Oakland, CA - January 25, 2012 - Zhone Technologies, Inc.
(NASDAQ: ZHNE), a global leader in FTTx network access
solutions, today reported its financial results for the
fourth quarter ended December 31, 2011.
Revenue for the fourth quarter of 2011 was $33.4 million
compared to $30.2 million for the third quarter of 2011 and
$31.0 million for the fourth quarter of 2010. Adjusted
earnings before stock-based compensation, interest, taxes,
depreciation, and impairment of long-lived assets
("adjusted EBITDA") was an adjusted EBITDA profit
of $0.3 million for the fourth quarter of 2011, compared to
an adjusted EBITDA loss of $1.3 million for the third quarter
of 2011 and an adjusted EBITDA loss of $0.7 million for the
fourth quarter of 2010. During the fourth quarter of 2011, an
impairment charge of $4.2 million was recorded against
long-lived assets. The resulting net loss for the fourth
quarter of 2011, calculated in accordance with generally
accepted accounting principles ("GAAP"), was $4.6
million or $0.15 per share compared with a net loss of $2.7
million or $0.09 per share for the third quarter of 2011 and
a net loss of $1.3 million or $0.04 per share for the fourth
quarter of 2010.
"We're pleased to announce strong revenue growth
across all regions during the quarter," stated Mory
Ejabat, Zhone's chief executive officer. "Fourth
quarter revenue grew 11 percent sequentially over third
quarter revenue and 8 percent year over year as compared to
last year's fourth quarter revenue. With this strong top
line growth, we also achieved our other major financial
objective for the quarter and generated positive adjusted
EBITDA."
Total revenue for 2011 was $124.5 million as compared to
$129.0 million for 2010. Adjusted earnings before stock-based
compensation, interest, taxes, depreciation, gain on sale of
the Oakland Campus, and impairment of long-lived assets
("adjusted EBITDA") was an adjusted EBITDA loss of
$3.9 million for 2011, compared to an adjusted EBITDA loss of
$2.0 million for 2010. Net loss for 2011, calculated in
accordance with generally accepted accounting principles
("GAAP"), was $11.7 million or $0.38 per share
compared to a net loss of $4.8 million or $0.16 per share for
2010. The net loss for 2011 includes the $4.2 million
impairment charge recorded against long-lived assets. The
Company reviews long-lived assets, including intangible
assets, for impairment annually or whenever changes in
circumstances indicate that the carrying value of an asset
may not be recoverable. Due to the significant decrease in
the market capitalization recently, the Company determined
that the indicators of impairment existed similar to the
conditions that existed during the second quarter of 2008
when the Company last impaired assets.
Cash, cash equivalents and short-term investments at December
31, 2011 was $18.2 million compared to $21.2 million at
December 31, 2010.
Zhone will conduct a conference call and audio webcast today,
January 25, 2012, at approximately 2:00 p.m. PT / 5:00 p.m.
ET to review its fourth quarter 2011 results. This call is
open to the public by dialing +1 (866) 713-8564 for U.S.
callers and +1 (617) 597-5312 for international callers and
then entering passcode 36366758. The audio webcast will be
simultaneously available on the Investor Relations section of
Zhone's website at .
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 64982630. An audio webcast replay will also
be available online at for approximately one week following
the original call.
ZHONE TECHNOLOGIES, INC. | ||||||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
Net revenue | $ | 33,432 | $ | 30,204 | $ | 31,016 | $ | 124,502 | $ | 129,036 | ||||||||||
Cost of revenue | 21,379 | 19,901 | 18,731 | 80,480 | 79,770 | |||||||||||||||
Stock-based compensation | 11 | 29 | 11 | 61 | 94 | |||||||||||||||
Gross profit | 12,042 | 10,274 | 12,274 | 43,961 | 49,172 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and product development (1) | 5,121 | 5,294 | 5,430 | 21,380 | 21,188 | |||||||||||||||
Sales and marketing (1) | 5,847 | 5,557 | 6,147 | 22,297 | 23,982 | |||||||||||||||
General and administrative (1) | 1,466 | 2,154 | 1,926 | 7,784 | 9,855 | |||||||||||||||
Gain on sale of Oakland Campus | - | - | - | - | (1,959 | ) | ||||||||||||||
Impairment of long-lived assets | 4,236 | - | - | 4,236 | - | |||||||||||||||
Total operating expenses | 16,670 | 13,005 | 13,503 | 55,697 | 53,066 | |||||||||||||||
Operating income (loss) | (4,628 | ) | (2,731 | ) | (1,229 | ) | (11,736 | ) | (3,894 | ) | ||||||||||
Other expense, net | 79 | (4 | ) | (49 | ) | 70 | (988 | ) | ||||||||||||
Income (loss) before income taxes | (4,549 | ) | (2,735 | ) | (1,278 | ) | (11,666 | ) | (4,882 | ) | ||||||||||
Income tax provision (benefit) | 93 | 13 | (6 | ) | 60 | (101 | ) | |||||||||||||
Net income (loss) | $ | (4,642 | ) | $ | (2,748 | ) | $ | (1,272 | ) | $ | (11,726 | ) | $ | (4,781 | ) | |||||
Weighted average shares outstanding | ||||||||||||||||||||
Basic | 30,766 | 30,701 | 30,515 | 30,671 | 30,393 | |||||||||||||||
Diluted | 30,766 | 30,701 | 30,515 | 30,671 | 30,393 | |||||||||||||||
Net income (loss) per common share | ||||||||||||||||||||
Basic | $ | (0.15 | ) | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.38 | ) | $ | (0.16 | ) | |||||
Diluted | $ | (0.15 | ) | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.38 | ) | $ | (0.16 | ) | |||||
(1) Amounts include stock-based compensation costs as follows: | ||||||||||||||||||||
Research and product development | 55 | 89 | 49 | 244 | 362 | |||||||||||||||
Sales and marketing | 71 | 174 | 53 | 350 | 421 | |||||||||||||||
General and administrative | 79 | 639 | 90 | 1,015 | 1,388 | |||||||||||||||
205 | 902 | 192 | 1,609 | 2,171 | ||||||||||||||||
GAAP net income (loss) | $ | (4,642 | ) | $ | (2,748 | ) | $ | (1,272 | ) | (11,726 | ) | $ | (4,781 | ) | ||||||
Stock-based compensation | 216 | 931 | 203 | 1,670 | 2,265 | |||||||||||||||
Interest expense | (66 | ) | 33 | 30 | 44 | 996 | ||||||||||||||
Income taxes | 93 | 13 | (6 | ) | 60 | (101 | ) | |||||||||||||
Depreciation | 467 | 447 | 324 | 1,810 | 1,585 | |||||||||||||||
Gain on sale of Oakland Campus | - | - | - | - | (1,959 | ) | ||||||||||||||
Impairment of long-lived assets | 4,236 | - | - | 4,236 | - | |||||||||||||||
Non-GAAP Adjusted EBITDA profit (loss) | $ | 304 | $ | (1,324 | ) | $ | (721 | ) | $ | (3,906 | ) | $ | (1,995 | ) |
ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash, cash equivalents and short-term investments | $ | 18,190 | $ | 21,174 | ||||
Accounts receivable | 31,598 | 29,747 | ||||||
Inventories | 27,393 | 31,048 | ||||||
Prepaid expenses and other current assets | 2,672 | 2,514 | ||||||
Total current assets | 79,853 | 84,483 | ||||||
Property and equipment, net | 608 | 5,274 | ||||||
Restricted cash | 58 | 58 | ||||||
Other assets | 213 | 296 | ||||||
Total assets | $ | 80,732 | $ | 90,111 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 11,797 | $ | 11,864 | ||||
Line of credit | 15,000 | 10,000 | ||||||
Accrued and other liabilities | 10,029 | 13,217 | ||||||
Total current liabilities | 36,826 | 35,081 | ||||||
Other long-term liabilities | 4,379 | 5,615 | ||||||
Total liabilities | 41,205 | 40,696 | ||||||
Stockholders' equity: | ||||||||
Common stock | 31 | 30 | ||||||
Additional paid-in capital | 1,071,390 | 1,069,513 | ||||||
Other stockholders' equity | 237 | 277 | ||||||
Accumulated deficit | (1,032,131 | ) | (1,020,405 | ) | ||||
Total stockholders' equity | 39,527 | 49,415 | ||||||
Total liabilities and stockholders' equity | $ | 80,732 | $ | 90,111 |
About Zhone Technologies
Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in
all IP multi-service access solutions, serving more than 750
of the world's most innovative network operators.
The IP Zhone is the only solution that enables service providers to build the network of the future