Elastic Networks Inc. Reports 2001 Second Quarter Results.Business Editors ALPHARETTA, Ga.--(BUSINESS WIRE)--July 26, 2001 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 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 : 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 second quarter ended June June: see month. 30, 2001. In the second quarter, the Company reported revenues of $8.0 million compared to revenues of $5.6 million for the first quarter ended March 31, 2001. Revenues for the second quarter ended June 30, 2000 were $8.5 million. The 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 quarter ended June 30, 2001 was $(6.7) million or $(0.21) per share, excluding non-cash stock based compensation expenses totaling $1.2 million, compared with a pro forma net loss for the quarter ended June 30, 2000 of $(6.8) million or $(0.41) per share, excluding non-cash stock based compensation expenses and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of series A preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. totaling $0.8 million. "We made good progress in the second quarter by growing our revenues 42% over first quarter and realigning our expense structure to position our business for profitability," 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. "We achieved a number of significant accomplishments during the second quarter: -- We continued to ramp our EtherLoop(TM) systems with Verizon Avenue supporting their national broadband service deployment; -- We announced our new EtherLoop2(TM) technology on June 5, 2001, which we expect will achieve speeds of up to 100 megabits per second; -- We implemented a strategic relationship with Hitachi Telecom (USA), Inc. to combine best-of-breed products to simplify voice and broadband-based Internet access for the hospitality market. These initiatives demonstrate and support Elastic Networks' commitment to our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategy of diversifying and growing our customer base and continued positioning as a market leader in intelligent, 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 technologies and products." Elastic Networks will host a conference call later today at 5:00 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 to discuss second quarter 2001 operating results and the outlook for 2001. For listen-only access to our conference call within the U.S., please dial (800) 313-8070 by 4:45 p.m. EDT on July July: see month. 26 and ask for the Elastic Networks Earnings Conference Call. For the live 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 broadcast, please access the Elastic Networks' website at www.elastic.com, and then the Investor Relations Investor relations The process by which the corporation communicates with its investors. section where there will be a "Live Web-cast" link. Please go to the website at least 15 minutes prior to the call to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. A replay will be available shortly after the call and will remain on the Company's website for 14 days. About Elastic Networks Inc. Elastic Networks is a market leader in intelligent, first-mile Ethernet access technologies and products that enable service providers to rapidly deploy 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. By leveraging its technological differentiation differentiation, in biology, series of changes that occur in cells and tissues during development, resulting in their specialization. This, in turn, permits a greater variety of organisms. in speed, deployability, and economics, and by building strategic relationships with distributor, chip manufacturing, and data networking partners, Elastic Networks continues to increase the pervasiveness per·va·sive adj. Having the quality or tendency to pervade or permeate: the pervasive odor of garlic. [From Latin perv of its technology in markets throughout the world. 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 high-speed access and subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. management solutions, visit www.elastic.com, www.speedupamerica.com or contact Elastic's U.S. headquarters in Alpharetta, Georgia, directly at (678) 297-3100. For investor information, e-mail Elastic 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its in the trend toward increased usage of the Internet may occur, (11) that a drastic, negative change in the U.S. economy or market conditions may occur, and (12) 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.
Pro Forma Condensed Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Six Months
Ended June 30 Ended June 30
2001 2000 2001 2000
-------- -------- -------- --------
Net revenues $ 8,000 $ 8,504 $13,643 $14,693
Cost of revenues 6,807 8,075 12,337 14,131
-------- -------- -------- --------
Gross profit (1) 1,193 429 1,306 562
Operating expenses: (1)
Sales and marketing 3,010 3,596 6,949 6,137
Research and development 2,953 2,678 6,445 4,757
General and administrative 2,460 971 4,595 2,163
-------- -------- -------- --------
Total operating expenses 8,423 7,245 17,989 13,057
-------- -------- -------- --------
Operating loss (7,230) (6,816) (16,683)(12,495)
Other income (expense), net 541 (25) 1,440 53
-------- -------- -------- --------
Pro forma net loss $(6,689) $(6,841) $(15,243)$(12,442)
======== ======== ======== =======
Pro forma net loss per share
diluted $ (0.21) $ (0.41) $ (0.48) $(0.75)
======== ======== ======== =======
Weighted Shares used in computing
pro forma basic and diluted
net loss per share 31,467 16,675 31,429 16,675
======== ======== ======= =======
The above Pro Forma Condensed Statements of Operations is not a
presentation in accordance with accounting principles generally
accepted in the United States of America as it excludes the effects of
the following:
(1) Excludes $14.0 million of restructuring charges, excess
inventory provisions, and additional accruals for
uncollectible accounts for the six months ended June 30, 2001.
Excludes $1.2 million, $0.7 million, $2.3 million, and $0.8
million of non-cash stock based compensation expenses for the
three months ended June 30, 2001 and 2000 and six months ended
June 30, 2001 and 2000, respectively. Excludes accretion of
series A preferred stock of $0.1 million and $0.3 million for
the three months and six months ended June 30, 2000,
respectively.
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 accounting principles
generally accepted in the United States of America.
ELASTIC NETWORKS INC.
Condensed Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Six Months
Ended June 30 Ended June 30
2001 2000 2001 2000
--------- -------- -------- -------
Net revenues $ 8,000 $ 8,504 $13,643 $14,693
Cost of revenues 6,807 8,075 12,337 14,131
Charges related to excess
inventory on hand and on
order and restructuring
charges - - 11,853 -
--------- -------- -------- -------
Gross profit (loss) (1) 1,193 429 (10,547) 562
Operating expenses: (1)
Sales and marketing 3,032 3,668 7,031 6,241
Research and development 2,978 3,324 6,528 5,429
General and administrative 3,573 999 8,903 2,204
--------- -------- -------- -------
Total operating expenses 9,583 7,991 22,462 13,874
--------- -------- -------- -------
Operating loss (8,390) (7,562) (33,009) (13,312)
--------- -------- -------- -------
Other income (expense), net 541 (25) 1,440 53
--------- -------- -------- -------
Net loss (7,849) (7,587) (31,569) (13,259)
Accretion of Series A preferred
stock - (133) - (266)
--------- -------- -------- -------
Net loss attributed to common
stockholders $(7,849) $(7,720)$(31,569)$(13,525)
========= ======= ========= =======
Basic and diluted net loss per
common share $ (0.25) $(0.46)$ (1.00)$ (0.81)
========= ======= ========= =======
Weighted average shares used in
computing basic and diluted net
loss per common share 31,467 16,675 31,429 16,675
========= ======= ========= =======
(1) Includes $14.0 million of restructuring charges, excess
inventory provisions, and additional accruals for
uncollectible accounts for the six months ended June 30, 2001.
Includes $1.2 million, $0.7 million, $2.3 million, and $0.8
million of non-cash stock based compensation expenses for the
three months ended June 30, 2001 and 2000 and six months ended
June 30, 2001 and 2000, respectively. Includes accretion of
series A preferred stock of $0.1 million and $0.3 million for
the three months and six months ended June 30, 2000,
respectively.
ELASTIC NETWORKS INC.
Condensed Balance Sheets
(in thousands)
(unaudited)
June 30, December 31,
2001 2000
----------- -----------
Assets
Current assets:
Cash, cash equivalents and
short-term investments $ 41,338 $ 68,591
Accounts receivable, net of
allowance for doubtful
accounts of $209 and $90 5,830 8,068
Inventories 13,136 6,467
Note receivable - 2,951
Other current assets 2,140 1,799
----------- -----------
Total current assets 62,444 87,876
Property and equipment, net 4,410 3,375
Investment - long term 102 102
----------- -----------
Total assets $ 66,956 $ 91,353
=========== ===========
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 13,086 $ 10,891
Accrued liabilities 5,317 2,341
Deferred revenues 774 926
Capital lease obligations 227 216
----------- -----------
Total current liabilities 19,404 14,374
Deferred revenues, long-term 337 712
Capital lease obligations,
long-term 192 305
Stockholders' equity 47,023 75,962
----------- -----------
Total liabilities and
stockholders' equity $ 66,956 $ 91,353
=========== ===========
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