Copper Mountain Networks Announces Second Quarter 2001 Financial Results and Actions Designed to Provide for Fully- Funded Operating Plan Beyond 2002.Business Editors and 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)--Aug. 2, 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 copper-based broadband access See broadband and wireless broadband. solutions, today announced financial results for the second quarter of 2001. Net revenue for the second quarter of 2001 was $6.1 million, compared with $8.2 million in the prior quarter. 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 second quarter of 2001 was $9.1 million, or $0.17 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, compared to pro forma net loss of $10.7 million, or $0.20 per pro forma diluted share in the prior quarter. The pro forma net loss excludes pro forma adjustments of $58.1 million, which are comprised of stock based compensation charges, a write-off of purchased intangibles, 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 second quarter of 2001 was $73.8 million, or $1.39 per diluted share, compared to a net loss of $66.9 million, or $1.27 per diluted share in the prior quarter. Copper Mountain also announced that it has taken significant steps to reduce expenses and conserve cash, resulting in an operating plan which the Company believes will sustain the Company's currently planned operations beyond 2002 without the need to raise additional capital. These actions include a headcount reduction of approximately 40%, with affected employees being notified at once. In addition, the Company will close its Fremont office and consolidate the Fremont products and operations into its Palo Alto facility; shift from a direct to indirect international sales and support model; and eventually terminate its low-end CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment and 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. product lines . The Company plans to take a third quarter charge in the range of $15-18 million in connection with this 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). . "In light of the difficult economic environment, we are pleased to report second quarter revenue which is in line with Company guidance," said Rick Gilbert, president and chief executive of Copper Mountain Networks. "We have taken important steps to align our spending with current market conditions and fully fund our current operating plan beyond 2002. As a result, we believe we are very well-positioned to serve our existing customers as well as the 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. 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 we are pursuing today." In addition, the Company announced two management team changes. Charles Nieman will retire as Vice President of Worldwide Sales and will be replaced by Doug Hilmes, currently Vice President, National Accounts and a long-time member of the Copper Mountain sales management Sales Management Role and Goal Importance of sales management is critical for any commercial organization. Expanding business in not possible without increasing sales volumes, and effective sales management goal is to organize sales team work in such a manner that ensures a team. Keith Higgins Keith Higgins is a Gaelic football player for Mayo. He plays his club football for Ballyhaunis. In 2006, he was award the Young Player of the year. He is currently injured and ruled out of the 2007 championship.[1] , formerly Assistant Vice President of Marketing, will return to the Company as Vice President of Marketing replacing Bryan Long, who will remain with the Company as an executive advisor through the end of this year. These changes are effective immediately. Copper Mountain Networks' second 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 1.800.937.4592. For replay telephone-access, dial 1.800.633.8284/858.812.6440 and enter the reservation number: 19286997. 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 intelligent 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 and aggregation equipment for central office, digital loop and multi-tenant unit (MTU) 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). 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 family and CopperCompatible(R) 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 Wendy Holder at 1.650.687.3316 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, such as statements regarding Copper Mountain's forecasts of its 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. 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: quarterly fluctuations in operating results attributable to the timing and amount of orders for our products; the ability of our 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) 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; the concentration of our revenue in a small number of customers; the rate of growth in our client base; our ability to penetrate the international, 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 restructuring charges 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. , related to the collectability of certain receivables, charges related to the investment in commercial paper of Southern California Edison and charges 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. ); factors which could affect our profit margins or lead to increased expenses, such as pressures to reduce our product prices, increases in our costs of goods sold and unforeseen increases in research and development expenses; the loss of services A deprivation of a family member, such as a parent or spouse, of the right to benefit from the performance of various duties, coupled with the privation of love and companionship, provided by the victim of a personal injury or Wrongful Death. of key personnel which could materially adversely affect our business; factors and market conditions affecting the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry, the market for DSL services, CLEC service providers and economic conditions generally, 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, 2000 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.
Pro Forma Condensed Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2001 2000 2001 2000
Net revenue $6,054 $80,185 $14,215 $141,009
Cost of revenue 4,182 36,079 8,710 64,180
------- ------- ------- -------
Gross margin 1,872 44,106 5,505 76,829
Operating expenses:
Research and development 10,781 8,400 22,448 15,172
Sales and marketing 4,876 9,370 11,886 15,033
General and administrative 3,232 3,917 8,410 6,580
------- ------- ------- -------
Total operating expense 18,889 21,687 42,744 36,785
------- ------- ------- -------
Income (loss)
from operations (17,017) 22,419 (37,239) 40,044
Other income, net 1,256 2,133 3,088 3,933
------- ------- ------- -------
Income (loss)
before income taxes (15,761) 24,552 (34,151) 43,977
Provision (benefit)
for income taxes (6,620) 10,312 (14,343) 18,470
------- ------- ------- -------
Pro forma net
income (loss) $(9,141) $ 14,240 $(19,808) $25,507
Pro forma basic
net income (loss)
per share $ (0.17) $ 0.28 $ (0.38) $ 0.51
Basic common stock
equivalents 52,959 50,561 52,776 49,568
Pro forma diluted
net income (loss)
per share $ (0.17) $ 0.24 $ (0.38) $ 0.44
Diluted common
stock equivalents 52,959 58,503 52,776 57,961
The above Pro Forma Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Statements of Operations is not a presentation 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 generally accepted accounting principles as it excludes the effects of the following: (1) The three months ended June 30, 2001 excludes $0.8 million of stock based compensation, a $40.8 million write-off of purchased intangibles, a $0.4 million charge related to the investment in commercial paper of Southern California Edison, $16.0 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. The six months ended June 30, 2001 excludes $1.4 million of stock based compensation, a $40.8 million write-off of purchased intangibles, $5.3 million of amortization of purchased intangibles, a $1.0 million charge related to the investment in commercial paper of Southern California Edison, $51.0 million of charges related to excess inventory, a $2.6 million charge related to the collectibility of certain receivables, a $4.4 million restructuring charge, and the resulting loss before tax is taxed utilizing a 42.0% tax rate. (2) The three months ended June 30, 2000 excludes $1.2 million of stock based compensation, $5.2 million in amortization of purchased intangibles and the resulting income before tax is taxed utilizing a 42.0% tax rate. The six months ended June 30, 2000 excludes $2.2 million of stock based compensation, $7.1 million in amortization of purchased intangibles, a $6.3 million write-off 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 Six Months Ended
June 30, June 30,
--------------------- --------------------
2001 2000 2001 2000
Net revenue $6,054 $80,185 $14,215 $141,009
Cost of revenue 4,182 36,079 8,710 64,180
Charge related to
excess inventory on
hand and on order 16,000 ---- 51,000 ----
------ ------ ------ ------
Gross margin (14,128) 44,106 (45,495) 76,829
Operating expenses:
Research and development 10,781 8,400 22,448 15,172
Sales and marketing 4,876 9,370 11,886 15,033
General and administrative 3,232 3,917 8,410 6,580
Amortization of
purchased intangibles ---- 5,246 5,326 7,099
Amortization of
deferred stock
compensation 828 1,164 1,384 2,196
Restructuring and
other non-recurring ---- ---- 7,000 ----
Write-off of in-process
research and development ---- ---- ---- 6,300
Write-off of purchased
intangibles 40,833 ---- 40,833 ----
------ ------ ------ ------
Total operating expenses 60,550 28,097 97,287 52,380
------ ------ ------ ------
Income (loss)
from operations (74,678) 16,009 (142,782) 24,449
Other income, net 861 2,133 2,068 3,933
------ ------ ------ ------
Income (loss) before
income taxes (73,817) 18,142 (140,714) 28,382
Provision (benefit)
for income taxes ---- 7,811 ---- 4,378
------ ------ ------ ------
Net income (loss) $(73,817) $ 10,331 $(140,714) $ 24,004
======== ======== ======== ========
Basic net income
(loss) per share $ (1.39) $ 0.20 $ (2.67) $ 0.48
Basic common
stock equivalents 52,959 50,561 52,766 49,568
Diluted net income
(loss) per share $ (1.39) $ 0.18 $ (2.67) $ 0.41
Diluted common
stock equivalents 52,959 58,503 52,766 57,961
Condensed Balance Sheets
(in thousands)
June 30, Dec 31,
Assets 2001 2000
Current assets:
Cash and S-T Investments $103,667 $162,616
Accounts receivable 1,709 19,496
Inventory 15,803 26,405
Other current assets 2,247 7,961
------- -------
Total current assets 123,426 216,478
Property and equip, net 22,231 24,961
Other assets 2,166 17,287
Purchased intangibles - 46,159
------------------------
$ 147,823 $ 304,885
========================
Liabilities and Stockholders' Equity June 30, Dec 31,
2001 2000
Current liabilities:
Accounts payable $ 30,222 $ 23,963
Accrued liabilities 10,324 17,351
Adverse purch. commit. 12,173 28,600
Current notes payable 3,162 3,177
------- -------
Total current liabilities 55,881 73,091
Notes payable 5,092 6,654
Other liabilities 453 314
Total stockholders' equity 86,397 224,826
------------------------
$147,823 $304,885
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