<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
----------------------------
OLICOM A/S
(Translation of registrant's name into English)
Nybrovej 114
DK-2800 Lyngby
Denmark
(Address of principal executive offices)
-----------------------------
[Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F
Form 20-F [X] Form 40-F [ ]
[Indicate by check mark whether the registrant by finishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 13g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ] No [X]
[If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 13g3-2(b): Not Applicable
This Form 6-K shall be incorporated by reference to the
registrant's registration statement on Form F-4 under the
Securities Act of 1933, as amended, registration
no. 333-24655.
<PAGE> 2
OLICOM A/S
FORM 6-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ITEM 1. FINANCIAL INFORMATION
Consolidated Balance Sheets as of
December 31, 1997 and September 30, 1998 3
Consolidated Statements of Income
for the three months ended September 30, 1997
and September 30, 1998 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1997 and September 30, 1998 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8
</TABLE>
ITEM 4. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
99.1 Press Release dated October 13, 1998 "Olicom 12
Reports Revenue and Earnings for Third
Quarter 1998"
99.2 Press Release dated October 13, 1998 "Olicom 14
Appoints Niels Christian Furu to Chief
Executive Officer and President"
99.3 Press Release dated November 30, 1998 "Olicom 17
Sets Strategy for Future Growth"
</TABLE>
Page 2 of 20
<PAGE> 3
OLICOM A/S
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
(UNAUDITED)
ASSETS (IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 45,591 $ 29,526
Short term investments 915 0
Accounts receivable, less allowance of
$3,326 in 1997 and $2,296 in 1998 57,967 73,452
Inventories 25,663 35,414
Deferred tax 1,925 2,564
Prepaid expenses and other 4,337 7,137
--------- ---------
Total current assets 136,398 148,093
Property and equipment 16,028 17,759
Purchased intangibles 9,172 7,670
Investment in affiliated companies 733 1,021
--------- ---------
Total assets $ 162,331 $ 174,543
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,815 $ 19,366
Accrued payroll and related expenses 4,092 4,340
Accrued product warranty expense 1,118 1,118
Other accrued expenses 8,834 15,678
Deferred revenue 2,942 2,262
Income taxes payable 45 (1,695)
--------- ---------
Total current liabilities 35,846 41,069
Minority interests 926 748
Shareholders' equity:
Common shares, DKK 0.25 nominal value
authorized and issued -
18,495 in 1997, 18,594 in 1998 712 715
Additional paid - in capital 102,633 104,301
Retained earnings 38,728 45,680
Treasury stock - 940 in 1997 and 731 in 1998 (14,988) (17,462)
Unearned compensation (1,594) (508)
Unrealized gains/losses on securities 68 0
--------- ---------
Total shareholders' equity 125,559 132,726
--------- ---------
Total liabilities and shareholders' equity $ 162,331 $ 174,543
========= =========
</TABLE>
See accompanying notes
Page 3 of 20
<PAGE> 4
OLICOM A/S
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- ------------------------
1997 1998 1997 1998
---------- ---------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net Sales $ 165,742 $ 199,864 $ 64,035 $ 63,586
Cost of sales 85,515 108,662 31,676 37,040
--------- --------- --------- ---------
Gross profit 80,227 91,202 32,359 26,546
--------- --------- --------- ---------
Operating expenses:
Sales and marketing 37,229 52,374 14,760 17,933
Research and development 12,011 16,813 5,592 5,029
General and administrative 7,896 9,840 3,073 3,869
Restructuring charges 0 4,237 0 4,237
Acquisition related expenses 40,917 0 0 0
--------- --------- --------- ---------
Total operating expenses 98,053 83,264 23,425 31,068
--------- --------- --------- ---------
Income from operations (17,826) 7,938 8,934 (4,522)
Interest income (expense) and other, net 840 1,191 (11) 41
--------- --------- --------- ---------
Income before income taxes (16,986) 9,129 8,923 (4,481)
Income taxes 7,649 2,255 2,785 (1,811)
--------- --------- --------- ---------
Income before minority interests (24,635) 6,874 6,138 (2,670)
Minority interests 195 (78) 36 (31)
--------- --------- --------- ---------
Net income ($ 24,830) $ 6,952 $ 6,102 ($ 2,639)
========= ========= ========= =========
Net income per share (diluted EPS) ($ 1.58) $ 0.37 0.34 ($ 0.15)
========= ========= ========= =========
Weighted average shares outstanding
Including common stock equivalents 15,745 18,547 18,203 17,882
========= ========= ========= =========
Net income per share (basic EPS) ($ 1.58) $ 0.39 $ 0.35 ($ 0.15)
========= ========= ========= =========
Weighted average shares outstanding 15,745 17,791 17,350 17,882
========= ========= ========= =========
</TABLE>
See accompanying notes
Page 4 of 20
<PAGE> 5
OLICOM A/S
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1997 1998
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Operating activities:
Net income $(24,830) $ 6,952
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 3,929 6,809
Equity in net income of affiliate 0 (288)
Minority interest in earnings 195 (78)
Exchange rate adjustment re. minority interest 0 (100)
Deferred income taxes (846) (639)
Purchased research and development 40,917 0
Change in operating assets and liabilities:
Accounts receivable (14,684) (15,485)
Other receivables 1,913 0
Inventories 2,292 (9,751)
Prepaid expenses (2,530) (2,800)
Accounts payable (8,492) 551
Accrued payroll and related expenses (56) 248
Accrued product warranty expense 298 0
Other accrued liabilities and deferred
revenue 11,071 6,164
Income taxes payable (1,252) (1,740)
-------- --------
Net cash provided by (used in)
operating activities 7,925 (10,157)
Investing activities:
Capital expenditures (4,611) (7,034)
Investment in affiliated company Digianswer (527) 0
Proceeds from sale of short-term investments 30,786 0
Aquisition of CrossComm net of cash acquired (39,634) 0
Short-term investments (net) 0 1,660
-------- --------
Net cash provided by (used in)
investing activites (13,986) (5,374)
Financing activities:
Borrowings (repayments) 0 0
Proceeds from warrants/options exercised 2,983 9,479
Sale (purchase) of treasury stock (4,750) (10,013)
-------- --------
Net cash used in financing activities (1,767) (534)
Effect of exchange rate changes on cash (915) 0
-------- --------
Net increase (decrease) in cash and cash equivalents (8,743) (16,065)
Cash and cash equivalents at beginning of period 41,663 45,591
-------- --------
Cash and cash equivalents at end of period $ 32,920 $ 29,526
======== ========
Interest paid during the period $ 33 $ 41
======== ========
Tax paid during the period $ 8,260 $ 2,846
======== ========
</TABLE>
See accompanying notes
<PAGE> 6
OLICOM A/S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements as of September 30, 1997 and 1998, are
unaudited. In the opinion of the management of Olicom A/S (the "Company"), such
unaudited financial statements include only such normally recurring adjustments
necessary for a fair presentation of the results of operations for the interim
periods presented and of the financial position of the Company at the date of
the interim balance sheet. The results for such interim periods are not
necessarily indicative of the results for the entire year.
It is recommended that this financial data be read in conjunction with the
audited consolidated financial statements and notes thereto included in the 1997
Annual Report.
1. EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share". The
Standard is effective for both interim and annual periods ending after
December 15, 1997. The Company has adopted SFAS 128 retroactively.
Accordingly, the Company has disclosed both Basic earnings per share and
Diluted earnings per share for all periods presented. Diluted earnings per
share are computed based on the weighted average number of common stock and
common stock equivalents outstanding during each year. Common stock
equivalents are determined under the assumption that outstanding warrants
and options are exercised. Outstanding warrants and options have been
included in earnings per share computations based on the treasury stock
method. Basic earnings per share are computed based on the weighted average
shares outstanding during each year.
2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Olicom A/S and
its majority-owned subsidiaries. The Company's investments in 20-50% owned
companies are accounted for by the equity method of accounting.
3. INVENTORIES
Inventories are stated as the lower of cost or market with cost determined
on the basis of the first in, first out method. Raw materials inventories
are sold at the Company's cost to subcontractors who assemble products to
the Company's specifications. Finished goods inventories include completed
products purchased from subcontractors. Inventories consist of:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Finished goods $ 17,704 $ 27,307
Raw materials 7,959 8,107
--------- ---------
Total inventories $ 25,663 $ 35,414
========= =========
</TABLE>
4. LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment are carried at cost. Depreciation is
charged on a straight-line basis to costs and expenses over the expected
useful lives of the assets. Equipment is depreciated over four years, and
leasehold improvements are amortized over the shorter of their estimated
lives or non-cancelable term of the lease. Leasehold improvements and
equipment consist of:
Page 6 of 20
<PAGE> 7
OLICOM A/S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
(UNAUDITED)
(in thousands)
<S> <C> <C>
Leasehold improvements $ 2,970 $ 3,389
Equipment 31,809 38,424
--------- ---------
34,779 41,813
Accumulated depreciation (18,751) (24,054)
--------- ---------
Total property and equipment $ 16,028 $ 17,759
========= =========
</TABLE>
5. REPORTING CURRENCY
Although the Company and its subsidiaries maintain their books and records
in local currencies, as required by law, the Consolidated Financial
Statements have been prepared in U.S. dollars because the U.S. dollar is the
currency of the primary economic environment in which the Company and its
subsidiaries conduct their operations.
The majority of the Company's sales are billed and collected in U.S.
dollars, and the majority of the Company's purchases of raw materials and
finished goods inventories are invoiced and paid in U.S. dollars.
6. RESEARCH AND DEVELOPMENT COSTS
Research and development costs, including costs of developing software
products, are expensed as incurred. Application of Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of Computer Software
to Be Sold, Leased, or Otherwise Marketed", has not had any material effect
on the Company's consolidated financial position or results of operations.
Page 7 of 20
<PAGE> 8
OLICOM A/S
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998.
Certain statements included in this Report include trend analysis and are
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended), including, without limitation, statements containing the words
"believes", "anticipates", "expects" and words of similar import. Such
forward-looking statements relate to future events, the future financial
performance of the Company, and involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Prospective investors should specifically consider
the various factors identified in this Report that could cause actual results to
differ, including, without limitation, those discussed in the following section,
as well as in the Company's Annual Report on Form 20-F. The Company disclaims
any obligation to update any such factors or to publicly announce the results of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.
The following discussion should be read in conjunction with the information
contained in the Company's Annual Report on Form 20-F for the fiscal year ended
December 31, 1997, and the consolidated financial statements and related notes
included elsewhere herein.
RESULTS OF OPERATIONS
Net sales decreased $.45 million, from the three months ended September 30,
1997, to the comparable period of 1998. The Company believes that the decrease
in net sales primarily was caused by increased pricing pressure particularly in
relation to network interface cards, and disappointing sales of the Company's
router products.
Gross profit decreased $5.8 million, or 18% from the three months ended
September 30, 1997, to the comparable period of 1998, and decreased as a
percentage of net sales from 50.5% to 41.7%. The decrease in gross margins was
primarily due to increased pricing pressure, particularly in the core adapter
market.
Sales and marketing expenses increased $3.1 million, or 21.5%, from the three
months ended September 30, 1997, to the comparable period of 1998, and increased
as a percentage of net sales from 23% to 28.2%. The increase in the amount of
such expenses during such period was primarily due to increased marketing
activities both in the United States and Europe, including higher costs
associated with personnel expenses and promotional expenditures, and the
inclusion of expenses associated with CrossComm's operations.
Research and development expenses decreased $563,000, or 10%, from the three
months ended September 30, 1997, to the comparable period of 1998, and decreased
as a percentage of net sales from 8.7% to 7.9%.
General and administrative expenses increased $796,000, or 25.9%, from the three
months ended September 30, 1997, to the comparable period of 1998, and increased
as a percentage of net sales from 4.7% to 6.1%.
The Company's operating loss for the third quarter of 1998 was $4.5 million,
compared to operating income of $8.9 million for the third quarter of 1997. The
result for the third quarter of 1998 includes restructuring pre-tax charges of
$4.2 million associated with the Company's previously announced consolidation of
certain functions. Of such amount, approximately $2 million represents asset
write-offs and other non-cash charges.
On November 30, 1998, the Company announced a major corporate restructuring and
strategy for future growth.
Page 8 of 20
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company had two unsecured line of credit facilities for an aggregate amount
of DKK 15.0 million ($2.2 million) and, in addition, a USD-denominated line of
credit facility for $8.5 million, of which $10.7 million was unused at September
30, 1998. Under prevailing banking practice in Denmark, these lines of credit
are terminable by the lender on 14 days prior notice (even if the Company is not
in breach of the general conditions for such facilities) and are terminable
without notice in the event of a breach thereof by the Company (subject to any
applicable cure period).
On September 30, 1998, the Company's inventory levels had increased by $9.8
million, or 38% from that recorded at December 31. 1997. This increase was
primarily due to lower sales than expected in the nine months of 1998.
Trade accounts receivable at September 30, 1998, increased 26.7% to $73.5
million, from that recorded at December 31, 1997. This increase was primarily
due to sales revenue in the first nine months of 1998 being recognized later
than normal.
BUSINESS ENVIRONMENT AND RISK FACTORS
The Company's future operating results may be affected by various trends and
factors, which the Company must successfully manage in order to achieve
favorable operating results. In addition, there are trends and factors that are
beyond the Company's control that may affect its operations.
Such trends and factors include, without limitation, the following: conditions
within the networking industry, and economic conditions generally; rapid
technological change, frequent product introductions, changes in customer needs
and evolving industry standards, which require that the Company continue to add
engineering refinements to its existing products and develop and introduce new
products which achieve market acceptance; difficulties or delays in the
development, production and marketing of products, including, without
limitation, any failure to ship new products and technologies when anticipated
and a failure of manufacturing economies to develop when planned; fluctuations
in the Company's revenues and operating results from quarter to quarter, due to
a variety of factors, including, among others, the timing of significant orders,
the timing of product introductions by the Company or its competitors,
variations in net revenues by product and distribution channel, increased price
and other competition, and decisions by distributors and OEMs as to the quantity
of the Company's products to be maintained in inventories; pricing, purchasing,
operational and promotional decisions by distributors, value added resellers and
OEMs, which could affect their supply of, or end-user demand for, the Company's
products; the absence of long-term obligations on the part of distributors and
OEMs to purchase products from the Company (and the implicit risk of any
unanticipated declines in sales to any of the Company's material customers for
competitive reasons or because of the internalization of production of products
purchased from the Company on an OEM basis); the Company's shipment of products
shortly after receipt of a purchase order, with the result that a substantial
portion of the Company's revenues for any quarter results from orders received
during such quarter, and minor shifts in the timing of purchase orders can have
a significant effect on net sales for any quarter; the Company's failure to
accurately anticipate the demand for its products, due to, among other things,
the fact that the Company's expectations of future net sales as well as its
expenditures are based largely on its own estimate of future demand and not on
firm customer orders; declines in the demand for Desktop Network Interface
cards, which accounted for approximately 53.9% of the Company's net sales during
1997; the effect that consolidation in the LAN industry may have on the
competitive position of the Company and its revenues and operating results; the
acquisition of assets and businesses and the making or incurring of any
expenditures and expenses in connection therewith, including, without
limitation, any research and development expenses relating thereto; the ability
of the Company to reduce product and other costs; the activities of any parties
with whom the Company has an agreement or understanding, including, without
limitation, issues affecting joint development projects in which the Company is
a participant; unexpected changes in regulatory requirements, tariffs and other
trade barriers, longer accounts receivable payment cycles and other risks
associated with international operations; the ability or inability of the
Company to hedge against foreign currency, exchange rates and fluctuations in
such rates; and a change in the value of the U.S. dollar (the Company's
functional currency) relative to other currencies.
In light of the foregoing factors, as well as other factors affecting the
Company's operating results, past trends should not be used by investors or
others to anticipate future trends, and prior operating performance may not
Page 9 of 20
<PAGE> 10
be an accurate indicator of future performance.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
With the exception of historical information, certain of the matters discussed
in this report and the press release included herewith are forward-looking
statements that involve risks and uncertainties, including, without limitation,
the risks and uncertainties described above under the caption "Business
Environment and Risk Factors", together with such risks and uncertainties as are
described in registration statements, reports and other documents filed by the
Company from time to time with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended. Such risks and uncertainties could cause the Company's actual
consolidated results for 1998 and beyond to differ materially from those
expressed in any forward-looking statements made by, or on behalf of, the
Company.
Page 10 of 20
<PAGE> 11
SIGNATURES
The registrant certifies that it meets all of the requirements for filing and
has duly caused this form to be signed on its behalf by the undersigned,
thereunto duly authorized.
Olicom A/S
Date: March 8, 1999 By: /s/ NIELS CHRISTIAN FURU
-----------------------------------
Niels Christian Furu
Chief Executive Officer
Page 11 of 20
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
99.1 Press Release dated October 13, 1998 "Olicom 12
Reports Revenue and Earnings for Third
Quarter 1998"
99.2 Press Release dated October 13, 1998 "Olicom 14
Appoints Niels Christian Furu to Chief
Executive Officer and President"
99.3 Press Release dated November 30, 1998 "Olicom 17
Sets Strategy for Future Growth"
</TABLE>
<PAGE> 1
EXHIBIT 99.1
NEWS RELEASE
OLICOM REPORTS REVENUE AND EARNINGS FOR THIRD QUARTER 1998
COPENHAGEN, DENMARK AND DALLAS, TEXAS, OCTOBER 13, 1998 - Olicom A/S (Nasdaq:
OLCMF), a leading global supplier of high-performance networking solutions,
today reported financial results for the third quarter ended September 30, 1998.
The Company announced preliminary third quarter 1998 financial results on
October 6, 1998.
Net sales for the third quarter of 1998 were $63.6 million compared with $64
million a year ago. Pro forma net income for the quarter was $0.1 million,
compared with net income of $6.1 million a year ago. Pro forma net income per
share was $0.01 on 17.9 million shares outstanding. This compares with earnings
per share of $0.34 on 18.2 million shares outstanding reported in the third
quarter of 1997. These results exclude restructuring pre-tax charges of $4.2
million associated with the previously announced consolidation of certain
functions. Of these $4.2 million, approximately $2 million represents asset
write-offs and other non-cash charges. Including these charges, the actual net
loss for the quarter totaled $2.6 million, corresponding to a loss of $0.15 per
share.
As announced today in a separate press release, Niels Christian Furu has been
appointed to chief executive officer and president of the Company. Lars Stig
Nielsen, founder and former chief executive officer and president, today
announced his retirement from Olicom as well as his seat on the Olicom Board of
Directors.
"While we are disappointed with our third quarter results, we are encouraged
about the fact that we shipped approximately 50,000 Token-Ring switch ports in
the quarter," said Niels Christian Furu, chief executive officer and president
of Olicom. "This is nearly double our second quarter shipments and an all-time
high for Olicom. In addition, we are pleased with the customer acceptance of our
first-to-market High Speed Token-Ring products, a market segment in which we
believe we are months ahead of our competitors," he added.
As previously announced by the Company, Olicom's third quarter results were
below earlier expectations. Although the revenue shortfall resulted primarily
from increased pricing pressure in the network interface card (NIC) market,
Olicom NIC unit shipments remained unchanged from the second quarter to the
third quarter.
Olicom expects pro forma net income for the fourth quarter of 1998 to be at an
equal or a lower level than pro forma net income for the third quarter of 1998.
In anticipation of continued pricing pressure, particularly in the NIC market,
the Company intends to reshape over the next few quarters its business model,
including the Company's overall cost structure. The Company's intention is to
announce a plan for this restructuring in the fourth quarter of 1998.
Page 12 of 20
<PAGE> 2
The Company will hold a conference call on Tuesday, October 13, at 8:30
Eastern Time (2:30 p.m. Copenhagen time), to discuss this announcement. The
number to call is (+1) 712/271 0917; the password is Olicom.
OLICOM BACKGROUND
Olicom, a leading global supplier of high-performance data networking solutions,
designs, develops, manufactures, and markets its products for large,
geographically dispersed enterprises. Olicom specializes in providing campus
network connectivity solutions, advanced technical support services and
CLEARSTEP(SM) evolution strategies for networks in transition. The Company's
products are distributed worldwide by a network of strategic partners and
resellers. More information on Olicom is available from the Company's SEC
filings or by contacting the Company directly. See Olicom news, product, and
service information on its Web site at http://www.olicom.com.
Olicom is a registered trademark. ClearStep is a service mark of Olicom A/S. All
other brand and product names are registered trademarks of their respective
holders.
Except for historical information contained herein, the matters discussed in
this news release contain forward-looking statements involving risks and
uncertainties that may cause actual results to differ materially. Among the
factors that could cause results to differ are uncertain market conditions,
overall demand levels for networking solution products, the timely development
of new products and intense competition in the networking industry and the
Company's ability to manage expenses. Further information may be found in
Olicom's periodic filings with the U. S. Securities and Exchange Commission
(SEC), including the most recent reports on Form 20-F and 6-K, which identify
important risk factors related to the Company's business that could cause actual
results to materially differ from those contained in the forward-looking
statements.
###
Contact Information:
OLICOM GROUP
Niels Christian Furu, CEO Per Larsen, President Soren Hovgaard, Director, IR
Olicom A/S Olicom, Inc. Olicom A/S
+45 45 27 00 00 (972) 907-4600 +45 45 27 00 00
[email protected]
U.S. INVESTOR RELATIONS CONTACT:
STAPLETON COMMUNICATIONS
Kristine Mozes
(650) 470-0200
[email protected]
Page 13 of 20
<PAGE> 1
EXHIBIT 99.2
NEWS RELEASE
OLICOM APPOINTS NIELS CHRISTIAN FURU TO
CHIEF EXECUTIVE OFFICER AND PRESIDENT
Olicom founder, former chief executive officer and president, Lars Stig Nielsen,
announces retirement; Company announces additional management promotions
COPENHAGEN, DENMARK AND DALLAS, TEXAS, OCTOBER 13, 1998 - Olicom
(Nasdaq: OLCMF), a leading global supplier of high-performance networking
solutions, today announced the appointment of Niels Christian Furu to chief
executive officer and president, Olicom A/S. Lars Stig Nielsen, founder, former
chief executive officer and president, today announced his retirement from
Olicom as well as his seat on the Olicom Board of Directors.
The Company also announced the promotion of Per Larsen to head of
worldwide sales, in addition to his current responsibility as executive vice
president of global marketing and president of Olicom Inc. Also announced today
is the promotion of Niels Jorgensen to executive vice president, in addition to
his position as chief technology officer.
With these changes, the Company's Group Executive Management Board is
now comprised of Niels Christian Furu, Per Larsen, Niels Jorgensen, and Boje
Rinhart, who continues as executive vice president and chief financial officer.
After founding Olicom in 1985, Mr. Nielsen took the Company public -
first in 1992 on the NASDAQ National Market - while spearheading a successful
product strategy based on price-performance leadership. Under his direction,
Olicom launched a number of market-leading products - most notably in the
Token-Ring desktop and switch markets - and enabled the Company to gain an
installed customer base of millions of end users worldwide.
"It is with regret and understanding that the Board of Directors
accepts the resignation of Mr. Nielsen," said Jan Bech, Olicom Chairman of the
Board. "As Mr. Nielsen has stated, he has decided to step down due to health
reasons and to make room for a new generation of management. It has been agreed
between the parties that Mr. Nielsen will be available as a consultant to the
Board of Directors, providing insight regarding technological and strategic
matters," he added.
In preparation for the management hand-over announced today, Mr. Furu,
formerly Olicom's chief operating officer, has over the past twelve months
assumed most of the Company's crucial operating responsibilities. "I am
extremely pleased and privileged to assume my new role with Olicom," said Niels
Christian Furu, chief executive officer and
Page 14 of 20
<PAGE> 2
president at Olicom. "While Lars has made an enormous contribution to Olicom's
growth, the Company has great challenges ahead. We are particularly focused on
leveraging the success we have earned in Token-Ring switching as we prepare to
expand our offerings in the Fast Ethernet switch market for campus LANs. I am
fully committed and determined to make Olicom a success for our shareholders,
customers and employees," he added.
Niels Christian Furu, 41, joined Olicom in May 1997 as executive vice
president and chief operating officer. Among his accomplishments at Olicom, Mr.
Furu helped the Company achieve a market-leading position in Token-Ring
switching. Prior to joining Olicom, Mr. Furu gained more than 14 years of
management and sales experience within IBM. Per Larsen, 46, joined Olicom in May
1998 as executive vice president, global marketing of the Olicom Group and
president of Olicom, Inc. Prior to joining Olicom, Mr. Larsen gained 24 years of
sales, management and marketing experience within IBM, where he had worldwide
responsibility for the marketing of IBM's highly successful ThinkPad product
line. Niels Jorgensen, 41, joined Olicom in 1988 and became chief technology
officer in 1998. He has had primary responsibility for the Company's product
development group since joining the Company.
OLICOM BACKGROUND
Olicom, a leading global supplier of high-performance data networking
solutions, designs, develops, manufactures, and markets its products for large,
geographically dispersed enterprises. Olicom specializes in providing campus
network connectivity solutions, advanced technical support services and
CLEARSTEP(SM) evolution strategies for networks in transition. The Company's
products are distributed worldwide by a network of strategic partners and
resellers. More information on Olicom is available from the Company's SEC
filings or by contacting the Company directly. See Olicom news, product, and
service information on its Web site at http://www.olicom.com.
Olicom is a registered trademark. ClearStep is a service mark of Olicom A/S. All
other brand and product names are registered trademarks of their respective
holders.
Except for historical information contained herein, the matters discussed in
this news release contain forward-looking statements involving risks and
uncertainties that may cause actual results to differ materially. Among the
factors that could cause results to differ are uncertain market conditions,
overall demand levels for networking solution products, the timely development
of new products and intense competition in the networking industry and the
Company's ability to manage expenses. Further information may be found in
Olicom's periodic filings with the U. S. Securities and Exchange Commission
(SEC), including the most recent reports on Form 20-F and 6-K, which identify
important risk factors related to the Company's business that could cause actual
results to materially differ from those contained in the forward-looking
statements.
###
Page 15 of 20
<PAGE> 3
Contact Information:
OLICOM GROUP
Niels Christian Furu, CEO Per Larsen, President Soren Hovgaard, Director, IR
Olicom A/S Olicom, Inc. Olicom A/S
+45 45 27 00 00 (972) 907-4600 +45 45 27 00 00
[email protected]
U.S. INVESTOR RELATIONS CONTACT:
STAPLETON COMMUNICATIONS
Kristine Mozes
(650) 470-0200
[email protected]
Page 16 of 20
<PAGE> 1
EXHIBIT 99.3
NEWS RELEASE
OLICOM SETS STRATEGY FOR FUTURE GROWTH
COPENHAGEN AND DALLAS, NOVEMBER 30, 1998 - Olicom A/S (Nasdaq NMS: OLCMF) today
announced its strategy for future growth. In this connection, Olicom will
undertake a major corporate restructuring in the current quarter.
Olicom's new strategy consists of the following key elements:
o Maintain leadership in Token-Ring
o Two-phased entry into niche segments of the Fast Ethernet switching market in
1999
o New `Go-to-Market' model designed to enhance productivity and increase
brand awareness
o Optimizing research and development time-to-market and focus on key
technologies
o Pursuing alliances and partnerships to exploit technologies and broaden market
reach
o Regaining profitability and preparing the Company for entry into Fast Ethernet
by streamlining costs and expenses
The Company will execute this strategy by cutting costs and expenses, including
an immediate staff reduction of approximately 20 percent, boosting Olicom's
sales productivity through customer segmentation and increased brand awareness,
and focusing on penetrating niche segments of the growing Fast Ethernet market.
The restructuring will result in estimated non-recurring pre-tax charges of
approximately $8 million in the fourth quarter of 1998. The reduction in staff
and other measures are expected to lead to annual gross savings corresponding to
approximately $15 million during 1999. Additionally, Olicom will make a channel
inventory adjustment of about $15 million in the fourth quarter.
OLICOM'S NEW STRATEGY
Olicom believes that there is a fundamental transition under way in data
networking to a more diversified environment, as illustrated by the growth of
Fast Ethernet. Olicom's strategy addresses this change by focusing the Company
on carefully selected, growth-oriented niche markets where Olicom will benefit
from the growth in mission critical, Fast Ethernet local area networks. Olicom's
reputation for product reliability and excellence in customer support is
expected to be of unique value to this segment of the market.
Olicom's approach to penetrating the Fast Ethernet market is based on a
two-step, niche marketing approach to the business. During the first stage,
Olicom will draw upon its understanding of Token-Ring networks to develop unique
products that support users in migrating their networks to Fast Ethernet. This
initiative will result in new product launches by the end of the first quarter
of 1999.
Page 17 of 20
<PAGE> 2
In the second stage, which is planned for implementation in late 1999, Olicom
will build upon its anticipated success in transitioning Token-Ring users to
Fast Ethernet by targeting medium-sized, mission critical Fast Ethernet
installations. The Company expects to benefit from the competencies derived from
its leadership position in mission critical Token-Ring networks, where
availability and service responsiveness drive the buying decision.
"We expect the medium size network market to grow substantially over the next
three to five years as a result of the networked global economy encompassing
electronic commerce and supply chain integration with the Internet," commented
Niels Christian Furu, Olicom's chief executive officer. "With our reputation for
technological quality, combined with our existing base of Token-Ring users,
Olicom will be well-positioned to succeed in this complex networking
environment."
Olicom remains a dominant player in the Token-Ring business, particularly in
switching. Although this market is expanding, accelerating pricing pressure and
a shrinking adapter market has led to decreasing margins. Recognizing this,
Olicom has decided to regain profitability by streamlining costs and expenses
and growing revenues based on the Company's proven ability to bring
price/performance leading products to market.
The Company's new `Go-to-Market' model is designed to increase brand awareness
and consideration for its products. The model identifies the Company's future
sales and marketing process by segmenting customers in the switching, adapter
card, and OEM markets. It also links the sales and marketing operations through
a uniform set of performance metrics, which are designed to significantly
enhance the productivity of Olicom's sales force.
As the Company enters the Fast Ethernet switching market, research and
development time-to-market becomes increasingly important. The Company will
shorten development cycles through parallel product development initiatives and
other process enhancements. Olicom is increasingly focusing on core technologies
within switching. The Company will continue to maintain price/performance
leadership in its Token-Ring business and will apply this expertise in Fast
Ethernet switching as well. Research and development funding will remain at
pre-restructuring levels.
In order to exploit new and emerging technologies, and to further develop the
Company's market reach in core businesses, Olicom intends to actively pursue
strategic alliances and partnerships. Pursuant to the strategy of focusing on
core businesses, Olicom plans to divest its interest in LASAT Communications
A/S, a provider of PC modems.
UPDATE ON THE FOURTH QUARTER
In light of lower than anticipated growth in the Token-Ring market during 1998,
Olicom will adjust its channel inventory by approximately $15 million. This
adjustment will bring the channel inventory into line with previous levels. As
of January 1, 1999, the Company will implement a new compensation model in sales
and marketing, further concentrating the sales staff on a `demand pull' rather
than `channel push' sales approach, thereby ensuring that channel inventory
levels going forward better reflect market demand.
Page 18 of 20
<PAGE> 3
As a consequence of the channel inventory adjustment, Olicom expects to report
sales in the range of $40 to $45 million in the fourth quarter, and a loss per
share of approximately $0.60, excluding non-recurring charges. Including these
charges, the loss per share for the fourth quarter is expected to be about
$0.90.
1999 OUTLOOK
For fiscal 1999, the Company is targeting revenue growth of about 15 percent.
Olicom aims to achieve a gross margin level in the range of 40 to 45 percent.
"Notwithstanding the continued rapid development of the Internet and the
accelerating convergence of voice, video and data, and the consequent need for
increased bandwidth and high availability, we believe that a number of factors
indicate a cautious outlook regarding the Company's near term revenue and
earnings prospects," commented Furu. "Olicom is being affected by lower growth
in the Token-Ring market due to increasing migration to Fast Ethernet from
Token-Ring in network environments. While we continue to believe that Token-Ring
has a crucial place in networks for the foreseeable future, it is also clear
that Token-Ring enterprises are likely to incorporate Fast Ethernet in parts of
their network architecture going forward. Against this backdrop, Olicom's
concerted efforts to address the needs of the Fast Ethernet user are expected to
drive revenue growth during 1999."
"Although we remain cautious about near term growth, we are convinced that
Olicom's long term opportunities are excellent," Furu continued. "The changes we
announced today will align Olicom's expense base with the realities of the
existing Token-Ring business, while positioning Olicom to prosper from the
emerging trend towards complex, multi-topological networking environments."
OLICOM BACKGROUND
Olicom, a leading global supplier of high-performance data networking solutions,
designs, develops, manufactures, and markets its products for large,
geographically dispersed enterprises. It specializes in providing campus network
connectivity solutions, advanced technical support services and CLEARSTEP(SM)
evolution strategies for networks in transition. The Company's products are
distributed worldwide by a network of strategic partners and resellers. More
information on Olicom is available from the Company's SEC filings or by
contacting the Company directly. See Olicom news, product, and service
information on its Web site at http://www.olicom.com.
Olicom is a registered trademark. ClearStep is a service mark of Olicom A/S. All
other brand and product names are registered trademarks of their respective
holders.
Except for historical information contained herein, the matters discussed in
this news release may contain forward-looking statements, involving risks and
uncertainties that may cause actual results to differ materially. Among the
factors that could cause results to differ are uncertain market conditions,
overall demand levels for networking solution products, the timely development
of new products, intense competition in the networking industry and the
Company's ability to execute strategies efficiently and effectively. Further
information may be found in Olicom's periodic filings with the US Securities and
Exchange Commission (SEC), including the most recent reports on Form 20-F and
6-K, which identify important risk factors related to the Company's business
that could cause actual results to materially differ from those contained in the
forward-looking statements.
Page 19 of 20
<PAGE> 4
###
Contact Information:
OLICOM GROUP
Niels Christian Furu, CEO Per Larsen, President Soren Hovgaard, Director,
Investor Relations
Olicom A/S Olicom, Inc. Olicom A/S
+45 (45) 27 00 00 +1 (972) 907 4600 +45 (45) 27 00 00
[email protected]
THOMSON INVESTOR RELATIONS
Americas International
Ed Owens Angus Prentice
+1 (212) 440 9078 +44 (171) 395 7100
[email protected] [email protected]
Page 20 of 20
