-----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, QS+tlQRtg31KF78Y0anO0c7Z6JU9V3uwA1ckbTqXCWuTxFOcnF0FgWZPS6b/36Fi qnD7swsVyQMCL1yffib3MA== 0000950172-99-000609.txt : 19990524 0000950172-99-000609.hdr.sgml : 19990524 ACCESSION NUMBER: 0000950172-99-000609 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASCEND COMMUNICATIONS INC CENTRAL INDEX KEY: 0000921146 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 943092033 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-23774 FILM NUMBER: 99631575 BUSINESS ADDRESS: STREET 1: 1701 HARBOR BAY PKWY CITY: ALAMEDA STATE: CA ZIP: 94502 BUSINESS PHONE: 5107696001 MAIL ADDRESS: STREET 1: ONE ASCEND PLAZA STREET 2: 1701 HARBOR BAY PARKWAY CITY: ALAMEDA STATE: CA ZIP: 94502 10-K/A 1 10-K - AMENDMENT NO. 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT NO. 2 ( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________ Commission File Number: 000-23774 ASCEND COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Delaware 94-3092033 ---------------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1701 Harbor Bay Parkway, Alameda, CA 94502 ---------------------------------------- -------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (510) 769-6001 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: common stock, $0.001 Par Value 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 --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of December 31, 1998 the approximate aggregate market value of voting stock held by non-affiliates of the Registrant was $11,672,400,250 (based upon the closing price for shares of the Registrant's common stock as reported by the Nasdaq National Market on that date). Shares of common stock held by each officer, director and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. The determination of affiliate status is not necessarily a conclusive determination for other purposes. As of February 28, 1999, 222,250,267 shares of the Registrant's common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Not applicable. PORTIONS AMENDED The Registrant hereby amends and restates Footnote 9 to the Registrant's Consolidated Financial Statements set forth in this Report on Form 10-K, as set forth below. 9. Segment and Geographical Information Segment Disclosures -- The Company operates in three business segments, within the global communications networking industry. For management purposes, the Company is divided into three primary business segments: Core Systems, Access Switching and Enterprise Access. Each of these groups has a vice president who reports directly to the Chief Executive Officer ("CEO"), who is the Chief Operating Decision Maker as defined by SFAS 131. The measures of profitability reviewed by the CEO for these segments consist of sales, gross profit and contribution margin, which includes only certain identifiable operating expenses. The majority of the Company's operating expenses are not allocated to the business units, but are treated as corporate expenses (unallocated). Fiscal year 1998 revenues and expenses attributable to each business segment are described in the table below. Similar cost of sales and operating expense data for fiscal 1997 and 1996 is not available, as the Company was not organized in a similar manner. It is impracticable for the Company to restate the corresponding information for earlier periods. In addition, there is no allocation, direct or indirect, of the assets and liabilities to these business segments. The Company had no inter-segment sales in 1998, 1997 and 1996. The following is a summary of the Company's business segments: Core Systems - Offers frame relay switches, the CBX 500 family of ATM switches, and the GRF family of IP switches used to improve the speed, performance and reliability of backbone carrier networks as well as the intelligent networking fault tolerance product. Access Switching - Produces the MAX family of products which provide band- width-on-demand for wide area network (WAN), internet and multimedia access over a common set of digital access lines. The MAX TNT is a carrier class WAN access switch. Enterprise Access - Offers the Pipeline family of remote access equipment as well as the Multiband family of inverse multiplexing equipment. The Pipeline product family provides access equipment for remote office, telecommuting and small office/home office and Internet access. The Ascend Multiband family of controllers is used for video-conferencing and multimedia networks. Unallocated - Representing "All Other," Unallocated is primarily sales from customer service, maintenance, and professional services. Related cost of sales is primarily labor and parts for the respective sales.
Core % Access % Enterprise % Systems Switching Access Unallocated Consolidated -------- --------- ---------- ----------- ------------ Net sales $688,890 $603,523 $103,135 $ 83,134 $1,478,682 Cost of sales 229,370 33% 227,371 38% 44,043 43% 43,187 543,971 -------- --------- ---------- GROSS PROFIT 459,520 67% 376,152 62% 59,092 57% 39,947 934,711 OPERATING EXPENSES: Research and development 117,847 17% 75,509 13% 8,233 8% 14,646 216,235 Sales and marketing 15,608 2% 2,931 0.5% 4,905 5% 278,601 302,045 General and administrative 12,752 2% 8 0.0% 1,093 1% 65,011 78,864 Purchased in-process research and development 266,953 266,953 Costs of Mergers (18,279) (18,279) -------- --------- ---------- ---------- TOTAL OPERATING EXPENSES 146,207 21% 78,448 13% 14,231 14% 606,932 845,818 -------- --------- ---------- ---------- ------------ OPERATING INCOME (LOSS) (1) $313,313 45% $297,704 49% $ 44,861 43% $(566,985) $ 88,893 -------- --------- ---------- ---------- ------------ Interest income 28,102 28,102 Income before income taxes 116,995 116,995 Provision for income taxes 136,649 136,649 NET LOSS $ (19,654) ============
(1) Contribution margin is identified as operating income for Core Systems, Access Switching and Enterprise Access segments in this schedule. Prior to 1998 the Company operated within one business segment with the CEO and Vice-Presidents only receiving net sales information as categorized by the primary business units. Sales attributable each business unit in 1997 and 1996 were as follows: YEAR ENDED DECEMBER 31, ---------------------------- 1997 1996 ---- ---- Core Systems $ 410,144 $ 320,498 Access Switching 605,906 427,331 Enterprise Access 100,291 115,735 Other (unallocated) 51,011 26,709 ------------ ------------- $1,167,352 $890,273 ============ ============= Major Customers and Revenues by Geographic Area -- One customer accounted for 13% and 17% of net sales in 1998 and 1997, respectively. The customer primarily purchased products from the Company's Core Systems and Access Switching segments. No customer accounted for more than 10% of net sales in 1996. Net sales were derived from customers based in the following geographic areas (in thousands): YEAR ENDED DECEMBER 31 ------------------------------------------ 1998 1997 1996 ----------- ----------- ----------- North America................. $ 1,051,160 $ 805,012 $ 576,996 Europe........................ 184,128 157,960 129,126 Asia and Pacific Basin........ 212,184 189,675 170,747 Latin and South America....... 31,210 14,705 13,404 ----------- ----------- ----------- $ 1,478,682 $ 1,167,352 $ 890,273 =========== =========== =========== Substantially all of the Company's identifiable assets at December 31, 1998 and 1997 were attributable to North American operations. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. ASCEND COMMUNICATIONS, INC. Date May 21, 1999 by /S/ Mory Ejabat - --------------------- --------------------------------------- Mory Ejabat, President, Chief Executive Officer and Director -----END PRIVACY-ENHANCED MESSAGE-----