Elastic Networks Inc. Reports 2001 Fourth Quarter and Annual Results.Business Editors ALPHARETTA, Ga.--(BUSINESS WIRE)--Jan. 29, 2002 Elastic elastic Of or relating to the demand for a good or service when the quantity purchased varies significantly in response to price changes in the good or service. Networks Inc. (Nasdaq: ELAS ELAS Elastic ELAS Equitable Life Assurance Society ELAS Ethnikos Laikos Apeleftherotikos Stratos (Greek: National Popular Liberation Army) ELAS Enhanced Logbook Automation System (US Army aviation initiative) ) today reported results for the fourth quarter and year ended December December: see month. 31, 2001. In the fourth quarter, the Company reported revenues of $4.9 million compared to revenues of $5.8 million for the third quarter ended September September: see month. 30, 2001. The net loss for the quarter ended December 31, 2001 was $(4.2) million or $(0.13) per share, including non-cash stock based compensation expenses totaling $1.9 million. The net loss for the previous quarter ended September 30, 2001 was $(20.2) million or $(0.64) per share, 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. of $13.9 million and non-cash stock based compensation expenses totaling $1.3 million. For the year ended December 31, 2001, Elastic Networks reported revenues of $24.3 million and a net loss of $(56.0) million or $(1.78) per share. "In the fourth quarter, we continued strong support of our customers, improved our gross margins mainly attributable to a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix, and aligned our spending with current economic conditions," said Guy Gill gill, in weights and measures gill, in weights and measures: see English units of measurement. , Chief Executive Officer and President of Elastic Networks. "On December 27, 2001, our Board of Directors approved the merger of Elastic Networks with Paradyne Networks. The merger, which is subject to stockholder approval by both companies, is expected to close in March of 2002." About Elastic Networks Inc. Elastic Networks is a 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). leader in first-mile Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer access solutions, deploying its patented EtherLoop (ETHERnet Local LOOP) A transmission technology from Nortel Networks that combines DSL and Ethernet to deliver up to 6 Mbps between the customer and telco central office (CO). technology across a variety of products and high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. multi-media applications. With the introduction of the Storm System(TM) family of intelligent IP-over-Ethernet products, Elastic Networks has successfully addressed the needs of the carrier, enterprise, MDU/MTU and hospitality markets for high-speed first-mile access solutions that deliver top quality service to end users while eliminating costly deployment and complicated support issues for service providers. Additionally, Elastic Networks is building strategic relationships with distributor, chip manufacturing and data networking partners. The company has offices in Alpharetta, Georgia Alpharetta is a city in Fulton County, Georgia, United States. As of 2006 census estimates, the city had a total population of 43,424[1]. Selected for its location next to a spring, it began as a campground, and was originally known as , and Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , China. For more information about Elastic Networks and its patented EtherLoop technology and products, visit www.elastic.com or contact Elastic's U.S. headquarters in Alpharetta, Georgia at 678-297-3100. For investor information, e-mail our Investor Relations Investor relations The process by which the corporation communicates with its investors. group at irinfo@elastic.com, or call 678-297-3100. 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. Certain of the statements contained in this release are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the Company seeks the protections afforded by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These risks include, without limitation, (1) that the Company may fail to be competitive with existing and new competitors, (2) that the Company may not maintain or grow its level of revenues, given its currently limited customer base, (3) that the Company's limited number of product offerings may fail to achieve widespread market acceptance, (4) that negative changes in customer demands and requirements regarding our prices, technology and products may occur, (5) that 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 technology may fail to achieve widespread market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" , (6) that interruptions or disruptions in our product shipments and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. our various arrangements with our distributors, manufacturers or resellers may negatively impact our ability to make sales and/or minimize our costs, (7) that the Company may not adequately respond to technological and regulatory developments impacting the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry, (8) that needed financing may not be available to the Company if and as needed as needed prn. See prn order. , (9) that a decline in the size and potential growth of the 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. , carrier and international markets for our technology may occur, (10) that a significant reversal in the trend toward increased usage of the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the may occur, (11) that a drastic, negative change in the U.S. economy or market conditions may occur, (12) that our stockholders may not approve our merger with Paradyne Networks, Inc., or some other event may occur which causes the merger not to close, and (13) that some other unforeseen difficulties may occur from time to time. This list is intended to identify certain of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere herein. These factors are not intended to represent a complete list of all risks and uncertainties inherent in the Company's business, and should be read in conjunction with the more detailed cautionary statements included in the Company's most recent filings with the SEC.
ELASTIC NETWORKS INC.
Condensed Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
---------------------- ----------------------
Net revenues $ 4,870 $ 14,255 $ 24,338 $ 40,152
Cost of revenues 2,900 12,053 19,864 36,246
---------------------- ----------------------
Gross profit before
special charges 1,970 2,202 4,474 3,906
Charges related to excess
inventory on hand and on
order and restructuring
charges - - 23,998 -
---------------------- ----------------------
Gross profit (loss) 1,970 2,202 (19,524) 3,906
Operating expenses: (1)
Sales and marketing 2,793 4,552 12,688 14,675
Research and
development 2,645 3,355 12,190 11,740
General and
administrative 1,112 11,981 13,590 16,677
---------------------- ----------------------
Total operating
expenses 6,550 19,888 38,468 43,092
---------------------- ----------------------
Operating loss (4,580) (17,686) (57,992) (39,186)
Other income (expense),
net 359 1,171 1,997 320
---------------------- ----------------------
Net loss (4,221) (16,515) (55,995) (38,866)
Accretion of Series A
preferred stock - (6) - (405)
---------------------- ----------------------
Net loss attributed to
common stockholders $ (4,221) $ (16,521) $ (55,995) $ (39,271)
====================== ======================
Basic and diluted net
loss per common share $ (0.13) $ (0.54) $ (1.78) $ (1.94)
====================== ======================
Weighted average shares
used in computing basic
and diluted net loss per
common share 31,524 30,683 31,476 20,208
====================== ======================
(1) Includes $3.9 million of restructuring charges and additional
accruals for uncollectable accounts for the twelve months ended
December 31, 2001. Includes $1.9 million, $10.4 million, $5.6 million,
and $12.4 million of non-cash stock based compensation expenses for
the three months ended December 31, 2001 and 2000 and twelve months
ended December 31, 2001 and 2000, respectively.
ELASTIC NETWORKS INC.
Condensed Balance Sheets
(in thousands)
(unaudited)
December 31,
2001 2000
------------------------------
Assets
Current assets:
Cash, cash equivalents, restricted
cash, and short-term investments $ 25,306 $ 68,591
Accounts receivable, net of allowances 3,303 8,068
Inventories 5,881 6,467
Note receivable - 2,951
Other current assets 1,083 1,651
--------------- --------------
Total current assets 35,573 87,728
Other assets 3,101 3,625
--------------- --------------
Total assets $ 38,674 $ 91,353
===============================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,379 $ 10,891
Accrued liabilities 8,077 2,341
Deferred revenues 721 926
Capital lease obligations 196 216
--------------- --------------
Total current liabilities 12,373 14,374
Deferred revenues, long-term -- 712
Other liabilities, long-term 375 305
Stockholders' equity 25,926 75,962
---------------- --------------
Total liabilities and
stockholders' equity $ 38,674 $ 91,353
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