Zhone Technologies Reports Fourth Quarter 2013 Financial Results

Zhone Technologies, Inc. (NASDAQ: ZHNE), a global leader in FTTx network access solutions, today reported its financial results for the fourth quarter of 2013, ended December 31, 2013.

Revenue for the fourth quarter of 2013 was $32.3 million, compared to $31.5 million for the third quarter of 2013 and $28.3 million for the fourth quarter of 2012. Net income for the fourth quarter of 2013, calculated in accordance with generally accepted accounting principles (“GAAP”), was $1.4 million or $0.04 per share compared with net income of $1.6 million or $0.05 per share for the third quarter of 2013 and net income of $0.7 million or $0.02 per share for the fourth quarter of 2012. Adjusted earnings before stock-based compensation, interest, taxes, and depreciation (“adjusted EBITDA”) was an adjusted EBITDA profit of $1.6 million for the fourth quarter of 2013, compared to an adjusted EBITDA profit of $1.8 million for the third quarter of 2013 and an adjusted EBITDA profit of $0.9 million for the fourth quarter of 2012.

"When we entered 2013, our primary financial goal was to generate profitability for the year as a whole,” stated Mory Ejabat, Zhone Technologies' chief executive officer. “Having achieved both top line growth and profitability, we enter 2014 with two primary financial objectives: generating continued revenue growth and improving profitability. Our industry leading MxK and new FiberLAN Optical LAN Solution make us optimistic that we can continue toward that path adding momentum as we move forward."

Cash and cash equivalents at December 31, 2013 was $15.7 million compared to $11.1 million at December 31, 2012.

Zhone will conduct a conference call and audio webcast today, January 22, 2014, at approximately 2:00 p.m. PT / 5:00 p.m. ET to review its fourth quarter 2013 results. This call is open to the public by dialing +1 (877) 415-3183 for U.S. callers and +1 (857) 244-7326 for international callers and then entering passcode 67293561. 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 89416110. 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 Comprehensive Income (Loss).

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