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Press ReleaseZhone Technologies Reports Second Quarter 2007 Financial ResultsOakland, CA — July 24, 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
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. 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 ======================== 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
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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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