U.S. Robotics Corporation
8100 N. McCormick Blvd.
Skikie, IL 60076-2999
http://www.usr.com

ALEXANDRIA, V.A., July 25, 1996/FOOLWIRE/-- Yesterday, U.S. Robotics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:USRX)") else Response.Write("(NASDAQ:USRX)") end if %> announced its third quarter results. The company reported record earnings for the period. All reported figures for earnings per share and weighted average shares outstanding reflect the two-for-one stock splits, both in the form of 100% stock dividends paid in September 1995 and May 1996.

Third Quarter Results

Revenues rose 130% to $546.8 million from $237.3 million reported for Q3 1995. Net income also increased to $63.3 million from $24.9 million for the same period of a year before. This equates to an increase of 155% in net income year over year.

For the last nine months, the company reported revenues of $1,366 million, and increase of 129% over $596.0 million for the same period last year. Net income rose 185% to $156 million, from $54.9 million (excluding non-recurring merger-related costs) for the first nine months of fiscal 1995. Earnings per share for the nine months were $1.65, based on 95 million weighted average shares outstanding, compared to $0.68 (excluding non-recurring merger-related costs) on 80 million shares for the corresponding period in fiscal 1995.

Forward Looking Statements

U.S. Robotics reported record results this quarter but warned that next quarters growth may not be as

high. The company warned that it will be difficult to sustain its recent quarter to quarter growth of up to 20% as absolute levels continue to grow dramatically. Furthermore, the company warned that this quarter's earnings were partially due to increasing the inventories in the distribution channels. Currently, the distribution channels have four weeks worth of inventory. This is up from one to two weeks worth of inventory. U.S. Robotics is trying to avoid stockouts at the retail level which have hurt company sales in the past.

Highlights

U.S. Robotics announced an agreement to acquire Scorpio Communications, Ltd. The transaction should be completed before the end of the current quarter. The transaction will be accounted for as a purchase, and is expected to result in a large one-time charge primarily related to purchased R&D costs. Excluding the one-time charge, the acquisition should not have a significant impact on fourth quarter results.

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