It's about time this friggng company has turned around ,,, this 10-Q sounds very promising ,,
PairGain Reports Revenues of $283 Million for 1998
TUSTIN, Calif.--(BUSINESS WIRE)--Jan. 27, 1999--PairGain
Technologies, Inc. (Nasdaq: PAIR) today reported 1998 revenues of
$283.1 million compared to $282.3 million in 1997. Net income for 1998
was $41.0 million, or $0.55 per share on a diluted basis, excluding a
$1.5 million write-off taken in the fourth quarter to reflect the
market value of a minority investment in a privately-held
telecommunications company. Including the effect of the valuation
adjustment, net income for 1998 was $39.5 million or $0.53 per share
on a diluted basis. Net income for 1997 was $47.6 million, or $0.63
per share on a diluted basis, including merger expenses of $2.6
million related to the February 1997 acquisition of AVIDIA Systems.
Revenues for the fourth quarter ended December 31, 1998 were
$60.7 million compared to $74.5 million in the corresponding 1997
quarter. As the Company previously announced in December, the decline
in revenues for the 1998 quarter was the result of continuing price
erosion in the T1 access sector and the loss of primary supplier
status at a regional Bell operating company for its HiGain(R) T1
access products.
Net income in the fourth quarter of 1998 was $5.1 million, or
$0.07 per share on a diluted basis, excluding the $1.5 million
valuation adjustment. Including the effect of the valuation
adjustment, net income in the fourth quarter of 1998 was $3.6 million,
or $0.05 per share on a diluted basis. Net income in the fourth
quarter of 1997 was $12.7 million, or $0.17 per share on a diluted
basis.
Fourth quarter sales of the Company's PG-Flex(R) and PG-Plus(R)
products were up more than 135% over Q4 1997. Sales of these products
for 1998 were more than three times the level of sales in 1997.
Although unit shipments of the Company's T1/E1 access products
were 30% higher than the prior year quarter, revenues from those
products declined 27%, reflecting significant price competition over
the last 15 months.
Gross margins were 42.0% in Q4 1998 and 48.2% for the full year
1998 compared to 49.8% and 49.5% in the comparable 1997 periods. This
reduction was also due to the effect of T1/E1 price erosion.
Operating expenses of $20 million in Q4 1998 increased 8% over Q4
1997 expenses of $19 million but were flat compared to Q3 1998.
PairGain generated $57 million cash in 1998, ending the year with
total cash and short-term investments of $234 million. In October 1998
the Company announced a stock repurchase program, and during the
fourth quarter of 1998 the Company repurchased one million of its
outstanding common shares.
During the fourth quarter the Company's PG-Plus small subscriber
carrier product was approved by a major interexchange carrier.
Also, the Company launched its new Avidia(TM) System, a product
which provides PairGain entry into the high-speed Internet access
market. The Avidia System allows service providers to deploy multiple
ATM and IP based services from a single platform. Several trials are
underway.
The Company also achieved significant milestones in two "new
technology" sectors. PairGain recently announced that it has
successfully demonstrated interoperability with ADC Telecommunications
between the two companies' HDSL2 solutions. In addition, PairGain's
G.lite ADSL program is on track with product in development and
interoperability testing well underway.
PairGain announced the availability of a new open,
non-proprietary HDSL solution, the HiGain Wideband system 3190
(WBS-3190). The WBS-3190 is the first truly open T1 access platform,
enabling service providers to deploy T1 services using several
manufacturers' line cards, from a single managed platform.
PairGain Technologies, Inc.
PairGain is a world leader in the design, manufacture and
marketing of DSL (Digital Subscriber Line) networking systems. Service
providers and private network operators worldwide use PairGain's
products to deploy DSL-based services, such as high-speed Internet
access, remote LAN access and enterprise LAN extensions over the
existing infrastructure of copper telephone lines.
For more than ten years, PairGain has been recognized as a
technology leader and industry innovator. The Company offers the
widest range of HDSL, ADSL and SDSL-based systems available. Its
product lines include HiGain T1/E1 access systems, small subscriber
carrier systems, including PG-Flex and PG-Plus, enterprise LAN systems
and megabit access solutions, including the Avidia System, integrated
access concentrator and Megabit Modems(R). Currently, well over
1,000,000 PairGain DSL nodes are installed in over 70 countries.
Except for the historical information contained herein, matters
discussed in this announcement may constitute forward-looking
statements involving risk and uncertainties which could cause actual
results to differ materially from the Company's current expectations.
For example, although the Company believes that world telecom markets
will continue to grow, various factors including worldwide
recessionary forces could curb that expected growth. While the Company
believes that DSL technologies will continue to be employed in these
datacom markets, the Company's business sector can be significantly
affected by rapid technological change and product obsolescence.
Finally, while the Company does not believe that pricing pressures in
certain of its product sectors will continue indefinitely, the Company
operates in a fiercely competitive environment and it is impossible to
predict when those pressures will relent. A more complete description
of the economic, competitive, governmental and technological factors
affecting the Company's operations, markets, products, services and
prices may be found in the Company's periodic Form 10-Q and Form 10-K
filings with the Securities and Exchange Commission.
PairGain Technologies, Inc.
Condensed Consolidated Income Statements
(In thousands, except per share data)
Quarter Ended Twelve Months Ended
12/31/98 12/31/97 12/31/98 12/31/97
(Unaudited)
Revenues $ 60,679 $ 74,510 $283,100 $282,325
Cost of revenues 35,182 37,436 146,569 142,571
Gross margin 25,497 37,074 136,531 139,754
Research and
development 8,974 9,595 37,576 31,982
Selling and
marketing 7,905 6,199 30,098 22,808
General and
administrative 3,351 2,903 13,321 10,583
Merger expenses -- -- -- 2,642
Total operating
expenses 20,230 18,697 80,995 68,015
Operating income 5,267 18,377 55,536 71,739
Valuation adjustment to
minority investment (1,500) -- (1,500) --
Interest and other
income, net 2,762 2,048 9,029 6,204
Income before
income taxes 6,529 20,425 63,065 77,943
Provision for
income taxes 2,930 7,679 23,566 30,306
Net income $ 3,599 $ 12,746 $ 39,499 $ 47,637
Earnings per common share
Basic $ 0.05 $ 0.19 $ 0.56 $ 0.70
Diluted $ 0.05 $ 0.17 $ 0.53 $ 0.63
Earnings per common share,
excluding valuation adjustment
Basic $ 0.07 $ 0.58
Diluted $ 0.07 $ 0.55
Average shares outstanding
Basic 70,682 68,874 70,234 67,991
Diluted 74,257 75,458 74,802 75,225
PairGain Technologies, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
12/31/98 12/31/97
Assets
Cash and cash equivalents $ 131,923 $ 111,602
Short-term investments 102,011 64,983
Accounts receivable, net 20,226 35,429
Inventory, net 34,320 30,538
Other current assets 18,712 19,074
Total current assets 307,192 261,626
Total long-term assets 21,328 20,793
Total assets $ 328,520 $ 282,419
Liabilities & Stockholders' Equity
Trade accounts payable $ 6,358 $ 8,527
Accrued expenses 27,002 21,702
Accrued income taxes 16,119 16,673
Total current liabilities 49,479 46,902
Total long-term liabilities -- --
Total stockholders' equity 279,041 235,517
Total liabilities and
stockholders' equity $ 328,520 $ 282,419
CONTACT:
PairGain Technologies Inc., Tustin
Charles W. McBrayer or Kim Gower, 714/832-9922
KEYWORD: CALIFORNIA
BW0327 JAN 27,1999
13:22 PACIFIC
16:22 EASTERN |
