TMCnet News
Zhone Technologies Reports Second Quarter 2007 Financial ResultsOAKLAND, Calif. --(Business Wire)-- Zhone Technologies, Inc. (NASDAQ:ZHNE), a global provider of advanced communications equipment and a leader in VoIP, IPTV, and Ethernet over both copper and fiber access lines, today reported its financial results for the second quarter ended June 30, 2007. Revenue for the second quarter of 2007 was $44.1 million compared with $43.1 million for the first quarter of 2007 and $54.2 million for the second quarter of 2006. Net loss for the second quarter of 2007, calculated in accordance with generally accepted accounting principles ("GAAP"), was $4.6 million or $0.03 per share compared with a net loss of $4.8 million or $0.03 per share for the first quarter of 2007, and a net loss of $13.1 million or $0.09 per share for the second quarter of 2006. Pro forma earnings before stock-based compensation, interest, taxes, impairment, depreciation and amortization ("EBITDA") was a $2.9 million loss for the second quarter of 2007, compared to a pro forma EBITDA loss of $2.9 million for the first quarter of 2007, and pro forma EBITDA loss of $10.1 million for the second quarter of 2006. "During the second quarter of 2007, we launched our new GPON solution and are excited about the significant level of interest by our customers. In addition, our SLMS revenue continued to grow almost 5% over the prior quarter," said Mory Ejabat, chairman and chief executive officer of Zhone Technologies, Inc. "Our next generation technologies continue to gain traction in markets across the globe." Zhone will hold a conference call and audio webcast today, July 24, 2007, at approximately 2:00 p.m. PT / 5:00 p.m. ET to review its second quarter 2007 results. This call is open to the public by dialing +1 (888) 680-0879 for U.S. callers and +1 (617) 213-4856 for international callers and then entering passcode 31271514. The audio webcast will be simultaneously available on the Investor Relations section of Zhone's website at http://www.zhone.com/about/investors/. A replay of the conference call will be available for approximately one week following the original call by dialing +1 (888) 286-8010 for U.S. callers and +1 (617) 801-6888 for international callers and then entering passcode 66796909. An audio webcast replay will also be available online at http://www.zhone.com/about/investors/ for approximately one week following the original call. Non-GAAP Financial Measures To supplement Zhone's consolidated financial statements presented in accordance with GAAP, Zhone uses pro forma EBITDA, a non-GAAP measure Zhone believes is appropriate to enhance an overall understanding of Zhone's past financial performance and prospects for the future. These adjustments to GAAP results are made with the intent of providing greater transparency to supplemental information used by management in its financial and operational decision-making. These non-GAAP results are among the primary indicators that management uses as a basis for making operating decisions because they provide meaningful supplemental information regarding the company's operational performance, including the company's ability to provide cash flows to invest in research and development, and to fund capital expenditures. In addition, these non-GAAP financial measures facilitate management's internal comparisons to the company's historical operating results and comparisons to competitors' operating results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation between net loss calculated on a GAAP basis and pro forma EBITDA on a non-GAAP basis is provided in a table immediately following the Unaudited Condensed Consolidated Statements of Operations. About Zhone Technologies, Inc. Zhone Technologies, Inc. (NASDAQ:ZHNE) is a provider of advanced communications equipment to more than 600 operators worldwide. The company's broad line of access and transport networking solutions enables the full range of multi-play services, including residential and business broadband, VoIP, IPTV, and Ethernet. Zhone's converged access platform improves network agility and reduces costs, allowing operators to rapidly deploy premium services on their existing copper and fiber infrastructure while providing a seamless migration path to an efficient, all-IP network. www.zhone.com Zhone, the Zhone logo, and all Zhone product names are trademarks of Zhone Technologies, Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or product names are all subject to change without notice. Copyright (C) 2007 Zhone Technologies, Inc. All rights reserved.
ZHONE TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Six Months Ended
----------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2007 2007 2006 2007 2006
-------------------------------------------------
Net revenue $ 44,085 $ 43,146 $ 54,214 $ 87,231 $106,900
Cost of revenue 29,028 27,487 42,291 56,515 74,795
Stock-based
compensation 81 120 235 201 556
-------------------------------------------------
Gross profit 14,976 15,539 11,688 30,515 31,549
-------------------------------------------------
Operating expenses:
Research and
product
development (a) 8,528 8,656 9,817 17,184 18,429
Sales and
marketing (a) 8,068 8,627 10,684 16,695 20,274
General and
administrative
(a) 2,783 2,825 3,627 5,608 7,138
Amortization and
impairment of
intangible assets - - 559 - 2,457
-------------------------------------------------
Total operating
expenses 19,379 20,108 24,687 39,487 48,298
-------------------------------------------------
Operating loss (4,403) (4,569) (12,999) (8,972) (16,749)
Other expense, net (26) (179) (46) (205) (93)
-------------------------------------------------
Loss before
income taxes (4,429) (4,748) (13,045) (9,177) (16,842)
Income tax provision 125 38 55 163 162
-------------------------------------------------
Net loss $ (4,554) $ (4,786) $(13,100) $ (9,340) $(17,004)
=================================================
Basic and diluted
net loss per share $ (0.03) $ (0.03) $ (0.09) $ (0.06) $ (0.11)
Weighted average
shares outstanding
used to compute
basic and diluted
net loss per share 149,533 149,338 148,721 149,462 148,430
(a) Amounts include
stock-based
compensation costs
as follows:
Research and
product
development 184 262 391 446 929
Sales and
marketing 147 211 332 358 776
General and
administrative 360 389 478 749 646
-------------------------------------------------
691 862 1,201 1,553 2,351
GAAP net loss $ (4,554) $ (4,786) $(13,100) $ (9,340) $(17,004)
Stock-based
compensation 772 982 1,436 1,754 2,907
Interest expense,
net 77 167 235 244 234
Income taxes 125 38 55 163 162
Depreciation 672 656 678 1,328 1,265
Amortization and
impairment of
intangible assets - - 559 - 2,457
-------------------------------------------------
Non-GAAP pro forma
EBITDA $ (2,908) $ (2,943) $(10,137) $ (5,851) $ (9,979)
=================================================
Revenue by product
line:
SLMS 31,657 30,221 35,272 61,878 68,427
Legacy, service
and other 12,428 12,925 18,942 25,353 38,473
-------------------------------------------------
44,085 43,146 54,214 87,231 106,900
ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2007 2006
----------- ------------
Assets
Current assets:
Cash, cash equivalents and short-term
investments $ 57,234 $ 64,310
Accounts receivable 34,802 31,828
Inventories 42,890 45,036
Prepaid expenses and other current assets 3,429 3,852
------------------------
Total current assets 138,355 145,026
Property and equipment, net 21,730 23,704
Goodwill 70,737 70,737
Restricted cash 646 636
Other assets 90 79
------------------------
Total assets $ 231,558 $ 240,182
========================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 19,460 $ 18,893
Line of credit 14,500 14,500
Current portion of long-term debt 7,683 7,673
Accrued and other liabilities 18,047 20,088
------------------------
Total current liabilities 59,690 61,154
Long-term debt, less current portion 19,262 19,376
Other long-term liabilities 2,063 2,048
------------------------
Total liabilities 81,015 82,578
------------------------
Stockholders' equity:
Common stock 150 149
Additional paid-in capital 1,060,412 1,058,317
Other stockholders' equity 281 98
Accumulated deficit (910,300) (900,960)
------------------------
Total stockholders' equity 150,543 157,604
------------------------
Total liabilities and stockholders'
equity $ 231,558 $ 240,182
========================
|
