Paradyne Reports Fourth Quarter 2003 Results; Growth in Revenue and EPS, Increase in Cash Highlight Quarter.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)--Jan. 29, 2004 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 fourth quarter financial results for the period ended December December: see month. 31, 2003. 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 fourth quarter of fiscal 2003 were $22.2 million, with broadband sales accounting for $18.4 million or 83 percent of the overall business. 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. revenues were $2 million, and service revenues accounted for $1.8 million. 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 fourth quarter of fiscal 2003 was ($1.1 million) or ($0.02) 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. Net loss for the fourth quarter of fiscal 2003, 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, was ($1.4 million) or ($0.03) per share. A reconciliation between net loss on a GAAP basis and pro forma net loss is provided in a table immediately following the Consolidated Statements of Operations. Paradyne's cash position at the end of the fourth quarter improved to $46.8 million. "Paradyne is well positioned to capture growth as the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market and corporate capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. improves," 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. "For the third consecutive quarter we had growth in revenue and improvement to our bottom line." Business highlights for the fourth quarter 2003 include: -- Shipments of standards-based ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line ports increased 30% from the prior quarter, with 42,900 ports shipped in the fourth quarter, indicating continued success in the market for Paradyne's expanded product line. -- Standards-based ADSL endpoint shipments increased 121% over the third quarter for a total of 10,900 units shipped in the fourth quarter. -- Ports shipped in ReachDSL grew to over 24,200 ports shipped in the fourth quarter, an increase of 116% from Q3. Paradyne now has shipped over 464,000 ReachDSL DSLAM (DSL Access Multiplexor) A central office (CO) device for ADSL service that intermixes voice traffic and DSL traffic onto a customer's DSL line. It also separates incoming phone and data signals and directs them onto the appropriate carrier's network. See DSL. ports worldwide. -- ReachDSL endpoints, and our combination ADSL/ReachDSL endpoints combined for a total of 21,200 units shipped in the fourth quarter, or an increase of 16% from the third quarter. -- Total DSLAMs shipped grew to over 1,800 in the fourth quarter, or an increase of 62% from the third quarter. This brings our total number of DSLAMs in the marketplace to over 35,900. Fourth Quarter Results Conference Call and Webcast As previously announced, Paradyne will host a conference call on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , January January: see month. 30, 2004 at 10:00 a.m. (ET) to discuss fourth quarter 2003 results and its outlook for the first 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 is a leading developer of carrier-class, 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. network access solutions for broadband voice, data and video. A recognized market leader in digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and (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 ), service level management (SLM See service level management system and spatial light modulator. ), and Broadband Voice and Media Gateway solutions, Paradyne markets its award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" GranDSLAM(R) and BitStorm(TM) DSL systems, ReachDSL and EtherLoop(TM) products, Jetstream(TM) Media Gateway systems and iMarc/FrameSaver Service Level Management systems to service providers and business customers worldwide. 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 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. , dated January 20, 2004, and in Paradyne's other filings with the Securities and Exchange Commission. Editors Note: BitStorm, EtherLoop, iMarc, GranDSLAM, and ReachDSL are trademarks of Paradyne Corporation. FrameSaver, Hotwire, Paradyne, and the Paradyne are registered trademarks of Paradyne Corporation. All other service marks and trademarks are the property of their respective owners.
Paradyne Networks, Inc.
Condensed Unaudited Consolidated Statements of Operations
(Thousands except per share amounts)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
Revenues:
Sales $20,390 $21,170 $73,378 $105,584
Services 1,777 2,286 7,097 5,698
Royalties 0 142 800 982
-------- --------- --------- ---------
Total Revenues 22,167 23,598 81,275 112,264
Total cost of sales 12,625 12,560 43,985 57,945
-------- --------- --------- ---------
Gross Margin 9,542 11,038 37,290 54,319
Operating expenses:
Research and development
(includes $2,830 of purchased
R&D in March 2002) 4,210 6,243 19,201 27,935
Selling, general &
administrative 6,568 7,694 27,233 34,347
Impairment of intangible asset 0 6,681 0 6,681
Amortization of deferred stock
compensation and intangible
asset 343 446 1,501 1,513
Business restructuring charges 0 2,304 1,900 3,315
-------- --------- --------- ---------
Total operating expenses 11,121 23,368 49,835 73,791
-------- --------- --------- ---------
Operating Income (Loss) (1,579) (12,330) (12,545) (19,472)
Other (income) expenses:
Interest, net (144) (170) (610) (790)
Other, net (29) 74 95 (37)
-------- --------- --------- ---------
Income (loss) before provision
for income tax (1,406) (12,234) (12,030) (18,645)
Provision (benefit) for income
tax 0 0 0 (1,488)
-------- --------- --------- ---------
Net income (loss) ($1,406) ($12,234) ($12,030) ($17,157)
======== ========= ========= =========
Average shares outstanding
Basic 44,195 42,764 43,389 40,936
Diluted 44,195 42,764 43,389 40,936
Earnings per common share
Basic (0.03) (0.29) (0.28) (0.42)
Diluted (0.03) (0.29) (0.28) (0.42)
Pro forma diluted net income
(loss) per share (A) ($0.02) ($0.08) ($0.25) ($0.23)
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 financial statement impact of the writeoff of purchased
research and development related to the acquisition of Elastic
Networks Inc., the loss on the disposal of assets related to the
closure of the Alpharetta development center, the impairment of
intangible assets, the amortization of deferred stock compensation
and intangible assets, business restructuring charges and tax benefit
from the Job Creation and Worker Assistance Act of 2002.
Three Months Twelve Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
Net income (loss) before
excluding items to normalize
results ($1,406) ($12,234) ($12,030) ($17,157)
Increase (decrease) to net
income:
Elimination of margin
generated from the
reversal of inventory
reserves (767) (2,430) (4,933)
Exclusion of writeoff of
purchased research
and development 2,830
Exclusion of loss on the
disposal of assets from
the closure of the
Alpharetta development
center 278
Exclusion of the impairment
of intangible asset 6,681 6,681
Exclusion of amortization of
deferred stock compensation
& intangible assets 343 446 1,501 1,513
Exclusion of business
restructuring charges 2,304 1,900 3,315
Exclusion of tax benefit (1,488)
-------- --------- --------- ---------
Adjustment to net income
(loss) 343 8,664 1,249 7,918
Pro Forma net income (loss) $(1,063) $(3,570) $(10,781) $(9,239)
======== ========= ========= =========
Paradyne Networks, Inc.
Condensed Unaudited Consolidated Balance Sheets
(In Thousands)
December 31, December 31,
ASSETS 2003 2002
------------ -------------
CURRENT ASSETS:
Cash and cash equivalents $46,775 $47,706
Accounts receivables, net 7,119 13,072
Inventories, net 16,419 16,661
Prepaid & other current assets 1,578 2,896
------------ -------------
Total current assets 71,891 80,335
Property plant & equipment, net 5,595 10,396
Other assets 4,956 6,525
------------ -------------
Total assets $82,442 $97,256
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $4,591 $6,333
Current portion of debt 0 396
Payroll & benefit related liabilities 2,636 3,445
Other current liabilities 5,640 9,087
------------ -------------
Total current liabilities 12,867 19,261
------------ -------------
Total liabilities 12,867 19,261
Stockholders' equity 69,575 77,995
------------ -------------
Total liabilities and stockholders'
equity $82,442 $97,256
============ =============
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