(Source: Business Wire)
Zhone Technologies, Inc. (NASDAQ:ZHNE), a global leader in network
access solutions, today reported its financial results for the third
quarter ended September 30, 2009.
Revenue for the third quarter of 2009 was $36.0 million compared with
$30.3 million for the second quarter of 2009 and $32.0 million for the
third quarter of 2008. Net loss for the third quarter of 2009,
calculated in accordance with generally accepted accounting principles
("GAAP"), was $1.2 million or $0.01 per share compared with a net loss
of $2.3 million or $0.02 per share for the second quarter of 2009, and a
net loss of $6.5 million or $0.04 per share for the third quarter of
2008. Pro forma earnings before stock-based compensation, interest,
taxes, depreciation, restructuring, lease liability accrual, gain on
sale of intangible assets and goodwill impairment ("EBITDA") was a $0.1
million profit for the third quarter of 2009, compared to a pro forma
EBITDA loss of $0.9 million for the second quarter of 2009, and pro
forma EBITDA loss of $4.6 million for the third quarter of 2008.
"Strong sequential revenue growth for the second straight quarter led to
better than expected earnings. This revenue growth was driven by broad
based deployment of our new products in the U.S. and abroad as we begin
a new major product cycle for the company," stated Mory Ejabat, Zhone's
chief executive officer. "As a result, we generated slightly positive
proforma EBITDA ahead of schedule and are on track to improve proforma
EBITDA profitability in the fourth quarter."
Zhone will conduct a conference call and audio webcast today, October
20, 2009, at approximately 2:00 p.m. PT / 5:00 p.m. ET to review its
third quarter 2009 results. This call is open to the public by dialing
+1 (800) 237-9752 for U.S. callers and +1 (617) 847-8706 for international
callers and then entering passcode 18383089. The audio webcast will be
simultaneously available on the Investor Relations section of Zhone's
website at http://www.zhone.com/investors/.
A replay of the conference call will be available after 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
48028058. An audio webcast replay will also be available online at http://www.zhone.com/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 Access for a Converging World
Zhone Technologies, Inc. (NASDAQ:ZHNE) is a global leader in
multi-service access solutions, serving more than 700 of the world's
most innovative network operators. The company offers the industry's
only fully-integrated portfolio of MSAP, FTTx, EFM and Wi-Fi access
technologies, improving network agility and reducing the costs of
delivering the full spectrum of access services, including residential
and business broadband, VoIP, and High-Definition IPTV over copper,
fiber, and wireless. Zhone is headquartered in California, and its MSAP
products are all manufactured in the USA, in a facility that is
emission, waste-water, and CFC free.
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.
Forward-Looking Statements
This press release contains forward-looking statements that are subject
to the safe harbors created under the Securities Act of 1933 and the
Securities Exchange Act of 1934. Words such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "goal," "intend," "may,"
"plan," "project," "seek," "should," "target," "will," "would,"
variations of such words, and similar expressions are intended to
identify forward-looking statements. In addition, forward-looking
statements include, among others, statements that refer to third quarter
2009 financial estimates; projections of revenue, margins, expenses or
other financial items; and improvement of financial markets. Readers are
cautioned that actual results could differ materially from those
expressed in or contemplated by the forward-looking statements. Factors
that could cause actual results to differ include, but are not limited
to, commercial acceptance of our products; intense competition in the
communications equipment market; our ability to execute on our strategy
and operating plans; and economic conditions specific to the
communications, networking, internet and related industries. In
addition, please refer to the risk factors contained inthe
Company'sSEC filings available at www.sec.gov,
including without limitation,the Company'sannual report on Form 10-K
for the year ended December 31, 2008 and Zhone's quarterly report on
Form 10-Q for the quarters ended June 30, 2009 and March 31, 2009.
Readers are cautioned not to place undue reliance on any forward-looking
statements, which speak only as of the date on which they are made.
Zhone undertakes no obligation to update or revise any forward-looking
statements for any reason.
ZHONE TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2009 2009 2008 2009 2008
Net revenue $ 36,016 $ 30,346 $ 32,020 $ 90,465 $ 115,122
Cost of revenue 23,929 19,266 22,332 59,457 79,921
Stock-based compensation 20 24 44 72 135
Gross profit 12,067 11,056 9,644 30,936 35,066
Operating expenses:
Research and product development (1) 5,338 5,565 6,480 16,699 20,780
Sales and marketing (1) 5,323 5,014 6,483 16,372 22,080
General and administrative (1) 2,300 2,431 2,834 7,309 12,234
Gain on sale of intangible assets - - - - (3,297 )
Goodwill impairment - - - - 70,401
Total operating expenses 12,961 13,010 15,797 40,380 122,198
Operating loss (894 ) (1,954 ) (6,153 ) (9,444 ) (87,132 )
Other expense, net (302 ) (263 ) (326 ) (858 ) (496 )
Loss before income taxes (1,196 ) (2,217 ) (6,479 ) (10,302 ) (87,628 )
Income tax provision 8 47 50 69 176
Net loss $ (1,204 ) $ (2,264 ) $ (6,529 ) $ (10,371 ) $ (87,804 )
Basic and diluted net loss per share $ (0.01 ) $ (0.02 ) $ (0.04 ) $ (0.07 ) $ (0.58 )
Weighted average shares outstanding used to compute basic and diluted net loss per share 151,108 150,916 150,443 150,914 150,258
(1) Amounts include stock-based compensation costs as follows:
Research and product development 90 94 116 281 389
Sales and marketing 104 110 146 328 412
General and administrative 266 315 292 862 938
460 519 554 1,471 1,739
GAAP net loss $ (1,204 ) $ (2,264 ) $ (6,529 ) $ (10,371 ) $ (87,804 )
Stock-based compensation 480 543 598 1,543 1,874
Interest expense, net 349 325 293 1,043 619
Income taxes 8 47 50 69 176
Depreciation 446 468 573 1,406 1,708
Restructuring - - 380 - 380
Lease liability accrual - - - - 3,305
Gain on sale of intangible assets - - - - (3,297 )
Goodwill impairment - - - - 70,401
Non-GAAP pro forma EBITDA $ 79 $ (881 ) $ (4,635 ) $ (6,310 ) $ (12,638 )
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ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets (In thousands)
September 30, December 31,
2009 2008
Assets
Current assets:
Cash, cash equivalents and short-term investments $22,027 $36,243
Accounts receivable 31,990 23,665
Inventories 30,518 40,706
Prepaid expenses and other current assets 2,621 2,654
Total current assets 87,156 103,268
Property and equipment, net 18,994 20,003
Restricted cash 58 123
Other assets 41 55
Total assets $106,249 $123,449
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $10,525 $12,719
Line of credit 10,000 15,000
Current portion of long-term debt 403 380
Accrued and other liabilities 13,357 13,162
Total current liabilities 34,285 41,261
Long-term debt, less current portion 18,392 18,698
Other long-term liabilities 3,038 4,193
Total liabilities 55,715 64,152
Stockholders' equity:
Common stock 151 151
Additional paid-in capital 1,066,083 1,064,493
Other stockholders' equity 268 250
Accumulated deficit (1,015,968 ) (1,005,597 )
Total stockholders' equity 50,534 59,297
Total liabilities and stockholders' equity $106,249 $123,449
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