2010-07-29 22:37:02 -
FREMONT, CA -- (Marketwire) -- 07/29/10 -- Telecommunications equipment maker Network
Equipment Technologies, Inc. (NASDAQ: NWK) today reported results for its
fiscal first quarter, ended June 25, 2010.
Total revenue in the first quarter of fiscal 2011 was $13.5 million, down
from $18.9 million in the fourth quarter of fiscal 2010 and $19.5 million
in the first quarter of fiscal 2010. The decline in revenue was primarily
due to reduced government orders, as there were a number of key program
delays by the Company's U.S. Government customers.
Net loss was $8.2 million, or $0.28 per share, compared to a net loss of
$3.1 million, or $0.11 per share, in the preceding quarter and a net loss
of $3.7 million, or $0.13 per share, in the first quarter of the prior
year.
Cash and investment balances were $75.6 million at the end of the first
quarter, down $5.4 million from the end of the prior quarter. The
reduction resulted primarily from cash used for operations.
On a non-GAAP basis, net loss was $6.7 million, or $0.23 per share,
compared to a net loss of $1.8 million, or $0.06 per share, in the
preceding quarter, and a net loss of $2.0 million, or $0.07 per share, in
the first quarter of the prior year. Non-GAAP net loss adjusts for non-cash
compensation, restructure charges, gains from the early extinguishment of
debt, and other significant non-recurring items, including the separation
charges related to the retirement of our former Federal sales executive.
Refer to the table below for reconciliation of GAAP to non-GAAP net loss.
"While revenue in the first quarter was disappointing, NET's continued
focus on unified communications and secure voice opportunities is resulting
in an expanding global pipeline. We are moving ahead with the introduction
of voice and data products that enable us to stay at the forefront of
delivering integrated communications to both enterprise and government
customers," said President and CEO C. Nicholas Keating, Jr. "Revenues
during our first fiscal quarter reflect an increase in enterprise sales of
unified communication solutions, particularly in North America. Our goal
is to be the industry's best enabler of integrated communications."
Conference Call Information:
NET will be hosting a conference call today to discuss these results at
5:00 p.m. ET. To access the call, dial (866) 788-0547 or (857) 350-1685 and
provide conference ID#99762772. The call will also be broadcast from the
company's website.
A recording of the conference call will be provided by telephone and the
Internet beginning two hours after completion of the call. The replay may
be accessed by telephone through midnight on August 5, 2010; please dial
(888) 286-8010 or (617) 801-6888 and enter conference ID# 55550997. A
digital recording will be available on the company's website for one year.
About Network Equipment Technologies:
Network Equipment Technologies, Inc. (NET) provides network and VoIP
solutions to enterprises and government agencies that seek to reduce the
cost to deploy next generation unified and secure communications
applications. For a quarter of a century, NET has delivered solutions for
multi-service networks requiring high degrees of versatility, security and
performance. Today, the company's broad family of products enables
interoperability and integration with existing networks for migration to
secure IP-based communications. NET is headquartered in Fremont, CA and has
14 offices worldwide including the US, the UK, France, the Middle East,
China, Japan, Australia, and Latin America. The company sells its solutions
through a direct sales force and an international network of resellers and
distributors.
Use of Non-GAAP Financial Information
Use of non-GAAP information. In evaluating NET's performance, management
uses certain non-GAAP financial measures to supplement consolidated
financial statements prepared under GAAP. Management believes that
non-GAAP net loss and other non-GAAP measures help indicate a base level of
NET's performance before gains, losses, or charges that are considered by
management to be outside of the recurring operations of our business. We
believe that the non-GAAP information regarding recurring operations allows
for a better understanding of NET's operating performance compared to prior
periods and a clearer analysis of operating trends. Management uses this
non-GAAP information for planning and forecasting of future periods, making
decisions regarding spending levels and the allocation of resources, and
determining management and employee compensation. We believe that
disclosing these non-GAAP financial measures to the readers of our
financial statements provides such readers with useful supplemental data
that, while not a substitute for financial measures prepared in accordance
with GAAP, allows for greater transparency in the review of our ongoing
financial and operational performance. Specifically, we believe these
non-GAAP financial measures, when read in conjunction with NET's GAAP
financials, provide useful information to investors by offering:
-- the ability to make more meaningful period-to-period comparisons of
our ongoing operating results;
-- the ability to better identify trends in our underlying business and
perform related trend analysis;
-- a better understanding of how management plans and measures our
underlying business; and
-- an easier way to compare our most recent results of operations against
investor and analyst financial models.
In determining non-GAAP net loss, we exclude certain gains or losses that
are the result of infrequent events. Such items include (i) gains from the
early extinguishment of our debt, and (ii) gains or losses from significant
restructuring or other infrequent charges such as termination and severance
charges related to changes in senior management. Management believes that
these exclusions are appropriate because these items are not indicative of
ongoing operating results or limit comparability.
We also exclude certain non-cash charges that may vary between periods and
between companies based on the valuation methodology chosen and the input
of required data that may not be directly related to current business
operations, such as a company's stock price. Such items include (i)
stock-based compensation, and (ii) amortization and impairment of
intangible assets. Management believes that excluding these items allows
for more meaningful comparisons of our operating results across periods and
to our competitors.
Limitations. These non-GAAP financial measures are not presented in
accordance with, nor are they a substitute for, U.S. GAAP. The non-GAAP
financial measures used should not be considered in isolation from measures
of financial performance prepared in accordance with GAAP. Investors are
cautioned that there are material limitations associated with the use of
non-GAAP financial measures as an analytical tool. In addition, these
measures may be different from non-GAAP measures used by other companies,
limiting their usefulness for comparison purposes.
Forward Looking Statements
This press release contains forward-looking statements, relating to
possible future operating results, within the meaning of the safe harbor
provisions of Section 21E of the Securities Exchange Act of 1934. Investors
are cautioned that such statements are based on current expectations,
forecasts and assumptions that involve risks and uncertainty that may cause
actual results to differ materially from those expressed or implied in the
forward-looking statements. Factors that could affect such results include
our ability to develop and commercialize new products and product
enhancements, the status of relations with and performance by third-party
technology providers, success in building new sales channels, achieving
broad market acceptance for our products, challenges of managing inventory
and production of products, certifications and regulatory compliance for
new and existing products, federal government budget matters and
procurement decisions, and the timing of orders and revenue, as well as the
factors identified in Network Equipment Technologies' most recent Annual
Report on Form 10-K and subsequent reports filed with the Securities and
Exchange Commission. Network Equipment Technologies disclaims any intention
or obligation to update or revise any forward looking statements, whether
as a result of new information, future events or otherwise.
NOTE TO EDITORS: Financial tables follow
NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share amounts)
Quarter Ended
------------------------
June 25, June 26,
2010 2009
----------- -----------
Revenue:
Product $ 9,987 $ 15,865
Service and other 3,494 3,645
----------- -----------
Total revenue 13,481 19,510
----------- -----------
Costs of revenue:
Cost of product revenue 5,622 7,357
Cost of service and other revenue 3,111 3,281
----------- -----------
Total cost of revenue 8,733 10,638
----------- -----------
Gross margin 4,748 8,872
Operating expenses:
Sales and marketing 4,733 5,392
Research and development 5,039 4,625
General and administrative 2,726 2,867
Restructure and other costs -- 38
----------- -----------
Total operating expenses 12,498 12,922
----------- -----------
Loss from operations (7,750) (4,050)
Other expense, net (81) (72)
Interest expense, net (328) (88)
Gain on extinguishment of debt -- 555
----------- -----------
Loss before taxes (8,159) (3,655)
----------- -----------
Income tax provision 51 58
----------- -----------
Net loss $ (8,210) $ (3,713)
=========== ===========
Per share amounts
Basic and diluted net loss $ (0.28) $ (0.13)
=========== ===========
Basic and diluted common and common
equivalent shares 29,634 28,923
=========== ===========
NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 25, March 26,
2010 2010
(unaudited) (1)
------------ ------------
Current assets:
Cash and investments $ 75,086 $ 80,461
Restricted cash 554 554
Accounts receivable, net 9,874 13,468
Inventories 4,195 4,377
Prepaid expenses and other assets 6,110 7,961
------------ ------------
Total current assets 95,819 106,821
Property and equipment, net 4,868 5,155
Other assets 5,351 5,710
------------ ------------
Total assets $ 106,038 $ 117,686
============ ============
Liabilities and Stockholders' Equity:
Accounts payable $ 6,347 $ 7,987
Other current liabilities 11,068 13,230
------------ ------------
Total current liabilities 17,415 21,217
Long-term liabilities 1,985 2,161
3 3/4% convertible senior notes 10,500 10,500
7 1/4% redeemable convertible subordinated
debentures 23,704 23,704
Stockholders' equity 52,434 60,104
------------ ------------
Total liabilities and stockholders'
equity $ 106,038 $ 117,686
============ ============
(1) Derived from audited consolidated financial statements as of March 26,
2010.
NETWORK EQUIPMENT TECHNOLOGIES, INC.
GAAP TO NON-GAAP NET LOSS RECONCILIATION
(Unaudited - in thousands, except per share amounts)
Quarter Ended
------------------------
June 25, June 26,
2010 2009
----------- -----------
GAAP net loss $ (8,210) $ (3,713)
Stock based compensation expense:
Cost of product revenue 104 116
Cost of service and other revenue 95 112
Sales and marketing 390 657
Research and development 508 460
General and administrative 349 386
Severance and restructure related:
General and administrative, accretion of
discount on future cash flows from
subleases 38 57
Sales and marketing, severance -- 490
Restructure, primarily severance -- 38
Gain on extinguishment of debt -- (555)
----------- -----------
Non-GAAP net loss $ (6,726) $ (1,952)
=========== ===========
Non-GAAP net loss per share data:
Basic and diluted $ (0.23) $ (0.07)
=========== ===========
Common and common equivalent shares:
Basic and diluted 29,634 28,923
=========== ===========
Company Contact:
Network Equipment Technologies, Inc.
Leigh Salvo
(510) 647-8870
Email Contact :
