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) April 23, 1997
U.S. Robotics Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-25630 36-3994412
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) 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)
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Item 5. Other Events
On April 23, 1997, the Registrant issued a press release
announcing its results of operations for its second quarter,
which ended March 30, 1997. The press release is attached as an
exhibit.
Item 7. Financial Statements, Pro Forma Financial Statements
and Exhibits
(c) Exhibits.
99 Press Release dated April 23, 1997.
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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: April 23, 1997 BY: /s/ Mark Remissong
Mark Remissong
Vice President and
Chief Financial Officer
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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 SECOND
QUARTER; REVENUES UP 52%, EARNINGS UP 77%
--Second Quarter Revenues a Record $690.2 Million --
--Second Quarter Earnings, Including a Non-Recurring Benefit,
$91.5 Million or $.95 per Share --
SKOKIE, Illinois -- April 23, 1997 -- U.S. Robotics Corporation
(NASDAQ:USRX) today reported record revenues and earnings for its
fiscal second quarter ended March 30, 1997.
Revenues for the second quarter of fiscal 1997 were a record
$690.2 million, an increase of 52% over the $454.5 million
recorded for the second quarter of fiscal 1996. Net earnings for
the current quarter were a record $91.5 million, an increase of
77% over the $51.6 million recorded for the prior year quarter.
Net earnings per share for the current quarter were $.95 (based
on 95.9 million weighted average shares outstanding), compared to
$.55 per share (based on 94.2 million shares) for the prior year
quarter. Net earnings for the second quarter of fiscal 1997
included a non-recurring tax benefit of $17.9 million associated
with the company's acquisition of Scorpio Communications, which
closed in the September quarter. Excluding the non-recurring tax
benefit, earnings for the quarter were $73.5 million or $.77 per
share.
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR SECOND
QUARTER; REVENUES UP 52%, EARNINGS UP 77%
The company attributed the growth in revenues to continuing
strong demand for its products in all of the markets it serves
worldwide, noting that higher unit sales of both network systems
products and PC-related products were the primary reasons for the
increase over the prior year period. Revenues from sales of all
the company's network systems products totaled approximately $177
million during the second quarter of fiscal 1997.
Gross margins increased to 49.1% of net sales in the current
quarter compared to 41.9% of net sales for the corresponding
period in 1996. This increase was due in part to strong margins
on initial shipments of the company's x2 native desktop modem
products. x2 (56Kbps) is a key technology breakthrough that
enables Internet and other on-line connections for downloading
information at speeds nearly twice as fast as those previously
available with standard modems over regular telephone lines. The
increase in gross margins also reflected reductions in
manufacturing costs and changes in the mix of products sold in
each of the periods.
Operating expenses were $220.0 million or 31.9% of sales in the
current quarter, compared to $110.4 million or 24.3% of sales in
the corresponding period of 1996. The increase was reflected in
each major category of expense, consistent with the company's
overall growth, with the majority related to selling and
marketing expenses. Substantial expenses were incurred during the
March 1997 quarter in connection with the introduction of the
company's x2 native products and for selling and marketing
programs designed to generate continuing
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR SECOND
QUARTER; REVENUES UP 52%, EARNINGS UP 77%
growth in revenues and market share. Also, the company continued
to make significant investments during the March 1997 quarter to
expand its sales force worldwide.
Revenues for the second quarter of fiscal 1997 increased by $44.8
million or 7% over the $645.4 million reported for the first
quarter ended December 29, 1996. Excluding the non-recurring tax
benefit, earnings for the second quarter increased by 7% to $73.5
million from the $69.0 million posted for the December quarter.
Earnings per share, excluding the non-recurring tax benefit, were
$.77 per share (based on 95.9 million weighted average shares
outstanding), compared to $.72 per share (based on 96.3 million
shares) for the December quarter.
Revenues for the second quarter reflected continuing strong end
user demand for information access devices overall and the impact
of the introduction of the company's x2 native products.
Increased sales of network systems products and higher average
selling prices of x2 Sportster desktop modems were the primary
reasons for the growth in total revenues from the December
quarter level. International revenues for the quarter were
$229.8 million or 33% of total revenues, up from $193.5 million
or 30% of total revenues for the December quarter. International
revenues from sales of network systems products during the March
quarter were approximately $53 million.
Sales of modem products to end users by the company's North
American distribution channel customers increased during the
second quarter, continuing an established trend. Also, since
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR SECOND
QUARTER; REVENUES UP 52%, EARNINGS UP 77%
x2 native desktop modem products became available at retail in
late February, unit sales to end-user customers of x2 desktop
modems as a percentage of total North American desktop modem
sales have steadily increased.
Gross margins increased to 49.1% of net sales in the March
quarter from 42.8% of net sales in the December quarter. This
increase was primarily due to strong margins on x2 native desktop
modem products as well as changes in product mix. Revenues
attributable to sales of network systems products increased as a
percentage of total revenues during the quarter.
Total operating expenses for the March quarter were $220.0
million or 31.9% of sales, compared to $165.0 million or 25.6% of
sales for the December quarter. The primary reasons for the
increase were higher employee-related costs stemming from a 6%
rise in the number of employees in selling, marketing and
research and development during the quarter, as well as increased
expenses related to the introduction of the company's x2 products
and for other selling and marketing programs designed to generate
continuing growth in revenues and market share. The company
continued to make substantial investments in building its
worldwide sales force during the March quarter, expanding it
approximately 6% over and above the 25% increase in the previous
two quarters, with the intent of further increasing its revenues
from sales of network systems products.
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR SECOND
QUARTER; REVENUES UP 52%, EARNINGS UP 77%
Revenues for the first six months of fiscal 1997 were $1,335.6
million, an increase of 63% over the $819.3 million for the
corresponding period of the previous year. Excluding the non-
recurring tax benefit, earnings for the first six months of
fiscal 1997 were $142.6 million or $1.48 per share (based on 96.1
million weighted average shares outstanding), compared to $93.3
million or $1.00 per share (based on 93.6 million shares) for the
first six months of fiscal 1996. Including the non-recurring tax
benefit, net earnings were $160.5 million or $1.67 per share for
the first six months of fiscal 1997.
Outlook
The following statements include forward-looking statements and
actual results may differ materially.
Commenting on the quarter, U.S. Robotics President and Chief
Operating Officer John McCartney said, "Demand continues to be
strong for our expanding portfolio of information access
products, including Total Control remote access servers and
concentrators, Sportster modems, Megahertz PC cards and PalmPilot
connected organizers. In addition, our x2 (56Kbps-capable)
Technology is available now, and is expected to have a widespread
impact on Internet users by enabling them to have a more
satisfying online experience."
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR SECOND
QUARTER; REVENUES UP 52%, EARNINGS UP 77%
Mr. McCartney indicated that the company expects to complete its
pending merger with 3Com Corporation in June 1997 (subject to
stockholder approval and other closing conditions) and, in that
event, will not report separate results for the June quarter.
However, he added that the company expects demand for all of its
product lines to continue to grow during the remainder of the
company's current fiscal year as world-wide requirements for
highly integrated, cost-effective, end-to-end information access
solutions increase. Mr. McCartney stated that revenue growth
during the remainder of 1997 will depend to a large extent on the
rapidity with which its Internet and online service provider
customers continue to implement x2 Technology in their networks
and the resultant consumer and corporate demand for x2-enabled
products. He also stated that, although gross margins increased
6.3 percentage points during the March quarter, the company
expects gross margins to return over time to levels more
consistent with the company's results in recent quarters.
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.
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U.S. ROBOTICS REPORTS RECORD REVENUES AND EARNINGS FOR SECOND
QUARTER; REVENUES UP 52%, EARNINGS UP 77%
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 those listed in the company's most recent
reports on Form 10-K and Form 10-Q and set forth from time to
time in other documents filed by the company with the Securities
and Exchange Commission, including the preliminary proxy
materials filed by the company in connection with the pending
transaction with 3Com.
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 access servers
and concentrators, 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, voice and multi-media 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.
##########
Financial statements follow.
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U.S. Robotics Corporation and Subsidiaries
Condensed Consolidated Statement of Earnings
(In thousands, except per share data)
(UNAUDITED)
Quarter Quarter
Ended Ended
03/30/97 % 03/31/96 %
--------------- -----------------
Net sales $690,184 100.0 $454,505 100.0
Cost of goods sold 351,234 50.9 264,188 58.1
-------- ----- -------- -----
Gross profit 338,950 49.1 190,317 41.9
Operating expenses
Selling and marketing 134,042 19.4 57,961 12.8
General and administrative 41,564 6.0 24,041 5.3
Research and development 44,434 6.5 28,378 6.2
-------- ----- -------- -----
Total operating expenses 220,040 31.9 110,380 24.3
Operating profit 118,910 17.2 79,937 17.6
Other income (expense) - net (2,023) (0.3) 1,345 0.3
-------- ----- -------- ----
Earnings before income taxes 116,887 16.9 81,282 17.9
Income tax expense 25,428 3.6 29,677 6.5
-------- ----- -------- -----
Net earnings $ 91,459 13.3 $ 51,605 11.4
======== ========
Net earnings per share $ 0.95 $ 0.55 (A)
======== ========
Shares used in per share
calculation 95,944 94,168
======== ========
(A) Adjusted to reflect the two-for-one stock split in the form of a
100% stock dividend paid on May 10, 1996.
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U.S. Robotics Corporation and Subsidiaries
Condensed Consolidated Statement of Earnings
(In thousands, except per share data)
(UNAUDITED)
Six Months Six Months
Ended Ended
03/30/97 % 03/31/96 %
----------------- ----------------
Net sales $1,335,596 100.0 $819,317 100.0
Cost of goods sold 720,648 54.0 476,384 58.1
---------- ----- -------- -----
Gross profit 614,948 46.0 342,933 41.9
Operating expenses
Selling and marketing 234,792 17.6 105,751 12.9
General and administrative 71,582 5.3 41,666 5.1
Research and development 78,664 5.9 51,831 6.3
---------- ----- -------- -----
Total operating expenses 385,038 28.8 199,248 24.3
Operating profit 229,910 17.2 143,685 17.6
Other income (expense) - net (3,279) (0.2) 3,178 0.4
---------- ----- -------- -----
Earnings before income taxes 226,631 17.0 146,863 18.0
Income tax expense 66,143 5.0 53,613 6.5
---------- ----- -------- -----
Net earnings $ 160,488 12.0 $ 93,250 11.5
========== ========
Net earnings per share $ 1.67 $ 1.00 (A)
========== ========
Shares used in per share
calculation 96,139 93,568
======== ========
(A) Adjusted to reflect the two-for-one stock split in the form of a
100% stock dividend paid on May 10, 1996.
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U.S. Robotics Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(In thousands)
(UNAUDITED)
March 30, September 29,
1997 1996
------------ -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 49,888 $ 16,814
Accounts receivable - net 718,410 490,040
Inventories 155,823 185,855
Deferred income taxes 57,371 45,493
Prepaid expenses and other current
assets 13,694 12,407
---------- ----------
Total current assets 995,186 750,609
PROPERTY, PLANT & EQUIPMENT - NET 346,613 276,591
DEFERRED INCOME TAXES 10,465 -
OTHER ASSETS 55,001 40,083
---------- ----------
$1,407,265 $1,067,283
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term
obligations $ 12,310 $ 12,174
Short-term obligations 60,700 32,500
Accounts payable 196,458 130,959
Accrued liabilities 175,725 138,747
Income taxes payable 43,474 19,324
---------- ---------
Total current liabilities 488,667 333,704
LONG-TERM OBLIGATIONS 55,066 54,044
DEFERRED INCOME TAXES - 7,665
STOCKHOLDERS' EQUITY
Common stock 893 882
Additional contributed capital 392,781 356,265
Retained earnings 472,980 312,492
---------- ----------
866,654 669,639
Cumulative translation adjustment
and other (3,122) 2,231
--------- ----------
Total stockholders' equity 863,532 671,870
---------- ----------
$1,407,265 $1,067,283
========== ==========
