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Press ReleaseZhone Technologies Reports First Quarter 2007 Financial ResultsOakland, CA — April 19, 2007 —
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
first quarter ended March 31, 2007.
Revenue for the first quarter of 2007 was $43.1 million compared with $44.3
million for the fourth quarter of 2006 and $52.7 million for the first quarter
of 2006. Net loss for the first quarter of 2007, calculated in accordance with
generally accepted accounting principles ("GAAP"), was $4.8 million
or $0.03 per share compared with a net loss of $4.6 million or $0.03 per share
for the fourth quarter of 2006, and a net loss of $3.9 million or $0.03 per
share for the first 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 first quarter of 2007,
compared to a pro forma EBITDA loss of $2.3 million for the fourth quarter of
2006, and pro forma EBITDA earnings of $158 thousand for the first quarter of
2006.
"We are pleased with our first quarter 2007 results, especially the
growth in our SLMS revenue in excess of 15% over the prior quarter," said
Mory Ejabat, chairman and chief executive officer of Zhone Technologies, Inc.
"The accelerating pace of deployment of our next generation technologies
in markets across the globe is very encouraging."
Zhone will hold a conference call and audio webcast today, April 19, 2007, at
approximately 2:00 p.m. PT / 5:00 p.m. ET to review its first quarter 2007
results. This call is open to the public by dialing +1 (866) 700-7173 for U.S.
callers and +1 (617) 213-8838 for international callers and then entering
passcode 29498674. 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 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
93023453. 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 acquisitions and 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. ZHONE TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended -------------------------------------- March 31, December 31, March 31, 2007 2006 2006 -------------------------------------- Net revenue $ 43,146 $ 44,306 $ 52,686 Cost of revenue 27,487 28,214 32,504 Stock-based compensation 120 155 321 -------------------------------------- Gross profit 15,539 15,937 19,861 -------------------------------------- Operating expenses: Research and product development (a) 8,656 8,628 8,612 Sales and marketing (a) 8,627 8,643 9,590 General and administrative (a) 2,825 2,968 3,511 Amortization of intangible assets - - 1,898 -------------------------------------- Total operating expenses 20,108 20,239 23,611 -------------------------------------- Operating loss (4,569) (4,302) (3,750) Other expense, net (179) (248) (47) -------------------------------------- Loss before income taxes (4,748) (4,550) (3,797) Income tax provision 38 80 107 -------------------------------------- Net loss $ (4,786) $ (4,630) $ (3,904) ====================================== Basic and diluted net loss per share ($0.03) ($0.03) ($0.03) Weighted average shares outstanding used to compute basic and diluted net loss per share 149,338 149,142 148,139 (a) Amounts include stock-based compensation costs as follows: Research and product development 262 333 538 Sales and marketing 211 294 444 General and administrative 389 498 168 -------------------------------------- 862 1,125 1,150 GAAP net loss $ (4,786) $ (4,630) $ (3,904) Stock-based compensation 982 1,280 1,471 Interest (income) expense, net 167 299 (1) Income taxes 38 80 107 Depreciation 656 662 587 Amortization of intangible assets - - 1,898 -------------------------------------- Non-GAAP pro forma EBITDA $ (2,943) $ (2,309) $ 158 ====================================== Revenue by product line: SLMS 30,221 26,174 33,155 Legacy, service and other 12,925 18,132 19,531 -------------------------------------- 43,146 44,306 52,686 ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In thousands) March 31, December 31, 2007 2006 ------------ ------------ Assets Current assets: Cash, cash equivalents and short-term investments $ 60,313 $ 64,310 Accounts receivable 34,463 31,828 Inventories 43,940 45,036 Prepaid expenses and other current assets 3,506 3,852 -------------------------- Total current assets 142,222 145,026 Property and equipment, net 23,385 23,704 Goodwill 70,737 70,737 Restricted cash 641 636 Other assets 80 79 -------------------------- Total assets $ 237,065 $ 240,182 ========================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,841 $ 18,893 Line of credit 14,500 14,500 Current portion of long-term debt 7,669 7,673 Accrued and other liabilities 19,619 20,088 -------------------------- Total current liabilities 61,629 61,154 Long-term debt, less current portion 19,361 19,376 Other long-term liabilities 2,047 2,048 -------------------------- Total liabilities 83,037 82,578 -------------------------- Stockholders' equity: Common stock 150 149 Additional paid-in capital 1,059,478 1,058,317 Other stockholders' equity 146 98 Accumulated deficit (905,746) (900,960) -------------------------- Total stockholders' equity 154,028 157,604 -------------------------- Total liabilities and stockholders' equity $ 237,065 $ 240,182 ========================== About Zhone Technologies, Inc.
Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global provider of advanced
communications equipment to more than 600 operators in both emerging and
established markets. Zhone's market-leading Broadband Loop Carrier
equipment enables operators to rapidly deploy revenue-generating access
services using their existing infrastructure, while providing a
migration path to a cost-efficient, all-IP access network. The
company's products address a broad range of applications including
residential and business broadband, VoIP, IPTV, and Ethernet over both
copper and fiber access lines. Zhone's advanced networking solutions
include the Single Line Multi-Service architecture (SLMS™), Multi-Access
Line Concentrator (MALC™), Raptor™ ATM/IP DSLAMs, GigaMux™ Optical
Transport Systems and Zhone Management System (ZMS™). www.zhone.com
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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. |
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