Zhone Technologies, Inc. (NASDAQ:ZHNE), a global leader in FTTx network access solutions, today reported its financial results for the third quarter ended September 30, 2011.

Revenue for the third quarter of 2011 was $30.2 million compared to $31.3 million for the second quarter of 2011 and $33.7 million for the third quarter of 2010. Net loss for the third quarter of 2011, calculated in accordance with generally accepted accounting principles (“GAAP”), was $2.7 million or $0.09 per share compared with a net loss of $1.9 million or $0.06 per share for the second quarter of 2011 and a net income of $1.7 million or $0.05 diluted per share for the third quarter of 2010. Adjusted earnings before stock-based compensation, interest, taxes, and depreciation (“adjusted EBITDA”) was an adjusted EBITDA loss of $1.3 million for the third quarter of 2011, compared to an adjusted EBITDA loss of $1.1 million for the second quarter of 2011 and an adjusted EBITDA profit of $0.6 million for the third quarter of 2010.

"The MXK continued to drive new organic customer growth, sustained industry leadership and strong customer acceptance," stated Mory Ejabat, Zhone's chief executive officer. "As a result, we expect revenue growth in the fourth quarter accompanied by adjusted EBITDA profitability."

Cash, cash equivalents and short-term investments at September 30, 2011 was $17.8 million compared to $21.2 million at December 31, 2010. Cash net of debt obligations at September 30, 2011 was $7.8 million compared to $11.2 million at December 31, 2010.

Zhone will conduct a conference call and audio webcast today, October 19, 2011, at approximately 2:00 p.m. PT / 5:00 p.m. ET to review its third quarter 2011 results. This call is open to the public by dialing +1 (866) 713-8564 for U.S. callers and +1 (617) 597-5312 for international callers and then entering passcode 14257755. The audio webcast will be simultaneously available on the Investor Relations section of Zhone's website at http://www.zhone.com/investors/.

A replay of the conference call will be available after the original call by dialing +1 (888) 286-8010 for U.S. callers and +1 (617) 801-6888 for international callers and then entering passcode 34732116. An audio webcast replay will also be available online at http://www.zhone.com/investors/ for approximately one week following the original call.

Non-GAAP Financial Measures

To supplement Zhone’s consolidated financial statements presented in accordance with GAAP, Zhone uses adjusted EBITDA, a non-GAAP measure Zhone believes is appropriate to enhance an overall understanding of Zhone’s past financial performance and prospects for the future. These adjustments to GAAP results are made with the intent of providing greater transparency to supplemental information used by management in its financial and operational decision-making. These non-GAAP results are among the primary indicators that management uses as a basis for making operating decisions because they provide meaningful supplemental information regarding the Company’s operational performance, including the Company’s ability to provide cash flows to invest in research and development, and to fund capital expenditures. In addition, these non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and comparisons to competitors' operating results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation between net loss calculated on a GAAP basis and adjusted EBITDA on a non-GAAP basis is provided in a table immediately following the Unaudited Condensed Consolidated Statements of Operations.

About Zhone Technologies

Zhone Technologies, Inc. (NASDAQ:ZHNE) is a global leader in all IP multi-service access solutions, serving more than 750 of the world's most innovative network operators. The IP Zhone is the only solution that enables service providers to build the network of the future…today, supporting end-to-end Voice, Data, Entertainment Social Media, Business, Mobile Backhaul and Mobility service. Zhone is committed to building the fastest and highest quality All IP Multi-Service solution for its customers. Zhone is headquartered in California and its products are manufactured in the USA in a facility that is emission, waste-water and CFC free.

Zhone, the Zhone logo, and all Zhone product names are trademarks of Zhone Technologies, Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or products names are all subject to change without notice.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words, and similar expressions are intended to identify forward-looking statements. In addition, forward-looking statements include, among others, statements that refer to financial estimates; projections of revenue, margins, expenses or other financial items. Readers are cautioned that actual results could differ materially from those expressed in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, commercial acceptance of the Company’s products; intense competition in the communications equipment market; the Company’s ability to execute on its strategy and operating plans; and economic conditions specific to the communications, networking, internet and related industries. In addition, please refer to the risk factors contained in the Company's SEC filings available at www.sec.gov, including without limitation, the Company's annual report on Form 10-K for the year ended December 31, 2010 and the Company’s quarterly report on Form 10-Q for the quarters ended March 31, 2011 and June 30, 2011. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements for any reason.

ZHONE TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)
         

Three Months Ended

Nine Months Ended

September 30,
June 30, September 30, September 30, September 30,
2011   2011   2010   2011   2010
 
Net revenue $ 30,204 $ 31,294 $ 33,683 $ 91,070 $ 98,020
Cost of revenue 19,901 20,217 20,095 59,101 61,039
Stock-based compensation   29       11       12       50       83  
Gross profit   10,274       11,066       13,576       31,919       36,898  
Operating expenses:
Research and product development (1) 5,294 5,449 5,283 16,259 15,758
Sales and marketing (1) 5,557 5,399 5,979 16,450 17,835
General and administrative (1) 2,154 2,093 2,352 6,318 7,929
Gain on sale of Oakland Campus   -       -       (1,959 )     -       (1,959 )
Total operating expenses   13,005       12,941       11,655       39,027       39,563  
Operating income (loss) (2,731 ) (1,875 ) 1,921 (7,108 ) (2,665 )
Other expense, net   (4 )     (14 )     (216 )     (9 )     (939 )
Income (loss) before income taxes (2,735 ) (1,889 ) 1,705 (7,117 ) (3,604 )
Income tax provision (benefit)   13       7       8       (33 )     (95 )
Net income (loss) $ (2,748 )   $ (1,896 )   $ 1,697     $ (7,084 )   $ (3,509 )
 
Weighted average shares outstanding
Basic 30,701 30,644 30,431 30,645 30,324
Diluted 30,701 30,644 31,882 30,645 30,324
 
Earnings per common share net income (loss)
Basic $ (0.09 ) $ (0.06 ) $ 0.06 $ (0.23 ) $ (0.12 )
Diluted $ (0.09 ) $ (0.06 ) $ 0.05 $ (0.23 ) $ (0.12 )
 
 
(1) Amounts include stock-based compensation costs as follows:
Research and product development 89 53 63 189 313
Sales and marketing 174 53 58 279 368
General and administrative   639       175       113       936       1,298  
902 281 234 1,404 1,979
 
GAAP net income (loss) $ (2,748 ) $ (1,896 ) $ 1,697 $ (7,084 ) $ (3,509 )
Stock-based compensation 931 292 246 1,454 2,062
Interest expense 33 28 240 110 966
Income taxes 13 7 8 (33 ) (95 )
Depreciation 447 443 380 1,343 1,261
Gain on sale of Oakland Campus   -       -       (1,959 )     -       (1,959 )
Non-GAAP Adjusted EBITDA profit (loss) $ (1,324 )   $ (1,126 )   $ 612     $ (4,210 )   $ (1,274 )
 

ZHONE TECHNOLOGIES, INC. AND SUBSIDIARIES
   

Unaudited Condensed Consolidated Balance Sheets

(In thousands)
 
September 30, December 31,

2011

2010
 
Assets
Current assets:
Cash, cash equivalents and short-term investments $ 17,834 $ 21,174
Accounts receivable 26,853 29,747
Inventories 29,458 31,048
Prepaid expenses and other current assets   2,583       2,514  
Total current assets 76,728 84,483
Property and equipment, net 5,158 5,274
Restricted cash 58 58
Other assets   154       296  
Total assets $ 82,098     $ 90,111  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 12,143 $ 11,864
Line of credit 10,000 10,000
Accrued and other liabilities   11,687       13,217  
Total current liabilities 33,830 35,081
Other long-term liabilities   4,373       5,615  
Total liabilities   38,203       40,696  
Stockholders’ equity:
Common stock 31 30
Additional paid-in capital 1,071,113 1,069,513
Other stockholders’ equity 240 277
Accumulated deficit   (1,027,489 )     (1,020,405 )
Total stockholders’ equity   43,895       49,415  
Total liabilities and stockholders' equity $ 82,098     $ 90,111  

Copyright Business Wire 2010

If you liked this article you might like

Insider Trading Alert - ALB, ZHNE And AGX Traded By Insiders

Insider Trading Alert - ALB, ZHNE And AGX Traded By Insiders

Zhone Technologies (ZHNE) Downgraded From Hold to Sell

Zhone Technologies (ZHNE) Downgraded From Hold to Sell

5 Active Under-$10 Stocks to Buy Now

5 Active Under-$10 Stocks to Buy Now

Why Zhone Technologies (ZHNE) Stock Is Soaring Today

Why Zhone Technologies (ZHNE) Stock Is Soaring Today

5 Stocks Under $10 Set to Soar

5 Stocks Under $10 Set to Soar