FREMONT, CA today reported its results for the first quarter of
fiscal 2009.
Total revenue was $15.6 million, down from $33.4 million in the
prior quarter and $26.3 million in the first quarter of the prior
fiscal year.
Net loss in the first quarter was $9.8 million, or $0.34 per
share, compared to net income of $2.8 million, or $0.09 per share,
in the fourth quarter of fiscal 2008 and net income of $1.3
million, or $0.05 per share, in the first quarter of fiscal 2008.
The company's financial results for the first quarter of fiscal
2009 and the fourth quarter of fiscal 2008 include the operating
results of Quintum Technologies following its acquisition by the
company on December 4, 2007, and other accounting effects of the
acquisition.
Cash and investment balances at the end of the quarter were
$150.9 million, down from $165.7 million at the end of the prior
quarter. In the first quarter of fiscal 2009, the company used
$858,000 for repurchases of its common stock and $8.3 million for
the repurchase of convertible bonds having a face value of $12.5
million.
Non-GAAP net loss was $11.2 million, or $0.39 per share,
compared to net income of $2.6 million, or $0.09 per share, in the
prior quarter, and net income of $1.8 million, or $0.06 per share,
in the first quarter of the prior year. Non-GAAP net income and
loss were calculated by excluding non-cash stock-based compensation
expense, amortization of intangible assets from our acquisition of
Quintum, and restructure charges resulting from vacating our former
manufacturing facility; offset by a gain on the extinguishment of
debt by the repurchase of convertible bonds. Refer to the table
below for reconciliation of GAAP to non-GAAP net income and
loss.
"During the first quarter, the Federal government's supplemental
defense and communications budgets were pushed out and program
funding was delayed," said President and CEO C. Nicholas Keating,
Jr. "The government sector, both Federal and international, still
presents significant long-term opportunities for NET, and we are
seeing growth in our enterprise voice-over-IP business."
Conference Call Information:
The company will be hosting a conference call today to discuss
these results at 5:30 p.m. ET. Please dial (866) 825-3209 or (617)
213-8061 and provide conference ID# 41715244 to access the call.
The conference 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
4, 2008; please dial (888) 286-8010 or (617) 801-6888 and enter
conference ID# 85000255. 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 adjust
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, and the gain on extinguishment of
debt. 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, 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 federal
government budget matters and procurement decisions, our ability to
develop and commercialize new products and product enhancements,
including relations with and performance by third-party technology
providers, the volume and 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 27, June 29,
2008 2007
----------- -----------
Revenue:
Product $ 12,039 $ 22,991
Service 3,535 3,350
----------- -----------
Total revenue 15,574 26,341
----------- -----------
Costs of revenue:
Cost of product revenue 9,356 9,508
Cost of service revenue 3,673 2,905
----------- -----------
Total cost of revenue 13,029 12,413
----------- -----------
Gross margin 2,545 13,928
Operating expenses:
Sales and marketing 5,748 4,536
Research and development 6,307 6,050
General and administrative 3,791 2,691
Restructure and other costs 242 1
----------- -----------
Total operating expenses 16,088 13,278
----------- -----------
Income (loss) from operations (13,543) 650
Other income (expense), net 113 (21)
Interest (expense) income, net (105) 692
Gain on extinguishment of debt 3,714 --
----------- -----------
Income (loss) before taxes (9,821) 1,321
----------- -----------
Income tax provision 17 58
----------- -----------
Net income (loss) $ (9,838) $ 1,263
=========== ===========
Per share amounts:
Net income (loss):
Basic $ (0.34) $ 0.05
=========== ===========
Diluted $ (0.34) $ 0.05
=========== ===========
Common and common equivalent shares:
Basic 28,884 26,270
=========== ===========
Diluted 28,884 27,338
=========== ===========
NETWORK EQUIPMENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 27, March 28,
2008 2008
(unaudited) (1)
----------- -----------
Assets
Cash and investments $ 150,912 $ 165,658
Accounts receivable, net 8,324 23,174
Inventories 8,577 9,986
Prepaid expenses and other assets 11,177 8,031
----------- -----------
Total current assets 178,990 206,849
Property and equipment, net 8,927 9,459
Goodwill and purchased intangibles, net 40,511 41,317
Other assets 10,820 11,708
----------- -----------
Total assets $ 239,248 $ 269,333
=========== ===========
Liabilities and Stockholders' Equity
Accounts payable $ 6,121 $ 9,968
Other current liabilities 15,447 17,821
----------- -----------
Total current liabilities 21,568 27,789
Long-term liabilities 5,362 6,295
3 3/4% convertible senior notes 72,535 85,000
7 1/4% redeemable convertible subordinated
debentures 24,706 24,706
Stockholders' equity 115,077 125,543
----------- -----------
Total liabilities and stockholders' equity $ 239,248 $ 269,333
=========== ===========
(1) Derived from audited consolidated financial statements as of March 28,
2008.
NETWORK EQUIPMENT TECHNOLOGIES, INC.
GAAP TO NON-GAAP NET INCOME (LOSS) RECONCILIATION
(Unaudited - in thousands, except per share amounts)
Quarter Ended
-------------
June 27, June 29,
2008 2007
----------- -----------
GAAP net income (loss) $ (9,838) $ 1,263
Stock-based compensation expense:
Cost of product revenue 95 28
Cost of service revenue 68 28
Sales and marketing 304 113
Research and development 274 77
General and administrative 478 208
Acquisition related amortization of acquired
intangibles:
Cost of product revenue 355 --
Sales and marketing 398 --
General and administrative 53 --
Restructure related:
General and administrative, accretion of
discount on future cash flows from subleases 42 79
Restructure and other:
Costs to vacate former manufacturing
facility -- (15)
Other, primarily severance 242 16
Other income/(expense), gain on
extinguishment of debt (3,714) --
Income tax provision (benefit):
Income tax effect of above items -- (21)
----------- -----------
Non-GAAP net income (loss) $ (11,243) $ 1,776
=========== ===========
Non-GAAP net income (loss) per share data:
Basic $ (0.39) $ 0.07
=========== ===========
Diluted $ (0.39) $ 0.06
=========== ===========
Common and common equivalent shares:
Basic 28,884 26,270
=========== ===========
Diluted 28,884 27,338
=========== ===========
Company Contact: Network Equipment Technologies, Inc. Leigh
Salvo (510) 647-8870 Email Contact
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