Orckit Communications Ltd. (Nasdaq:ORCT) today reported results for
the second quarter and six months ended June 30, 2011.
Revenues in the second quarter of 2011 were $5.0 million
compared to $4.6 million in the previous quarter ended March 31,
2011 and $1.7 million in the comparable quarter last year. Net loss
for the quarter ended June 30, 2011 was $5.0 million, or $(0.22)
per share, compared to $6.0 million, or $(0.27) per share, for the
previous quarter ended March 31, 2011 and $7.7 million, or $(0.40)
per share, for the second quarter of 2010.
As a result of the settlement of a legal proceeding during the
second quarter of 2011, the Company reversed a provision with
respect to this proceeding. This reversal reduced selling,
marketing, general and administrative expenses during the quarter
by approximately $870,000. Without this reversal, these expenses
would have been approximately the same as in the comparable quarter
last year.
Adjustments related to the Company's Series A convertible notes
issued in March 2007 and Series B convertible notes issued in June
2011 resulted in financial expense in the aggregate amount of
$589,000 in the quarter ended June 30, 2011. Adjustments related to
the conversion terms of the Series A convertible notes resulted in
financial expense of $352,000 in the quarter ended March 31, 2011
and $91,000 in the quarter ended June 30, 2010. Adjustments related
to the Series B Notes for the quarter ended June 30, 2011 include
an adjustment based on the market value of these notes, as well as
one time expenses for the discount applicable to the issuance of
the Series B notes and for expenses incurred in connection with the
issuance of these notes.
Revenues for the six months ended June 30, 2011 were $9.5
million compared to $3.3 million for the six months ended June 30,
2010. Net loss for the six months ended June 30, 2011 was $11.0
million, or $(0.49) per share, compared to $13.9 million, or
$(0.77) per share, for the six months ended June 30, 2010.
Adjustments related to the Company's Series A and Series B
convertible notes resulted in financial expense of $941,000 in the
six months ended June 30, 2011 and $408,000 million in the six
months ended June 30, 2010.
Results for the six months ended June 30, 2010 include other
income of $1.6 million as a result of the sale of an equity
investment in the first quarter of 2010.
Key highlights:
- Growing customer base contributed to 200%
year-over-year revenue increase in the second quarter compared to
the same quarter last year and now totals approximately 25 Tier 1,
Tier 2 and Tier 3 service providers, as well as wireline and
wireless carriers.
- Successfully completed an intensive trial with
one of the largest mobile operators in India and actively
participating in trials and discussions with large service
providers.
- Reduced operating expenses through a work
force reduction that, when fully in effect in the fourth quarter of
2011, is expected to reduce quarterly operating expenses by
approximately $1.6 million.
- Upgraded offerings with the introduction of a
new CM-401x PTN access product line that includes the CM-4011,
CM-4012 and CM-4013 products that offer a comprehensive technology
feature-set for delivery of voice and data services using high end
packet technologies housed in 1RU as a "pizza-box" with low power
consumption. This new product line has received excellent market
feedback and completes Orckit's offerings for end-to-end solutions
for all types of services at all network domains. The CM-401x
product was named an "Access" winner in the "Innovations in
Information Technology" category of "The 3rd Annual 2011 Golden
Bridge Award".
- Raised net proceeds of approximately $8.0
million in June 2011 through a public offering in Israel
of Series B Convertible Notes due December 31, 2017. The notes are
denominated in NIS, are not linked to the consumer price index, are
convertible into ordinary shares of Orckit and bear interest at the
rate of 8% per year. The offering included approximately $3.0
million invested by related parties under the same terms as outside
investors: Mr. Izhak Tamir, Chairman of the Board and President and
a co-founder of Orckit; Mr. Eric Paneth, Chief Executive Officer, a
director and a co-founder of Orckit; and Catalyst Private Equity
Partners (Israel) II LP and affiliated funds. Mr. Yair Shamir,
an outside director of Orckit at the time of this investment,
serves as the Chairman of the management company of the Catalyst
funds.
Izhak Tamir, Chairman and President of Orckit, said, "Orckit
achieved significantly stronger revenue this quarter with a 200%
revenue increase year-over-year. This accomplishment was
primarily driven by our growing customer base which now totals
approximately 25 Tier 1, Tier 2 and Tier 3 service providers, as
well as wireline and wireless carriers. Since the beginning of
the second quarter, we have added three new Tier 2 service
providers. We also saw growing global interest in our
portfolio, and are now engaged in technical discussions, trials and
commercial negotiations with close to ten Tier 1 customers in APAC,
Europe and LATAM. Looking forward, we are maintaining our guidance
of $28 million in revenues for 2011."
Mr. Tamir concluded, "In addition to successfully growing our
installed base, we realized two major milestones this
quarter. In India, we completed an intensive trial for one of
the country's largest mobile operators. We continue to actively
participate in trials and discussion with other large service
providers. We also introduced our CM-401x PTN access product
line, which supplements our offerings for end-to-end solutions for
services in network domains. We believe we are well positioned to
meet the need of mobile operators for technologies that can cope
with both voice and data services on a large scale at a lower cost.
We also believe that our advanced mobile backhaul solution provides
the best fit for existing legacy networks and next-generation
networks."
Conference Call
Orckit Communications will host a conference call on August 23,
2011, at 9:00 a.m. ET. The call can be accessed by dialing
1-877-316-9044 (United States) and 1-706-634-2329 (International).
Please use the code 81440906.
A replay of the call will be available at www.orckit.com. A
dial-in replay of the call will be also available through September
23, 2011 at 11:59 p.m. at 1-800-642-1687 (United States) and
1-706-645-9291 (International). To access this replay, enter the
following code: 81440906.
About Orckit Communications Ltd.
Orckit facilitates the delivery by telecommunication providers
of high capacity broadband residential, business and mobile
services over wireline or wireless networks with its
Orckit-Corrigent family of products. With 20 years of field
experience with Tier-1 customers located around the
world, Orckit has a firm foothold in the ever-developing world
of telecommunications. Orckit-Corrigent's product portfolio
includes Packet Transport Network (PTN) switches, an MPLS and
MPLS-TP dual stack based portfolio enabling advanced packet, as
well as legacy services over packet networks with a wide set of
transport features. Orckit-Corrigent markets its products directly
and indirectly through strategic alliances, as well as through
distribution and reseller partners worldwide. Orckit was founded in
1990 and became publicly traded in 1996. Orckit is dually listed on
NasdaqGM (ORCT) and the Tel Aviv Stock Exchange and is
headquartered in Tel-Aviv, Israel.
For more information, please visit http://www.orckit.com. Follow
Orckit on Twitter @ORCT
Certain matters discussed in this news release are
forward-looking statements that involve a number of risks and
uncertainties including, but not limited to, the Company's history
of losses, dependence on a limited number of customers, risks in
product development plans and schedules, rapid technological
change, changes and delays in product approval and introduction,
customer acceptance of new products, the impact of competitive
products and pricing, market acceptance, the lengthy sales cycle,
exchange rate fluctuations, fluctuation in order size, proprietary
rights of the Company and its competitors, need for additional
financing, the ability to repay the convertible notes, risk of
operations in Israel, government regulation, dependence on third
parties to manufacture products, the effect of current global
economic conditions, as well as turmoil in the financial and credit
markets, and other risk factors detailed in the Company's United
States Securities and Exchange Commission filings. Actual results
may materially differ. Orckit assumes no obligation to update the
information in this release.
ORCKIT
COMMUNICATIONS LTD. |
CONSOLIDATED
BALANCE SHEETS |
(US$ in
thousands) |
|
|
|
|
June 30 |
December 31 |
|
2011 |
2010 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
Cash and short term marketable
securities |
$ 17,403 |
$ 19,195 |
Trade receivables |
8,455 |
6,624 |
Other receivables |
2,467 |
3,197 |
Inventories |
3,674 |
3,183 |
|
|
|
Total current assets |
31,999 |
32,199 |
|
|
|
Long term marketable
securities |
16,074 |
16,351 |
Severance pay fund |
3,681 |
3,611 |
Property and equipment,
net |
739 |
923 |
Deferred issuance costs,
net |
104 |
173 |
|
|
|
Total assets |
$ 52,597 |
$ 53,257 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Trade payables |
$ 3,682 |
$ 3,778 |
Accrued expenses and other
payables |
6,057 |
6,910 |
Deferred income |
2,495 |
1,933 |
|
|
|
Convertible subordinated notes,
series A |
27,763 |
-- |
Adjustments due to convertible
notes conversion terms |
(775) |
-- |
Convertible subordinated notes
series A, net |
26,988 |
-- |
|
|
|
Total current liabilities |
39,222 |
12,621 |
|
|
|
Long term liabilities : |
|
|
|
|
|
Convertible subordinated notes,
series A |
-- |
26,151 |
Adjustments due to convertible
notes conversion terms |
-- |
(1,213) |
Convertible subordinated notes
series A, net |
-- |
24,938 |
|
|
|
Convertible subordinated notes,
series B |
8,211 |
-- |
|
|
|
Accrued severance pay and
other |
4,547 |
4,446 |
|
|
|
Total long term
liabilities |
12,758 |
29,384 |
|
|
|
Total
liabilities |
51,980 |
42,005 |
|
|
|
Shareholders' equity |
617 |
11,252 |
|
|
|
Total liabilities and
shareholders' equity |
$ 52,597 |
$ 53,257 |
ORCKIT COMMUNICATIONS
LTD. |
CONSOLIDATED
STATEMENTS OF OPERATIONS |
(US$ in
thousands, except per share data) |
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
June 30 |
June 30 |
|
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Revenues |
$ 4,970 |
$ 1,664 |
$ 9,525 |
$ 3,295 |
|
|
|
|
|
Cost of revenues |
2,811 |
1,205 |
5,531 |
2,428 |
|
|
|
|
|
Gross profit |
2,159 |
459 |
3,994 |
867 |
|
|
|
|
|
Research and development expenses,
net |
3,117 |
3,611 |
6,133 |
7,351 |
|
|
|
|
|
Selling, marketing, general and
administrative expenses |
3,074 |
4,003 |
7,194 |
8,051 |
|
|
|
|
|
Total operating
expenses |
6,191 |
7,614 |
13,327 |
15,402 |
|
|
|
|
|
Operating loss |
(4,032) |
(7,155) |
(9,333) |
(14,535) |
|
|
|
|
|
Financial expenses, net |
(340) |
(501) |
(707) |
(531) |
Adjustments due to Series A and
Series B convertible notes |
(589) |
(91) |
(941) |
(408) |
Total financial expense,
net |
(929) |
(592) |
(1,648) |
(939) |
|
|
|
|
|
Other income |
0 |
0 |
0 |
1,624 |
|
|
|
|
|
|
|
|
|
|
Net loss |
$ (4,961) |
$ (7,747) |
$ (10,981) |
$ (13,850) |
Net loss per share - basic and
diluted |
$ (0.22) |
$ (0.40) |
$ (0.49) |
$ (0.77) |
Weighted average number of shares
outstanding – basic and diluted |
22,732 |
19,354 |
22,624 |
17,976 |
CONTACT: KCSA Strategic Communications
Investors, Analysts and Portfolio Managers
Rob Fink
(212) 682-6300 ext. 206