ACT Networks Announces Fourth Quarter and Fiscal Year End Results - Company Financial Information

Cambridge Telcom Report, August 2, 1999

ACT Networks, Inc. (Nasdaq:ANET) has announced results for its fourth quarter and full fiscal year ended June 30, 1999.

Fourth quarter revenue was $13,209,000, compared to $13,626,000 for the same period of 1998. Net loss for the quarter was $2,998,000 or $0.30 per share as compared to net loss of $13,099,000 or $1.43 per share for the same period of 1998. The net loss for the quarter included charges of approximately $1,150,000 for corporate relocation and inventory scrapping.

For the year ended June 30, 1999, revenue was $54,322,000 with a loss of $2,519,000, or $0.26 per share, before after-tax charges of $607,000 for restructuring and related items. For the year ended June 30, 1998, revenue was $54,964,000 with a loss of $9,238,000 or $1.01 per share, before after-tax charges of $10,143,000 for restructuring and in process research and development.

Including restructuring costs, net loss for the year ended June 30, 1999 was $3,126,000 or $0.32 per share, compared to a net loss of $19,381,000 or $2.11 per share in 1998. Operating expenses as a percentage of revenue were 73% for the fourth quarter of 1999, compared to 92% in the fourth quarter of 1998 before one-time charges. Gross margins for the fourth quarter of 1999 were 45%, up from 14% in the fourth quarter of 1998.

As of June 30, 1999, ACT's balance sheet included total cash and marketable securities of $51,463,000, total stockholders' equity of $76,917,000 and no long-term debt.

Andre de Fusco, President and Chief Executive Officer, stated, "Certain significant orders from two ten percent customers did not materialize this quarter as expected. We continue to work closely with our major accounts and believe that this shortfall in orders was due mainly to timing considerations of the customers and not to a lack of demand for our products."

"Excluding two North American ten percent customers, we saw strong sequential growth in our overall business," continued Mr. de Fusco. "Internationally, ACT performed well, with sequential growth in Asia of 200%, Latin America of 70% and Europe of 37% over the prior quarter. We commenced business in Korea after an approximately two year lull and shipped new orders to both India and China."

Late in the quarter, the Company shipped its SX-10 product which accounted for approximately 7.5% of revenue. Sales of the SX-10 are focused on the emerging global carrier market.

Mr. de Fusco concluded, "While this has been a difficult financial quarter for ACT, we remain confident about our products and the potential of the multi-service networking market. We believe that our focus on exploiting our packet voice technology is the right strategy for our business and our customers."

ACT Networks develops, manufactures, and markets Multi-Service Access products that enable the true convergence of voice, video, and data onto one managed network. Service providers and enterprise customers use the Company's products to build converged networks that are bandwidth efficient, cost-effective and easy to manage. The Company's award-winning NetPerformer product incorporates advanced voice and data compression algorithms, enhanced switching and traffic management capabilities, and state-of-the-art hardware and software integration technologies. For more information about ACT Networks, headquartered in Calabasas, CA, visit the corporate website at http://www.actnetworks.com.

                       ACT NETWORKS, INC.
               Statement of Operations Highlights
          (amounts in thousands, except per share data)

                        Three Months Ended    Twelve Months Ended
                             June 30,               June 30,
                         1999        1998       1999        1998
                       --------    --------   --------    --------
Net sales             $ 13,209    $ 13,626    $ 54,322    $ 54,964
Gross profit             5,966       1,884      29,910      25,064

Research & Development   3,172       4,680      12,887      16,349
SG&A                     6,443       7,857      21,886      24,919
Impairment
 and restructuring                   3,393         607       3,393
In-process research
 and development                                             6,750

Operating loss          (3,649)    (14,046)     (5,470)    (26,347)

Gain on investment                                 120       4,704
Interest and other
 income, net               543         897       2,260       2,419

Loss before provision
 for income taxes       (3,106)    (13,149)     (3,090)    (19,224)
(Benefit) Provision
 for income taxes         (108)        (50)         36         157

Net Loss              $ (2,998)   $(13,099)   $ (3,126)   $(19,381)

Net loss per share
 - Basic              $  (0.30)   $  (1.43)   $  (0.32)   $  (2.11)
Weighted average
 shares outstanding     10,095       9,167       9,644       9,170
Net loss per share
 - Diluted            $  (0.30)   $  (1.43)   $  (0.32)   $  (2.11)
Weighted average shares
  - diluted             10,095       9,167       9,644       9,170


                       ACT NETWORKS, INC.
                      BALANCE SHEET SUMMARY

                                                June 30,  June 30,
                                                 1999       1998

Cash and cash equivalents                       $33,850    $35,018
Short-term investments                           17,613     11,607
Accounts receivable, net                         18,309     17,226
Inventory                                         9,613      8,829
Other current assets                                582      1,786
Fixed assets, net                                 4,095      3,743
Goodwill and other intangibles, net               1,311      2,574
Other assets                                        147         55
                                                -------    -------
Total Assets                                    $85,520    $80,838
                                                =======    =======

Current liabilities                               8,603    $ 8,321
Stockholders' equity                             76,917     72,517
                                                -------    -------
Total Liabilities and Stockholders' Equity      $85,520    $80,838
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