-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CQma1endtfemrYiQoe9nHQiXK75q7LqfFYvv3bMWhDv1re2iby2jEXNXolEfpa6J jBNLvevCNrQ/n5EWeFzC9w== 0000928385-97-002055.txt : 19971217 0000928385-97-002055.hdr.sgml : 19971217 ACCESSION NUMBER: 0000928385-97-002055 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971102 FILED AS OF DATE: 19971216 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWBRIDGE NETWORKS CORP CENTRAL INDEX KEY: 0000827301 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 980077506 STATE OF INCORPORATION: A6 FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13316 FILM NUMBER: 97739306 BUSINESS ADDRESS: STREET 1: 600 MARCH ROAD PO BOX 13600 STREET 2: KANATA ONTARIO CANADA CITY: K2K 2E6 STATE: A6 BUSINESS PHONE: 6135913600 MAIL ADDRESS: STREET 1: 600 MARCH ROAD STREET 2: KANATA ONTARIO CANADA CITY: K2K 2E6 STATE: A6 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 2, 1997 Commission file number 1-13316 NEWBRIDGE NETWORKS CORPORATION (Exact name of registrant as specified in its charter) CANADA 98-0077506 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 MARCH ROAD, KANATA, ONTARIO, CANADA K2K 2E6 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (613) 591-3600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. yes X no --- --- The number of Common Shares of the registrant outstanding as at December 5, 1997 was 175,370,717. (Exhibit index located on page 21) (Page 1 of 24) NEWBRIDGE NETWORKS CORPORATION TABLE OF CONTENTS
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Earnings and Retained Earnings-Fiscal quarters and two fiscal quarters ended November 2, 1997 and October 27, 1996............. 3 Consolidated Balance Sheets- November 2, 1997 and April 30, 1997..................... 4 Consolidated Statements of Cash Flow- Fiscal quarters and two fiscal quarters ended November 2, 1997 and October 27, 1996............. 5 Notes to the Consolidated Financial Statements............ 6-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 12-18 PART II. OTHER INFORMATION Item 1. Legal Proceedings............................................ 19 Item 5. Other Information............................................ 19 Item 6. Exhibits and Reports on Form 8-K............................. 19 SIGNATURES................................................................... 20
(Page 2 of 24) PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NEWBRIDGE NETWORKS CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (Canadian dollars, amounts in thousands except per share data) (Unaudited)
Fiscal quarters ended Two fiscal quarters ended -------------------------- --------------------------- November 2, October 27, November 2, October 27, 1997 1996 1997 1996 ------------ ------------ ------------- ------------ Sales $432,169 $316,082 $866,907 $602,119 Cost of sales 159,801 112,185 320,531 212,928 -------- -------- -------- -------- Gross margin 272,368 203,897 546,376 389,191 Expenses Selling, general and administrative 123,402 78,138 247,259 144,396 Research and development 66,169 35,167 125,852 65,402 -------- -------- -------- -------- Income from operations 82,797 90,592 173,265 179,393 Interest income 2,792 5,320 5,814 10,792 Interest expense on long term obligations (207) (186) (491) (258) Other expenses (2,957) (2,734) (5,142) (4,879) -------- -------- -------- -------- Earnings before income taxes and non-controlling interest 82,425 92,992 173,446 185,048 Provision for income taxes 24,324 29,776 51,358 59,473 Non-controlling interest 108 435 (259) 1,993 -------- -------- -------- -------- Net earnings 57,993 62,781 122,347 123,582 Retained earnings, beginning of the period 832,502 672,032 768,148 611,231 -------- -------- -------- -------- Retained earnings, end of the period $890,495 $734,813 $890,495 $734,813 ======== ======== ======== ======== Earnings per share (Note 6) Basic $ 0.33 $ 0.37 $ 0.70 $ 0.73 Fully diluted $ 0.33 $ 0.36 $ 0.69 $ 0.71 Weighted average number of shares Basic 174,733 170,232 173,830 169,736 Fully diluted 190,516 184,131 189,783 182,934
See accompanying Notes to the Consolidated Financial Statements. (Page 3 of 24) NEWBRIDGE NETWORKS CORPORATION CONSOLIDATED BALANCE SHEETS (Canadian dollars in thousands)
November 2, April 30, 1997 1997 ---------- ---------- (unaudited) ASSETS Cash and cash equivalents (Note 2) $ 317,515 $ 333,904 Accounts receivable, net of provision for returns and doubtful accounts of $12,167 (April 30, 1997 - $10,572) 426,759 387,338 Inventories (Note 3) 212,910 159,495 Prepaid expenses and other current assets 99,482 64,191 ---------- ---------- 1,056,666 944,928 Property, plant and equipment 369,456 294,939 Deferred income taxes 25,890 37,393 Goodwill (Note 4) 126,398 125,565 Software development costs 24,999 22,299 Other assets 100,212 71,579 ---------- ---------- $1,703,621 $1,496,703 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 131,704 $ 105,884 Accrued liabilities 106,843 95,804 Provision for restructuring (Note 5) 5,519 35,944 Income taxes 27,618 61,551 Current portion of long term obligations 7,191 7,353 ---------- ---------- 278,875 306,536 Long term obligations 10,148 10,817 Deferred income taxes 39,696 32,439 Non-controlling interest 17,003 20,412 ---------- ---------- 345,722 370,204 ---------- ---------- Common shares - 175,304,537 outstanding (April 30, 1997 - 171,858,984 outstanding) 446,702 351,388 Accumulated foreign currency translation adjustment 20,702 6,963 Retained earnings 890,495 768,148 ---------- ---------- 1,357,899 1,126,499 ---------- ---------- $1,703,621 $1,496,703 ========== ==========
See accompanying Notes to the Consolidated Financial Statements. (Page 4 of 24) NEWBRIDGE NETWORKS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Canadian dollars in thousands) (Unaudited)
Fiscal quarters ended Two fiscal quarters ended -------------------------- -------------------------- November 2, October 27, November 2, October 27, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ OPERATING ACTIVITIES Net earnings $ 57,993 $ 62,781 $ 122,347 $123,582 Items not affecting cash Amortization 32,448 19,124 60,004 36,808 Deferred income taxes 13,863 1,760 19,021 5,871 Non-controlling interest (1,911) 435 (2,278) 1,993 Other 2,380 768 4,359 2,322 Cash effect of changes in: Accounts receivable (1,526) (41,968) (25,506) (62,973) Inventories (20,574) (6,504) (49,857) (4,706) Prepaid expenses and other current assets (50,025) (3,043) (34,916) (9,049) Accounts payable and accrued liabilities 19,213 15,566 (3,117) (2,214) Income taxes (10,488) 17,399 (23,802) 17,341 -------- --------- --------- -------- 41,373 66,318 66,255 108,975 -------- --------- --------- -------- INVESTING ACTIVITIES Additions to property, plant and equipment (71,363) (28,390) (125,006) (48,439) Acquisition of subsidiaries, excluding cash acquired (5,260) (34,231) (5,260) (35,097) Capitalized software development costs (4,150) (3,024) (7,235) (5,964) Additions to other assets (22,555) (20,061) (30,115) (25,602) -------- --------- --------- -------- (103,328) (85,706) (167,616) (115,102) -------- --------- --------- -------- FINANCING ACTIVITIES Issue of common shares 26,951 14,290 80,531 31,888 Increase in long term obligations -- 1,026 4,060 1,026 Repayment of long term obligations (3,777) (2,097) (5,192) (3,356) -------- --------- --------- -------- 23,174 13,219 79,399 29,558 -------- --------- --------- -------- Increase (decrease) in cash and cash equivalents (38,781) (6,169) (21,962) 23,431 Effect of foreign currency translation on cash 2,335 (3,731) 5,573 (3,448) Cash from acquisition of subsidiaries -- 6,165 -- 6,165 -------- --------- --------- -------- (36,446) (3,735) (16,389) 26,148 Cash and cash equivalents, Beginning of period 353,961 485,632 333,904 455,749 -------- --------- --------- -------- Cash and cash equivalents, end of period $317,515 $ 481,897 $ 317,515 $481,897 ======== ========= ========= ========
See accompanying Notes to the Consolidated Financial Statements. (Page 5 of 24) NEWBRIDGE NETWORKS CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Canadian dollars, tabular amounts in thousands except per share data) (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements of Newbridge Networks Corporation (the "Company") have been prepared in accordance with accounting principles generally accepted in Canada for interim financial information. These accounting principles are also generally accepted in the United States ("U.S. GAAP") in all material respects except for the disclosure of certain cash equivalents on the Consolidated Balance Sheets and investing activities on the Consolidated Statements of Cash Flows, as disclosed in Note 2, and the method of calculation of earnings per share, as disclosed in Note 6. In the opinion of Management, the unaudited interim consolidated financial statements reflect all normal and recurring adjustments considered necessary for fair presentation. The results of operations for the second fiscal quarter and two fiscal quarters ended November 2, 1997 are not necessarily indicative of the results to be expected for the fiscal year ending April 30, 1998. 2. CASH AND CASH EQUIVALENTS Components of cash and cash equivalents are:
November 2, April 30, 1997 1997 ----------- --------- Cash $287,555 $197,007 Held to maturity marketable securities (at amortized cost, which approximates fair market value) 29,910 136,278 Available for sale marketable securities (at fair market value) 50 619 -------- -------- $317,515 $333,904 ======== ========
Held to maturity marketable securities are investments with original maturities of three months or more. Available for sale marketable securities are common shares of publicly traded companies acquired upon the Company's disposition of minority interests in privately held companies. Under accounting principles generally accepted in the United States ("U.S. GAAP"), marketable securities would be disclosed as a separate caption on the Consolidated Balance Sheets. (Page 6 of 24) NEWBRIDGE NETWORKS CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Canadian dollars, tabular amounts in thousands except per share data) (Unaudited) If the Consolidated Statements of Cash Flows were prepared under U.S. GAAP, maturities, purchases and sales of marketable securities would be disclosed as an investing activity. Disclosure in the Consolidated Statements of Cash Flows prepared under U.S. GAAP would be as follows.
Fiscal quarters ended Two fiscal quarters ended -------------------------- --------------------------- November 2, October 27, November 2, October 27, 1997 1996 1997 1996 ------------ ------------ ------------- ------------ Investing activities in short term marketable securities: Held to maturity securities Maturities $ 27,635 $ 41,791 $ 156,386 $ 165,674 Purchases -- (163,624) (50,018) (281,470) --------- --------- --------- --------- 27,635 (121,833) 106,368 (115,796) Available for sale securities Sales (569) 11,208 (569) 16,538 --------- --------- --------- --------- 27,066 (110,625) 105,799 (99,258) Investing activities, as reported (103,328) (85,706) (167,616) (115,102) --------- --------- --------- --------- Investing activities, U.S. GAAP $ (76,262) $(196,331) $ (61,817) $(214,360) --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents, as reported $ (36,446) $ (3,735) $ (16,389) $ 26,148 Investing activities in short term marketable securities 27,066 (110,625) 105,799 (99,258) --------- --------- --------- --------- Increase (decrease) in cash and cash equivalents, U.S. GAAP $ (9,380) $(114,360) $ 89,410 $ (73,110) --------- --------- --------- ---------
The Company uses financial instruments, principally forward exchange contracts, in its management of foreign currency exposures. Realized and unrealized forward exchange contracts are recognized and offset foreign exchange gains and losses on the underlying net asset or net liability position. These contracts primarily require the Company to purchase and sell certain foreign currencies with or for Canadian dollars at contractual rates. At November 2, 1997 the Company had $288,272,000 in outstanding forward exchange contracts (April 30, 1997 - $293,414,000). 3. INVENTORIES
November 2, April 30, 1997 1997 ----------- --------- Finished goods $148,116 $100,405 Work in process 17,191 20,938 Raw materials 47,603 38,152 -------- -------- $212,910 $159,495 ======== ========
(Page 7 of 24) NEWBRIDGE NETWORKS CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Canadian dollars, tabular amounts in thousands except per share data) (Unaudited) 4. GOODWILL
November 2, April 30, 1997 1996 ------------ ---------- Goodwill $138,866 $133,854 Accumulated amortization (12,468) (8,289) -------- --------- $126,398 $125,565 ======== =========
5. PROVISION FOR RESTRUCTURING On January 17, 1997, the Company acquired a 100% equity interest in Ungermann- Bass Networks, Inc. ("UB Networks"), a manufacturer of local area network equipment based in Santa Clara, California. The provision for restructuring relates to programs instituted by the Company to integrate the operations of UB Networks with the Company and to eliminate redundant functions. The components of the provision for restructuring and related spending to November 2, 1997 are as follows.
Reduction in Reduction Discontinued Other Work Force in Facilities Activities Restructuring Total ------------- -------------- ------------- -------------- --------- Provision upon acquisition $ 26,153 $11,582 $ 9,787 $ 6,457 $ 53,979 Incurred to April 30, 1997 (9,496) (970) (4,478) (3,091) (18,035) -------- ------- ------- ------- -------- Provision balances at April 30, 1997 16,657 10,612 5,309 3,366 35,944 Incurred in the fiscal quarter ended August 3, 1997 (15,782) (6,919) (3,422) (2,581) (28,704) Incurred in the fiscal quarter ended November 2, 1997 (404) (103) (637) (577) (1,721) -------- ------- ------- ------- -------- Provision balances at November 2, 1997 $ 471 $ 3,590 $ 1,250 $ 208 $ 5,519 ======== ======= ======= ======= ========
The provision for reduction in work force includes severance, related medical and other benefits, relocation costs and other obligations to employees. The provision includes termination benefits for approximately 300 employees. The work force reductions are in all functions and in all regions in which UB Networks operates. The Company believes that these work force reductions have been substantially completed. Additional workforce reductions are contemplated as set forth in Note 8. The provision for reduction in facilities comprises primarily lease payments and fixed costs associated with the closing of sales, support and administrative facilities in the Americas, Europe and Asia Pacific geographic areas. The provision for discontinued activities includes costs associated with the disposition of assets and fulfilling prior commitments related to certain discontinued product lines and activities. The Company anticipates that the balance of these costs will be incurred over the remainder of the fiscal year. The provision for other restructuring costs comprises various direct incremental costs associated with the integration of operations of UB Networks with the Company. (Page 8 of 24) NEWBRIDGE NETWORKS CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Canadian dollars, tabular amounts in thousands except per share data) (Unaudited) 6. EARNINGS PER SHARE Basic earnings per share has been calculated as net earnings for the period divided by the daily weighted average number of Common Shares outstanding during the fiscal quarter. Fully diluted earnings per share has been calculated as net earnings plus after tax imputed earnings on the cash which would have been received on the exercise of options, divided by the daily weighted average number of Common Shares and common share equivalents outstanding during the period. Under accounting principles generally accepted in the United States, earnings per share is calculated using the treasury stock method. Earnings per share in U.S. dollars is disclosed for the convenience of the reader. The exchange rates used for translation are based on the daily average exchange rate of a Canadian dollar for U.S. dollars as reported by the Federal Reserve Bank of New York. The calculation of earnings per share under U.S. GAAP is as follows.
Fiscal quarters ended Two fiscal quarters ended ------------------------ ------------------------- November 2, October 27, November 2, October 27, 1997 1996 1997 1996 ----------- ----------- ----------- ------------ Earnings per share Primary $ 0.32 $ 0.36 $ 0.68 $ 0.71 ======= ======= ======= ======= Fully diluted $ 0.32 $ 0.36 $ 0.67 $ 0.71 ======= ======= ======= ======= Earnings per share - in U.S. dollars Primary $ 0.23 $ 0.26 $ 0.49 $ 0.52 ======= ======= ======= ======= Fully diluted $ 0.23 $ 0.26 $ 0.49 $ 0.52 ======= ======= ======= ======= Weighted average number of shares Primary 182,728 174,747 181,036 174,837 ======= ======= ======= ======= Fully diluted 182,728 174,747 181,970 174,837 ======= ======= ======= =======
The United States Financial Accounting Standards Board ("FASB") issued the Statement of Financial Accounting Standards No. 128 ("SFAS 128") in February 1997 related to changes to the methodologies used in calculating earnings per share under U.S. GAAP. Under SFAS 128 primary earnings per share would be replaced by basic earnings per share, the calculation of which, given the Company's capital structure, would be the same as the calculation of basic earnings per share under accounting principles generally accepted in Canada. The calculation of fully diluted earnings per share under U.S. GAAP would be replaced by diluted earnings per share, the calculation of which, given the Company's capital structure, would be the same as the calculation of primary earnings per share under U.S. GAAP. The Company plans to implement SFAS 128 in the third quarter of fiscal 1998. (Page 9 of 24) NEWBRIDGE NETWORKS CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Canadian dollars, tabular amounts in thousands except per share data) (Unaudited) 7. LITIGATION Lucent Technologies Inc. ("Lucent Technologies") filed a complaint dated June 24, 1997 in United States District Court in Delaware against the Company and its United States subsidiary, Newbridge Networks Inc. Lucent Technologies manufactures and sells telecommunications systems, software and products, and is both a distributor of the Company's products and a competitor of the Company. The complaint alleges that the Company's manufacture and sale in the United States of Newbridge frame relay and ATM (asynchronous transfer mode) switch products infringe certain United States patent rights claimed by Lucent Technologies, and requests actual and trebled damages in an unspecified amount. The Company has filed an answer to the complaint, and intends to defend this action vigorously. Based upon its present understanding of the laws in the United States and the facts, the Company believes it has meritorious defenses to these claims. Because the outcome of the action is not certain at this time, no provision for any liability that may result upon adjudication has been made in these Consolidated Financial Statements. During the fiscal year ended April 30, 1995, the Company was served with one of several complaints filed in United States District Court in Washington, D.C. by certain persons purporting to be purchasers of Common Shares of the Company. On or about May 8, 1995 these complaints were combined into a single consolidated and amended complaint (the "First Amended Complaint") which named the Company and certain of its executive officers as defendants. The First Amended Complaint purported to be a class action on behalf of a class of persons who purchased securities of the Company between March 29 and August 1, 1994 and alleged that the Company made false and misleading statements in violation of United States securities law and common law, for which damages were sought in unspecified amounts. On June 3, 1996, the Court issued an order granting in part and denying in part the defendants' motion to dismiss. Among other things, the Court dismissed with prejudice the claim alleging violation of common law. The Court also dismissed the majority of plaintiffs' allegations of violation of United States securities law, but granted plaintiffs leave to replead these allegations in a Second Amended Complaint, which plaintiffs filed on July 3, 1996. The Court further conditionally certified the action as a class action without prejudice to the Company's right to renew its objection to class action certification upon completion of discovery. On April 10, 1997, the Court issued an order granting in part and denying in part the defendants' motion to dismiss the Second Amended Complaint. Among other things, the Court dismissed with prejudice a substantial portion of plaintiffs' allegations. The Company has served an answer denying plaintiffs' claims. The Company intends to continue to defend this action vigorously. Based upon its present understanding of the laws in the United States and the facts, the Company believes it has meritorious defenses to the action. Because the outcome of the action is not certain at this time, no provision for any liability that may result upon adjudication has been made in these Consolidated Financial Statements. (Page 10 of 24) NEWBRIDGE NETWORKS CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Canadian dollars, tabular amounts in thousands except per share data) (Unaudited) 8. SUBSEQUENT EVENTS Subsequent to the second fiscal quarter ended November 2, 1997, the Company received an offer to acquire all of its shares of Broadband Networks Inc. ("BNI"), a Canadian wireless technology company in which the Company holds a minority interest. Pursuant to this offer the Company estimates the gain on disposition of its shares will approximate $50,000,000 before income taxes, and the sale is expected to be completed during fiscal 1998. Upon completion of the sale the gain will be recorded as non-operating income. In November 1997 the Company acquired a 49.9% equity interest in RADNet Ltd., an Israeli developer and manufacturer of access switches for asynchronous transfer mode ("ATM") networks, by the purchase of shares in the amount of approximately $52,000,000. The acquisition will be accounted for by the purchase method of accounting. It is expected that the majority of the purchase price will be related to research and development in process. Under Canadian GAAP, the research and development in process will be amortized on a straight line basis over the estimated useful life of six months. Under U.S. GAAP, the research and development in process will be charged to income in the third quarter of fiscal 1998. Because the Company jointly controls RADNet, the financial results of RADNet will be proportionately consolidated commencing from the date of acquisition under Canadian GAAP. The Company will account for RADNet under the equity method under U.S. GAAP. On December 3, 1997 the Company announced the first step of its plan to reallocate its resources in its local area network equipment business during the fiscal quarter ending February 1, 1998. The first step involves both the redeployment of resources and the reduction of approximately 280 positions primarily related to local area network products worldwide. Costs associated with this reduction in work force, including severance, related medical and other benefits, and other obligations to employees are estimated to be $8,000,000 to $10,000,000. The accounting treatment for the costs associated with the first and other steps to be taken in connection with the Company's plan will be determined when all of the elements of the plan have been formulated. (Page 11 of 24) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain parts of the following discussion and analysis may be forward-looking statements that involve a number of risks and uncertainties. As a consequence, actual results might differ materially from results forecast or suggested in any forward-looking statements. See "Market for Registrant's Common Equity and Related Stockholder Matters - Cautionary Statement Regarding Forward-Looking Information" in the Company's Annual Report on Form 10-K, which is incorporated by reference herein. During the fiscal year ended April 30, 1997, the Company acquired a 100% equity interest in Ungermann-Bass Networks, Inc. ("UB Networks"), a manufacturer of local area network equipment based in Santa Clara, California, for cash consideration of $146,590,000. The operating results of UB Networks have been consolidated into the operating results of the Company commencing in the fourth fiscal quarter ended April 30, 1997. RESULTS OF OPERATIONS Sales increased in the second quarter of fiscal 1998 ended November 2, 1997 by 37% compared to sales in the second quarter of fiscal 1997 ended October 27, 1996 and sales for the first six months of fiscal 1998 increased by 44% over sales for the first six months of fiscal 1997. The increase in sales was more than offset by a decline in the gross margin as a percentage of sales and an increase in operating expenses, resulting in net earnings of $57,993,000 for the second quarter of fiscal 1998, a decrease of 8% from net earnings for the second quarter of fiscal 1997, and net earnings of $122,347,000 for the first six months of fiscal 1998, a decrease of 1% from net earnings for the first six months of fiscal 1997. Sales for the second quarter of fiscal 1998 of $432,169,000 declined 1% relative to sales of $434,738,000 for the first quarter of fiscal 1998. Net earnings for the second quarter of fiscal 1998 of $57,993,000 declined 10% relative to net earnings of $64,354,000 for the first quarter of fiscal 1998. The declines in sales and net earnings in the second quarter of fiscal 1998 compared to the first quarter of fiscal 1998 were principally the result of revenue declines associated with the former UB Networks.
SALES Fiscal Quarter Ended Two Fiscal Quarters Ended ---------------------------- ---------------------------- Nov 2, Oct 27, % Nov 2, Oct 27, % 1997 1996 Increase 1997 1996 Increase -------- -------- -------- -------- -------- -------- (Canadian dollars in thousands) Sales $432,169 $316,082 37% $866,907 $602,119 44% ======== ======== ======== ========
Growth in sales in the second quarter and first six months of fiscal 1998 compared to the second quarter and first six months of fiscal 1997 was due to an increase in sales of products based on packet technologies. The proportion of product sales from products based on packet technologies was over 55% in the second quarter and first six months of fiscal 1998 compared to approximately 35% in the second quarter and first six months of fiscal 1997. The growth in sales of products based on packet technologies compared to the prior fiscal year was derived from both wide area network and local area network products. Product line enhancements and new (Page 12 of 24) products introduced for wide area network applications over the past two years resulted in sales growth in the second quarter and first six months of fiscal 1998 as compared to the second quarter and first six months of fiscal 1997, predominantly through increased acceptance and demand for the Company's asynchronous transfer mode (ATM) products. The acquisition of UB Networks in the latter part of fiscal 1997 resulted in sales growth for packet based products into local area networks in the second quarter and first six months of fiscal 1998 as compared to sales recorded for these products in the second quarter and first six months of fiscal 1997 prior to the acquisition. Sales of circuit switched networking products in the second quarter and first six months of fiscal 1998 were approximately consistent with sales in the comparable periods of fiscal 1997. Sales of these networking products have been and are expected to be subject to slower growth as customers increasingly adopt packet technologies, not only in North America but in the rest of the world as well. The Company is subject to a greater degree of variation in quarterly sales of circuit switched networking products as the majority of sales of these products is expected to be derived from less mature, rapidly developing markets outside of North America. The Company expects the proportion of sales derived from products based on packet technologies to continue to increase relative to sales derived from circuit switched networking products in fiscal 1998 when compared to fiscal 1997. Due to longer sales cycles often associated with the adoption of new technologies, sales of products based on packet technologies may be subject to variable rates of quarterly growth. The sales increases in the second quarter and first six months of fiscal 1998 relative to the second quarter and first six months of fiscal 1997 reflect growth in all of the Company's business regions, most notably in Europe and the United States. Deliveries to original equipment manufacturers (OEMs) for carrier customers and deliveries under certain large contracts with carriers contributed significantly to sales throughout the first six months of fiscal 1998 and the first six months of fiscal 1997. Sales to Siemens A.G. and subsidiaries, generally under OEM arrangements for resale to end users, were 20% of sales in the second quarter of fiscal 1998, compared to 18% of sales in the second quarter of fiscal 1997, and were 19% of sales in the first six months of fiscal 1998 and fiscal 1997. Sales to carriers of central office applications for tariffed services, for use within their internal networks and for resale to end users, represented 70% of total sales in both the second quarter of fiscal 1998 and the second quarter of fiscal 1997 and accounted for 67% of total sales for the first six months of fiscal 1998 compared to 69% for the first six months of fiscal 1997. Sales for the second quarter of fiscal 1998 of $432,169,000 represented a 1% decline from sales of $434,738,000 recorded in the first quarter of fiscal 1998. The decline was a reflection of a decrease in sales of products associated with the former UB Networks, largely offset by an increase in revenues from the Company's ATM products for wide area networks. The revenue decline associated with the former UB Networks was primarily due to declines in sales of shared media hub products as well as with unplanned delays in availability of certain key interface cards. Revenue associated with the former UB Networks may be further adversely affected during the remainder of fiscal 1998. The Company is taking steps to reallocate its resources in its local area network business as discussed in "Financial Condition". A significant portion of the Company's sales are derived from products shipped against orders received in each fiscal quarter and from products shipped against firm purchase orders released in that fiscal quarter. In addition, customers have the ability to revise or cancel orders and change delivery schedules without significant penalty. As a result, the Company operates without significant backlog and schedules some production and budgets expenses based on (Page 13 of 24) forecasts of sales which are difficult to predict. Unforseen delays in product deliveries or closing large sales, introductions of new products by the Company or its competitors, seasonal patterns of customer capital expenditures or other conditions affecting the networking industry in particular or the economy generally during any fiscal quarter could cause quarterly revenue and, to a greater degree, net earnings, to vary greatly. Because substantial portions of the Company's sales, cost of sales and other expenses are denominated in U.S. dollars and Pounds Sterling, the Company's results of operations are subject to change based on fluctuations in the rates of exchange of those currencies for the Canadian dollar. During the second quarter and first six months of fiscal 1998, the decrease in the value of the Canadian dollar against the Pound Sterling and the U.S. dollar, relative to exchange rates prevailing in the second quarter and first six months of fiscal 1997, resulted in no material variance in reported sales, gross margin or income from operations. COST OF SALES AND GROSS MARGIN
Fiscal Quarter Ended Two Fiscal Quarters Ended -------------------- ------------------------- Nov 2, Oct 27, Nov 2, Oct 27, 1997 1996 1997 1996 -------- -------- -------- --------- (Canadian dollars in thousands) Gross margin $272,368 $203,897 $546,376 389,191 ======== ======== ======== ======= As % of sales 63% 65% 63% 65%
Cost of sales consists of manufacturing costs, warranty expense and costs associated with the provision of services. The gross margin as a percentage of sales declined in the second quarter and first six months of fiscal 1998 relative to the second quarter and first six months of fiscal 1997 primarily as a result of gross margins earned on revenues of the former UB Networks, which have been below the average gross margins earned on the Company's other products. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Fiscal Quarter Ended Two Fiscal Quarters Ended ------------------------------- ------------------------------- Nov 2, Oct 27, % Nov 2, Oct 27, % 1997 1996 Increase 1997 1996 Increase --------- --------- --------- --------- --------- --------- (Canadian dollars in thousands) Selling, general and and administrative $123,402 $78,138 58% $247,259 $144,396 71% ======== ======== ======== ======== As % of sales 29% 25% 29% 24%
Selling, general and administrative expenses increased in the second quarter and first six months of fiscal 1998 relative to the second quarter and first six months of fiscal 1997 primarily as a result of increases in sales and service personnel. The majority of the increase in personnel was the result of acquisitions made in the last six months of fiscal 1997 to enhance the Company's business and diversify its marketing and distribution channels. Incremental hiring and spending was directed at programs to strengthen its sales and support infrastructure throughout the world and to market new products. (Page 14 of 24) The increase in selling, general and administrative expenses as a percentage of sales in the second quarter and first six months of fiscal 1998 over the second quarter and first six months of fiscal 1997 is the reflection of the higher cost structure of companies acquired during fiscal 1997, most significantly the former ub networks, as well as the result of the sequential sales decline in the second quarter of fiscal 1998 from the first quarter of fiscal 1998, and in the first quarter of fiscal 1998 from the fourth quarter of fiscal 1997.
RESEARCH AND DEVELOPMENT Fiscal Quarter Ended Two Fiscal Quarters Ended ---------------------------- ------------------------------ Nov 2, Oct 27, % Nov 2, Oct 27, % 1997 1996 Increase 1997 1996 Increase ------- ------- -------- -------- -------- -------- (Canadian dollars in thousands) Gross research and development expenditures $77,479 $43,920 76% $148,296 $ 83,371 78% Investment tax credits (8,600) (6,000) 43% (17,000) (11,800) 44% Customer, government and other funding (1,435) (1,840) (22%) (2,937) (4,427) (34%) Net deferral (amortization) of software development costs (1,275) (913) 40% (2,507) (1,742) 44% ------- ------- -------- -------- Net research and development expenses $66,169 $35,167 88% $125,852 $ 65,402 92% ======= ======= ======== ======== Gross expenditures as a % of sales 18% 14% 17% 14% Recoveries as a % of gross expenditures 15% 20% 15% 22% Net expenses as a % of sales 15% 11% 15% 11%
Research and development expenditures consist primarily of software and hardware engineering personnel expenses, costs associated with equipment and facilities, and subcontracted research and development costs. The increased gross research and development expenditures in the second quarter of fiscal 1998 compared to the second quarter of fiscal 1997 and in the first six months of fiscal 1998 relative to the first six months of fiscal 1997 reflect spending on new networking products, features and interfaces, particularly for ATM platforms in carrier, carrier access and enterprise network applications and network and services management software. The majority of the increase was the result of increased engineering personnel, a portion of which relates to the acquisition of UB Networks. Recoveries decreased as a percentage of gross expenditures in the second quarter and first six months of fiscal 1998 compared to the second quarter and first six months of fiscal 1997 due to declines in investment tax credits as a proportion of gross research and development expenditures and due to declines in customer, government and other funding. Based on management's estimates of the proportion of fiscal 1998 gross research and development expenditures to be incurred in canada and therefore eligible for investment tax credits, and current levels of committed funding, management expects the level of recoveries as a (Page 15 of 24) percentage of gross research and development expenditures in fiscal 1998 to continue to be lower than in fiscal 1997. The markets for the Company's products are characterized by continuing technological change. The Company has determined to increase the pace of its product development in fiscal 1998 to address the requirements of carriers as they invest in new infrastructures to meet the challenges of increased competition and growing demand for new communications services. As a result, Management anticipates that net research and development expenses, expressed as a percentage of sales, in fiscal 1998 will be higher than in fiscal 1997.
INTEREST AND OTHER EXPENSES Fiscal Quarter Ended Two Fiscal Quarters Ended ----------------------------- ---------------------------- Nov 2, Oct 27, % Nov 2, Oct 27, % 1997 1996 Increase 1997 1996 Increase ------- --------- -------- ------- ------- -------- (Canadian dollars in thousands) Interest income 2,792 $ 5,320 (48%) $ 5,814 $10,792 (46%) Interest expense on long term obligations (207) (186) 11% (491) (258) 90% Other expenses (2,957) (2,734) 8% (5,142) (4,879) 5%
Interest income for the second quarter of fiscal 1998 and first six months of fiscal 1998 decreased compared to the second quarter of fiscal 1997 and first six months of fiscal 1997 due to a decline in the cash position maintained, and due to a decline in interest rates earned on investments. Interest expense on long term obligations increased in the second quarter of fiscal 1998 and the first six months of fiscal 1998 due to the assumption of long term obligations of companies acquired by the Company during fiscal 1997. Other expenses represented less than 1% of sales in the second quarter and first six months of both fiscal 1998 and fiscal 1997. INCOME TAXES
Fiscal Quarter Ended Two Fiscal Quarters Ended -------------------- ------------------------- Nov 2, Oct 27, NOV 2, Oct 27, 1997 1996 1997 1996 -------- -------- -------- -------- Income tax rate 30% 32% 30% 32%
The composite rates of income tax for the second quarter and first six months of fiscal 1998 and the second quarter and first six months of fiscal 1997 were reduced from the statutory rate primarily as a result of the application of certain deductions related to manufacturing and processing activities and to research and development expenditures in Canada. Future changes in the composite rate of income tax will be primarily due to the relative profitability of operations and the national tax policies in each of the various countries in which the company operates. Management believes that the composite rate of income tax will remain lower than the statutory rate through the application of deductions related to manufacturing and processing activities and research and development expenditures in Canada as well as other tax planning measures undertaken by the Company. (Page 16 of 24) NON-CONTROLLING INTEREST The non-controlling interests' share of subsidiary net earnings of $108,000 in the second quarter of fiscal 1998 relate principally to the net earnings of Coasin Chile S.A., a Chilean distributor and systems integrator of networking products. The non-controlling interests' share of subsidiary net losses of $259,000 in the first six months of fiscal 1998 and the non-controlling interests' share of subsidiary income of $435,000 in the second quarter of fiscal 1997 and $1,993,000 in the first six months of fiscal 1997 were all derived principally from the activities of Transistemas S.A., an Argentine systems integrator of networking products. The Company has a 51% equity interest in both Coasin Chile S.A. and Transistemas S.A. NET EARNINGS Sales increased in the second quarter of fiscal 1998 ended November 2, 1997 by 37% compared to sales in the second quarter of fiscal 1997 ended October 27, 1996 and increased by 44% in the first six months of fiscal 1998 compared to the first six months of fiscal 1997. These increases in sales were more than offset by increases in operating expenses, resulting in net earnings of $57,993,000 for the second quarter of fiscal 1998 and $122,347,000 for the first six months of fiscal 1998, which represent declines in net earnings of 8% and 1% as compared to the second quarter of fiscal 1997 and the first six months of fiscal 1997, respectively. Net earnings for the second quarter of fiscal 1998 of $57,993,000 decreased by 10% compared to net earnings of $64,354,000 for the first quarter of fiscal 1998, principally as a result of revenue declines from products associated with the former UB Networks. FINANCIAL CONDITION During the first six months of fiscal 1998 ended November 2, 1997 working capital increased from $638,392,000 to $777,791,000. As at November 2, 1997 the Company had $317,515,000 of cash and cash equivalents, which decreased by $16,389,000 during the first six months of fiscal 1998. Net earnings of $122,347,000 for the first six months of fiscal 1998 generated $66,255,000 of cash from operations and cash from stock option exercises totaled $80,531,000. These cash inflows were more than offset by additions to property, plant and equipment of $125,006,000, and other investing activities, including acquisitions and equity investments in affiliates, of $42,610,000. Two principal components of the Company's working capital are inventory and accounts receivable. The Company schedules some production of its products based on forecasts of sales, which are difficult to predict. Orders in the first two quarters of fiscal 1998 did not match forecasts as to quantities and product mix contributing to an increase in inventory of $53,415,000. Management believes that the payment terms and conditions extended to the Company's customers and arrangements with the Company's suppliers are consistent with practices generally prevailing in the networking industry. Management anticipates that capital expenditures for fiscal 1998 will exceed those of fiscal 1997 as the Company is investing in new research and development and manufacturing facilities in Canada, in land and facilities in the metropolitan area of Washington, D.C., in research and development and manufacturing equipment and in information systems. The Company intends to extinguish its existing long term obligations as they become due, and may also increase its current investments in subsidiaries and associated companies. The Company intends to fund the increased capital expenditures, retirement of long term obligations and increased investments with existing cash and cash expected to be generated from operations during fiscal (Page 17 of 24) 1998, supplemented as appropriate by the issuance of shares or debt. In addition, the Company may use a portion of its cash resources, to extend or enhance its business and diversify its marketing and distribution channels through acquisitions of or investments in businesses, products or technologies or through the formation of strategic partnerships with other companies. Subsequent to the second fiscal quarter ended November 2, 1997, the Company received an offer to acquire all of its shares of Broadband Networks Inc. ("BNI"), a Canadian wireless technology company in which the Company holds a minority interest. The Company estimates the proceeds on disposition of its shares will approximate $70,000,000, less amounts subject to escrow conditions. The sale is expected to be completed during fiscal 1998. In November 1997 the Company acquired a 49.9% equity interest in RADNeT Ltd., an Israeli developer and manufacturer of access switches for ATM networks, by the purchase of shares in the amount of approximately $52,000,000. On December 3, 1997 the Company announced the first step of its plan to reallocate its resources in its local area network equipment business during the fiscal quarter ending February 1, 1998. The first step involves both the redeployment of resources and the reduction of approximately 280 positions primarily related to local area network products worldwide. Costs associated with this reduction in work force, including severance, related medical and other benefits, and other obligations to employees are estimated to be $8,000,000 to $10,000,000. Other costs associated with the first and other steps to be taken in connection with the Company's plan for its local are network equipment business will be determined when all of the elements of the plan have been formulated. Management believes that the Company's liquidity in the form of existing cash resources and its credit facilities, as well as cash generated from operations, will prove adequate to meet its operating and capital expenditure requirements through the end of fiscal 1998 and into the foreseeable future. (Page 18 of 24) PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Lucent Technologies Inc. ("Lucent Technologies") filed a complaint dated June 24, 1997 in United States District Court in Delaware against the Company and its United States subsidiary, Newbridge Networks Inc. Lucent Technologies manufactures and sells telecommunications systems, software and products, and is both a distributor of the Company's products and a competitor of the Company. The complaint alleges that the Company's manufacture and sale in the United States of Newbridge frame relay and ATM (asynchronous transfer mode) switch products infringe certain United States patent rights claimed by Lucent Technologies, and requests actual and trebled damages in an unspecified amount. The Company has filed an answer to the complaint, and intends to defend this action vigorously. Based upon its present understanding of the laws in the United States and the facts, the Company believes it has meritorious defenses to these claims. During the fiscal year ended April 30, 1995, the Company was served with one of several complaints filed in United States District Court in Washington, D.C. by certain persons purporting to be purchasers of Common Shares of the Company. on or about May 8, 1995 these complaints were combined into a single consolidated and amended complaint (the "First Amended Complaint") which named the Company and certain of its executive officers as defendants. The First Amended Complaint purported to be a class action on behalf of a class of persons who purchased securities of the Company between March 29 and August 1, 1994 and alleged that the Company made false and misleading statements in violation of United States securities law and common law, for which damages were sought in unspecified amounts. On June 3, 1996, the Court issued an order granting in part and denying in part the defendants' motion to dismiss. Among other things, the Court dismissed with prejudice the claim alleging violation of common law. The Court also dismissed the majority of plaintiffs' allegations of violation of United States securities law, but granted plaintiffs leave to replead these allegations in a Second Amended Complaint, which plaintiffs filed on July 3, 1996. The Court further conditionally certified the action as a class action without prejudice to the Company's right to renew its objection to class action certification upon completion of discovery. On April 10, 1997, the Court issued an order granting in part and denying in part the defendants' motion to dismiss the Second Amended Complaint. Among other things, the Court dismissed with prejudice a substantial portion of plaintiffs' allegations. The Company has served an answer denying plaintiffs' claims. The Company intends to continue to defend this action vigorously. Based upon its present understanding of the laws in the United States and the facts, the Company believes it has meritorious defenses to the action. ITEM 5. OTHER INFORMATION The "Cautionary Statement Regarding Forward-Looking Information" contained in "Market for Registrant's Common Equity and Related Stockholder Matters" in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 1997 is incorporated herein by reference and made a part hereof. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit 11.1 Computation of earnings per share under accounting principles generally accepted in Canada. Exhibit 11.2 Computation of earnings per share under accounting principles generally accepted in the United States. Exhibit 27 Financial Data Schedule (Page 19 of 24) 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 thereunto duly authorized. NEWBRIDGE NETWORKS CORPORATION (Registrant) Date: December 12, 1997 By: /s/ Terence H. Matthews ----------------------- TERENCE H. MATTHEWS, Chairman of the Board of Directors and Chief Executive Officer Date: December 12, 1997 By: /s/ Kenneth B. Wigglesworth --------------------------- KENNETH B. WIGGLESWORTH, Vice President, Chief Financial Officer (Page 20 of 24) EXHIBIT INDEX
PAGE NO. -------- 11.1 Computation of earnings per share under accounting principles generally accepted in Canada 22 11.2 Computation of earnings per share under accounting principles generally accepted in the United States 23 27 Financial data schedule 24
(Page 21 of 24) EX-11.1 2 COMPUTATION OF EARNINGS PER SHARE - CANADA EXHIBIT 11.1 NEWBRIDGE NETWORKS CORPORATION COMPUTATION OF EARNINGS PER SHARE (Accounting principles generally accepted in Canada) (Canadian dollars, amounts in thousands except per share data) (Unaudited)
FISCAL QUARTER ENDED TWO FISCAL QUARTERS ENDED -------------------- -------------------------- Nov 2, Oct 27, Nov 2, Oct 27, 1997 1996 1997 1996 --------- -------- ----------- ----------- BASIC EARNINGS PER SHARE Net earnings $ 57,993 $ 62,781 $122,347 $123,582 ======== ======== ======== ======== Common shares outstanding at the beginning of the period 174,245 169,754 171,859 168,676 Weighted average number of Common Shares issued, net of Common Shares repurchased, during the period 488 478 1,971 1,060 -------- -------- -------- -------- Weighted average number of Common Shares outstanding during the period 174,733 170,232 173,830 169,736 ======== ======== ======== ======== Basic earnings per share $ 0.33 $ 0.37 $ 0.70 $ 0.73 ======== ======== ======== ======== FULLY DILUTED EARNINGS PER SHARE Earnings before imputed earnings $ 57,993 $ 62,781 $122,347 $123,582 After tax imputed earnings from the investment of funds received through dilution 4,363 2,715 8,342 5,598 -------- -------- -------- -------- Adjusted net earnings $ 62,356 $ 65,496 $130,689 $129,180 ======== ======== ======== ======== Weighted average number of Common Shares outstanding during the period 174,733 170,232 173,830 169,736 Weighted average common share equivalents based on conversion of outstanding stock options 15,783 13,899 15,953 13,198 -------- -------- -------- -------- Weighted average number of Common Shares and equivalents outstanding during the period 190,516 184,131 189,783 182,934 ======== ======== ======== ======== Fully diluted earnings per share $ 0.33 $ 0.36 $ 0.69 $ 0.71 ======== ======== ======== ======== EARNINGS PER SHARE EXPRESSED IN U.S. DOLLARS Daily average exchange rate of a Canadian dollar for U.S. dollars as reported by the Federal Reserve Bank of New York $ 0.7204 $ 0.7322 $ 0.7223 $ 0.7316 Basic earnings per share, in U.S. dollars $ 0.24 $ 0.27 $ 0.51 $ 0.53 ======== ======== ======== ======== Fully diluted earnings per share, in U.S. dollars $ 0.24 $ 0.26 $ 0.50 $ 0.52 ======== ======== ======== ========
(Page 22 of 24) EX-11.2 3 COMPUTATION OF EARNINGS PER SHARE - U.S. EXHIBIT 11.2 NEWBRIDGE NETWORKS CORPORATION COMPUTATION OF EARNINGS PER SHARE (Accounting principles generally accepted in the United States) (Canadian dollars, amounts in thousands except per share data) (Unaudited)
FISCAL QUARTER ENDED TWO FISCAL QUARTERS ENDED -------------------- ------------------------- Nov 2, Oct 27, Nov 2, Oct 27, 1997 1996 1997 1996 -------- --------- ---------- ---------- EARNINGS PER SHARE (U.S. GAAP) - PRIMARY Net earnings $ 57,993 $ 62,781 $122,347 $123,582 ======== ======== ======== ======== Weighted average number of Common Shares outstanding during the period 174,733 170,232 173,830 169,736 Net effect of dilutive stock options based on the treasury stock method 7,995 4,515 7,206 5,101 -------- -------- -------- -------- Weighted average number of Common Shares and equivalents outstanding during the period 182,728 174,747 181,036 174,837 ======== ======== ======== ======== Earnings (loss) per share (U.S. GAAP) $ 0.32 $ 0.36 $ 0.68 $ 0.71 ======== ======== ======== ======== EARNINGS (LOSS) PER SHARE (U.S. GAAP) - FULLY DILUTED Net earnings (loss) $ 57,993 $ 62,781 $122,347 $123,582 ======== ======== ======== ======== Weighted average number of Common Shares outstanding during the period 174,733 170,232 173,830 169,736 Net effect of dilutive stock options based on the treasury stock method 7,995 4,515 8,140 5,101 -------- -------- -------- -------- Weighted average number of Common Shares and equivalents outstanding during the period 182,728 174,747 181,970 174,837 ======== ======== ======== ======== Earnings (loss) per share (U.S. GAAP) $ 0.32 $ 0.36 $ 0.67 $ 0.71 ======== ======== ======== ======== EARNINGS (LOSS) PER SHARE EXPRESSED IN U.S. DOLLARS Daily average exchange rate of a Canadian dollar for U.S. dollars as reported by the federal reserve bank of New York $ 0.7204 $ 0.7322 $ 0.7223 $ 0.7316 Earnings (loss) per share (U.S. GAAP) - Primary, in U.S. dollars $ 0.23 $ 0.26 $ 0.49 $ 0.52 ======== ======== ======== ======== Earnings (loss) per share (U.S. GAAP) - Fully diluted, in U.S. dollars $ 0.23 $ 0.26 $ 0.49 $ 0.52 ======== ======== ======== ========
(Page 23 of 24) EX-27 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated statement of earnings, consolidated balance sheet and consolidated statement of cash flows included in the Company's Form 10-Q for the fiscal quarter ended November 2, 1997, and is qualified in its entirety by reference to such financial statements. 1,000 CANADIAN DOLLARS 3-MOS APR-30-1998 AUG-04-1997 NOV-02-1997 0.7204 287,555 29,960 438,926 12,167 212,910 1,056,666 749,847 380,391 1,703,621 278,875 0 0 0 446,702 911,197 1,703,621 432,169 432,169 159,801 349,372 2,957 0 207 82,425 24,324 57,993 0 0 0 57,993 0.32 0.32
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