilities 100,713 105,086
Capital lease obligations 20,167 22,000
Total liabilities 120,880 127,086
Total stockholders' equity 223,858 227,965
Total liabilities and stockholders' equity $344,738 $355,051
Note: Period ended December 31, 1997 includes impact of financial
restatements on all prior periods. All periods include the
impact of Multilink, Inc., which was acquired on July 22, 1997,
in a pooling of interests transaction.
PICTURETEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
BEFORE AND AFTER SPECIAL CHARGES (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine Months Ended September 27, 1998
Without
As Special Special
Reported Charges Charges
Revenues $ 307,685 $ -- $ 307,685
Cost of revenues 175,765 (6,808) 168,957
Gross margin 131,920 (6,808) 138,728
Operating expenses:
Research and development 45,968 -- 45,968
Selling, general and
administrative 99,207 (4,817) 94,390
Total operating
expenses 145,175 (4,817) 140,358
Loss from operations (13,255) (11,625) (1,630)
Other income, net 2,623 -- 2,623
Income (loss) before taxes (10,632) (11,625) 993
Income tax expense (benefit) (3,402) (3,720) 318
Net income (loss) $ (7,230) $ (7,905) $ 675
Net income (loss)
per common share - Basic $ (0.19) $ (0.21) $ 0.02
Net income (loss)
per common share - Diluted $ (0.19) $ (0.21) $ 0.02
Weighted average number of
common shares
outstanding - Basic 38,259 38,259 38,259
Weighted average number of
common shares
outstanding - Diluted 38,259 38,259 38,546
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Contact:
PictureTel Corporation
Kevin Flanagan, 978/292-5178
flanagank@pictel.com
or
Sterling Hager, Inc.
Susanna Hinds, 617/926-6665
susanna@sterlinghager.com
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