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Press ReleaseZhone Technologies Reports First Quarter 2008 Financial ResultsOakland, CA — April 22, 2008 —
Zhone Technologies, Inc. (NASDAQ:ZHNE), a global leader in multi-service
access equipment for VoIP, IPTV, and Ethernet over copper and fiber access
lines, today reported its financial results for the first quarter ended March
31, 2008.
Revenue for the first quarter of 2008 was $43.0 million compared with $46.6
million for the fourth quarter of 2007 and $43.1 million for the first quarter
of 2007. Net loss for the first quarter of 2008, calculated in accordance with
generally accepted accounting principles ("GAAP"), was $0.9 million
or $0.01 per share compared with a net loss of $1.2 million or $0.01 per share
for the fourth quarter of 2007, and a net loss of $4.8 million or $0.03 per
share for the first quarter of 2007. Pro forma earnings before stock-based
compensation, interest, taxes, depreciation and amortization, and gain on sale
of intangible assets ("EBITDA") was a $2.8 million loss for the
first quarter of 2008, compared to a breakeven pro forma EBITDA for the fourth
quarter of 2007, and pro forma EBITDA loss of $2.9 million for the first
quarter of 2007.
"Strong revenue growth from the Middle East and Central and Latin America
regions helped us exceed prior financial guidance. Revenue grew 9% over the
prior quarter excluding revenue associated with divested product lines,"
said Mory Ejabat, chairman and chief executive officer of Zhone Technologies,
Inc. "The divestiture of legacy products has helped streamline our focus
and contributed to the accelerating growth of our next generation
technologies."
Zhone will hold a conference call and audio webcast today, April 22, 2008, at
approximately 2:00 p.m. PT / 5:00 p.m. ET to review its first quarter 2008
results. This call is open to the public by dialing +1 (800) 299-6183 for U.S.
callers and +1 (617) 801-9713 for international callers and then entering
passcode 31069953. 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
70689802. 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, 2008 2007 2007 -------------------------------- Net revenue $ 43,033 $ 46,613 $ 43,146 Cost of revenue 29,177 30,493 27,487 Stock-based compensation 50 28 120 -------------------------------- Gross profit 13,806 16,092 15,539 -------------------------------- Operating expenses: Research and product development(1) 7,144 7,382 8,656 Sales and marketing(1) 7,742 8,051 8,627 General and administrative(1) 3,012 1,643 2,825 Gain on sale of intangible assets (3,204) - - -------------------------------- Total operating expenses 14,694 17,076 20,108 -------------------------------- Operating loss (888) (984) (4,569) Other expense, net (20) (142) (179) -------------------------------- Loss before income taxes (908) (1,126) (4,748) Income tax provision 33 106 38 -------------------------------- Net loss $ (941) $ (1,232) $ (4,786) ================================ Basic and diluted net loss per share ($0.01) ($0.01) ($0.03) Weighted average shares outstanding used to compute basic and diluted net loss per share 150,072 149,907 149,338 (1) Amounts include stock-based compensation costs as follows: Research and product development 145 92 262 Sales and marketing 138 91 211 General and administrative 303 193 389 -------------------------------- 586 376 862 GAAP net loss $ (941) $ (1,232) $ (4,786) Stock-based compensation 636 404 982 Interest expense, net 136 118 167 Income taxes 33 106 38 Depreciation and amortization 556 616 656 Gain on sale of intangible assets (3,204) - - -------------------------------- Non-GAAP pro forma EBITDA $ (2,784) $ 12 $ (2,943) ================================ ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In thousands) March 31, December 31, 2008 2007 ------------------------ Assets Current assets: Cash, cash equivalents and short-term investments $ 57,293 $ 50,165 Accounts receivable 32,106 33,258 Inventories 37,116 44,698 Prepaid expenses and other current assets 2,625 3,804 ------------------------ Total current assets 129,140 131,925 Property and equipment, net 20,544 20,818 Goodwill 70,401 70,401 Restricted cash 121 186 Other assets 69 76 ------------------------ Total assets $ 220,275 $ 223,406 ======================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 18,735 $ 21,276 Line of credit 15,000 15,000 Current portion of long-term debt 302 265 Accrued and other liabilities 17,702 17,888 ------------------------ Total current liabilities 51,739 54,429 Long-term debt, less current portion 19,030 19,140 Other long-term liabilities 324 290 ------------------------ Total liabilities 71,093 73,859 ------------------------ Stockholders' equity: Common stock 150 150 Additional paid-in capital 1,062,607 1,061,849 Other stockholders' equity 428 610 Accumulated deficit (914,003) (913,062) ------------------------ Total stockholders' equity 149,182 149,547 ------------------------ Total liabilities and stockholders' equity $ 220,275 $ 223,406 ======================== About Zhone Technologies, Inc. -- Access for a Converging World
Zhone Technologies, Inc. (NASDAQ:ZHNE) is a provider of advanced access
network equipment to more than 600 operators worldwide. The company
offers the industry's broadest portfolio of fully-integrated access
solutions, enabling the full range of multi-play services, including
residential and business broadband, VoIP, IPTV, and Ethernet.
Zhone's converged multi-service access platforms improve network
agility and reduce 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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