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[LOGO]
MADGE NETWORKS N.V.
Transpolis Schiphol Airport
Polaris Avenue 23
2132 JH Hoofddorp
The Netherlands
Main: (+31) (0) 23 5685526
Fax: (+31) (0) 23 5685528
MADGE NETWORKS N.V.
REPORTS FIRST QUARTER 2000 RESULTS
- MADGE.WEB CUSTOMER BASE INCREASES 20 PER CENT
- MADGE.WEB LAUNCHES NEW YORK CITY DATA CENTER AS GATEWAY TO EUROPE
- MADGE.CONNECT ANNOUNCES GIGABIT NETWORKING FOR TOKEN RING
- MADGE.CONNECT FORMS STRATEGIC ALLIANCE TO DELIVER GLOBAL SUPPORT, SERVICE
AND TRAINING FOR TOKEN RING CUSTOMERS
Amsterdam, The Netherlands (April 26, 2000) -- Madge Networks N.V. (NASDAQ NM:
MADGF), a global network solutions provider, today announced results for its
first fiscal quarter ended March 31, 2000.1 Madge Networks N.V. is the parent
company of Madge.web Holdings B.V. and Madge.connect Holdings B.V.
Revenues for the first quarter were US$51.5 million, a sequential decrease of 1
per cent over fourth quarter 1999 revenues of $51.8 million and a 6 per cent
increase over revenues of $48.8 million for the first quarter of 1999. The net
loss for the quarter was $15.1 million, or $(0.36) per share, compared to a net
loss of $5.3 million, or $(0.13) per share, for the fourth quarter of 1999.
Excluding special gains the comparable net loss for the fourth quarter of 1999
was $14.0 million, or $(0.35) per share. The net loss for the first quarter of
1999 was $8.5 million, or $(0.20).
During the quarter, Madge Networks N.V. raised $29 million through the issuance
of common stock under a Form F-3 primarily to fund continued investment in
Madge.web. The Company intends to raise further funds during the course of 2000
to support continued investment in Madge.web.
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MADGE.WEB
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS Three months ended(1)
(Unaudited, in thousands) Mar. 31, Dec. 31,
2000 1999
-------- --------
<S> <C> <C>
Sales $ 7,868 $ 7,788
Gross profit (loss) $ (6,854) $ (4,871)
EBITDA (loss) $(14,234) $(10,579)
</TABLE>
QUARTERLY HIGHLIGHTS AND RECENT DEVELOPMENTS
Madge.web is a Europe-based provider of rich content network and application
services for finance and media companies. Madge.web revenues for the first
quarter were $7.9 million, compared with $7.8 million for the fourth quarter of
1999. EBITDA (earnings before interest, taxes, depreciation, amortization and
other non-cash charges) was $(14.2) million in the quarter as Madge.web
continued to add staff and invest in the growth of its network infrastructure.
During the first quarter Madge.web expanded its customer base to 371, an
increase of 20 per cent over the previous quarter. In February, Madge.web
launched its New York City data and network operations center, which serves
domestic customers and is a gateway to Madge.web's pan-European operation. The
center connects to Madge.web's private Overnet, to provide American as well as
European customers access to a comprehensive range of managed services including
virtual private networking, hosting and storage, encoding, streaming media
distribution and advertising delivery. To accelerate penetration of the European
market, Peter Miller, former director of the Financial Services Division of EDS
UK, was appointed vice president Sales for Europe.
"This has been a very positive quarter for Madge.web," said Robert Madge, CEO,
Madge.web. "We are now beginning to see the fruits of our labor and our
investment over the last few quarters, as orders for our advanced IP-based
network and application services doubled sequentially to $1.8 million, against a
very healthy total order flow of $8.8 million up from a good performance in the
fourth quarter of $6.1 million.
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[FN]
(1) Gross profit for the fourth quarter is shown on a comparable basis
</FN>
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"Now that we have our key foundations in place, we are continuing to roll out
new services, and we are on track for the launch of our Madge Broadcast Network,
powered by RealNetworks, during the second quarter. Our emphasis during 2000 is
on further order momentum, an aggressive further deployment of sales and support
personnel across Europe, and a broadening of the range of our rich content
application services."
MADGE.CONNECT
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS Three months ended
(Unaudited, in thousands) Mar. 31, Dec. 31,
2000 1999
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<S> <C> <C>
Sales $ 43,642 $ 44,016
Gross profit $ 22,301 $ 23,162
EBITDA $ 4,903 $ 3,233
</TABLE>
QUARTERLY HIGHLIGHTS AND RECENT DEVELOPMENTS
Madge.connect is a global supplier of advanced networking products including
Token Ring solutions, ISDN switching and IP-based video networking for large
enterprises. Madge.connect revenues for the first quarter were $43.6 million,
compared with $44.0 million for the fourth quarter of 1999. EBITDA was $4.9
million in the quarter.
During the quarter Madge.connect announced its initiative to address the Gigabit
IP needs of Token Ring customers with the Smart GigIntegrator(TM), a high
performance Gigabit backbone-class switch, and 100Mbps workgroup switching.
These products, planned for availability in the second half of 2000, are part of
Madge.connect's commitment to delivering state of the art Gigabit solutions for
all Token Ring users. Madge.connect and VITAL Network Services LLC, a
wholly-owned subsidiary of General DataComm Inc., announced in April that VITAL
will become Madge.connect's strategic support provider and will deliver a
multi-tiered support and training solution for Madge.connect customers.
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As part of its long-term business diversification strategy, Madge.connect has
initiated some advanced research and development activities with the aim of
bringing to market within 12 months a series of Internet-centric connectivity
products.
"Overall I am pleased with the Token Ring revenue performance in the quarter and
the continued quarter on quarter improvement in EBITDA, reflecting the success
of our cost reduction activity. Our Smart GigIntegrator announcement in the
first quarter gives us the industry's most complete product roadmap, maximizing
customers' investment in Token Ring while providing IP networking at Gigabit
speeds," said Michael Wilson, CEO, Madge.connect.
Ends
Investors will have the opportunity to listen to management's discussion of its
first quarter 2000 results in a conference call to be held Thursday, April 27th
at 8:30 a.m. (Eastern Time) over the Internet through Vcall at www.vcall.com. To
listen to the live call please go to the web site at least fifteen minutes early
to register, download, and install any necessary audio software. A link to the
Vcall will also be available from our website at www.madge.com. For those who
cannot listen to the live broadcast, a replay will be available shortly
thereafter by dialing 1-800-633-8284 (858-812-6440 for international callers),
reservation #14876769, or by visiting our website at www.madge.com.
ABOUT MADGE NETWORKS N.V.
Founded in 1986, Madge Networks N.V. (NASDAQ NM: MADGF) is a global managed
network services and product solutions provider specializing in mission-critical
enterprise needs. The company's goal is to optimize the implementation of
enterprises' voice, video and data networks with the ultimate aim of converging
all networking needs on Internet Protocol (IP) solutions. The company's main
business centers are located in Wexham Springs, United Kingdom, New York City
and Dallas, Texas. Madge Networks N.V., a company organized under the laws of
the Netherlands, is the parent company of Madge.web Holdings B.V. and
Madge.connect Holdings B.V. Information about Madge's complete range of products
and services can be accessed on the World Wide Web at www.madge.com
ABOUT MADGE.WEB
Madge.web is a Europe-based provider of rich content network and application
services for finance and media companies. These services are delivered via the
company's Overnet, by-passing the public Internet to more than 30 countries
around the world. Rich content services from Madge.web - architected to handle
on-line video, audio, images and interactive media - include virtual private
networking, managed hosting, storage, and marketing services, and will soon
include workflow management, encoding services and streaming media distribution.
ABOUT MADGE.CONNECT
Madge.connect is a global supplier of advanced networking product solutions to
large enterprises. As the market leader in Token Ring, Madge.connect is
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pioneering next generation networking solutions which enable the painless
deployment of 100Mbps and Gigabit speed IP-based applications within existing
corporate networks while protecting customers' investments in Token Ring and
ATM. As part of this strategy, Madge.connect provides a range of ISDN switching
and IP-based video networking products for real-time multimedia communications
across the network.
PRIVATE SECURITIES LITIGATION REFORM ACT STATEMENT
Investors should take note that certain statements in this press release are
forward-looking and may not give full weight to all of the potential risks
(e.g., ability to raise additional funds, changing technologies, competition,
planned service and product launches, management of change and changed resource
allocation resulting from these and other factors). Forward-looking statements
in this press release include statements that refer to the company's plans to
raise further funds, how those funds will be raised, the planned launch of our
Madge Broadcast Network powered by RealNetworks, our planned emphasis on order
momentum and aggressive further deployment of sales and support personnel across
Europe, our intention to broaden our range of rich content application services
including workflow management, encoding services and streaming media
distribution, the ability of our future planned products to address the Gigabit
IP needs of Token Ring customers, to allow customers to upgrade their systems
painlessly and the planned release dates for these products, our aim to bring to
market within 12 months a series of Internet-centric connectivity products and
other statements which are not completely historical. These statements may
differ materially from actual future actions, events or results. For more
information on risks, please refer to Madge's recent SEC filings.
Madge, the Madge logo, Madge.web, Madge.connect and Smart GigIntegrator are
trademarks, and in some jurisdictions may be registered trademarks of Madge
Networks or its affiliated companies.
Contact: Madge Networks, Wexham Springs, United Kingdom
Internet: www.madge.com
Company Contact:
Chris Bradley, Chief Financial Officer
MADGE NETWORKS N.V.
Tel: (+44) 1753 661172
Investor Relations Contact:
Lisa Ellis, Director of Investor & Public Relations
MADGE NETWORKS N.V.
Tel: 212-709-1007
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Madge Networks N.V.
Condensed Consolidated Balance Sheets(2)
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
MAR. 31, DEC. 31,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents, and short-term investments(3) $ 28,419 $ 29,971
Accounts receivable, net 41,363 38,655
Inventories 13,335 16,160
Prepaid expenses and other current assets 17,808 10,802
--------- ---------
Total current assets 100,925 95,588
Investments, property and equipment, net 45,045 44,834
Intangible assets, net 48,935 52,076
--------- ---------
Total assets $ 194,905 $ 192,498
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 81,216 $ 92,639
Income taxes payable 15,779 16,715
Short-term borrowings 4,627 7,107
Short-term obligations 2,723 3,298
--------- ---------
Total current liabilities 104,345 119,759
Long-term obligations 2,956 3,563
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Total liabilities 107,301 123,322
Shareholders' equity 87,604 69,176
--------- ---------
Total liabilities and shareholders' equity $ 194,905 $ 192,498
========= =========
</TABLE>
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[FN]
(2) The condensed consolidated results include Madge.web, Madge.connect and
Madge Group Companies.
(3) Cash includes a balance of $9.2M at March 31, 2000 and $10.5M at December
31, 1999 that has restricted use.
</FN>
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Madge Networks N.V.
Condensed Consolidated Statements of Operations(4)
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
Madge.web sales $ 7,868 $ 4,903
Madge.connect sales 43,642 43,911
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Net sales 51,510 48,814
Cost of sales 36,063 27,900
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Gross profit 15,447 20,914
Operating expenses:
Sales & marketing 19,103 17,210
Research & development 5,682 9,375
General and administrative 5,399 3,868
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Total operating expenses 30,184 30,453
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Loss from operations (14,737) (9,539)
Net interest (expense) income (115) 1,062
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Loss before tax (14,852) (8,477)
Income tax provision 240 --
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Net Loss $ (15,092) $ (8,477)
========= =========
Earnings per share
Basic $ (0.36) $ (0.20)
Diluted $ (0.36) $ (0.20)
Weighted Average Shares Outstanding
Basic 41,993 41,400
Diluted 41,993 41,400
</TABLE>
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[FN]
(4) The condensed consolidated results include Madge.web, Madge.connect and
Madge Group Companies.
</FN>
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