Zhone Technologies, Inc. (NASDAQ:ZHNE), a global leader in the
fiber access market, today reported its financial results for the
fourth quarter ended December 31, 2014.
Revenue for the fourth quarter of 2014 was $30.1 million
compared to $29.4 million for the third quarter of 2014 and $32.3
million for the fourth quarter of 2013. Net loss for the fourth
quarter of 2014, calculated in accordance with generally accepted
accounting principles (“GAAP”), was $2.1 million or $0.06 per share
compared with net loss of $2.7 million or $0.08 per share for the
third quarter of 2014 and net income of $1.4 million or $0.04 per
share for the fourth quarter of 2013. Adjusted earnings before
stock-based compensation, interest, taxes, and depreciation
(“adjusted EBITDA”) was an adjusted EBITDA loss of $1.7 million for
the fourth quarter of 2014, compared to an adjusted EBITDA loss of
$2.2 million for the third quarter of 2014 and an adjusted EBITDA
profit of $1.6 million for the fourth quarter of 2013.
"We entered 2015 with a renewed level of confidence that we will
grow revenue in both our service provider and enterprise
businesses," stated Jim Norrod, Zhone's chief executive officer.
"We are equally confident that our focused business structure and
decisive business restructuring will lead to profitability which
remains our primary financial objective."
Cash and cash equivalents at December 31, 2014 was $11.5 million
compared to $15.7 million at December 31, 2013.
Zhone will conduct a conference call and audio webcast today,
January 27, 2015, at approximately 2:00 p.m. PT / 5:00 p.m. ET to
review its fourth quarter 2014 results. This call is open to the
public by dialing +1 (866) 953-6859 for U.S. callers and +1 (617)
399-3483 for international callers and then entering passcode
80013849. 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 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
92794848. 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 adjusted 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
income (loss) calculated on a GAAP basis and adjusted EBITDA on a
non-GAAP basis is provided in a table immediately following the
Unaudited Condensed Consolidated Statements of Comprehensive Income
(Loss).
About Zhone Technologies
Zhone Technologies, Inc. (NASDAQ:ZHNE) is a global leader in
fiber access transformation for service provider and enterprise
networks, 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 today,
supporting end-to-end Voice, Data, Entertainment, Social Media,
Business, Mobile Backhaul and Mobility service. Zhone is committed
to building the fastest and highest quality all IP Multi-Service
solution for its customers. Zhone is headquartered in California
and its products are manufactured in the USA in a facility that is
emission, waste-water and CFC free.
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 products' names are all subject to change without
notice.
Forward-Looking Statements
This press release contains forward-looking statements that are
subject to the safe harbors created under the Securities Act of
1933 and the Securities Exchange Act of 1934. Words such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,”
“target,” “will,” “would,” variations of such words, and similar
expressions are intended to identify forward-looking statements. In
addition, forward-looking statements include, among others,
statements that refer to financial estimates; projections of
revenue, margins, expenses or other financial items. Readers are
cautioned that actual results could differ materially from those
expressed in or contemplated by the forward-looking statements.
Factors that could cause actual results to differ include, but are
not limited to, commercial acceptance of the Company's products;
intense competition in the communications equipment market; the
Company's ability to execute on its strategy and operating plans;
and economic conditions specific to the communications, networking,
internet and related industries. In addition, please refer to the
risk factors contained in the Company's SEC filings
available at www.sec.gov, including
without limitation, the Company's annual report on Form
10-K for the year ended December 31, 2013 and the Company's
quarterly reports on Form 10-Q for the quarters ended March 31,
2014, June 30, 2014, and September 30, 2014. Readers are cautioned
not to place undue reliance on any forward-looking statements,
which speak only as of the date on which they are made. The Company
undertakes no obligation to update or revise any forward-looking
statements for any reason.
ZHONE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive
Income (Loss) (In thousands, except per share data)
Three Months
Ended
Twelve Months
Ended
December 31,
September 30,
December 31, December 31, December 31, 2014
2014 2013
2014 2013 Net revenue $ 30,115 $
29,436 $ 32,306 $ 120,582 $ 122,248 Cost of revenue 20,909 18,681
20,197 78,741 76,116 Stock-based compensation 5
1 -
7 - Gross profit
9,201 10,754
12,109 41,834
46,132 Operating expenses: Research and
product development (1) 4,419 4,611 3,812 17,340 15,326 Sales and
marketing (1) 4,822 4,775 5,620 19,079 20,159 General and
administrative (1) 2,052 4,024
1,283
9,409 6,199 Total operating
expenses 11,293 13,410
10,715
45,828 41,684 Operating income (loss)
(2,092 ) (2,656 ) 1,394 (3,994 ) 4,448 Other income (expense), net
(3 ) (36 ) 2
(69 ) (92 ) Income
(loss) before income taxes (2,095 ) (2,692 ) 1,396 (4,063 ) 4,356
Income tax provision (benefit) 2 13
(36 )
68 42 Net income (loss) $ (2,097
) $ (2,705 ) $ 1,432
$ (4,131 ) $ 4,314 Other comprehensive
income (loss) (70 ) (16 ) (38 )
(100 ) (151
) Comprehensive income (loss) $ (2,167 ) $ (2,721 ) $
1,394 $ (4,231 ) $
4,163 Weighted average shares outstanding Basic
32,484 32,384 31,896 32,380 31,429 Diluted 32,484 32,384 34,287
32,380 33,021 Earnings per common share Basic $ (0.06 ) $
(0.08 ) $ 0.04 $ (0.13 ) $ 0.14 Diluted $ (0.06 ) $ (0.08 ) $ 0.04
$ (0.13 ) $ 0.13 (1) Amounts include stock-based
compensation costs as follows: Research and product development $ 7
$ 2 $ 1 $ 11 $ 2 Sales and marketing 15 5 1 29 2 General and
administrative 228 356
55 739
420 $ 250 $ 363 $ 57 $ 779 $ 424
GAAP net income (loss) $ (2,097 ) $ (2,705 ) $ 1,432 $ (4,131 ) $
4,314 Stock-based compensation 255 364 57 786 424 Interest expense
11 36 11 68 85 Income taxes 2 13 (36 ) 68 42 Depreciation
118 102 101
403 367
Non-GAAP Adjusted EBITDA income (loss) $ (1,711 ) $
(2,190 ) $ 1,565 $
(2,806 ) $ 5,232
ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets (In
thousands)
December 31,
December 31,
2014
2013
Assets
Current assets: Cash, cash equivalents and short-term investments
$11,528 $15,686 Accounts receivable 29,916 33,328 Inventories
19,985 19,562 Prepaid expenses and other current assets 2,863
2,269 Total current assets 64,292
70,845 Property and equipment, net 1,165 718 Other assets 255
254 Total assets $65,712
$71,817
Liabilities and Stockholders’
Equity
Current liabilities: Accounts payable $11,719 $12,689 Line of
credit 10,000 10,000 Accrued and other liabilities 7,669
8,865 Total current liabilities 29,388 31,554
Other long-term liabilities 1,981 2,704
Total liabilities 31,369 34,258
Stockholders’ equity: Common stock 32 32 Additional paid-in capital
1,075,309 1,074,294 Other comprehensive income (35 ) 65 Accumulated
deficit (1,040,963 ) (1,036,832 ) Total stockholders’
equity 34,343 37,559 Total liabilities
and stockholders' equity $65,712 $71,817
Zhone Investor Relations:Tel: +1 510-777-7013Fax: +1
510-777-7001E: investor-relations@zhone.comorZhone Public
Relations:Tel: +1 760-814-8194E: carla.vallone@portavocepr.com
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