General DataComm Announces Fourth Fiscal Quarter and Year-End Results - Company Financial Information

Edge: Work-Group Computing Report, Nov 8, 1999

General DataComm Industries, Inc. (NYSE:GDC) has announced that revenues for the fourth fiscal quarter of 1999 were $47.5 million, versus $49.7 million reported in the fourth quarter of fiscal 1998. There was a net loss for the current quarter of $(3.9) million, or $(0.20) per share, as compared to a net loss of $(6.2) million, or $(0.31) per share, in the same period one year ago.

For the fiscal year ended September 30, 1999, revenues were $171.0 million versus $194.3 million reported for fiscal year 1998. There was a net loss of $(22.6) million, or $(1.12) per share, as compared to a net loss of $(33.4) million, or $(1.64) per share, for fiscal year 1998.

Results for the fiscal year ended September 30, 1999 include a gain of $9.0 million, or $0.41 per share, from the sale of the assets of a division and a charge of $(2.0) million, or $(0.09) per share, for restructuring of operations. Results for the fiscal year ended September 30, 1998 include a charge of $(2.5) million, or $(0.12) per share, for restructuring of operations. Excluding the asset sale and restructuring charges, the loss for fiscal 1999 was $(29.6) million, or $(1.44) per share, versus $(30.9) million, or $(1.52) per share, for the prior fiscal year.

General DataComm Chairman and Chief Executive Officer Charles P. Johnson said, "I am encouraged by the continued progress being made by our new business units in the aftermath of the restructuring announced last December. Product revenue has grown at double-digit rates for two consecutive quarters, while at the same time the order backlog has grown. And in the fourth quarter we further streamlined our activities by outsourcing manufacturing operations and closing a remote technology center in England.

"We exit fiscal 1999 with all three business units experiencing upward momentum in business. Vital Network Services is profitable and is poised for substantial growth by addressing the increasing demand for professional networking services. The Network Access Division is also profitable and is successfully attacking the exciting market for DSL equipment. And Broadband Systems Division, with its proven voice-over-ATM and total ATM video solutions, is well positioned to take full advantage of the growing demand for these applications as witnessed by a record level of orders in the fourth quarter."

GDC (www.gdc.com) is a leader in the design, development, and manufacture of multiservice communications systems for service providers and enterprise businesses. The GDC APEX multiservice switching platforms are used extensively within the world's largest public ATM Wide Area Networks. A broad range of Advanced Network Access products provide universal access system DSL solutions; integrated analog, DDS and T1/E1/T3 access products; all managed under a distributed, open network management framework, ProSphere. GDC is headquartered in Middlebury, Connecticut, USA, and has an extensive network of subsidiaries and partners located throughout North America, South America, Europe, the Middle East, Asia and the Pacific Rim.

      GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF OPERATIONS
             (In Thousands, Except Per Share Data)

                           Three months ended         Year Ended
                              September 30,          September 30,
                           ------------------       ---------------

                               1999      1998       1999       1998
                               ----      ----       ----       ----
                                (Unaudited)
Revenues:
 Net product sales         $ 34,273 $  38,076  $ 118,052  $ 146,965
 Service revenue             12,111     9,446     46,676     37,852
 Other revenue                1,068     2,152      6,289      9,438
                           -------- --------- ---------- ----------
                             47,452    49,674    171,017    194,255
Costs and expenses:

 Cost of product sales       17,005    18,827     59,967     73,226
 Amortization of capitalized
  software development costs  3,000     2,974     12,172     11,867
 Cost of service revenue      8,542     6,737     32,538     26,856
 Cost of other revenue           81       149        777        540
 Selling, general and
  administrative             14,715    17,861     60,682     74,069
 Research and product
  development                 5,358     7,434     26,581     31,937
 Restructuring of operations     --        --      2,000      2,500
                           -------- --------- ---------- ----------
                             48,701    53,982    194,717    220,995

Operating loss               (1,249)   (4,308)   (23,700)  (26,740)

Other income (expense):
 Gain on sale of assets(1)      --        --       9,001        --
 Interest, net               (1,999)   (1,559)    (6,998)   (5,900)
 Other, net                    (207)     (220)       241       (52)
                           -------- --------- ---------- ----------
                             (2,206)   (1,779)     2,244    (5,952)

Loss before income taxes     (3,455)   (6,087)   (21,456)  (32,692)

Income tax provision            450       100      1,150        700
                           -------- --------- ---------- ----------

Net loss                   $( 3,905) $( 6,187) $( 22,606)$( 33,392)
                           ======== ========= ========== ==========
Basic and diluted loss per
 share                     $(  0.20)  $( 0.31)  $(  1.12) $(  1.64)
                           ======== ========= ========== ==========

Average number of common and
 common equivalent shares
 outstanding                 21,970    21,606     21,857     21,495
                           ======== ========= ========== ==========

(1)  Represents gain from the sale of assets of a division.

      GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED BALANCE SHEETS
                          Preliminary

                                 September 30,        September 30,
                                       1999                  1998
ASSETS:
Current assets:
 Cash and cash equivalents             $3,790                $3,757
 Accounts receivable                   32,795                31,513
 Inventories                           22,329                26,045
 Deferred income taxes                  1,578                 1,675
 Other current assets                  12,624                10,059
 Total current assets                  73,116                73,049

 Property, plant and equipment, net    32,679                40,553
 Capitalized software development
  costs, net                           21,815                24,286
 Other assets                          12,764                11,650

                                     $140,374              $149,538

LIABILITIES AND STOCKHOLDERS' EQUITY:
 Current liabilities:
  Current portion of long-term debt    $4,533                $8,133
  Accounts payable, trade              18,669                12,763
  Accrued payroll and
   payroll-related costs                4,676                 5,896
  Deferred income                       6,082                 6,034
  Other current liabilities            16,399                15,122

 Total current liabilities             50,359                47,948

 Long-term debt, less current
  portion                              64,532                52,679
 Deferred income taxes                  2,337                 2,589
 Other liabilities                      1,053                   364

 Total liabilities                    118,281               103,580

 Commitments and contingent
  liabilities                            --                     --
 Stockholders' equity                  22,093                45,958

                                     $140,374              $149,538