Newbridge Networks Announces Financial Results for Fourth Quarter and Fiscal Year 1999
KANATA, ONTARIO--Newbridge Networks Corporation today announced
financial results for the Company's fourth quarter and fiscal year
ended May 2, 1999.
Revenue for the fourth quarter was $457 million, while revenue for
the full fiscal year was $1.8 billion. Net earnings for the quarter, excluding non-recurring gains and charges, were $33
million, which represents 18 cents per share basic and fully
diluted under Canadian GAAP, or U.S. 12 cents per share basic and
diluted under U.S. GAAP. Net earnings for the full fiscal year,
excluding non-recurring items, were $162 million. This represents
91 cents per share basic and fully diluted under Canadian GAAP, or
U.S. 60cents per share basic and U.S. 59 cents per share diluted
under U.S. GAAP.
Non-recurring gains generated in the quarter were associated with net investment gains, principally related to the initial and
secondary public offering of Newbridge Affiliate Tundra Semiconductor Corporation. Non-recurring charges were associated
with continuous improvement initiatives, planned throughout the
third and fourth quarters, and implemented late in the fourth
quarter to streamline operations and improve the efficiency,
effectiveness, and ongoing cost structure of the Company. For
example, certain redundant offices were closed; other facilities
were also closed, in response to unfavorable economic conditions.
Operations in Japan have moved to an indirect sales and
distribution model through partnering with a Japanese distributor.
In R&D, the Company continues to optimize the product portfolio by discontinuing certain mature products and capping the development
of others at the current product release. The majority of this
streamlining occurred in the TDM access portfolio. More than $40
million in savings will be generated in this fiscal year from
these actions.
Including non-recurring gains and charges, the Company reported a net loss of $30 million in the fourth quarter, which represents a loss of 17cents per share basic and fully diluted under Canadian GAAP, or U.S. 11cents per share basic and diluted under U.S. GAAP.
For the full fiscal year 1999, net earnings were $179 million.
This represents $1.01 per share basic and fully diluted under
Canadian GAAP, or U.S. 67 cents per share basic and U.S. 66 cents
per share diluted under U.S. GAAP.
"I stated on May 4th, when we announced preliminary estimates of
financial results, that the fourth quarter was a disappointment,"
said Alan Lutz, president and chief operating officer, Newbridge
Networks. "However, the time for disappointment is behind us.
It's time to look and move forward. Customer response to the
Company's broadband multiservice, multi-access ATM + IP product
portfolio was -- and continues to be -- excellent, as evidenced by
the record order intake and an overall book-to-bill ratio that
exceeded 1.2 for all product lines -- also a record for the
Company. Supply line management issues prevented us from
converting this exceptionally strong customer demand into a record
sales level.
"The top management priority over the past month has been to focus
on these supply line management issues, in leading a
cross-functional team that has been conducting a thorough root
cause analysis of the issues, and developing and implementing
corrective actions. As I indicated on May 4th, the issue is
multi-dimensional and the complete solution is multi-faceted.
While it will take two quarters to fully implement the corrective
action plan, I am pleased with the progress made in less than a
month.
"We have substantially changed the process by which production is
scheduled. As well, we are actively modifying the IT tools used
by logisitics to match inventories and orders. Longer term
payback investments in test improvements and product portfolio
simplification have been initiated. The task is not completed,
but progress to date is good."
"In conclusion, the macroeconomics for the wide area network ATM +
IP market are very strong," said Terence Matthews, chairman and
chief executive officer, Newbridge Networks. "Newbridge is highly
focused on this market and is recognized as a solid leader in the
market, which is not overcrowded with competitors. The Company is
about to introduce a strong new portfolio of multiservice ATM,
broadband access, and versatile business class IP products.
Customer demand for the Company's ATM + IP solutions is at record
levels. The solution for the supply line management issue is
evident and we are making solid progress in achieving this
solution. The combination of these factors gives me confidence
that we are strongly positioned to capitalize on the opportunities
before us."
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 designs, manufactures, markets and services
networking solutions to organizations in more than 100 countries.
The Company leverages its relationship with a growing family of
Newbridge Affiliate companies and with Siemens and 3Com
Corporation to deliver seamless, end-to-end solutions. Newbridge
customers include the world's 350 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 six continents. News and
information are available at www.newbridge.com.
Newbridge and logo are registered trademarks of Newbridge Networks
Corporation.
Management will be hosting a conference call on Tuesday, June 1st
at 5:30 p.m. Eastern Daylight Time.
/T/
Real Time:
Telephone Conference Call
- Please call in 10 minutes prior to the start of the call
- North America: 1-800-553-3709
- International: 1-303-267-1002
Audio Web Cast (listen only mode)
- Newbridge web site: www.newbridge.com
Replay:
Via Telephone
- North America: 1-800-625-5288, passcode 545001
- International: 1-303-804-1855, passcode 545001
- Available until 5:00 p.m. EDT on June 4th, 1999
Audio Web Cast
- Newbridge web site: www.newbridge.com
Available until June 15th, 1999
Fiscal quarters ended Fiscal year ended
--------------------- ---------------------
May 2, April 30, May 2, April 30,
1999 1998 1999 1998
--------------------- ----------------------
Sales $457,115 $395,193 $1,790,705 $1,620,620
Cost of Sales 198,026 159,721 751,874 625,065
--------------------- ----------------------
Gross Margin 259,089 235,472 1,038,831 995,555
Expenses
Selling,
general and
administra-
tive 137,808 127,088 531,308 494,429
Research and
development 68,533 66,719 264,421 258,879
Restructuring
costs 73,570 -- 118,030 181,444
Amortization of
purchased
research and
development -- 26,381 -- 52,762
--------------------- ----------------------
Income from
operations (20,822) 15,284 125,072 8,041
Net gain on
investments 5,692 -- 188,726 47,960
Other expense (5,272) (352) (12,681) (687)
--------------------- ----------------------
Earnings before
income taxes and
non-controlling
interest (20,402) 14,932 301,117 55,314
Provision for
income taxes 8,462 12,186 121,303 73,001
Non-controlling
interest 928 (872) 653 631
--------------------- ----------------------
Net earnings
(loss) $(29,792) $ 3,618 $ 179,161 $ (18,318)
--------------------- ----------------------
--------------------- ----------------------
Earnings (loss)
per share
Cdn. GAAP -
basic $ (0.17) $ 0.02 $ 1.01 $ (0.10)
Cdn. GAAP -
fully
diluted $ (0.17) $ 0.02 $ 1.01 $ (0.10)
U.S. GAAP -
basic-US$ $ (0.11) $ 0.12 $ 0.67 $ (0.07)
U.S. GAAP -
diluted-US$ $ (0.11) $ 0.12 $ 0.66 $ (0.07)
Weighted average
number of shares
Basic - Cdn
GAAP and
U.S. GAAP 180,105 175,598 177,630 174,617
Fully diluted
- Cdn GAAP 180,105 175,598 177,630 174,617
Diluted - U.S.
GAAP 180,105 177,052 180,376 174,617
Newbridge Networks Corporation
Reconciliation of Canadian to US GAAP Net Earnings and Earnings Per Share
(Canadian dollars in thousands, except per share data)
Fiscal quarters ended Fiscal year ended
--------------------- ---------------------
May 2, April 30, May 2, April 30,
1999 1998 1999 1998
--------------------- ----------------------
Net earnings
(loss),
Canadian GAAP $(29,792) $ 3,618 $179,161 $(18,318)
Write-off of
purchased R&D
in process upon
acquisition of
RadNet -- -- -- (52,762)
Add back
amortization of
RadNet purchased
R&D in process
(Cdn. GAAP) -- 26,381 -- 52,762
--------------------- ----------------------
Net earnings
(loss), U.S.
GAAP $(29,792) $ 29,999 $179,161 $(18,318)
--------------------- ----------------------
--------------------- ----------------------
Earnings (loss)
per share
U.S. GAAP -
basic - US$ $ (0.11) $ 0.12 $ 0.67 $ (0.07)
U.S. GAAP -
diluted -
US$ $ (0.11) $ 0.12 $ 0.66 $ (0.07)
Weighted average number of shares
U.S. GAAP -
basic 180,105 175,598 177,630 174,617
U.S. GAAP -
diluted 180,105 177,052 180,376 174,617
Newbridge Networks Corporation
Condensed Consolidated Balance Sheets
as at May 2, 1999 and April 30, 1998
(Canadian dollars in thousands)
May 2, April 30,
1999 1998
---------- ----------
Cash and cash equivalents $ 879,694 $ 499,278
Accounts receivable 472,811 428,527
Inventory 210,286 196,285
Property, plant and equipment 455,483 450,735
Goodwill 40,022 72,719
Other assets 412,328 319,281
---------- ----------
$2,470,624 $1,966,825
---------- ----------
---------- ----------
Accounts payable and accruals $ 391,991 $ 245,811
Income taxes 16,853 5,851
Long term obligations 386,890 387,447
Future tax obligations 123,088 71,197
Non-controlling interest 22,583 22,899
---------- ----------
941,405 733,205
Shareholders' equity 1,529,219 1,233,620
---------- ----------
$2,470,624 $1,966,825
Pro forma Condensed and Consolidated Statements of Earnings
Excluding Restructuring Costs, Net Gain on Investments, and
Amortization of Purchased Research and Development
(Canadian dollars in thousands, except per share data)
Fiscal quarters ended Fiscal year ended
--------------------- ---------------------
May 2, April 30, May 2, April 30,
1999 1998 1999 1998
--------------------- ----------------------
Sales $457,115 $395,193 $1,790,705 $1,620,620
Cost of Sales 198,026 159,721 751,874 625,065
--------------------- ----------------------
Gross Margin 259,089 235,472 1,038,831 995,555
Expenses
Selling,
general and
administra-
tive 137,808 124,446 531,308 491,787
Research and
development 68,533 66,719 264,421 258,879
--------------------- ----------------------
Income from
operations 52,748 44,307 243,102 244,889
Other expense (5,272) (352) (12,681) (687)
--------------------- ----------------------
Earnings before
income taxes
and non-controlling
interest 47,476 43,955 230,421 244,202
Provision for
income taxes 14,006 12,966 67,974 72,234
Non-controlling
interest 928 (872) 653 631
--------------------- ----------------------
Net earnings $ 32,542 $ 31,861 $ 161,794 $171,337
--------------------- ----------------------
--------------------- ----------------------
Earnings per
share
Cdn GAAP -
basic $ 0.18 $ 0.18 $ 0.91 $ 0.98
Cdn GAAP -
fully
diluted $ 0.18 $ 0.18 $ 0.91 $ 0.98
U.S. GAAP -
basic - US$ $ 0.12 $ 0.13 $ 0.60 $ 0.70
U.S. GAAP -
diluted -
US$ $ 0.12 $ 0.13 $ 0.59 $ 0.69
/T/
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FOR FURTHER INFORMATION PLEASE CONTACT:
Newbridge Networks Corporation
John Lawlor
(613) 591-3600
E-mail: jlawlor@newbridge.com
Website: www.newbridge.com |
