Science & Technology
Science and Technology
Science and Technology
Thu, January 29, 2009
Wed, January 28, 2009
Network Equipment Technologies: Network Equipment Technologies Announces Financial Results for Third Quarter of Fiscal 2009
FREMONT, CA--(Marketwire - January 28, 2009) - Network Equipment Technologies, Inc. ("NET") (
Total revenue in the third quarter was $19.0 million, up 3% from the prior quarter and down 35% from the third quarter of fiscal 2008. Government revenue was $15.3 million in the third quarter, an increase of 14% sequentially and a decrease of 37% from the third quarter of the prior fiscal year.
Net income in the third quarter, attributable to gains from the early retirement of convertible bonds, was $13.1 million or $0.42 per share. In the prior quarter, the company reported a net loss of $47.5 million or $1.66 per share, due primarily to impairment charges. In the third quarter last fiscal year, net income was $1.5 million or $0.05 per share.
On a non-GAAP basis excluding items noted below, net loss in the third quarter was $3.2 million or $0.11 per share, compared to net loss of $8.1 million or $0.28 per share in the prior quarter, and net income of $2.6 million, or $0.09 per share in the third quarter of fiscal 2008. Non-GAAP net income and loss were calculated by excluding the impairment of goodwill and other intangible assets, non-cash stock-based compensation expense, amortization of intangible assets from our acquisition of Quintum, accretion, and other restructure charges resulting from severance and vacating our former manufacturing facility; as well as excluding the gain on the retirement of debt by the repurchase of convertible bonds. Refer to the table below for reconciliation of GAAP to non-GAAP net income and loss.
Cash and investment balances at the end of the quarter were $101.6 million, down $30.0 million from the end of the prior quarter. During the third quarter, the company used $23.1 million for the buyback of convertible bonds and $311,000 for the repurchase of shares of its common stock. Following the buybacks, the company now has outstanding $13.0 million of its 3 3/4% convertible senior notes and $23.7 million of its 7 1/4% convertible subordinated debentures.
"We see our greatest near term opportunity emerging in VoIP applications for unified communications in both the enterprise and government markets. Our VoIP products are being used in an increasing number of pilots globally. Working with our growing base of channel partners, we are actively pursuing new opportunities and converting successful pilots into larger deployments," said president and CEO C. Nicholas Keating, Jr. "Although we are gaining traction with our pilot programs, we believe that the uncertain economy and continued delays in some government programs will affect our customers' spending through at least the first half of calendar 2009. As a result, we will continue to look for further opportunities to improve efficiencies and trim expenses."
Conference Call Information:
The company will be hosting a conference call today to discuss these results at 4:30 p.m. ET. Please dial (866) 700-0133 or (617) 213-8831 and provide conference ID# 38799965 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 February 4, 2009; please dial (888) 286-8010 or (617) 801-6888 and enter conference ID# 42424438. A digital recording will be available on the company's website for one year.
About Network Equipment Technologies, Inc.
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. Broadening NET's voice solutions, Quintum Technologies, now a part of NET, is a VoIP innovator whose applications bring the reliability and clarity of public telephone networks to Internet telephony and unified 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. For more information, visit [ www.net.com ].
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 impairment charge for goodwill and other intangible assets, non-cash stock-based compensation expense, amortization of intangible assets from our acquisition of Quintum, accretion and other restructure charges resulting from severance and 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 (within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934) relating to possible future operating results, including operating expenses and cash flows. 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, the timing of orders, market acceptance for our new products, timely completion of product development initiatives, relations with and performance by third-party technology providers, new competition and technological changes, success in building new sales channels, circumstances regarding specific sales that can affect the recognition of revenue, and the progression of patent litigation, 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 (In thousands, except per share amounts) (unaudited) Quarter Ended Nine Months Ended ----------------------- ----------------------- December December December December 26, 2008 28, 2007 26, 2008 28, 2007 ----------- ----------- ----------- ----------- Revenue: Product $ 15,304 $ 25,480 $ 42,001 $ 72,424 Service 3,668 3,559 11,060 10,288 ----------- ----------- ----------- ----------- Total revenue 18,972 29,039 53,061 82,712 ----------- ----------- ----------- ----------- Costs of revenue: Cost of product revenue (1) 6,841 11,672 35,530 31,061 Cost of service revenue 3,529 3,052 11,006 8,933 ----------- ----------- ----------- ----------- Total cost of revenue 10,370 14,724 46,536 39,994 ----------- ----------- ----------- ----------- Gross margin 8,602 14,315 6,525 42,718 Operating expenses: Sales and marketing 5,159 5,076 16,599 14,279 Research and development 5,123 5,783 17,251 17,751 General and administrative 2,872 2,774 9,885 8,300 Restructure and other costs 1,420 27 1,814 79 Impairment of goodwill and long-lived assets -- -- 34,197 -- ----------- ----------- ----------- ----------- Total operating expenses 14,574 13,660 79,746 40,409 ----------- ----------- ----------- ----------- Income (loss) from operations (5,972) 655 (73,221) 2,309 Other income, net 322 254 299 247 Interest (expense) income, net 35 676 (212) 2,043 Gain on extinguishment of debt 18,776 -- 28,927 -- ----------- ----------- ----------- ----------- Income (loss) before taxes 13,161 1,585 (44,207) 4,599 ----------- ----------- ----------- ----------- Income tax provision 61 47 15 206 ----------- ----------- ----------- ----------- Net income (loss) $ 13,100 $ 1,538 $ (44,222)$ 4,393 =========== =========== =========== =========== Per share amounts Net income (loss): Basic $ 0.45 $ 0.06 $ (1.53)$ 0.16 =========== =========== =========== =========== Diluted $ 0.42 $ 0.05 $ (1.53)$ 0.16 =========== =========== =========== =========== Common and common equivalent shares: Basic 28,847 27,779 28,856 26,939 =========== =========== =========== =========== Diluted 32,500 28,858 28,856 27,997 =========== =========== =========== =========== (1) Includes charges for impairment of goodwill and long-lived assets of $9.7 million for the nine months ended December 26, 2008. NETWORK EQUIPMENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 26, March 28, 2008 2008 (unaudited) (1) --------------- --------------- Current assets: Cash and investments $ 100,440 $ 165,658 Restricted cash 1,150 -- Accounts receivable, net 12,009 23,174 Inventories 7,953 9,986 Prepaid expenses and other assets 11,138 8,031 --------------- --------------- Total current assets 132,690 206,849 Property and equipment, net 7,254 9,459 Goodwill and purchased intangibles, net -- 41,317 Other assets 4,646 11,708 --------------- --------------- Total assets $ 144,590 $ 269,333 =============== =============== Liabilities and Stockholders’ Equity Accounts payable $ 6,118 $ 9,968 Other current liabilities 14,629 17,821 --------------- --------------- Total current liabilities 20,747 27,789 Long-term liabilities 5,424 6,295 3 3/4% convertible senior notes 13,000 85,000 7 1/4% redeemable convertible subordinated debentures 23,706 24,706 Stockholders’ equity 81,713 125,543 --------------- --------------- Total liabilities and stockholders’ equity $ 144,590 $ 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 data) Quarter Ended Nine Months Ended ----------------------- ----------------------- December December December December 26, 2008 28, 2007 26, 2008 28, 2007 ----------- ----------- ----------- ----------- GAAP net income (loss) $ 13,100 $ 1,538 $ (44,222)$ 4,393 Stock based compensation expense: Cost of product revenue 71 51 221 120 Cost of service revenue 85 37 229 97 Sales and marketing 312 189 950 471 Research and development 277 136 824 315 General and administrative 352 356 1,245 1,058 Acquisition related amortization of acquired intangibles Cost of product revenue -- 145 592 145 Sales and marketing -- 29 663 29 General and administrative -- 17 88 17 Impairment of goodwill and long-lived assets -- -- 43,938 -- Restructure related: General and administrative, accretion of discount on future cash flows from subleases -- 69 77 226 Restructure and other: Costs to vacate former manufacturing facility 1,130 -- 1,130 31 Other, primarily severance 290 27 673 48 Other income/(expense) gain on extinguishment of debt (18,776) -- (28,927) -- Income tax effect -- (11) -- (56) ----------- ----------- ----------- ----------- Non-GAAP net income (loss) $ (3,159)$ 2,583 (22,519) 6,894 =========== =========== =========== =========== Non-GAAP net income (loss) per share data: Basic $ (0.11)$ 0.09 $ (0.78)$ 0.26 =========== =========== =========== =========== Diluted $ (0.11)$ 0.09 $ (0.78)$ 0.25 =========== =========== =========== =========== Common and common Equivalent shares: Basic 28,847 27,779 28,856 26,939 =========== =========== =========== =========== Diluted 28,847 28,858 28,856 27,997 =========== =========== =========== ===========
