10
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
l934
Date of Report (Date of earliest event reported) November 4, 1996
U.S. Robotics Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-25630 36-3994412
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) No.) Identification
No.)
8100 North McCormick Boulevard
Skokie, Illinois 60076
(Address of principal executive offices) (Zip Code)
(847) 982-5010
(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events
On November 4, 1996, the Registrant issued a press release announcing
its results of operations for its fiscal year, which ended September 29,
1996. The press release is attached as an exhibit.
Item 7. Financial Statements, Pro Forma Financial Statements and
Exhibits
(c) Exhibits.
99 Press Release dated November 4, 1996.
SIGNATURES
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.
U.S. Robotics Corporation
Date: November 4, 1996 BY: /s/ Mark Remissong
Mark Remissong
Vice President and Chief Financial Officer
Contact: Karen J. Novak
(Media Only)
847-982-5244
C. David Hall
(Investor Relations)
847-982-5162
U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 1996;
REVENUES UP 122%, EARNINGS UP 158%
--Fourth Quarter Revenues a Record $611 Million--
--Fourth Quarter Earnings, Before a Non-Recurring Charge, Were $67.5
Million ($.71 per Share); Up 97% vs. Fourth Quarter `95--
SKOKIE, Illinois -- November 4, 1996 -- U. S. Robotics Corporation
(NASDAQ:USRX) today reported record revenues of $1,977.5 million and
record earnings of $224.0 million (excluding a non-recurring charge) for
its fiscal year ended September 29, 1996.
For the fourth quarter, revenues were a record $611.4 million. Revenues
for the fourth quarter increased $318.0 million, or 108% over the
$293.4 million for the fourth quarter ended October 1, 1995, and
increased 11.8% over the $546.8 million reported for the third quarter
ended June 30, 1996.
Net earnings for the fourth quarter reflected a non-recurring charge of
$54.0 million incurred in connection with the acquisition of Scorpio
Communications, Ltd. Excluding the non-recurring charge, net earnings
for the fourth quarter of fiscal 1996 were a record $67.5 million ($.71
per share on 95.7 million shares), up 97% over the $34.2 million
posted for the fourth quarter of fiscal 1995. Including the non-
recurring charge, net earnings and earnings per share for the fourth
quarter were $13.5 million and $.14, respectively.
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 1996;
REVENUES UP 122%, EARNINGS UP 158%
Revenues for the year were $1,977.5 million, up 122% from $889.3 million
for fiscal 1995. Fiscal 1996 revenues from international operations,
including Canada, were $517.2 million, or 26% of total sales, an
increase of $286.8 million or 124% over 1995.
Excluding non-recurring charges in both 1996 and 1995, net earnings for
1996 were $224.0 million ($2.36 per share on 94.9 million weighted
average shares outstanding), an increase of 151% over the corresponding
1995 total of $89.2 million ($1.05 per share on 85.3 million shares).
Including the non-recurring charges, net income for the year climbed
158% to $170.0 million, or $1.79 per share,
The company attributed the growth in sales to continuing strong demand
for all of its product lines in all of the markets it serves, noting
that increasing unit sales more than offset price reductions effected
during the course of the year. For example, unit sales of the company's
desktop and PC card products in the fourth quarter were up over 97%
compared with the corresponding period in 1995, while average selling
prices fell slightly more than 6% from the third quarter to the fourth
quarter of 1996, primarily because of the retail price reduction for
Sportster desktop products which the company implemented at the
beginning of July.
"Our sales growth is driven by growing worldwide demand for access to
information over wide area networks and especially the Internet," said
Casey Cowell, U.S. Robotics Chairman, CEO and President. "Demand is
strong across the board, but the factors contributing to our growth are
especially evident in the success of our Total Control network systems
products that are being deployed by most of the world's leading Internet
and on-line service providers."
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 1996;
REVENUES UP 122%, EARNINGS UP 158%
The company reported that sales of its Total Control wide area network
hub product line, first introduced in 1993, totaled approximately $400
million for fiscal 1996.
Although not disclosing quarterly sales figures for all its network
systems products, the company noted that the percentage of total
revenues for the 1996 fourth quarter attributable to sales of these
products was up substantially from the third quarter. Compared with
fiscal 1995, sales of all network systems products were up 189% while
revenues from the sale of desktop and PC card products were up 106%.
Gross margins for fiscal 1996 were 41.9%, up from the 41.4% recorded for
fiscal 1995. The increase was due principally to a higher percentage of
total revenues being attributable to sales of higher-margin systems
products, partially offset by lower margins attributable to certain PC
card product lines.
Gross margins for the fourth quarter were 41.9%, unchanged from the
third quarter ended in June. The effect of higher sales of systems
products as a percent of total revenues was offset by reduced gross
margins in the desktop and PC card businesses, reflecting competitive
pricing pressures and price reductions related to disposition of
remaining stocks of 14.4 Kbps products.
Total operating expenses, excluding the non-recurring charge, for the
fourth quarter were $148.4 million or 24% of sales. As a percentage of
sales, these expenses increased slightly from 23% in the preceding
quarter. The primary reason for the increase was higher selling and
marketing expenses. The company made substantial investments in
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 1996;
REVENUES UP 122%, EARNINGS UP 158%
building its sales force both domestically and internationally, during
the September quarter, increasing its total sales force worldwide by
approximately 20%. U.S. Robotics views these additions as investments
that will enable it to take advantage of the market opportunities for
its products, including the recently announced x2 technology (56Kbps).
x2 is a key breakthrough in modem technology that enables Internet and
other network connections at speeds nearly twice as fast as those
currently available over standard telephone lines.
The increased commitment of resources to international sales
capabilities relate to the company's entire business but are
particularly critical to expanding international sales of its network
systems products.
Of particular note in the fourth quarter was the acquisition of Scorpio
Communications Ltd., which enabled U.S. Robotics to gain state of the
art capability in ATM (asynchronous transfer mode) switching. As
previously announced, the Scorpio transaction was accounted for as a
purchase. In accordance with the applicable accounting rules, $54.0
million of the total purchase price representing "in process
technology" was expensed upon closing of the transaction.
Outlook
The following statements include forward-looking statements and actual
results may differ materially.
Reviewing the fourth quarter and year-end results, John McCartney, U.S.
Robotics executive vice president and chief operating officer, said that
the company expects demand for all of its product lines to continue to
grow substantially in the 1997 fiscal
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 1996;
REVENUES UP 122%, EARNINGS UP 158%
year as world-wide requirements increase for highly integrated, cost-
effective, end-to-end information access solutions. The company
anticipates that its sales of network systems products will continue
over time to grow at a more rapid rate than sales of its PC related
products (desktop and PC Card products). Continued sales growth is
expected to be driven by increases in unit sales of existing products
and by new product introductions, which will be offset in part by
anticipated future reductions in the average selling prices of existing
products.
Mr. McCartney also emphasized that the company would continue to invest
in new technologies such as x2 (56Kbps), wireless, switching and
broadband access, including xDSL, during the coming year. "We feel it
is essential to the ongoing health of the company to continue our
investments in technology development. The markets we serve will
continue to grow at rapid rates during the next several years. The
winners in these markets will be the companies that can offer customers
fully integrated end-to-end solutions. We intend to position ourselves
to take advantage of the huge opportunities in the markets we serve."
U.S. Robotics also expects to continue its historical strategy of
building share in the markets which it serves. The company intends to
continue to build its sales force, with particular focus on expanding
sales of its network systems products domestically and internationally.
Depending upon the growth in revenues achieved, these investments,
coupled with expenses related to the launch of the company's new x2
products, may cause selling and marketing expenses in the first half of
fiscal 1997 to represent a higher percentage of total sales than in
recent quarters.
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 1996;
REVENUES UP 122%, EARNINGS UP 158%
The company's ability to achieve its revenue and profitability
objectives in fiscal 1997 will depend on many factors beyond the
company's control. These include the timing and market acceptance of
x2 and other new products and features announced and introduced by the
company and its competitors, and the extent to which the company is
successful in implementing its ongoing strategy of continuously
improving the performance/cost characteristics of its products through
improved designs and manufacturing efficiencies. Other factors include
rapid changes in technologies and standards relating to information
access and telecommunications.
The foregoing forward-looking statements involve a number of risks and
uncertainties. In addition to the factors discussed above, among the
other factors that could cause actual results to differ materially are
the following: changes in business conditions and growth trends
affecting the company's products and markets, the personal computer and
telecommunications industries and the economy in general; continuing
availability of key components and technologies at competitive prices; a
variety of other competitive factors such as price reductions by the
company and its competitors and resulting effects on market shares;
changes in consumer and business purchasing patterns; the company's
merger and acquisition activities, including its success in integrating
businesses it has acquired and the amounts of any non-recurring charges
related to such activities; and other factors listed from time to time
in documents filed by the company with the Securities and Exchange
Commission.
U.S. Robotics is one of the world's leading suppliers of products and
systems that provide access to information. The company designs,
manufactures, markets and supports remote
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 1996;
REVENUES UP 122%, EARNINGS UP 158%
access servers, enterprise communications systems, desktop/mobile client
products and modems and telephony products that connect computers and
other equipment over analog, digital and switched cellular networks,
enabling users to gain access to, manage and share data, fax and voice
information. Its customers include Internet service providers, regional
Bell operating companies, inter-exchange carriers and a wide range of
other large and small businesses, institutions and individuals.
U.S. Robotics Corporation And Subsidiaries
Consolidated Statement of Earnings
(In thousands, except earnings per share data)
(UNAUDITED)
Quarter Ended 9/29/96
----------------------------
Including Excluding
In Process In Process
Technology Technology Quarter
Charge Charge % Ended
--------- ----------------- 10/1/95 %
-----------------
Net sales $ 611,410 $ 611,410 100.0 $ 293,397 100.0
Cost of goods sold 355,238 355,238 58.1 170,365 58.1
--------- --------- ----------
Gross profit 256,172 256,172 41.9 123,032 41.9
Operating expenses
Selling & marketing 92,706 92,706 15.2 40,755 13.9
General &
administrative 26,768 26,768 4.4 13,844 4.7
Research & development
28,945 28,945 4.7 17,416 5.9
Purchased in pro-cess
technology 54,000 - - - -
--------- --------- ----------
202,419 148,419 24.3 72,015 24.5
--------- --------- ----------
Operating profit 53,753 107,753 17.6 51,017 17.4
Interest income 1,155 1,155 0.2 3,307 1.1
Interest expense 1,663 1,663 0.3 1,173 0.4
Other income (expense)
(147) (147) 0.0 91 -
-------- ---------- ----------
Earnings before income
taxes 53,098 107,098 17.5 53,242 18.1
Income tax expense 39,626 39,626 6.5 19,023 6.4
--------- ---------- ----------
Net earnings $ 13,472 $ 67,472 11.0 $ 34,219 11.7
========= ========== ----------
Net earnings per share
$ 0.14 $ 0.71 $ 0.37
========= ========== ==========
Shares used in per
share calculation 95,681 95,681 91,717
========= ========== ==========
All share and earnings per share data have been adjusted to reflect the
two-for-one stock splits in the form of 100% stock dividends paid on
September 8, 1995 and May 10, 1996.
U.S. Robotics Corporation And Subsidiaries
Consolidated Statement of Earnings
(In thousands, except earnings per share data)
(UNAUDITED)
Fiscal Year Ended
9/29/96
------------------------------
Including Excluding
In Process In Process
Technology Technology
Charge Charge %
---------- ------------------
Net sales $1,977,512 $1,977,512 100.0
Cost of goods sold 1,149,446 1,149,446 58.1
--------- ---------
Gross profit 828,066 828,066 41.9
Operating expenses
Selling & marketing 271,585 271,585 13.7
General &
administrative 93,717 93,717 4.7
Research & development
109,437 109,437 5.6
Purchased in process
technology 54,000 - -
Non-recurring merger
costs - - -
--------- ---------
528,739 474,739 24.0
--------- ---------
Operating profit 299,327 353,327 17.9
Interest income 8,424 8,424 0.4
Interest expense 4,995 4,995 0.3
Other income(expense) (866) (866) 0.0
--------- ---------
Earnings before income
taxes 301,890 355,890 18.0
Income tax expense 131,870 131,870 6.7
--------- ---------
Net earnings $ 170,020 $ 224,020 11.3
========= =========
Net earnings per share
$ 1.79 $ 2.36
========= =========
Shares used in per
share calculation 94,932 94,932
========= =========
All share and earnings per share data have been
adjusted to reflect the two-for-one stock splits in
the form of 100% stock dividends paid on September 8,
1995 and May 10, 1996.
U.S. Robotics Corporation And Subsidiaries
Consolidated Statement of Earnings
(In thousands, except earnings per share data)
(UNAUDITED)
Fiscal Year Ended
10/1/95
--------------------------
Including Excluding
Merger Merger
costs costs %
--------- -----------------
Net sales $ 889,347 $ 889,347 100.0
Cost of goods sold 521,159 521,159 58.6
-------- --------
Gross profit 368,188 368,188 41.4
Operating expenses
Selling & marketing 136,585 136,585 15.4
General &
administrative 42,614 42,614 4.8
Research &
development 52,478 52,478 5.9
Purchased in process
technology - - -
Non-recurring merger
costs 29,449 - -
-------- --------
261,126 231,677 26.1
-------- --------
Operating profit 107,062 136,511 15.3
Interest income 7,700 7,700 0.9
Interest expense 5,465 5,465 0.6
Other income(expense) (377) (377) -
-------- --------
Earnings before
income taxes 108,920 138,369 15.6
Income tax expense 42,969 49,215 5.6
-------- --------
Net earnings $ 65,951 $ 89,154 10.0
======== ========
Net earnings per
share $ 0.77 $ 1.05
======== ========
Shares used in per
share calculation 85,304 85,304
======== ========
All share and earnings per share data have been
adjusted to reflect the two-for-one stock splits in
the form of 100% stock dividends paid on September
8, 1995 and May 10, 1996.
U.S. Robotics Corporation And Subsidiaries
Consolidated Balance Sheet
(In thousands)
(UNAUDITED)
September 29, October 1,
1996 1995
------------- --------------
ASSETS
CURRENT ASSETS
Cash and marketable securities $ 16,814 $ 232,803
Accounts receivable, net 490,040 168,365
Inventories 185,855 103,032
Deferred income taxes 45,493 22,373
Prepaid expenses and other current
assets 12,407 7,739
----------- ------------
Total current assets 750,609 534,312
PROPERTY, PLANT & EQUIPMENT- NET 276,591 117,156
OTHER ASSETS 40,083 8,155
----------- ------------
$ 1,067,283 $ 659,623
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term
obligations 12,174 249
Revolving credit borrowings 32,500 -
Accounts payable 130,959 78,386
Accrued liabilities 138,747 78,171
Income taxes payable 19,324 9,525
----------- -----------
Total current liabilities 333,704 166,331
LONG-TERM OBLIGATIONS 54,044 65,651
DEFERRED INCOME TAXES 7,665 3,246
STOCKHOLDERS' EQUITY
Common stock 881 422
Additional contributed capital 356,266 273,939
Retained earnings 312,492 148,617
------------ -----------
669,639 422,978
Cumulative translation adjustment
and other 2,231 1,417
------------ -----------
Total stockholders' equity 671,870 424,395
------------ -----------
$ 1,067,283 $ 659,623
============ ===========
