Copper Mountain Networks Announces Fourth Quarter 2002 Financial Results; Revenue Up 26% and Cash Burn Down 34% vs. Q3; Continued Progress in Large Carrier VantEdge Lab Trials.Business Editors 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)--Feb. 5, 2003 Copper Mountain Networks, Inc., (Nasdaq:CMTN), a leading provider of intelligent broadband access See broadband and wireless broadband. solutions, today announced financial results for the fourth quarter of 2002. Net revenue for the fourth quarter of 2002 was $4.2 million, compared with $3.3 million in the prior quarter. 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 fourth quarter of 2002 was $5.8 million, or $1.05 per share, compared to a net loss of $8.1 million, or $1.50 per share in the prior quarter and a net loss of $12.0 million, or $2.26 per share in the fourth quarter of 2001. The net loss for the fourth quarter of 2002 includes a gain related to the recovery of bad debt expense of $0.7 million, which was partially offset by a non-cash stock-based compensation charge of $0.4 million. Cash utilized during the fourth quarter of 2002 was $4.2 million. 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 totaled $40.5 million at the end of the fourth quarter of 2002. Key accomplishments for the fourth quarter of 2002 include: -- 26% sequential increase in revenue from Q3 to Q4 -- 34% sequential decrease in cash burn from Q3 to Q4 -- 20% sequential decrease in operating expenses from Q3 to Q4 -- 29% sequential decrease in GAAP loss from Q3 to Q4 -- Successfully completed two VantEdge lab trials, at Versatel and a US ILEC -- At another US ILEC where a VantEdge lab trial is already under way, delivered equipment requested for a second lab trial -- Announced commercial deployments of VantEdge in the United States (NTS), Europe (Versatel), and Canada (BMTS) -- Won 20 new customers via channel partners Graybar and Power & Telephone after winning 22 new customers via these partners in Q3 -- Cisco Systems completed broad interoperability testing between its Integrated Access Devices and VantEdge and CopperEdge 200 platforms "The Copper Mountain team executed extremely well in the fourth quarter," said Rick Gilbert, Chairman 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. . "For the second consecutive quarter we grew revenue, cut expenses and cash burn, and made steady progress in our transition to the large carrier market. Our dual strategy of focusing on early VantEdge trials while expanding CE200 channel sales yielded excellent results during the quarter." Copper Mountain Networks' fourth quarter 2002 earnings conference call will be broadcast live today at 1:30 p.m. PST PST Paroxysmal supraventricular tachycardia, see there (4:30 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. ). The dial-in number for the conference call is 1.888.847.9994 (U.S./Canada) and 1.706.643.7905 (International). Please call a few minutes early to allow time for all participants to join. The live Webcast can be accessed through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section on the Copper Mountain Web site at www.coppermountain.com or www.streetevents.com. A replay of the conference call will be available on Copper Mountain's Web site approximately 45 minutes after the call concludes. For replay telephone access, dial 1.800.642.1687 (U.S./Canada) or 1.706.645.9291 (International) and enter the conference ID number: 7466444. The telephone replay will be available for one week after the call. The Webcast replay will be available on Copper Mountain's Web site for approximately 14 days following the call. About Copper Mountain Networks Copper Mountain Networks, Inc. (Nasdaq:CMTN) is a leading provider of intelligent broadband access solutions. The company offers a broad set of subscriber access and broadband services See broadband and broadband service provider. concentration equipment for ILECs, CLECs, IOCs, IXCs, PTTs, and other facilities-based carrier networks worldwide. These products enable efficient and scalable deployment of advanced voice, video, and data services while leveraging existing network infrastructures and reducing both capital and operational costs. Copper Mountain's products have been proven in some of the world's largest 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). network deployments. For more information, please visit the company's World Wide Web site at http://www.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, such as statements regarding Copper Mountain's unproven unproven Dubious, nonscientific, not proven, quack, questionable, unscientific adjective Relating to that which has not been validated by reproducible experiments or other scientific methods for determining effect or efficacy operating plan and customer acceptance of Copper Mountain's products. 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: our ability to successfully introduce and commercialize the VantEdge product and the market acceptance of this product; our ability to penetrate the incumbent local exchange carrier ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies (RBOCs) also known as the "Baby Bells". (ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. ), inter-exchange carrier (communications) inter-exchange carrier - (IXC) A company allowed to handle long-distance calls following the break-up of the Bell system in the US by anti-trust regulators. (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. ), and international postal, telephone and telegraph telegraph, term originally applied to any device or system for distant communication by means of visible or audible signals, now commonly restricted to electrically operated devices. Attempts at long-distance communication date back thousands of years (see signaling). (PTT (1) (Postal, Telegraph & Telephone) The governmental agency responsible for combined postal, telegraph and telephone services in many European countries. (2) See push-to-talk. PTT - Post, Telephone and Telegraph administration ) service provider markets with the VantEdge product; our ability to penetrate the independent operating company operating company A business that engages in transactions with outsiders. (IOC IOC abbr. International Olympic Committee IOC n abbr (= International Olympic Committee) → COI m IOC n abbr (= ) service provider market directly and via distribution channel partners; our ability to commence and successfully complete laboratory trials with our current and prospective customers; our ability to realize sufficient revenues in the future to sustain our operations or achieve profitability on an annual or quarterly basis; the need for additional financing and risks related to obtaining adequate financing in the current market environment; factors which could affect our profit margins or lead to increased expenses; factors affecting the demand for 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 technologies; general economic conditions, and the extent and timing of the economic recovery, which are beyond Copper Mountain's ability to control. 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, 2001 and other reports and filings made with the Securities and Exchange Commission. 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.
Condensed Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
-------------------- ----------------------
2002 2001 2002 2001
-------- --------- --------- ----------
Net revenue $4,172 $3,098 $12,941 $22,425
Cost of revenue 2,958 2,107 9,459 14,285
Increase (decrease) in
reserves related to
excess inventory on hand
and on order ---- ---- (14,870) 51,000
-------- --------- --------- ----------
Gross margin 1,214 991 18,352 (42,860)
Operating expenses:
Research and
development 3,650 7,249 21,829 37,733
Sales and marketing 1,858 1,957 6,994 16,586
General and
administrative 1,928 2,359 8,826 13,735
Amortization of
purchased intangibles ---- ---- ---- 5,326
Amortization of
deferred stock
compensation 415 2,537 4,320 4,934
Restructuring and other
non-recurring ---- ---- 1,361 23,000
Recovery of bad debt (749) (689) (4,442) (689)
Write-off of purchased
intangibles ---- ---- ---- 40,833
-------- --------- --------- ----------
Total operating
expenses 7,102 13,413 38,888 141,458
-------- --------- --------- ----------
Loss from operations (5,888) (12,422) (20,536) (184,318)
Other income, net 112 405 1,564 3,263
-------- --------- --------- ----------
Loss before income taxes (5,776) (12,017) (18,972) (181,055)
Provision (benefit) for
income taxes ---- ---- ---- ----
-------- --------- --------- ----------
Net Loss $(5,776) $(12,017) $(18,972) $(181,055)
======== ========= ========= ==========
Basic net loss per share $(1.05) $(2.26) $(3.51) $(34.14)
Basic common stock
equivalents 5,510 5,327 5,407 5,304
Diluted net loss per share $(1.05) $(2.26) $(3.51) $(34.14)
Diluted common stock
equivalents 5,510 5,327 5,407 5,304
Condensed Balance Sheets
(in thousands)
Dec. 31, Dec. 31, Liabilities and Dec. 31, Dec. 31,
Assets 2002 2001 Stockholders' 2002 2001
Equity
Current assets: Current
liabilities:
Cash and S-T Accounts
investments $40,509 $72,825 payable $998 $17,661
Accounts Accrued
receivable 1,001 1,574 liabilities 7,319 9,749
Adverse
purch.
Inventory 1,054 7,502 commit. ---- 8,083
Other Current
current notes
assets 1,438 393 payable 3,366 3,120
-------- -------- ------------ --------
Total current Total current
assets 44,002 82,294 liabilities 11,683 38,613
Property and
equipment, net 5,983 12,251 Notes payable 168 3,534
Other
Other assets 624 1,924 liabilities 3,351 4,137
Total
stockholders'
equity 35,407 50,185
-------- -------- ------------ --------
$50,609 $96,469 $50,609 $96,469
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