FREMONT, CA today reported its results for the fourth quarter of
fiscal 2008 and fiscal year 2008.
Total revenue in the fourth quarter was $33.4 million, a 15%
increase from $29.0 million in the third quarter and a 34% increase
from $25.0 million in the fourth quarter of the prior fiscal year.
NET has now achieved eight consecutive quarters of revenue growth.
Net income in the fourth quarter was $2.8 million or $.09 per
share, compared to net income of $1.5 million or $.05 per share in
the third quarter and a net loss of $9.5 million or $0.37 per share
in the fourth quarter of the prior year. Fiscal 2008 results
include the operating results of Quintum Technologies following its
acquisition by the Company on December 4, 2007, and other
accounting effects of the acquisition.
Total revenue in the fiscal year was $116.1 million, up from
$84.1 million in fiscal 2007, an increase of 38%. Net income was
$7.1 million or $0.25 per share, compared to a net loss of $16.2
million or $0.65 per share in fiscal 2007.
Cash and investment balances at the end of fiscal 2008 were
$165.7 million, compared to $161.2 million at the end of the third
quarter and $90.1 million at the end of the prior year. During the
third quarter, the company obtained net proceeds of $82 million
from an $85 million senior convertible debt offering and used
approximately $24 million of cash for the acquisition of
Quintum.
Non-GAAP net income in the fourth quarter was $2.6 million or
$0.09 per share, compared to $1.1 million or $0.04 per share in the
fourth quarter of the prior year. Non GAAP net income for the
fiscal year was $9.5 million or $0.33 per share, compared to a
non-GAAP net loss of $4.8 million or $0.19 per share for the prior
year. Non-GAAP net income was calculated by excluding non-cash
stock-based compensation expense, amortization of intangible assets
from our acquisition of Quintum, accretion and other restructure
charges resulting from vacating our former manufacturing facility,
and a non cash charge for the write-up in basis of Quintum finished
goods inventory; offset by additions for foreign exchange benefit
from the dissolution of our German subsidiary and the reversal of a
reserve for deferred tax assets for our United Kingdom subsidiary.
Refer to table below for reconciliation of GAAP to non-GAAP for net
income and earnings per share.
President and CEO C. Nicholas Keating, Jr. remarked, "We
accomplished a significant number of the objectives we established
for fiscal year 2008. Revenue grew 38%, we reached our highest
level of profitability in 10 years, and our cash position increased
by more than $75 million. We made a number of operational changes
throughout the year to streamline our business and lower our cost
structure. We advanced our products and customer reach through
continued investment in internal development and acquisition. Our
products are today being offered worldwide to government and
enterprise customers in three target markets: voice-over-IP,
multi-service access, and high performance computing. Our customer
traction in each of these markets is encouraging and we are seeing
more pilots convert into programs. The integration of Quintum
Technologies, which we acquired in December 2007, is progressing
well and we are already seeing strategic benefits of the
combination."
"Looking ahead, fiscal year 2009 will be a year of execution for
NET. We will continue to invest in our growth through product
development and key partnerships, while also keeping our eye out
for strategic acquisition opportunities," added Keating.
Conference Call Information:
The Company will be hosting a conference call today to discuss
these results at 4:30 p.m. ET. Please dial (888) 680-0860 or (617)
213-4852 and provide conference ID# 51607089 to access the call.
The conference call will also be broadcast from
http://ir.net.com.
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 May 7,
2008; please dial (888) 286-8010 or (617) 801-6888 and enter
conference ID# 93830277. A digital recording will be available on
the company's website for one year.
About Network Equipment Technologies, Inc.
For nearly a quarter of a century, Network Equipment
Technologies, Inc. has provided voice and data communications
equipment for multi-service networks requiring high degrees of
versatility, interoperability, security and performance. NET's
broad family of products are purpose-built for mixed-service,
multi-protocol networks; bandwidth-sensitive site communications;
high performance, security-sensitive transmissions; and converged
communications. The company's NX Series for network exchange
solutions and VX Series for voice exchange solutions enable
interoperability and integration with existing networks for
seamless migration to secure IP-based voice and data
communications. In addition, Quintum, a subsidiary of NET, delivers
VoIP access solutions that bring the reliability and voice clarity
of public telephone networks to Internet telephony.
Visit www.net.com for more information.
Use of Non-GAAP Financial Information
To supplement the company's condensed consolidated financial
statements presented in accordance with GAAP, NET has provided
certain non-GAAP net income (loss) financial measures that adjusts
for the company's non-cash stock-based compensation expense,
amortization of intangible assets from our acquisition of Quintum,
accretion and other restructure charges resulting from vacating our
former manufacturing facility, a non cash charge for the write-up
in basis of Quintum finished goods inventory, additions for foreign
exchange benefit from the dissolution of our German subsidiary, and
the reversal of a reserve for deferred tax assets for our United
Kingdom subsidiary. These non-GAAP measures may include net income
(loss) and net income (loss) per share data that are adjusted from
results based on GAAP to exclude certain expenses, gains and
losses. These non-GAAP measures are provided to enhance investors'
overall understanding of the company's current financial
performance and the company's prospects for the future. NET
believes the non-GAAP measures provide useful information to both
management and investors by excluding certain expenses that may not
be indicative of its core operating results and reflect NET's
ongoing business in a manner that allows meaningful
period-to-period comparisons. These measures should be considered
in addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
The non-GAAP measures included in this press release have been
reconciled to the GAAP results in the attached tables.
Forward-Looking Statements
This press release contains forward-looking statements, within
the meaning of the safe harbor provisions of Section 21E of the
Securities Exchange Act of 1934, relating to revenue growth,
profitability, product development, and future sales. 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, including
relations with and performance by third-party technology providers,
new competition and technological changes, the outcome of
litigation regarding intellectual property, the timing of orders
and satisfaction of conditions to recognize revenue, the challenges
involved in integrating an acquired business into the operations of
NET, uncertainties relating to potential acquisitions, and
unanticipated or extraordinary expenses, as well as the factors
identified in Network Equipment Technologies' most recent Annual
Report on Form 10-K and most recent subsequent Quarterly Report on
Form 10-Q. 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.
NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Quarter Ended Fiscal Year Ended
-------------------- --------------------
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenue:
Product $ 30,184 $ 21,343 $ 102,608 $ 72,813
Service 3,248 3,688 13,536 11,281
--------- --------- --------- ---------
Total revenue 33,432 25,031 116,144 84,094
--------- --------- --------- ---------
Costs of revenue:
Cost of product revenue 13,940 8,131 45,001 28,821
Cost of service revenue 3,356 3,026 12,289 10,249
--------- --------- --------- ---------
Total cost of revenue 17,296 11,157 57,290 39,070
--------- --------- --------- ---------
Gross margin 16,136 13,874 58,854 45,024
Operating expenses:
Sales and marketing 5,899 4,971 20,178 18,699
Research and development 6,528 5,685 24,279 21,432
General and administrative 3,073 3,574 11,373 13,129
Restructure and other costs 96 10,187 175 10,183
--------- --------- --------- ---------
Total operating expenses 15,596 24,417 56,005 63,443
--------- --------- --------- ---------
Income (loss) from
operations 540 (10,543) 2,849 (18,419)
Other income (expense), net 157 19 404 (67)
Interest income, net 165 526 2,208 1,784
--------- --------- --------- ---------
Income (loss) before taxes 862 (9,998) 5,461 (16,702)
--------- --------- --------- ---------
Income tax benefit (1,890) (513) (1,684) (508)
--------- --------- --------- ---------
Net income (loss) $ 2,752 $ (9,485) $ 7,145 $ (16,194)
========= ========= ========= =========
Per share amounts
Net income (loss):
Basic $ 0.10 $ (0.37) $ 0.26 $ (0.65)
========= ========= ========= =========
Diluted $ 0.09 $ (0.37) $ 0.25 $ (0.65)
========= ========= ========= =========
Common and common equivalent shares:
Basic 28,936 25,354 27,423 25,003
========= ========= ========= =========
Diluted 35,756 25,354 28,415 25,003
========= ========= ========= =========
NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 28, March 30,
2008 2007
------------ ------------
Current assets:
Cash and investments $ 165,658 $ 90,132
Accounts receivable, net 23,174 14,822
Inventories 9,986 10,452
Prepaid expenses and other assets 8,031 3,242
------------ ------------
Total current assets 206,849 118,648
Property and equipment, net 9,459 10,581
Goodwill and purchased intangibles, net 41,317 --
Other assets 11,708 4,790
------------ ------------
Total assets $ 269,333 $ 134,019
============ ============
Liabilities and Stockholders' Equity
Accounts payable $ 9,968 $ 8,569
Other current liabilities 17,821 15,274
------------ ------------
Total current liabilities 27,789 23,843
Long-term liabilities 6,295 3,886
3 3/4% convertible senior notes 85,000 --
7 1/4% redeemable convertible subordinated
debentures 24,706 24,706
Stockholders' equity 125,543 81,584
------------ ------------
Total liabilities and stockholders' equity $ 269,333 $ 134,019
============ ============
NETWORK EQUIPMENT TECHNOLOGIES, INC.
GAAP TO NON-GAAP NET INCOME (LOSS) RECONCILIATION
(Unaudited - in thousands, except per share data)
Quarter Ended Fiscal Year Ended
-------------------- --------------------
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
--------- --------- --------- ---------
GAAP net income (loss) $ 2,752 $ (9,485) $ 7,145 $ (16,194)
Stock based compensation expense:
Cost of product revenue 57 24 177 92
Cost of service revenue 68 17 165 44
Sales and marketing 250 82 721 257
Research and development 226 75 541 285
General and administrative 376 170 1,434 534
Acquisition related amortization:
Acquired intangibles -
Cost of product revenue 328 -- 473 --
Sales and marketing 502 -- 531 --
General and administrative 53 -- 70 --
Cost of product revenue,
amortization of purchase
adjustment to acquired
inventory 281 -- 281 --
Restructure related:
General and administrative,
accretion of discount on
future cash flows from
subleases 44 -- 270 --
Restructure and other -
Costs to vacate former
manufacturing facility 30 10,081 61 10,081
Other, primarily
severance 66 106 114 102
Other income (expense), net,
dissolution of subsidiary (385) -- (385) --
Income tax provision (benefit):
Income tax effect of above
items (39) 1 (95) --
Release of valuation
allowance (2,002) -- (2,002) --
--------- --------- --------- ---------
Non-GAAP net income (loss) $ 2,607 $ 1,071 $ 9,501 $ (4,799)
========= ========= ========= =========
Non-GAAP net income (loss)
per-share data:
Basic $ 0.09 $ 0.04 $ 0.35 $ (0.19)
========= ========= ========= =========
Diluted $ 0.09 $ 0.04 $ 0.33 $ (0.19)
========= ========= ========= =========
Common and common equivalent
shares:
Basic 28,936 25,354 27,423 25,003
========= ========= ========= =========
Diluted 35,756 25,354 28,415 25,003
========= ========= ========= =========
Company Contact: Network Equipment Technologies, Inc. Leigh
Salvo (510) 647-8870 Email Contact
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