Copper Mountain Announces First Quarter Financial Results.Business Editors/High-Tech Writers PALO ALTO Palo Alto, city, California Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif.--(BUSINESS WIRE)--April 19, 2001 Copper Mountain Networks, 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 :CMTN), a provider of 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 DSL in 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 ) solutions for business and residential users, today announced financial results for the first quarter of 2001. Net revenue for the first quarter of 2001 was $8.2 million, compared with $60.8 million for the same period of the prior year. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the first quarter of 2001 was $10.7 million, or $0.20 per pro forma 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. share. The pro forma net loss excludes pro forma adjustments of $48.5 million, which are comprised of the stock based compensation charge, the amortization of purchased intangibles, a 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. , a charge related to the collectability of certain receivables, a charge related to the investment in commercial paper of Southern California Edison Southern California Edison (or SCE Corp), the largest subsidiary of Edison International (NYSE: EIX), is the primary electricity supply company for much of Southern California. It provides 11 million people with electricity. , a charge for excess inventory, and applying an income tax rate of 42 percent to the resulting loss from operations. Net loss on a 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). ) basis for the first quarter of 2001 was $66.9 million, or $1.27 per diluted share, compared to net income of $13.7 million, or $0.24 per diluted share, for the same quarter of the prior year. "As expected, this has been another challenging quarter for Copper Mountain with continued deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the competitive local exchange carrier (CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) ) market and, perhaps more important, an overall economic climate that has led many of our customers to delay 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. ," said Copper Mountain's chairman and chief executive officer, Rick Gilbert. "However, we are encouraged by meeting our first quarter revenue goals, and after instituting significant cost-cutting measures and taking an additional inventory reserve to realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. our operating plan with the changing market conditions, we remain confident and committed to building the next generation broadband access See broadband and wireless broadband. technologies that will take us into the future." Copper Mountain Networks' first quarter 2001 earnings conference call will be broadcast live today at 2:00 p.m. PST PST Paroxysmal supraventricular tachycardia, see there (5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. ) at www.coppermountain.com and also through www.streetfusion.com. The dial-in number for the conference call is 1.800.252.8298. For replay telephone-access, dial 1.800.633.8284/858.812.6440 and enter the reservation number: 18516773. The telephone replay will be available for approximately seven business days. The taped audio replay will be archived on Copper Mountain's Website for approximately 14 days following the call. About Copper Mountain Networks Copper Mountain Networks, Inc. (Nasdaq:CMTN) manufactures DSL equipment for central office, digital loop and multi-tenant unit (MTU (1) (Maximum Transmission Unit, Maximum Transfer Unit) The largest frame size that can be transmitted over the network. For example, an Ethernet MTU is 1,500 bytes. Messages longer than the MTU must be divided into smaller frames. ) broadband networks  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. worldwide. Its DSL solutions enable carriers and service providers to deliver cost-effective, high-performance data and voice services over existing copper telephone wiring See twisted pair. . Its CopperEdge(R) 200 DSL Concentrator is deployed in some of the world's largest public networks, and its environmentally hardened CopperEdge(R) RT (remote terminal) DSL Concentrator extends the reach of DSL to the millions of customers served by digital loop carriers In telephone communications, a technology that increases the number of channels in the local loop by converting analog signals to digital and multiplexing them back to the end office. (DLCs). Copper Mountain's OnPrem(TM) MTU Concentrator offers a cost-effective and scalable platform for MTU service providers. With IP IQ(TM), Copper Mountain's robust Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (IP) service intelligence, service providers can maximize bandwidth utilization, support value-added broadband services See broadband and broadband service provider. , and scale to meet the demands of hundreds of thousands of subscribers. Copper Mountain's CopperRocket(R) CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment family and CopperCompatible(TM) program ensure that Copper Mountain DSL concentrators are interoperable The ability for one system to communicate or work with another. See interoperability. with the broadest range of customer premise equipment (CPE). Customers wanting more information about Copper Mountain products or office locations worldwide can contact Richard Washbourne at 1.650.687.3380 or visit the company's World Wide Web site at http://www.coppermountain.com. For investor relations' information, call toll free 1.877.INFO.CMTN (463.6268) or contact us at IR@coppermountain.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. Warning Portions of this release contain 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. regarding future events based on current expectations, and are subject to risks and uncertainties. Copper Mountain wishes to caution you that there are some factors that could cause actual results to differ materially from the results indicated by such statements. These factors include, but are not limited to: the ability of our CLEC customer base to raise sufficient capital to fund their operations and continue to order and pay for our products, (including the risk that the Company will not be able to collect existing receivables from its customer base); rapid changes in the service provider landscape and among our CLEC customer base; quarterly fluctuations in operating results attributable to the timing and amount of orders for our products; the concentration of our revenue in a small number of customers; our ability to penetrate the international, multi-tenant unit (MTU) and the incumbent telecommunications service provider A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. (ILEC/IXC) market; factors affecting the rate of DSL deployment by our customers; market acceptance of our products; our ability to keep pace with rapidly changing product requirements; factors affecting the demand for DSL technologies; the estimated charges, including a restructuring charge, a charge related to the collectability of certain receivables, a charge related to the investment in commercial paper of Southern California Edison and a charge for excess inventory, could be underestimated; the ability to realize sufficient revenues in the future to sustain or achieve profitability on an annual or quarterly basis (including the risk that from time to time the Company may need to write-off excess or obsolete inventory 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. ), and the risks associated with our short-term investment in commercial paper issued by Southern California Edison Company; factors and market conditions affecting the telecommunications industry, the market for DSL services, CLEC service providers and economic conditions generally. Prospective investors are cautioned not to place undue reliance on such forward-looking statements. Further, Copper Mountain expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect future events or developments after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . We refer you to the documents Copper Mountain files from time to time with the Securities and Exchange Commission, specifically the section titled Risk Factors in our 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, 2000 and other reports and filings made with the Securities and Exchange Commission. Note to Editors: Copper Mountain and all Copper Mountain product names are trademarks of Copper Mountain Networks, Inc. All other marks are the property of their respective owners.
Copper Mountain Networks, Inc.
Pro Forma Condensed Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
March 31,
------------------
2001 2000
-------- --------
Net revenue $ 8,161 $ 60,824
Cost of revenue 4,528 28,102
-------- --------
Gross margin 3,633 32,722
Operating expenses:
Research and development 11,667 6,771
Sales and marketing 7,010 5,663
General and administrative 5,178 2,662
-------- --------
Total operating expenses 23,855 15,096
-------- --------
Income (loss) from operations (20,222) 17,626
Other income, net 1,832 1,800
-------- --------
Income (loss) before
income taxes (18,390) 19,426
Provision (benefit) for
income taxes (7,724) 8,160
-------- --------
Pro forma net income (loss) $(10,666) $ 11,266
======== ========
Pro forma basic net income
(loss) per share $ (0.20) $ 0.23
Basic common stock equivalents 52,590 48,593
Pro forma diluted net income
(loss) per share $ (0.20) $ 0.20
Diluted common stock
equivalents 52,590 57,550
The above Pro Forma Condensed Statements of Operations is not a
presentation in accordance with generally accepted accounting
principles as it excludes the effects of the following:
(1) The three months ended March 31, 2001 excludes $0.6 million of
stock based compensation, $5.3 million in amortization of
purchased intangibles, a business restructuring charge of $4.4
million, a $2.6 million charge related to the collectability of
certain receivables, a $0.6 million charge related to the
investment in commercial paper of Southern California Edison,
$35.0 million of charges related to excess inventory on hand and
on order, and the resulting loss before tax is taxed utilizing a
42.0% tax rate.
(2) The three months ended March 31, 2000 excludes $1.0 million of
stock based compensation, $6.3 million of in-process R&D related
to the purchase of OnPrem Networks, $1.9 million in amortization
of purchased intangibles and the resulting income before tax is
taxed utilizing a 42.0% tax rate.
The pro forma data is presented for informational purposes only
and should not be considered as a substitute for the historical
financial data presented in accordance with generally accepted
accounting principles.
Copper Mountain Networks, Inc.
Condensed Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
------------------
March 31,
2001 2000
-------- --------
Net revenue $ 8,161 $ 60,824
Cost of revenue 4,528 28,102
Charges related to excess
inventory on hand and on
order 35,000 --
-------- --------
Gross margin (31,367) 32,722
Operating expenses:
Research and development 11,667 6,771
Sales and marketing 7,010 5,663
General and administrative 5,178 2,662
Amortization of purchased
intangibles 5,326 1,853
Amortization of deferred
stock compensation 555 1,033
Restructuring and other
non-recurring charges 7,000 --
Write-off of in-process
research and development -- 6,300
-------- --------
Total operating expenses 36,736 24,282
-------- --------
Income (loss) from operations (68,103) 8,440
Other income, net 1,207 1,800
-------- --------
Income (loss) before income
taxes (66,896) 10,240
Provision (benefit) for income
taxes -- (3,433)
-------- --------
Net income (loss) $(66,896) $ 13,673
======== ========
Basic net income (loss)
per share $ (1.27) $ 0.28
Basic common stock equivalents 52,590 48,593
Diluted net income (loss)
per share $ (1.27) $ 0.24
Diluted common stock
equivalents 52,590 57,550
Condensed Balance Sheets
(in thousands)
Mar. 31, Dec. 31,
Assets 2001 2000
---------- ----------
Current assets:
Cash and S-T
Investments $137,601 $162,616
Accounts receivable 2,248 19,496
Inventory 22,622 26,405
Other current assets 3,485 7,961
---------- ----------
Total current assets 165,956 216,478
Property and equip, net 23,226 24,961
Other assets 2,031 17,287
Purchased intangibles 40,833 46,159
---------- ----------
$232,046 $304,885
======== ==========
Liabilities and Mar. 31, Dec. 31,
Stockholders' Equity 2001 2000
---------- ----------
Current liabilities:
Accounts payable $ 5,018 $ 23,963
Accrued liabilities 13,706 17,351
Adverse purch
commitment 44,661 28,600
Current notes payable 3,173 3,177
---------- ----------
Total current liabilities 66,558 73,091
Notes payable 5,862 6,654
Other liabilities 391 314
Total stockholders'
equity 159,235 224,826
---------- ----------
$232,046 $304,885
========== ==========
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