Copper Mountain Networks Announces Second Quarter 2004 Financial Results.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. -- 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 second quarter of 2004. Net revenue for the second quarter of 2004 was $2.1 million, compared with $2.0 million in the first quarter of 2004. 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 2004 was $5.7 million, or $0.88 per share, compared to a net loss of $5.7 million, or $0.99 per share in the first quarter of 2004. The net loss for the second quarter of 2004 includes a non-cash stock-based compensation charge of $0.9 million and a gain of $0.3 million which was primarily related to the collection of past due rent from a former sub-lease tenant. The net loss for the first quarter of 2004 includes a non-cash stock-based compensation charge of $0.6 million. During the second quarter of 2004, net cash and short-term investments increased by $4.7 million to a balance of $22.0 million at the end of the quarter. Excluding the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the common stock private placement discussed below, net cash and short-term investments utilized during the second quarter of 2004 was $5.9 million, versus $5.7 million during the first quarter of 2004. Key recent accomplishments include: --Completed the sale of 1,250,000 shares of common stock to new and current shareholders at $9.00 per share. This private placement was announced on May 4, 2004 and closed on May 6. The private placement raised gross proceeds to the company of approximately $11,250,000 before fees and expenses; --Announced that FairPoint Communications Fairpoint Communications is an American holding company, specializing in acquiring, operating, and selling telecommunications companies [1] [2] that provide DSL, telephone, and cable TV services to customers in 18 states through 31 subsidiaries. , Inc., one of the nation's leading providers of telecommunications services to rural communities, has approved the VantEdge Access Broadband Remote Access Server A broadband remote access server (BRAS) routes traffic to and from the digital subscriber line access multiplexers (DSLAM) on an Internet service provider's (ISP) network.[1] (BRAS) for commercial deployment; --Announced selection of the VantEdge Access BRAS by two Independent Operating Companies (IOCs), El Paso County Telephone El Paso County Telephone Company is a small telephone company serving El Paso County, Colorado. It was founded in 1915 and is owned by Qwest. Qwest Communications International, Inc. and Polar Communications; --Announced the integration of the VantEdge Access BRAS and CopperView Element Management System (EMS) with products from leading Operations Support Systems Operations Support Systems (also called Operational Support Systems or OSS) are computer systems used by telecommunications service providers. The term OSS most frequently describes "network systems" dealing with the telecom network itself, supporting processes such (OSS Oss (ôs), city (1994 pop. 62,141), North Brabant prov., S Netherlands; chartered 1399. It is a significant industrial center. Manufactures include meat products, chemicals, pharmaceuticals, electrical equipment, and metalware. ) vendors Syndesis and Micromuse; --Announced the availability of ActiveQoS, a new suite of features available for the VantEdge Access BRAS designed to simplify the process of delivering enhanced broadband services; "During the second quarter we improved our cash position and expanded our customer base with multiple VantEdge wins, both key steps in our ongoing transition from the 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 market to the BRAS market. We also enhanced the capabilities of the VantEdge by adding new features for the delivery of enhanced services and completing integration with leading OSS vendors," 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. of Copper Mountain Networks. "We believe these accomplishments substantially strengthen our ability to compete in the large carrier procurement cycles in which we are actively participating worldwide." Securities 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. Update On June 29, 2004, the United States District Court for the Northern District of California The United States District Court for the Northern District of California is the Federal district court whose jurisdiction comprises following counties: Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Monterey, Napa, San Benito, San Francisco, San Mateo, Santa dismissed the federal securities litigation against the Company, its CEO and its former CFO See Chief Financial Officer. . The Court dismissed all of the allegations with prejudice. In addition, on June 28, 2004 and July 2, 2004, the California Superior Court granted plaintiffs' voluntary dismissal of two shareholder derivative lawsuits filed against certain officers and directors for alleged wrongdoings connected with the events alleged in the aforementioned federal securities litigation. Copper Mountain Networks' second quarter 2004 earnings conference call will be broadcast live today at 1:30 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT (4:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ). The dial-in number for the conference call is 1.800.901.5231 (U.S./Canada) and 1.617.786.2961 (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 1.888.286.8010 (U.S./Canada) or 1.617.801.6888 (International) and enter passcode number 66022073. The telephone replay will be available for one week after the call. The Webcast replay will be available on Copper Mountain's Web site until the results for the current fiscal quarter are released. 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 remote access server (BRAS) equipment for ILECs, IXCs, PTTs, CLECs, IOCs, 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 network deployments. For more information, please visit the company's World Wide Web site at http://www.coppermountain.com. For investor relations information, contact us at 858.410.7110 or 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 regarding future events based on current expectations and are subject to risks and uncertainties, such as statements regarding Copper Mountain's unproven 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 form and maintain successful marketing and distribution relationships with strategic partners, value-added resellers and other distribution partners; 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 (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. ), international postal, telephone and telegraph (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 ), and independent operating company (IOC IOC abbr. International Olympic Committee IOC n abbr (= International Olympic Committee) → COI m IOC n abbr (= ) service provider markets with the VantEdge product; 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 and other broadband 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. 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, 2003 and other reports and filings made and to be made with the Securities and Exchange Commission, including, but not limited to, our Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. . 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 Six Months Ended
June 30, June 30,
------------------ -------------------
2004 2003 2004 2003
--------- -------- --------- ---------
Net revenue $ 2,105 $ 3,571 $ 4,094 $ 7,142
Cost of revenue 1,197 1,455 1,843 2,431
--------- -------- --------- ---------
Gross margin 908 2,116 2,251 4,711
Operating expenses:
Research and development 3,286 3,288 6,677 6,725
Sales and marketing 1,302 1,670 2,792 3,392
General and administrative 1,487 1,937 3,099 3,986
Amortization of deferred stock
compensation 869 1,459 1,462 2,091
Recovery of bad debt -- (115) -- (804)
Restructuring and other non-
recurring costs (260) -- (260) --
--------- -------- --------- ---------
Total operating expenses 6,684 8,239 13,770 15,390
--------- -------- --------- ---------
Loss from operations (5,776) (6,123) (11,519) (10,679)
Other income, net 46 16 83 32
--------- -------- --------- ---------
Net loss $(5,730) $(6,107) $(11,436) $(10,647)
========= ======== ========= =========
Basic and diluted net loss per
share $ (0.88) $ (1.09) $ (1.88) $ (1.90)
Basic and diluted common stock
equivalent shares 6,491 5,617 6,084 5,593
Condensed Balance Sheets
(in thousands)
Liabilities and
June 30, Dec. 31, Stockholders' June 30, Dec. 31,
Assets 2004 2003 Equity 2004 2003
-------- -------- -------- --------
Current assets: Current
liabilities:
Cash and S-T Accounts
investments $22,015 $22,980 payable $ 1,326 $ 1,127
Accrued
Accounts receivable 1,451 1,305 liabilities 5,242 6,333
Current notes
Inventory 2,742 2,194 payable 20 168
-------- --------
Other current Total current
assets 695 734 liabilities 6,588 7,628
-------- --------
Total current assets 26,903 27,213 Notes payable -- --
Property and Other
equipment, net 2,036 2,172 liabilities 2,035 2,298
Total
stockholders'
Other assets 459 619 equity 20,775 20,078
-------- -------- -------- --------
$29,398 $30,004 $29,398 $30,004
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