Science & Technology
Science and Technology
Science and Technology
Tue, May 12, 2009
Mon, May 11, 2009
Network Equipment Technologies: Network Equipment Technologies Announces Financial Results for Fourth Quarter and Fiscal 2009
FREMONT, CA--(Marketwire - May 11, 2009) - Network Equipment Technologies, Inc. ("NET") (
Total revenue in the fourth quarter of fiscal 2009 was $12.7 million, a 33% decrease from $19.0 million in the third quarter and a 62% decrease from $33.4 million in the fourth quarter of fiscal 2008. The decline was mostly due to a reduction in product revenue from the company's government business, which was down 50% from the third quarter and down 75% from the fourth quarter of fiscal 2008. Net loss in the fourth quarter of fiscal 2009 was $9.3 million or $0.32 per share, compared to net income in the third quarter of $13.1 million or $0.42 per share, attributable to gains from the early retirement of convertible bonds, and net income of $2.8 million or $0.09 per share in the fourth quarter of the prior year.
Total revenue in the fiscal year was $65.8 million, down 43% from $116.1 million in fiscal 2008. Net loss was $53.5 million or $1.85 per share, compared to net income of $7.1 million or $0.25 per share in fiscal 2008. Fiscal 2009 results include a full year of operating results for Quintum Technologies, acquired by NET in December 2007, compared to approximately four months in the prior year. Fiscal 2009 results also include charges for the impairment of goodwill and intangible assets acquired from Quintum.
On a non-GAAP basis excluding items noted below, net loss in the fourth quarter was $7.3 million or $0.25 per share, compared to net loss of $3.2 million or $0.11 per share in the prior quarter, and net income of $2.6 million or $0.09 per share in the fourth 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 from 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 fourth quarter were $98.2 million, down from $101.6 million at the end of the prior quarter. Cash and investments decreased by $67.5 million from the prior year due in large part to the use of $41.8 million to repurchase the company's convertible debt, along with $21.0 million used in operations.
"Throughout this economic downturn, we carefully leveraged our existing resources, strengthened our balance sheet, and continued to reduce costs, while shifting our development investment from legacy products to a full range of IP-based platforms. Increasingly, we are earning recognition from industry leaders and being brought into larger opportunities within government entities and enterprise customers. This recognition reflects the early and continued investment we made in delivering the best products for the unified communications and secure voice markets," said president and CEO C. Nicholas Keating, Jr. "While it is still too early in the business cycle for many customers to have commenced full deployment within their organization, we continue to grow pilot programs and are keeping the pipeline strong through a direct touch sales organization and an expanding network of quality partners."
Conference Call Information:
The company will be hosting a conference call today to discuss these results at 5:00 p.m. ET. To access the call, dial (866) 770-7125 or (617) 213-8066 and provide conference ID#17662465. 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 May 18, 2009; please dial (888) 286-8010 or (617) 801-6888 and enter conference ID# 74089938. 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 enable 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 product 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 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 Fiscal Year Ended --------------------------- --------------------------- March 27, March 28, March 27, March 28, 2009 2008 2009 2008 ------------- ------------- ------------- ------------- Revenue: Product $ 9,201 $ 30,184 $ 51,202 $ 102,608 Service 3,526 3,248 14,586 13,536 ------------- ------------- ------------- ------------- Total revenue 12,727 33,432 65,788 116,144 ------------- ------------- ------------- ------------- Costs of revenue: Cost of product revenue 4,983 13,940 30,772 45,001 Cost of service revenue 3,409 3,356 14,415 12,289 Impairment of long-lived assets 320 -- 10,061 -- ------------- ------------- ------------- ------------- Total cost of revenue 8,712 17,296 55,248 57,290 ------------- ------------- ------------- ------------- Gross margin 4,015 16,136 10,540 58,854 Operating expenses: Sales and marketing 4,562 5,899 21,161 20,178 Research and development 4,566 6,528 21,817 24,279 General and administrative 3,235 3,073 13,120 11,373 Restructure and other costs 609 96 2,423 175 Impairment of goodwill and long-lived assets -- -- 34,197 -- ------------- ------------- ------------- ------------- Total operating expenses 12,972 15,596 92,718 56,005 ------------- ------------- ------------- ------------- Income (loss) from operations (8,957) 540 (82,178) 2,849 Other income (expense), net (282) 157 17 404 Interest (expense) income, net 10 165 (202) 2,208 Gain on extinguishment of debt -- -- 28,927 -- ------------- ------------- ------------- ------------- Income (loss) before taxes (9,229) 862 (53,436) 5,461 ------------- ------------- ------------- ------------- Income tax provision (benefit) 52 (1,890) 67 (1,684) ------------- ------------- ------------- ------------- Net income (loss) $ (9,281) $ 2,752 $ (53,503) $ 7,145 ============= ============= ============= ============= Per share amounts Net income (loss): Basic $ (0.32) $ 0.10 $ (1.85) $ 0.26 ============= ============= ============= ============= Diluted $ (0.32) $ 0.09 $ (1.85) $ 0.25 ============= ============= ============= ============= Common and common equivalent shares: Basic 28,847 28,936 28,854 27,423 ============= ============= ============= ============= Diluted 28,847 35,756 28,854 28,415 ============= ============= ============= ============= NETWORK EQUIPMENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) March 27, March 28, 2009 2008 (unaudited) (1) --------- --------- Current assets Cash and investments $ 97,021 $ 165,658 Restricted cash 1,154 -- Accounts receivable, net 7,091 23,174 Inventories 7,364 9,986 Prepaid expenses and other assets 10,073 8,031 --------- --------- Total current assets 122,703 206,849 Property and equipment, net 6,505 9,459 Goodwill and purchased intangibles, net -- 41,317 Other assets 4,225 11,708 --------- --------- Total assets $ 133,433 $ 269,333 ========= ========= Liabilities and Stockholders' Equity Accounts payable $ 4,257 $ 9,968 Other current liabilities 15,084 17,821 --------- --------- Total current liabilities 19,341 27,789 Long-term liabilities 4,568 6,295 3 3/4% convertible senior notes 13,000 85,000 7 1/4% redeemable convertible subordinated debentures 23,704 24,706 Stockholders' equity 72,820 125,543 --------- --------- Total liabilities and stockholders' equity $ 133,433 $ 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 Fiscal Year Ended --------------------- --------------------- March 27, March 28, March 27, March 28, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- GAAP net income (loss) $ (9,281) $ 2,752 $ (53,503) $ 7,145 Stock based compensation expense: Cost of product revenue 31 57 252 177 Cost of service revenue 69 68 298 165 Sales and marketing 303 250 1,253 721 Research and development 199 226 1,023 541 General and administrative 357 376 1,602 1,434 Acquisition related amortization: Acquired intangibles Cost of product revenue -- 328 592 473 Sales and marketing -- 502 663 531 General and administrative -- 53 88 70 Cost of product revenue, amortization of purchase adjustment to acquired inventory -- 281 -- 281 Impairment of goodwill and long-lived assets 320 -- 44,258 -- Restructure related: General and administrative, accretion of discount on future cash flows from subleases 62 44 139 270 Restructure and other: Costs to vacate former manufacturing facility -- 30 1,130 61 Other, primarily severance 609 66 1,282 114 Other income dissolution of subsidiary -- (385) -- (385) Other income gain on extinguishment of debt (2) -- (28,929) -- Income tax benefit Income tax effect of above items -- (39) -- (95) Release of valuation allowance -- (2,002) -- (2,002) ---------- ---------- ---------- ---------- Non-GAAP net income (loss) $ (7,333) $ 2,607 $ (29,852) $ 9,501 ========== ========== ========== ========== Non-GAAP net income (loss) per share data: Basic $ (0.25) $ 0.09 $ (1.03) $ 0.35 ========== ========== ========== ========== Diluted $ (0.25) $ 0.09 $ (1.03) $ 0.33 ========== ========== ========== ========== Common and common equivalent shares: Basic 28,847 28,936 28,854 27,423 ========== ========== ========== ========== Diluted 28,847 35,756 28,854 28,415 ========== ========== ========== ==========
