Centillium Communications Announces First Quarter 2006 Financial Results; Reports GAAP Net Loss of $313,000, or $0.01 Per Share; Reports Non-GAAP Net Income of $581,000, or $0.01 Per Share.FREMONT Fremont (frē`mŏnt). 1 City (1990 pop. 173,339), Alameda co., W Calif., on San Francisco Bay; inc. 1956. Long an agricultural center, with champagne vineyards founded (1870) by Leland Stanford, it still ships fruits and vegetables. , Calif. -- Centillium Communications, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CTLM CTLM Imaging Computed tomography laser mammography A diagnostic technique using lasers to produce a 3-D cross-sectional image of the breast without x-rays. See Mammography. ), a leading provider of broadband access See broadband and wireless broadband. solutions, today announced financial results for the first quarter ended March 31, 2006. Net revenues for the first quarter of 2006 were $20.3 million, and remained nearly unchanged, compared with the fourth quarter of 2005, and increased by 18 percent from $17.2 million for the first quarter of 2005. The company reports its net income (loss) and basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income (loss) per share in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) and additionally, on a non-GAAP basis. Non-GAAP net income (loss), where applicable, excludes the effect of the amortization of stock-based compensation. The company uses the non-GAAP information internally to evaluate its operating performance and believes these non-GAAP measures are useful to investors as they provide additional insight into the underlying operating results. However, non-GAAP measures are not stated in accordance with, should not be considered in isolation from and are not a substitute for GAAP measures. A reconciliation of GAAP to non-GAAP results is provided in the table immediately below the Non-GAAP Consolidated Statements of Operations included in this release. GAAP gross margins were 56.8% (57.0%, non-GAAP) for the first quarter of 2006, compared with 59.7% (59.7%, non-GAAP) for the fourth quarter of 2005, and 49.2% (49.2%, non-GAAP) for the first quarter of 2005. The GAAP net loss for the first quarter of 2006 was $313,000, or a net loss of $0.01 per share, compared with a GAAP net loss of $394,000, or a net loss of $0.01 per share, for the fourth quarter of 2005 and a GAAP net loss of $6.4 million, or a net loss of $0.16 per share, for the first quarter of 2005. The net loss for the first quarter of 2006 included a charge for stock-based compensation of $894,000, or $0.02 per share, due to the adoption of Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") No. 123 (revised 2004), Share-Based Payment ("SFAS 123R"), effective January January: see month. 1, 2006, using the modified-prospective method. GAAP results prior to 2006 do not include a charge for stock-based compensation. Non-GAAP net income in the first quarter of 2006, excluding the effect of stock based-compensation, was $581,000, or $0.01 per share, compared with a non-GAAP net loss of $394,000, or a net loss of $0.01 per share, in the fourth quarter of 2005 and a non-GAAP loss of $6.4 million, or $0.16 per share, in the first quarter of 2005. Total cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments increased for a fourth consecutive quarter to $63 million at March 31, 2006, compared with $61 million at December December: see month. 31, 2005. In addition, the company remains debt free. "We are pleased that we reached profitability on a non-GAAP basis during the first quarter of 2006," said Faraj Aalaei, co-founder and 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. of Centillium. "Our first quarter 2006 revenues, as a percentage of net revenues by region, were 65 percent from Japan, 17 percent from Asia, excluding Japan, 13 percent from the U.S. and 5 percent from Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Also, our first quarter 2006 revenues, as a
percentage of net revenues by market, were 82 percent from DSL DSLin full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary , 12 percent from VoIP and 6 percent from Optical," said Aalaei. "We plan to continue to broaden our product portfolio with innovative new products, which we believe will further enhance our market position in broadband access. During the first quarter, we introduced Maximus Maximus is a name formed from the Latin term for "greatest" or "largest." It is therefore also a common noun, and may refer to any of the following: People in the Ancient World Politicians ADSL - Asymmetric Digital Subscriber Line chipsets for the Central Office (CO). These chipsets leverage Centillium's extremeDSL (MAX) technology and are optimized to bring high definition quality to next-generation video and IPTV (Internet Protocol TV) Also called "TV over IP," IPTV delivers scheduled TV programs and video-on-demand (VOD) via the IP protocol and digital streaming techniques used to watch video on the Internet. applications for service providers and telcos worldwide. "In addition, we announced our Optical Services Gateway Platform, the industry's first solution which integrates Optical and VoIP technologies. The platform combines the company's Mustang mustang [Sp. mesteño=a stray], small feral horse of the W United States. Mustangs are descended from escaped Native American horses, which in turn were descended from horses of North African blood, brought to the New World by the Spanish c.1500. (TM) EPON See PON. system chip with chips from our Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. (TM) product family, enabling system vendors to offer an integrated gateway solution to their customers," said Aalaei. "We also recently announced our newest Optical transceiver (TRANSmitter reCEIVER) An electronic device or circuit that transmits and receives analog or digital signals. It comes in many forms; for example, a transponder on a satellite, a network adapter in the computer or the circuits in a cellphone. chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). families, Zeus Zeus (z  s), in Greek religion and mythology, son and successor of Kronos as supreme god. (TM) 2 and Apollo(TM) 2, the industry's first
fully integrated 2.5Gbps transceivers that target the GPON See PON. and EPON
markets, and SONET, transport and enterprise applications. The Zeus 2
and Apollo 2 chipsets add to Centillium's existing optical access
product portfolio, and strengthen our position as a provider of
end-to-end end-to-enda pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. FTTP (Fiber To The Premises) The installation of optical fiber from the carrier directly into the home or office. Also called "fiber to the home" (FTTH). See PON and FTTC. See also FTP. solutions," said Aalaei. A conference call to review the first quarter 2006 financial results will follow this release at 2:00 p.m. Pacific time/5:00 p.m. Eastern time. To listen to the call, please dial (517) 623-4705, passcode: Centillium. A replay will be made available approximately one hour after the conclusion of the call and will remain available for approximately one week. To access the replay, dial (203) 369-0512. The conference call will also be webcast over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the ; visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Centillium Communications website at www.centillium.com to access the call from the website. This webcast will be recorded and available for replay on the Centillium website from approximately two hours after the conclusion of the conference call until June 30, 2006. About Centillium Communications, Inc. Centillium Communications, Inc. is a leading innovator of high performance, cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. semiconductor solutions that give consumers, enterprises and service providers the winning edge in broadband access. The company's complete, end-to-end system-on-chip solutions accelerate development time-to-market for "last mile" products with Digital Subscriber Line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and (DSL), Fiber-To-The-Premises (FTTP) and Voice-over-Internet Protocol (VoIP) technologies. Centillium products include digital and mixed-signal integrated circuits A mixed-signal integrated circuit combines analog circuits with digital signal processing (DSP) circuits on a single semiconductor die. An integrated circuit that includes both analog and digital circuitry (but no DSP), like a 555 timer, is generally not considered a mixed-signal and related software for DSL and FTTP central office and customer premises equipment See CPE. and VoIP solutions for carrier- and enterprise-class gateways and consumer telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. . Centillium is a global company with headquarters in Fremont, CA. Additional information is available at www.centillium.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 This press release includes statements that are forward-looking statements 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. within the meaning of U.S. federal securities laws. For example, this press release speaks to Centillium's ongoing focus on achieving profitability, product and geographic diversity, and significance and expected success of Centillium's recently announced products, solutions and relationships. Actual results may differ materially from those indicated by such forward-looking statements based on a variety of risks and uncertainties, including without limitation the risks and uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the rate and breadth of deployment of broadband access in general, especially DSL, FTTP and VoIP technologies, and Centillium's technology solutions in particular; the successful development and market acceptance of Centillium's new products and technology; Centillium's dependence on a few significant customers for a substantial portion of its revenue; Centillium's ability to continue and expand on its relationships with new customers; the timing, rescheduling or cancellation of significant customer orders and Centillium's ability, as well as the ability of its customers, to manage inventory; Centillium's ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a cost-effective and timely manner; competitive pressures and other factors such as the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of Centillium's products; the timing of customer-industry qualification and certification of Centillium's products and the risks of non-qualification or non-certification; Centillium's ability to timely and accurately predict market requirements and evolving industry standards and to identify opportunities in new markets; changes in Centillium's product or customer mix; the satisfactory completion of the audits of Centillium's financial statements and systems of internal control; intellectual property disputes and customer indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from claims and other types of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. risk; the effectiveness of Centillium's expense and product cost control and reduction efforts; and Centillium's ability to attract, retain and motivate qualified personnel, including executive officers and other key management and technical personnel. Centillium undertakes no obligation to update forward-looking statements for any reason. Information about potential factors that could affect Centillium's financial results is included in Centillium'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. and in other documents on file with the Securities and Exchange Commission. Centillium Communications, the Centillium Logo, Apollo, Atlanta, Maximus, Mustang, Pharos and Zeus are trademarks of Centillium Communications, Inc. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and certain other countries. All rights reserved.
CENTILLIUM COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
----------------------------------------
March 31, December 31, March 31,
2006 2005 2005
------------- ------------- ------------
(In thousands, except per share data)
Net revenues $20,254 $20,291 $17,196
Cost of revenues (a) 8,741 8,168 8,733
------------- ------------- ------------
Gross profit 11,513 12,123 8,463
Operating expenses:
Research and development (a) 6,636 7,312 8,983
Selling, general and
administrative (a) 5,772 5,722 6,092
------------- ------------- ------------
Total operating expenses 12,408 13,034 15,075
------------- ------------- ------------
Operating loss (895) (911) (6,612)
Interest income, net 616 546 299
------------- ------------- ------------
Loss before provision for
income taxes (279) (365) (6,313)
Provision for income taxes 34 29 40
------------- ------------- ------------
Net loss $(313) $(394) $(6,353)
============= ============= ============
Basic and diluted net loss
per share $(0.01) $(0.01) $(0.16)
============= ============= ============
Shares used to compute basic
and diluted net loss per
share 40,282 39,932 38,845
============= ============= ============
(a) Includes stock-based
compensation as follows:
Cost of revenues $22 $- $-
Research and
development 349 - -
Selling, general and
administrative 523 - -
------------- ------------- ------------
$894 $- $-
============= ============= ============
CENTILLIUM COMMUNICATIONS, INC.
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
--------------- ------------ ---------
(In thousands, except per share data)
Net revenues $20,254 $20,291 $17,196
Cost of revenues 8,719 8,168 8,733
--------------- ------------ ---------
Gross profit 11,535 12,123 8,463
Operating expenses:
Research and development 6,287 7,312 8,983
Selling, general and
administrative 5,249 5,722 6,092
--------------- ------------ ---------
Total operating expenses 11,536 13,034 15,075
--------------- ------------ ---------
Operating loss (1) (911) (6,612)
Interest income, net 616 546 299
--------------- ------------ ---------
Income (loss) before provision
for income taxes 615 (365) (6,313)
Provision for income taxes 34 29 40
--------------- ------------ ---------
Non-GAAP net income (loss) $581 $(394) $(6,353)
=============== ============ =========
Non-GAAP basic net income
(loss) per share $0.01 $(0.01) $(0.16)
=============== ============ =========
Non-GAAP diluted net income
(loss) per share $0.01 $(0.01) $(0.16)
=============== ============ =========
Shares used to compute Non-GAAP
basic net income (loss) per
share 40,282 39,932 38,845
=============== ============ =========
Shares used to compute Non-GAAP
diluted net income (loss) per
share 41,861 39,932 38,845
=============== ============ =========
Reconciliation of GAAP to Non-GAAP Results
(Unaudited)
Three Months Ended
--------------------------------------
March 31, December 31, March 31,
2006 2005 2005
--------------- ------------ ---------
(In thousands, except per share data)
GAAP net loss $(313) $(394) $(6,353)
Adjustment for stock-based
compensation (a) 894 - -
--------------- ------------ ---------
Non-GAAP net income (loss) $581 $(394) $(6,353)
=============== ============ =========
GAAP net loss per share $(0.01) $(0.01) $(0.16)
Adjustment for stock-based
compensation (a) 0.02 - -
--------------- ------------ ---------
Non-GAAP net income (loss) per
share $0.01 $(0.01) $(0.16)
=============== ============ =========
(a) Effective January 1, 2006, the Company adopted SFAS123R, "Share-
Based Payment", which requires the measurement of all employee
share-based payments using a fair-value-based method and recording the
expense over the service period. As a result our GAAP statement of
operations for the three months ended March 31, 2006 includes
stock-based compensation of $894,000. Our financial statements for
periods prior to 2006 are not required to be restated. Stock-based
compensation expense for periods prior to 2006 does not include the
value of stock options.
CENTILLIUM COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2006 2005
--------------- -------------
(In thousands, except share
and per share data)
ASSETS
Current assets:
Cash and cash equivalents $41,010 $39,440
Short-term investments 22,447 21,900
Accounts receivable - net of allowance
for doubtful accounts of $151 at
March 31, 2006 and $169 at December 31,
2005 8,245 7,177
Inventories 3,194 3,609
Other current assets 1,758 1,780
--------------- -------------
Total current assets 76,654 73,906
Property and equipment, net 3,235 3,529
Other assets 794 912
--------------- -------------
Total assets $80,683 $78,347
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 7,326 5,987
Accrued compensation and related
expenses 3,887 4,247
Accrued liabilities 19,722 19,133
--------------- -------------
Total current liabilities 30,935 29,367
--------------- -------------
Other long-term liabilities 2,201 2,368
Stockholders' equity:
Common stock; $0.001 par value:
Authorized shares: 100,000,000; Issued
and outstanding shares: 40,360,588 at
March 31, 2006, 40,205,940 at December
31, 2005 40 40
Additional paid-in capital 248,303 247,081
Deferred compensation (7) (24)
Accumulated deficit (200,753) (200,440)
Accumulated other comprehensive loss (36) (45)
--------------- -------------
Total stockholders' equity 47,547 46,612
--------------- -------------
Total liabilities and stockholders'
equity $80,683 $78,347
=============== =============
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