Carrier Access Reports Second-Quarter 2002 Financial Results.Business Editors/High-Tech Writers BOULDER Boulder, city, United States Boulder, city (1990 pop. 83,312), seat of Boulder co., N central Colo.; inc. 1871. A Rocky Mountain resort and a suburb of Denver, it is the seat of the Univ. of Colorado (1876). , Colo.--(BUSINESS WIRE)--July 23, 2002 Carrier Access Corporation (Nasdaq:CACS CACS Center for Advanced Computer Studies CACS Computer Audit, Control and Security CACS Carrier Access Corporation (stock symbol) CACs Criteria Air Contaminants CACS Center for Alaskan Coastal Studies CACS Coronary Artery Calcium Scoring ), a manufacturer of broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). communications equipment, today reported results for its second quarter ending June 30, 2002. Net revenue for second quarter 2002 was $11.8 million, compared to net revenue of $16.4 million for the first quarter 2002. The company further announced that on July 19 it eliminated approximately 60 positions, or 17% of its workforce to reduce expenses. As part of the workforce reduction, the company further refined its salesforce focus and announced that Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. Wildman, Executive Vice President, Sales is no longer with the company. Carrier Access' two vice presidents of sales in strategic and national accounts will continue their responsibilities for sales operations, reporting directly to Roger Koenig, Carrier Access' CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . Cash and equivalents, together with securities available for sale was $30.8 million for the second quarter 2002, a decrease of only $2.4 million from the first quarter 2002. The company continues to maintain a strong balance sheet with no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Net loss reported for the second quarter 2002 was $0.84 per share, or $20.8 million, compared to a first quarter 2002 loss of $.36 per share, or $9.0 million. The total additions to reserves and allowances which include bad debt, certain business contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , inventory reserves and deferred tax assets accounted for $16.1 million of the company's $20.8 million loss reported for the quarter. Operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the second quarter, before reserves and allowances, were $4.7 million. During the quarter, the company accounted for the following reserves and allowances. The company increased its allowance for bad debt by $2.8 million due to the continued decline in the financial condition of certain customers and recorded a charge of $2.0 million for certain business contingencies. Both charges are reflected in general and administrative expenses. The company's cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold reflects an increase in its inventory reserve for excess and slow moving inventory by $1.1 million due to a decrease in anticipated demand for certain products. In addition, during the second quarter, the company recorded an income tax expense of $7.2 million. This consisted of a valuation allowance for $12.2 million of certain deferred tax assets, partially offset by a $5.0 million second-quarter net operating loss carryback carryback n. in taxation accounting, using a current tax year's deductions, business losses or credits to refigure and amend a previously filed tax return to reduce the tax liability. (See: carryover) . This valuation allowance is a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. that reduces to zero the deferred income tax asset on the balance sheet. In the second quarter of 2001, Carrier Access reported net revenue of $29.4 million and a net loss of $.08 per share, or $2.1 million. "Reduced spending on Central Office equipment by RBOC (Regional Bell Operating Company) The Bell telephone companies that were spun off of AT&T by court order in 1984 (the Divestiture). Also known as the "Baby Bells," the initial seven RBOCs were Nynex, Bell Atlantic, BellSouth, Southwestern Bell, US West, and IXC (1) (IntereXchange Carrier) An organization that provides interstate (long distance) communications services within the U.S., which includes AT&T, MCI, Sprint and more than 700 others. See LATA. (2) (IXC Communications Inc., Austin, TX, www. customers, in addition to the financial restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of competitive carriers, contributed to our shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. of revenue in the second quarter," said Roger Koenig, Carrier Access' CEO. "Our development of new customers and new products progressed well during the quarter. Wireless service provider revenue increased by 138% in the second quarter, including shipments of our new wireless transport and data platform, the Axxius(TM) 800. During the quarter, we also introduced a new product for IP business voice services, the Adit adit (ăd`ĭt), in mining, underground passage excavated nearly horizontally, with one end open to the earth's surface, usually used to service a mine. The adit end is the furthermost end from the surface, i.e., the location where miners work. (R) 600 CMG CMG Coastal & Marine Geology (USGS) CMG Chipotle Mexican Grill, Inc. (stock symbol) CMG Companion (of the Order Of) St Michael and St George CMG Computer Measurement Group , and a new product line for low-cost business fiber access, the Exxtenz(TM) 100/200. Our development of additional sales channels in service provider enterprise markets also progressed well during the quarter," said Koenig. "We believe that the cost-saving measures that we have implemented will enable us to continue the successful development of new markets and product solutions," said Timothy Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic , Carrier Access' CFO See Chief Financial Officer. . "These solutions are planned to meet both the cost savings and service revenue needs of wireless, enterprise and cable MSO (1) (Multiple System Operator) Typically refers to a cable TV organization that owns more than one cable system, but it may refer to an operator of only one system. customers. Our expense reductions are intended to accelerate our return to profitability. We have continued to reduce expenses by consolidating our sales and developments to deliver the largest growth opportunities available in our target segments," said Anderson. Carrier Access will hold a conference call today at 4:30 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. to review these results. The call is open to the public. Those who wish to participate should dial 888/690-9483, domestically or internationally, at least fifteen minutes prior to the scheduled start time for the call and reference Carrier Access. Carrier Access has also scheduled this event to be broadcast live via web cast and replayed until 5:00 p.m. EST, August 7, 2002. To access this web cast, please go to the Investor Relations Investor relations The process by which the corporation communicates with its investors. page at www.carrieraccess.com/investors, or www.companyboardroom.com. Forward-Looking Statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Caution This press release contains forward-looking statements regarding market conditions, our financial position and our growth prospects in broadband access See broadband and wireless broadband. and service creation particularly in the enterprise, cable and wireless markets. We caution that actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including, but not limited to, continuing uncertainty regarding general economic conditions, changes in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by carriers and telecommunications companies See telecom company. , a change in overall demand for our products, problems with or at our distributors and/or suppliers, changing market conditions and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. within our industry, the financial stability of our customers, the introduction of new competition and technologies, and other risks and uncertainties including those factors discussed in the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001, and other documents periodically filed with the Securities and Exchange Commission. We disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation or intention to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise. About Carrier Access Carrier Access is an equipment manufacturer that helps more than 1,800 telecommunications companies accelerate revenue, lower operating costs operating costs npl → gastos mpl operacionales , and extend capital budgets by applying high-performance broadband access and service creation technologies. Founded in 1992, Carrier Access serves global service providers, wireless, incumbent, and competitive carriers. Carrier Access's products are held to the highest possible reliability and interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. standards, including OSMINE (Operations Systems Modification of Intelligent Network Elements) A system from Telcordia for verifying compatibility with Telcordia-designed operating systems. Telcordia, NEBS NEBS Network Equipment Building System (Bell Telephone Labs) NEBS Network Equipment Building Standards NEBS New England Business Services NEBS New England Barbecue Society NEBS Neue Europäische Bewegung Schweiz Level 3 and ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9001. For more information, visit www.carrieraccess.com.
Carrier Access Corporation
Condensed Comparative Income Statements
(in thousands, except per-share amounts)
Presented in conformity with Generally
Accepted Accounting Principles (GAAP)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
---- ---- ---- ----
Net revenue $11,806 $29,434 $28,252 $58,272
Cost of goods sold 8,277 14,353 19,509 28,133
------- ------- ------- -------
Gross profit 3,529 15,081 8,743 30,139
------- ------- ------- -------
Operating expenses:
Research and development 5,735 9,220 14,664 17,691
Sales and marketing 4,727 6,370 10,023 11,833
General and administrative 6,723 2,747 11,868 5,022
Goodwill and other
intangible amortization 72 919 144 1,893
Amortization of deferred
stock compensation 43 74 129 256
------- ------- ------- -------
Total operating expenses 17,300 19,330 36,828 36,695
------- ------- ------- -------
Loss from operations (13,771) (4,249) (28,085) (6,556)
Other income, net 223 475 464 1,057
------- ------- ------- -------
Loss before income taxes (13,548) (3,774) (27,621) (5,499)
Income tax expense (benefit) 7,221 (1,700) 2,158 (2,573)
------- ------- ------- -------
Net loss $(20,769) $(2,074) $(29,779) $(2,926)
======== ======= ======== =======
Loss per share:
Basic $(0.84) $(0.08) $(1.20) $(0.12)
Diluted $(0.84) $(0.08) $(1.20) $(0.12)
Weighted average common shares:
Basic 24,755 24,891 24,749 24,862
Diluted 24,755 24,891 24,749 24,862
Carrier Access Corporation
Condensed Consolidated Balance Sheets
(in thousands)
Presented in conformity with Generally
Accepted Accounting Principles (GAAP)
June 30, December 31,
2002 2001
ASSETS ---- ----
Current assets:
Cash and cash equivalents $17,809 $24,741
Securities available for sale 13,022 11,873
Accounts receivable, net 10,058 17,808
Income tax receivable 11,663 8,468
Inventory, net 26,039 36,500
Deferred income taxes -- 3,958
Prepaid expenses and other 1,639 2,673
------- -------
Total current assets 80,230 106,021
Property and equipment, net of
accumulated depreciation and amortization 12,827 14,140
Goodwill and other intangibles, net
of amortization 9,214 9,354
Deferred income taxes -- 3,361
Other assets 154 141
------- -------
Total assets $102,425 $133,017
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $6,943 $8,864
Accrued expenses and other liabilities 6,540 5,560
------- -------
Total current liabilities 13,483 14,424
Stockholders' equity:
Preferred stock $0.001 par value, 5,000
shares authorized and no shares issued
or outstanding at June 30, 2002,
and December 31, 2001 -- --
Common stock $0.001 par value, 60,000
shares authorized and 24,766 shares
issued and outstanding at June 30, 2002,
and 24,740 shares issued and outstanding at
December 31, 2001 30 30
Additional paid-in capital 85,787 85,968
Deferred compensation (135) (466)
Retained earnings 3,231 33,012
Accumulated other comprehensive income 29 49
------- -------
Total stockholders' equity 88,942 118,593
------- -------
Commitments and contingencies
Total liabilities and
stockholders' equity $102,425 $133,017
======== ========
Carrier Access Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
---- ---- ---- ----
Cash flows from
operating activities:
Net loss $(20,769) $(2,074) $(29,779) $(2,926)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Depreciation and
amortization expense 1,326 2,046 1,997 4,108
Provision (credit) for
doubtful accounts and
returns, net of write-offs 2,639 80 5,401 (202)
Provision for inventory
obsolescence 1,173 466 2,970 817
Compensation expense
related to stock options
issued at less than
fair value 43 74 7,318 (3,490)
Deferred income tax benefit 12,214 (2,546) 129 256
Changes in operating
assets and liabilities:
Accounts receivable 1,130 (4,727) 3,123 1,721
Notes receivable (775) -- (775) --
Income taxes receivable (4,993) 844 (3,195) 3,443
Inventory 1,799 (10,495) 7,491 (10,342)
Prepaid expenses and other (509) 71 1,013 (92)
Accounts payable and
accrued expenses 4,794 10,263 (940) 1,043
Income taxes payable -- -- -- 944
------ ------ ------ ------
Net cash used by operating
activities (1,928) (5,998) (5,247) (4,720)
------ ------ ------ ------
Cash flows from
investing activities:
Purchases of property
and equipment (466) (1,747) (534) (3,691)
Purchases and sales of
marketable securities, net (3,490) 36 (1,172) 668
------ ------ ------ ------
Net cash used by
investing activities (3,956) (1,711) (1,706) (3,023)
------ ------ ------ ------
Cash flows from
financing activities:
Proceeds from exercise
of stock options 18 31 21 41
------ ------ ------ ------
Net decrease in cash
and cash equivalents (5,866) (7,678) (6,932) (7,702)
Cash and cash equivalents
at beginning of period 23,675 32,788 24,741 32,812
------ ------ ------ ------
Cash and cash equivalents
at end of period $17,809 $25,110 $17,809 $25,110
======= ======= ======= =======
Supplemental cash
flow disclosures:
Cash received for
income taxes (336) -- (1,973) --
Accounts receivable in
exchange for notes receivable 775 -- 775 --
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