Paradyne Reports First Quarter 2004 Results.Business Editors/High-Tech Writers LARGO Largo, town (1990 pop. 65,674), Pinellas co., W Fla., on the Pinellas peninsula and the Gulf Coast, across the bay from Tampa; settled 1853, inc. 1905. It is a packing, canning, and shipping center in a citrus fruit and fishing area. , Fla.--(BUSINESS WIRE)--April 21, 2004 Paradyne Networks, Inc. (Nasdaq:PDYN): -- Exceeds Expectations in Revenue and Pro Forma Earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. -- Achieves Break-even EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. in 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 Results -- Records $22.3 Million Revenue, more than 15 Percent Increase over Year-ago Period Paradyne Networks, Inc. (Nasdaq:PDYN), a leading provider of 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). voice, data and video network access solutions, today reported its first quarter financial results for the period ended March 31, 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter of fiscal 2004 were $22.3 million, an increase of 15.5 percent compared to the same period in 2003. Broadband access See broadband and wireless broadband. products accounted for $19 million, a 24 percent increase compared to the first quarter of 2003. Sales of narrowband In communications, transmission rates up to T1 speeds (1.544 Mbps). The upper limit is moving target. At one time, narrowband meant 150 bps (that is 150 bits per second!). Then, the upper limit became 2,400 bps. Later, it moved to 64 Kbps. Contrast with wideband and broadband. products were $1.8 million, and service revenue accounted for $1.5 million. On a pro forma basis, Paradyne achieved break-even earnings per 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 in the first quarter, exceeding analysts' initial consensus estimate of a 4-cent loss, as well as analysts' revised consensus estimate of a 2-cent loss after our April 6 pre-announcement of first quarter results. Break-even pro forma earnings per share represents a 9-cent per share improvement over the first quarter of 2003. Paradyne's cash position remains healthy at $46 million. "We are proud to report to our stockholders Paradyne's fourth consecutive quarter of revenue growth and pro forma earnings improvement," said Sean Belanger Bélanger is a French surname that derives from the Old French given name Berenger, which is of Germanic origin. In the English-speaking parts of North America, Bélanger has been anglicized to Belanger or occasionally to Belonger. Belanger means "warrior" in Old French. , president 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 Paradyne. "Our investment in research and development over the previous three years is now producing tangible results. New products - specifically used to deliver Voice over IP, video services, and broadband Internet access Broadband Internet access, often shortened to just "broadband", is high speed Internet access—typically contrasted with dial-up access over modem. Dial-up modems are generally only capable of a maximum bitrate of 56 kbit/s (kilobits per second) and require the full use of a , are playing an increasingly important role and we're pleased with the market demand and new opportunities for Paradyne products worldwide." Paradyne's first quarter results 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 were a loss of 2-cents per diluted share, as compared to a loss of 8-cents per diluted share for the first quarter of 2003. Reconciliation between GAAP and pro forma results is provided in a table immediately following the Consolidated Statements of Operations. Business highlights for the fourth quarter include: -- Shipments of standards-based ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line equipment increased over the prior quarter, with approximately 45,000 ports shipped in the first quarter of 2004, and over 16,500 ADSL modems shipped in the first quarter. -- ReachDSL modems, and Paradyne's ADSL/R combination modem supporting both standards-based ADSL and ReachDSL, increased to over 24,500 units shipped in the first quarter. -- Over 17,300 ports of ReachDSL, Paradyne's patented 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 product designed specifically to overcome distance limitations and poor wireline conditions, shipped in the first quarter. Paradyne has now shipped over 480,000 ReachDSL ports. -- Paradyne produced an eleven-city IP video seminar roadshow with Cisco as a co-sponsor. The day-long educational event attracted executives from telephone companies and engineering consulting firms Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . -- Paradyne participated in 9 industry tradeshows in the first quarter, and Paradyne management presented at 4 industry conferences. -- Research and development engineers participated in the DSL Forum meeting in Brussels, and are actively involved in various working groups within the DSL Forum The DSL Forum is a world wide consortium of about 200 companies which are part of the different divisions of the telecommunication and information technology sector. The DSL Forum was founded in 1994 and is used as a platform for companies that operate in the broadband market. to advance broadband initiatives worldwide; the International Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Union study groups; and in ATIS ATIS - A Tools Integration Standard Committee T1 on the T1/E1 standards committee. First Quarter Results Conference Call and Webcast As previously announced, Paradyne will host a conference call on Wednesday, April 21, 2004 at 5 p.m. (ET) to discuss first quarter 2004 results and its outlook for the second quarter of 2004. The call will be broadcast live on 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 for investors and the general public. This listen-only webcast can be accessed through the Company section of the Paradyne website (http://www.paradyne.com/corporate_info). Participants should go to the website at least ten minutes before this event to 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. Or, participants may dial into the call at (706) 634-1225. About Paradyne Paradyne's broadband access equipment enables service providers to profitably deliver voice, data and video services and smoothly migrate to packet-based networks. These solutions include an extensive portfolio of broadband access concentrators, media gateways, and customer premises equipment See CPE. . Services offered to business and residential customers worldwide using Paradyne's equipment include Voice over IP, high-speed Internet See broadband. , Wide Area Networking featuring Service Level Management, IP switched video, and traditional T1/E1 data. More information may be obtained by visiting http://www.paradyne.com or by calling +1-727-530-8623. Information about 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. : This press release contains forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements are made pursuant to the "safe-harbor" provisions of 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 and are made based on management's current expectations and beliefs as well as on assumptions made by, and information currently available to, management. Among the factors that could cause actual future events to differ materially include: the uncertainty regarding the acceptance of new telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. based on DSL technology; reduction or discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of purchase of our products by NSPs; the failure of NSPs to incorporate our products into their infrastructure; the possibility that Paradyne's competitors may develop competing products that are superior in terms of quality, cost or both. For a detailed discussion of other risk factors that could affect Paradyne's business, please refer to the risks identified in Paradyne's Current 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. , dated March 15, 2004, and in Paradyne's other filings with the Securities and Exchange Commission. Editors Note: Paradyne and the Paradyne Logo are registered trademarks of Paradyne Corporation.
Paradyne Networks, Inc.
Condensed Unaudited Consolidated Statements of Operations
(Thousands except per share amounts)
Three months Ended
March 31,
---------------------
2004 2003
--------- ---------
Revenues:
Sales $20,815 $17,734
Services 1,482 1,564
--------- ---------
Total Revenues 22,297 19,298
Total cost of sales 13,080 9,565
--------- ---------
Gross Margin 9,217 9,733
Operating expenses:
Research and development 3,758 5,609
Selling, general & administrative 5,806 7,250
Amortization of deferred stock compensation
and intangible asset 343 423
Business restructuring charges 269 0
--------- ---------
Total operating expenses 10,176 13,282
--------- ---------
Operating Income (Loss) (959) (3,549)
Other (income) expenses:
Interest, net (127) (154)
Other, net (45) 93
--------- ---------
Income (loss) before provision for income tax (787) (3,488)
Provision (benefit) for income tax 0 0
--------- ---------
Net income (loss) ($787) ($3,488)
========= =========
Average shares outstanding
Basic 44,801 42,862
Diluted 44,801 42,862
Earnings per common share
Basic (0.02) (0.08)
Diluted (0.02) (0.08)
Pro forma diluted net income (loss) per share (A) ($0.00) ($0.09)
Paradyne Networks, Inc.
Footnote To Condensed Consolidated Statements of Operations
(Thousands except per share amounts)
(Unaudited)
(A) Reconciliation of Earnings Following Generally Accepted
Accounting Principles (GAAP) With Non-GAAP Financial Measures
(Pro Forma Earnings)
Paradyne supplements its earnings releases provided in accordance
with generally accepted accounting principles, with non-GAAP financial
measures that exclude those transactions that management does not
reasonably expect to be part of recurring business transactions over
the long term. Paradyne's management believes the pro forma
information provides investors useful information to understand
operating results and make comparisons with prior periods. Paradyne's
management uses such pro forma measures internally, to evaluate the
company's net income and operating performance on a period-over-period
basis, and for planning and forecasting future periods.
Pro forma diluted net income (loss) per share calculations exclude
the elimination of margin generated from the reversal of inventory
reserves, the amortization of deferred stock compensation and
intangible assets and business restructuring charges.
Three months Ended
March 31,
---------------------
2004 2003
--------- ---------
Net income (loss) in accordance with GAAP ($787) ($3,488)
Increase (decrease) to net income (loss):
Elimination of positive margin generated
from the reversal of inventory reserves
on previously reserved inventory
sold during the quarter 0 (743)
Exclusion of amortization of deferred stock
compensation & intangible assets 343 423
Exclusion of business restructuring charges 269 0
--------- ---------
Adjustment to net income (loss) 612 (320)
Pro Forma net income (loss) $(175) $(3,808)
========= =========
Paradyne Networks, Inc.
Condensed Unaudited Consolidated Balance Sheets
(In Thousands)
March 31, December 31,
2004 2003
---------- -----------
CURRENT ASSETS:
Cash and cash equivalents $46,036 $46,775
Accounts receivables, net 10,944 7,119
Inventories, net 14,643 16,419
Prepaid & other current assets 1,475 1,578
---------- -----------
Total current assets 73,098 71,891
Property plant & equipment, net 4,784 5,595
Intangible assets, net 4,563 4,869
Other assets 457 87
---------- -----------
Total assets $82,902 $82,442
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $6,036 $5,486
Payroll & benefit related liabilities 2,155 2,636
Other current liabilities 4,903 4,745
---------- -----------
Total current liabilities 13,094 12,867
---------- -----------
Total liabilities 13,094 12,867
Stockholders' equity 69,808 69,575
---------- -----------
Total liabilities and
stockholders' equity $82,902 $82,442
========== ===========
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