Paradyne Reports First Quarter Financial Performance.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. -- Paradyne Grows Revenue 20 Percent Year-Over-Year and Posts Breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Earnings Per Share and Positive Non-GAAP Earnings Per Share, Exceeding Market Expectations Paradyne (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 :PDYN), a leading provider of triple play 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). loop carriers (BLCs) and 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 equipment, today announced first quarter financial results for the period ended March 31, 2005. Highlights for the quarter include: --First-quarter revenue of $26.7 million exceeded guidance and street expectation --First quarter GAAP 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. is breakeven; Non-GAAP EPS is one cent per share --Paradyne continues to be a leader with Ethernet over Copper solutions including the recently launched next generation family of T1/E1 network extenders --Shipped to more than 250 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 customers in the quarter, including 27 new DSL customers --Reported the sale of 29 non-core patents for $.8 million Net revenues for the first quarter 2005 were $26.7 million, an increase of 20 percent compared to the same period in 2004. The first quarter revenues are reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of solid results from the IOCs, hospitality 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. markets. "Paradyne achieved significant year-over-year revenue growth and we are pleased with the first quarter's results," 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. "We are excited to highlight several new product releases, customers, a new website, and our new quarterly newsletter 'The Broadband Times'." Paradyne reported first quarter break even results 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 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), compared with a GAAP loss per share of two cents for the first quarter of 2004. For the first quarter, the Company reported non-GAAP net income of $.5 million, representing earnings per share of one cent, outperforming the 2 cent earnings per share loss as reflected in the Street consensus and guidance. The one cent non-GAAP earnings per share compares with a break even earnings per share on a non-GAAP basis for the first quarter of 2004. A reconciliation between GAAP and non-GAAP results and earnings per share is provided in a table immediately following the Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statement of Operations See Income statement. . Paradyne's cash position remains healthy at $42.2 million, and the company is debt free. Product shipment highlights include: --Total DSLAMs shipped grew to more than 2,600 in the first quarter of 2005; up from over 1,650 DSLAMs in the first quarter of 2004 --Shipments of standards-based ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line exceeded 123,000 ports shipped in the quarter, up 176 percent from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 44,800 ports shipped in the first quarter of 2004 --Standards-based ADSL endpoint shipments exceeded 53,000 units, up from more than 16,500 shipped in the same period one year ago. --Shipments of ReachDSL modems and Paradyne's ADSL/R combination modems supporting both standards-based ADSL and ReachDSL, combined for a total of more than 38,000 units shipped in the first quarter; an increase of 56 percent from the first quarter of 2004. First Quarter Results Conference Call and Webcast As previously announced, Paradyne will host a conference call on Monday Monday: see week. , April 25, 2005 at 5 p.m. (ET) to discuss first quarter 2005 results and its outlook for the second quarter of 2005. 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 investor relations Investor relations The process by which the corporation communicates with its investors. page of the Paradyne website (http://www.paradyne.com). 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. An audio replay of the call will be available through April 30, 2005. To access the replay use Conference ID # 3506391. About Paradyne Paradyne provides a broad family of IP-based broadband access See broadband and wireless broadband. solutions, including BLCs, DSLAMs, Ethernet in the First Mile Ethernet in the First Mile (EFM), also known as IEEE 802.3ah, is a collection of protocols specified in IEEE 802.3, defining the Ethernet in the Access networks, i.e. First/Last Mile. bonded solutions, IADs, and CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment . Paradyne's products support both residential triple play solutions and business class bonded SHDSL SHDSL Single-Line High-bit-rate Digital Subscriber Line SHDSL Symmetrical High-Density Digital Subscriber Line SHDSL Symmetrical High Bitrate Digital Subscriber Line (Ericsson) SHDSL Symmetrical Highspeed Digital Subscriber Loop , ADSL2+, T1/E1, and DS3 bonded solutions for LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. extension and cell site data backhaul (1) The original definition of backhaul was to transmit a telephone call or data beyond its normal destination point and then back again in order to utilize available personnel (operators, agents, etc.) or network equipment that is not located at the destination location. applications. Paradyne's solutions are designed to enhance carrier revenue streams with full support for Multimedia Traffic Management (MTM MTM Medication Therapy Management MTM Minutes to Midnight (Linkin Park album) MTM Mary Tyler Moore (actress) MTM Made to Measure MTM Motoren-Technik-Mayer MTM Methods Time Measurement ) and to lower carrier operational expenses through Operational Intelligence (OpIQ). More information may be obtained by visiting http://www.paradyne.com or by calling 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 COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. 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 16, 2005, 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,
2005 2004
Revenues:
Sales $25,484 $20,815
Services 1,200 1,482
Royalties 10 -
---------- ----------
Total Revenues 26,694 22,297
Total cost of sales 16,797 13,080
---------- ----------
Gross Margin 9,897 9,217
Operating expenses:
Research and development (a) 4,270 3,782
Selling, general & administrative (a) 6,230 5,821
Amortization of intangible assets 516 304
Business restructuring charges 0 269
Other operating income, net (765) -
---------- ----------
Total operating expenses 10,251 10,176
---------- ----------
Operating Income (Loss) (354) (959)
Other (income) expenses:
Interest, net (245) (127)
Other, net (45) (45)
---------- ----------
Income (loss) before provision for income tax (64) (787)
Provision (benefit) for income tax - -
---------- ----------
Net income (loss) $(64) $(787)
========== ==========
Average shares outstanding
Basic 46,610 44,801
Diluted 46,610 44,801
Earnings per common share
Basic $(0.00) $(0.02)
Diluted $(0.00) $(0.02)
Non-GAAP diluted shares 48,018 44,801
Non-GAAP diluted net income (loss) per share (1) $0.01 $(0.00)
----------------------------------------------------------------------
(a) Amounts include stock-based compensation
as follows:
Research and development $18 $24
Selling, general and administrative 15 15
---------- ----------
$33 $39
========== ==========
Paradyne Networks, Inc.
Footnote To Condensed Unaudited Consolidated Statements of Operations
(Thousands except per share amounts)
(1) Reconciliation of Earnings and Earnings Per Share Following
Generally Accepted Accounting Principles With Non-GAAP Financial
Measures (Non-GAAP Earnings and Non-GAAP Earnings Per Share)
Management believes that presenting non-GAAP earnings and non-GAAP
earnings per share is useful to investors in addition to the GAAP
measures because the non-GAAP measures help investors understand
operating results and make comparisons with prior periods. Management
believes that excluding each of the below adjustments in calculating
non-GAAP results is helpful to investors in comparing the operations
of the core business between periods. In addition to providing
investors with a helpful comparison, management believes that:
-- excluding the amortization of deferred stock compensation is
helpful because it is a non-cash item;
-- excluding the amortization of intangible assets is helpful
because it is non-cash and the intangible asset is not expected
to be replaced when fully amortized (as might a depreciable
asset); and
-- excluding the business restructuring charges is useful because
while the category of expense recurs, including such
expenditures may actually distort the comparability of expenses
from period to period.
Paradyne's management uses non-GAAP measures internally to evaluate
the Company's net income and operating performance of the core
business on a period-over-period basis, and for planning and
forecasting future periods. Management does not consider the
amortization of deferred stock compensation and intangible assets in
its review of the business. Additionally, while management constantly
reviews the structure of the business to assure it is properly and
efficiently operating, once changes are made, there is no value in
comparing restructuring costs from period to period. The value is only
in reviewing the expected operating results after making a
restructuring change.
In order to calculate non-GAAP earnings per share we may also need to
calculate non-GAAP diluted shares. Whenever the Company has a net
loss, both basic and diluted shares will be the same because the
effect of increasing the number of shares for dilution would be to
decrease the loss per share (which would be anti-dilutive), since the
calculation is net loss divided by the number of shares. When
transactions are excluded in computing non-GAAP earnings, in some
cases, the exclusion can result in changing a net loss to net income.
When this happens, increasing the share count will reduce earnings per
share. Therefore, when the Company excludes transactions from its GAAP
net loss resulting in non-GAAP net income, the Company calculates
non-GAAP diluted shares by increasing the share count by the dilutive
effect of stock options.
Reconciliation of GAAP Earnings to Non-GAAP Earnings
Three months Ended
March 31,
2005 2004
Net income (loss), as reported $(64) $(787)
Increase (decrease) to net income:
Exclusion of amortization of deferred
stock compensation and intangible assets 549 343
Exclusion of business restructuring charges - 269
---------- ----------
Adjustment to net income (loss) 549 612
---------- ----------
Non-GAAP net income (loss) $485 $(175)
========== ==========
Reconciliation of GAAP Earnings Per Share to Non-GAAP Earnings Per
Share
Three months Ended
March 31,
2005 2004
Net income (loss) per share, as reported $(0.00) $(0.02)
Exclusion of amortization of deferred
stock compensation & intangible asset 0.01 0.01
Exclusion of business restructuring charges - 0.01
---------- ----------
Adjustment to net income (loss) 0.01 0.02
---------- ----------
Non-GAAP net income (loss) per share $0.01 $(0.00)
========== ==========
Reconciliation of Average Shares Outstanding with Non-GAAP Diluted
Shares (Thousands of Shares)
Three months Ended
March 31,
2005
Average shares outstanding 46,610
Dilutive effect of stock options 1,408
----------
Non-GAAP diluted shares 48,018
==========
Paradyne Networks, Inc.
Condensed Unaudited Consolidated Balance Sheets
(In Thousands)
March 31, December 31,
ASSETS 2005 2004
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $42,239 $43,832
Accounts receivables, net 17,459 16,904
Inventories, net 18,063 17,193
Prepaid & other current assets 2,017 1,246
---------- ----------
Total current assets 79,778 79,175
Property, plant & equipment, net 3,038 3,495
Intangible assets, net 6,645 7,160
Other assets 474 471
---------- ----------
Total assets $89,935 $90,301
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $6,475 $7,296
Payroll & benefit related liabilities 2,453 2,214
Other current liabilities 6,890 6,826
---------- ----------
Total current liabilities 15,818 16,336
---------- ----------
Total liabilities 15,818 16,336
Stockholders' equity 74,117 73,965
---------- ----------
Total liabilities and stockholders' equity $89,935 $90,301
========== ==========
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