Clarent Corporation Reports Third Quarter 2001 Results.Business Editors/High-Tech Writers REDWOOD CITY Redwood City, city (1990 pop. 66,072), seat of San Mateo co., W Calif., on San Francisco Bay; inc. 1868. Manufactures include commmunications, electrical, electronic, and medical equipment. , Calif.--(BUSINESS WIRE)--May 8, 2002 Clarent In the Alliterative Morte Arthure, an alliterative verse work of Arthurian literature, Clarent is one of King Arthur's two magic swords. While Excalibur is a sword of warfare, Clarent is one of peace, used for knighting. Corporation (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). : CLRN CLRN California Learning Resource Network CLRN Community Legal Resources Network CLRN Chemical Laboratory Response Network ), a leading provider of softswitch A programmable network switch that can process the signaling for all types of packet protocols. Also known as a "media gateway controller," "call agent" or "call server," such devices are used by carriers that support converged communications services by integrating SS7 telephone and enterprise convergence solutions for next generation telecommunications networks A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. , today reported financial results for the third quarter of 2001. Reporting of the results was delayed due to the previously announced restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of our financials for the year 2000 and the first two quarters of 2001. Revenues for the third quarter of 2001 were $18.7 million compared to a restated $17.6 million for the second quarter of 2001 and a restated $27.2 million for the three months ended September September: see month. 30, 2000. Net loss for the third quarter of 2001 was $263.2 million, or $6.45 per share, compared with a restated net loss of $53.5 million, or $1.47 per share for the third quarter of 2000. Given the very challenging economic and capital expenditure environment, Clarent has aligned its cost structure with its revised business outlook. As a result, the company reduced its workforce by 47% or approximately 480 people, recorded a third quarter restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $37.0 million and recorded inventory charges for excess and obsolete inventories Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. of $27.5 million. In addition, Clarent recorded non-cash charges 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. of $99.1 million for the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill and other intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. and $40.5 million for the impairment of property and equipment. For the nine months ended September 30, 2001 the company reported revenues of $57.4 million compared to restated revenues of $70.7 million for the nine months ended September 30, 2000. Net loss for the nine months ended September 30, 2001 was $406.2 million or $10.11 per share compared to a restated net loss of $62.4 million or $1.85 per share for the same period of the year 2000. For the nine months ended September 30, 2001, the company recorded restructuring charges of $50.2 million and took inventory write-downs of $38.0 million for excess and obsolete inventories, in addition to the non-cash charges mentioned above. "We recognize the need to provide more current financial information to the public. While we continue to focus on our customers and products, we are working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to accelerate our release of financial information and expect to become current on our filings by the time we report second quarter earnings," said Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. J. Sbona, Clarent's Chairman and Chief Executive Officer appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. in January January: see month. 2002. Our Form 10-Q Form 10-Q See 10-Q. for the three months ended September 30, 2001, has been filed today with the Securities and Exchange Commission. About Clarent Clarent Corporation is a leading provider of voice solutions for next generation networks. Clarent's solutions enable service providers to deploy a converged network The integration of the telephone system with IP-based data networks. See softswitch. (networking) converged network - A single network that can carry voice, video and data. (voice, data and applications). Clarent solutions reduce costs and increase operating efficiencies while delivering innovative new services that allow end users to manage their communications. Founded in 1996, Clarent is headquartered in Redwood City, Calif. and has offices in Asia, 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). and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . For more
information please visit www.clarent.com.
Forward Looking Statements This release contains 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. that involve risks and uncertainties, including but not limited to the Company's ability to successfully develop, market, deploy and support products, achieve acceptable gross margins, retain customers, the ability of customers to pay Clarent, the regional concentration of revenue, ability to retain key employees, as well as uncertainties associated with the future development of the markets for IP-based communications and changes in the global economic market. Certain of these risks and uncertainties are described further in the Company's periodic filings with the SEC. Trademarks Clarent, the Clarent logo, Clarent OpenAccess OpenAccess is a community effort to provide interoperability, including unified data exchange among integrated circuit design tools through an open standard data API and reference database supporting that API for IC design. ,Clarent Command Center, Clarent CPG CPG central pattern generators. , NetPerformer, SkyPerformer, PowerCell and ACTview are trademarks or registered trademarks of Clarent Corporation 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 other jurisdictions. All other trademarks, registered trademarks and service marks are the property of their respective owners.
Clarent Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September December
30, 31,
2001 2000
--------- ---------
(Restated)
Assets
Current assets:
Cash and cash equivalents $ 76,317 $ 185,627
Restricted cash 10,000 --
Short-term investments 9,959 74,987
Accounts receivable, gross 11,635 28,142
Receivables allowance (2,827) (6,973)
--------- ---------
Accounts receivable, net 8,808 21,169
Inventories 11,351 17,662
Prepaid expenses and other current assets 3,547 5,942
--------- ---------
Total current assets 119,982 305,387
Investments 6,890 14,479
Property and equipment, net 12,020 36,938
Goodwill, net -- 93,644
Purchased intangible assets, net -- 38,057
Deferred tax assets -- 14,534
Other assets 4,827 4,517
Note receivable from a leasing company 5,000 --
--------- ---------
Total assets $ 148,719 $ 507,556
========= =========
Liabilities And Stockholders' Equity
Current liabilities:
Line of credit $ 9,964 $ --
Accounts payable 10,593 14,337
Deferred revenue 4,069 8,528
Accrued liabilities 18,076 22,775
Customer advances 20,892 2,551
Restructuring and merger related accrual 11,045 6,248
--------- ---------
Total current liabilities 74,639 54,439
Deferred tax liabilities -- 14,534
Restructuring accrual -- long term 34,150 --
Contingencies
Stockholders' equity:
Common stock 583,277 583,328
Deferred compensation (1,644) (9,740)
Accumulated other comprehensive loss (861) (326)
Accumulated deficit (540,842) (134,679)
--------- ---------
Total stockholders' equity 39,930 438,583
--------- ---------
Total liabilities and stockholders' equity $ 148,719 $ 507,556
========= =========
Clarent Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
--------- --------- --------- ---------
(Restated) (Restated)
Net revenue:
Product and software $ 15,430 $ 23,218 $ 45,025 $ 61,131
Service 3,308 4,003 12,331 9,566
--------- --------- --------- ---------
Total revenue 18,738 27,221 57,356 70,697
Cost of revenue:
Product and software 37,771 14,210 85,032 30,223
Service 3,429 2,176 11,725 5,894
--------- --------- --------- ---------
Total cost of revenue 41,200 16,386 96,757 36,117
--------- --------- --------- ---------
Gross profit (loss) (22,462) 10,835 (39,401) 34,580
--------- --------- --------- ---------
Operating expenses:
Research and development 14,759 8,414 45,992 18,320
Sales and marketing 17,881 15,255 67,507 38,129
General and administrative 7,952 5,092 20,214 10,399
Amortization of deferred
compensation and other
stock compensation charges 1,855 1,763 6,037 4,073
Amortization of goodwill
and other intangibles 9,106 6,023 27,324 6,474
Impairment of goodwill
and other intangibles 99,149 -- 99,149 --
Property and equipment
impairment charge 40,518 -- 40,518 --
Restructuring and merger
related costs 36,009 1,386 50,150 1,386
Purchased in-process
research and development -- 31,496 -- 31,496
--------- --------- --------- ---------
Total operating expenses 227,229 69,429 356,891 110,277
--------- --------- --------- ---------
Loss from operations (249,691) (58,594) (396,292) (75,697)
Other income (expense), net (13,128) 5,088 (9,140) 13,602
--------- --------- --------- ---------
Loss before provision for
income taxes (262,819) (53,506) (405,432) (62,095)
Provision for income taxes (405) (2) (730) (286)
--------- --------- --------- ---------
Net loss $(263,224) $ (53,508) $(406,162) $ (62,381)
========= ========= ========= =========
Basic and diluted net
loss per share $ (6.45) $ (1.47) $ (10.11) $ (1.85)
========= ========= ========= =========
Shares used in computing
basic and diluted net
loss per share 40,813 36,482 40,165 33,763
========= ========= ========= =========
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