Financial: Wang Global Reports Results for December Quarter; Quarterly Revenues Exceed $1 Billion - Company Financial Information

Edge: Work-Group Computing Report, Feb 15, 1999

Wednesday Wang Global (NASDAQ:WANG) reported operating results for the quarter ended December 31, 1998. Revenues for the quarter were a record $1,032.0 million. The effect of foreign exchange was not significant. During the quarter, the company recorded restructuring and other operating charges and integration-related period costs of $41.5 million and, as anticipated, reported a net loss of $16.4 million, or a loss of $0.43 per diluted share.

Excluding these charges, EBITDA (earnings before interest, taxes, depreciation and amortization) was $88.3 million and earnings per share would have been $0.47 per diluted share. Earnings during the period benefited from a change in estimate of the anticipated useful life of certain intangible assets. The company ended the period with consolidated cash balances of $301.3 million and total debt of $285.6 million, or a net cash position of $15.7 million. "We had anticipated strong revenues at year end, and were quite pleased with topping the billion dollar mark," said Joseph M. Tucci, chairman and CEO. "We also recognize that our job isn't finished. We have to stay focused on cost reduction, operating efficiencies and improved margins," he added. During the quarter Wang Global continued to develop and expand its position in the international financial services markets with contract awards from Yorkshire Bank plc (part of the National Australia Group), Associated Bank-Corp, and Northern Rock Bank plc. The company's commitment to the financial services sector was underscored by its recent unveiling of Globalfsf, the first retail banking application natively designed to run on Microsoft's powerful Windows DNAfs architecture. Advancing a dynamic industry alliance, Wang Global achieved U.S. Gold Certification from Cisco Systems. Cisco's Gold Certification program is widely regarded as the most respected channel certification program in the networking industry. Wang Global also increased its long-standing strength in the federal marketplace with a number of multi-year, multi-million dollar awards. In a recent $453 million contract awarded by Lockheed Martin, the company will consolidate NASA's wide area networks as part of Lockheed Martin's $3.4 billion ten-year Consolidated Space Operations Contract. Additionally, Wang Global recently won two Federal Deposit Insurance Corporation (FDIC) contracts for information technology services and call center support. The company reaffirmed its previously stated goals of achieving $150-200 million in cost reductions and EBITDA in excess of $300 million for calendar year 1999. As of the end of the December quarter, the company had exceeded its previously announced target of the 2,300 reductions in force planned for the 1998 calendar year and said that it would likely exceed its target of 3,100 reductions before the end of calendar year 1999. In addition, 0.5 million square feet of excess office and warehouse space were eliminated during the quarter, bringing the total reduction of space to 1.5 million square feet of the targeted 2.5 million square feet scheduled for reduction by December of 1999. Following the acquisition of Olsy, company expectations of future expenditures for integration, rightsizing and other initiatives were estimated at $380 million. As of December 31, 1998, the company had initiated actions with expected costs totaling $335.1 million. As the company continues its worldwide integration activities, additional charges are likely in the March 1999 and subsequent quarters, but in total are expected to remain within the company's original $380 million estimate. As announced on August 12, 1998, Wang Global changed its fiscal year end from June 30 to December 31. For the six-month period ended December 31, 1998, the company reported revenues of $1,818.0 million and a net loss of $27.6 million, or a loss of $0.75 per diluted share. Excluding restructuring and other operating charges and integration-related period costs, earnings per share would have been $0.26 per diluted share. For the calendar year ended December 31, 1998, the company had revenues of $3,053.9 million and EBITDA of $222.3 million. About Wang Global Headquartered in Billerica, Massachusetts, Wang Global is a leading international networked technology services and solutions company providing a comprehensive range of information technology services for today's network-centric business environments. With annualized revenues in excess of $3.0 billion, Wang Global designs, installs, operates and maintains global computing and telecommunications networks for some of the world's largest multinational companies. Services include systems architecture design, installation, warranty, help desk, maintenance, software support, and management of enterprise networks to the desktop. Wang Global integration services provide business solutions primarily for the banking industry as well as defense and civilian government agencies. Wang Global employs approximately 20,000 professionals and has subsidiaries and affiliates in over 40 countries. Information about Wang Global and its services can be found on the World Wide Web at www.wang.com.