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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 4, 1998
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Date of report (Date of earliest event reported)
Telco Systems, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-12622 94-2178777
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(State or Other Juris- (Commission File No.) (IRS Employer
diction of Incorporation) Identification No.)
68 Nahatan Street
Norwood, Massachusetts 02062
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(Address of Principal Executive Offices and Zip Code)
(781) 551-0300
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On November 4, 1998, Ernst & Young LLP, the independent auditors of
Telco Systems, Inc. (the "Company"), completed its audit of the Company's
financial statements at and for the fiscal year ended August 30, 1998. Based
upon information reflected in the Company's audited fiscal 1998 financial
statements, on November 4, 1998, the Company announced audited fourth quarter
and fiscal year 1998 (ended August 30, 1998) results, which have been revised
upward from initial earnings reported by the Company on September 17, 1998.
For the fourth quarter of fiscal year 1998, revenue of $31,673,000 and
gross margins remained unchanged. Net income before special charges was
$2,875,000 or $.26 per share (basic and diluted), versus the initial report of
$2,450,000 or $.22 per share, due to lower actual operating expenses partially
offset by higher income tax expense. Special charges and inventory reserves
remained unchanged. After special charges, the Company's net loss for the fourth
quarter was ($375,000) or ($.03), per share versus the initial report of
($800,000) or ($.07) per share.
For the 1998 fiscal year, revenue of $113,230,000 and gross margins
remained unchanged. Net income for the year before special charges was
$5,134,000 or $.47 per share ($.46 per share, diluted), versus the initial
report of $4,709,000 or $.43 per share ($.42 per share, diluted). Special
charges, which included a one-time charge of $5,135,000 or $.47 per share for
the write-off of purchased research and development associated with the
Company's January 1998 acquisition of Jupiter Technology, Inc., and inventory
reserves remained unchanged. Including this one-time charge and the other
charges mentioned above, the net loss for the year was ($3,251,000) or ($.30)
per share versus the initial report of ($3,676,000) or ($.34) per share.
The following audited historical financial statements of the Company are
attached as exhibits hereto and incorporated by reference herein: Consolidated
Balance Sheets as of August 30, 1998 and August 31, 1997 and the related
Consolidated Statements of Operations, Shareholders' Equity and Cash Flows for
each of the three years ended August 30, 1998. The Company's Management
Discussion and Analysis of Financial Condition and Results of Operations
relating to its audited fiscal 1998 financial statements is also attached as an
exhibit hereto and incorporated by reference herein.
In addition, the Company's November 4, 1998, press release announcing
its audited fiscal 1998 financial results is attached as an exhibit hereto and
incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Exhibit 23.1 Consent of Independent Auditors
Exhibit 27.1 Financial Data Schedule
Exhibit 99.1 Consolidated Financial Statements and Schedule of the
Company as of August 30, 1998 and 1997 and for
each of the three years in the period ended August 30,
1998 and report of independent auditors
Exhibit 99.2 The Company's Management Discussion and Analysis of
Financial Condition and Results of Operations
Exhibit 99.3 Press release dated November 4, 1998, announcing the
Company's audited fiscal 1998 financial results
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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's duly authorized signatory.
Dated: November 4, 1998
TELCO SYSTEMS, INC.
By: /s/ William J. Stuart
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Name: William J. Stuart
Title: Vice President and Chief Financial Officer
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