SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): October 16, 1997
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NextLevel Systems, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 001-12925 36-4134221
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(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
8770 West Bryn Mawr Avenue, Chicago, Illinois 60631
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(Address of principal executive offices) (Zip Code)
(773)-695-1000
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(Registrant's telephone number, including area code)
<PAGE>
Item 5 Other Events
The Registrant hereby incorporates by reference the description of the matters
set forth in its press release dated October 16, 1997 (such press release being
Exhibit 99 attached hereto).
Item 7 Financial Statements and Exhibits
(c) Exhibits
99 Registrant's press release dated October 16, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NextLevel Systems, Inc.
By: /s/ Keith A. Zar October 16, 1997
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Keith A. Zar
Vice President and General Counsel
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EXHIBIT INDEX
Sequential
Page
No. Exhibits No.
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99 The Registrant's press release dated 4
October 16, 1997
EXHIBIT 99
For Immediate Release
Media Contact:
Dick Badler
VP, Corp. Comm.
773-695-1030
[email protected]
Investor Contacts:
Mark Borman
VP, Investor Relations
773-695-1150
[email protected]
Debra O'Shea
Mgr., Investor Relations
773-695-1154
[email protected]
NEXTLEVEL SYSTEMS ANNOUNCES PLAN TO IMPROVE FINANCIAL
PERFORMANCE; WILL EXPLORE ALTERNATIVES FOR TELEPHONY
BUSINESS, RAISE MARGINS IN SATELLITE TV
Richard Friedland Resigns as Chairman and CEO; Board Names Ed Breen
President and Acting CEO
Company Expects Results For Rest Of 1997 And 1998 To Be Below
Expectations
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CHICAGO, (October 16, 1997) - The Board of Directors of NextLevel Systems,
Inc. (NYSE: NLV) today announced it is developing a multifaceted plan to improve
the Company's financial performance and achieve the full strategic potential of
its world-class communications technologies and market leadership positions.
The Board has accepted the resignation of Richard S. Friedland as Chairman
and Chief Executive Officer, and has named Edward D. Breen President and Acting
CEO. Breen is currently President of NextLevel's Broadband Networks Group, which
accounts for approximately 70% of the Company's revenue and $200 million of its
operating income.
The Board said it will move aggressively to implement a detailed action
plan, which will be announced within 60 days. Lazard Freres & Co. LLC is
advising the Company in this process. While the plan has not been completed and
is subject to change, its three principal elements are expected to be as
follows:
The Company intends to promptly explore and evaluate alternatives for its
advanced telephony products subsidiary, Next Level Communications (NLC),
of Rohnert Park, Calif. NLC produces next-generation broadband digital
loop carrier networks and xDSL products, and has won significant orders
from U S West and Bell Atlantic. NLC is investing heavily in research and
development of its technology and, as a result, will produce operating
losses of over $50 million in 1997.
The Company will streamline the cost structure of its Satellite Data
Networks Group, headquartered in San Diego. At the same time, it will
support the division's key engineering developments and share those
technologies more widely across the Company. In 1997, the Satellite Data
Networks Group is expected to generate over $500 million of revenue, but
will produce a small loss on an operating basis.
The Company will actively employ its Board to capitalize on the strategic
opportunities and alliances made possible by NextLevel's large installed
base of cable television network equipment and the increasing importance
of these networks for low-cost home computing and high-speed Internet
access. The members of the Board hold various senior positions in the
world of communications, technology and finance.
The Company now expects revenues and operating earnings for the rest of 1997
and 1998 to be below analyst expectations. For the third quarter, earnings per
share are expected to approximate consensus expectations of $0.15 per share, but
with lower than anticipated operating income and revenues. For the fourth
quarter, EPS is now expected to be in the range of $0.09-$0.11, before any
one-time restructuring charges. A one-time restructuring charge is expected to
be taken in the fourth quarter in connection with the action plan. For 1998, EPS
is now expected to be in the range of
$0.45-$0.50 per share before the benefit of corrective actions versus consensus
estimates of $0.75 per share.
NextLevel is the world leader in providing equipment and services for advanced
broadband networks. The company holds a 65% share of the analog cable television
set-top market around the world. It has the largest installed base in the cable
TV industry and is the leading supplier to 13 of the top 15 MSOs. In 1997,
NextLevel also successfully delivered 500,000 digital set-top terminals for
future deployments and built digital cable TV infrastructure that passes 16
million homes. NextLevel was the first company to enter the digital set-top
market and, to date, is the only company that has delivered digital set-top
equipment in such quantities. NextLevel also controls important video encryption
and access control technology.
Next Level Communications (NLC), a wholly owned subsidiary of NextLevel Systems,
builds full-service digital loop carrier, broadband access and management
systems and customer premises equipment for the telecommunications industry. NLC
recently announced the signing of a contract with U S West Communications to
deploy NLC's NLevel3 Switched Digital Access (SDA) System and related products
for a minimum of 450,000 broadband xDSL access lines and residential gateways.
NLC also has begun to realize revenue from its contract with Bell Atlantic to
supply its NLevel3 SDA System for 1,000,000 lines of telephone service.
Ed Breen, 41, has been President of NextLevel Systems' Broadband Networks Group
since February 1996. He was previously Executive Vice President, Terrestrial
Systems, of predecessor company General Instrument Corporation from October 1994
to January 1996 and Senior Vice President of Sales from June 1988 to October
1994. Breen joined General Instrument in 1978, and rose through a number of
increasingly important domestic and international operating positions.
The information set forth above includes "forward-looking" information and,
accordingly, the cautionary statements contained in Exhibit 99, under the
caption "Forward-Looking Information" in NextLevel Systems' quarterly report on
Form 10-Q, for the three months ended June 30, 1997, are incorporated herein by
reference. NextLevel Systems' actual results could differ materially from the
"forward-looking" information in this press release.
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