SOURCE: Carrier Access

October 30, 2006 16:01 ET

Carrier Access Reports Third Quarter 2006 Financial Results

BOULDER, CO -- (MARKET WIRE) -- October 30, 2006 -- Carrier Access Corporation (NASDAQ: CACS), a manufacturer of broadband communications equipment, today reported third quarter 2006 revenue of $16.1 million, down approximately 23% from $20.9 million reported in the third quarter of 2005. Revenue for the nine months ended September 30, 2006 was $62.9 million, up approximately 15% from $54.5 million reported from the comparative nine months ended September 30, 2005.

On a GAAP basis, net loss for the third quarter of 2006 was $(5.5 million), or $(0.16) per diluted share as compared with a GAAP net loss of $(837,000), or $(0.02) per diluted share for the third quarter of 2005. The GAAP net loss for the nine months ended September 30, 2006 was $(6.3 million), or $(0.19) per diluted share, compared with a GAAP net loss of $(7.3 million) or $(0.21) per diluted share for the comparative nine months ended September 30, 2005.

Non-GAAP net loss in the third quarter of 2006 was $(4.5 million), or $(0.13) per diluted share, compared to a non-GAAP net loss of $(530,000) or $(0.02) per diluted share for the third quarter of 2005. Non-GAAP net loss for the nine months ended September 30, 2006 was $(3.5 million) or $(0.10) per diluted share, compared to a non-GAAP net loss of $(6.4 million) or $(0.18) per diluted share for the nine months ended September 30, 2005. Non-GAAP financial measures exclude stock-based compensation expense and amortization of purchased intangibles, including any income tax effects.

GAAP net loss for the three and nine months ended September 30, 2006 includes stock-based compensation expense related to the adoption of Statement of Financial Accounting Statement SFAS 123(R) of $639,000, or $0.02 per diluted share, and $1,823,000 or $0.05 per diluted share, respectively. GAAP net loss for the comparative three and nine month periods ended September 30, 2005 did not include stock-based compensation expense. Including the pro-forma stock-based compensation expense previously disclosed in Carrier Access' condensed consolidated financial statement footnotes, GAAP net loss for the three and nine month periods ended September 30, 2005 would have been $(1,342,000) or $(0.04) per diluted share and $(9,349,000) or $(0.27) per diluted share, respectively. (1)

The reconciliation of the GAAP net income and per share amounts to the respective non-GAAP amounts for the three and nine months ended September 30, 2006 and 2005 is set forth at the end of this press release.

"The decline in our third quarter revenues was disappointing, however, we do not view the current quarter as indicative of a negative long-term trend. Our quarterly decline in revenue was due primarily to lower sales to one large customer," said Roger Koenig, President and CEO of Carrier Access.

Koenig added, "Carrier Access is dedicated to diversifying our customer base. We continue to see increased interest in our new product platforms both internationally and domestically. We are continuing our investments in research and development related to our new product portfolios, as we believe these investments will allow us to expand both our technology and customer base to provide growth in 2007."

"We are taking steps to streamline our expenses and improve our operational efficiencies in order to reestablish profitability in 2007. As a component of our global expansion plans, we have recently acquired a development lab in Shanghai, China. This investment will help to lower our contractor R & D expenses, while accelerating the development of product additions to meet customer requirements. In addition, Carrier access has established initiative to optimize our manufacturing resources and increase our product gross margins with a progressive plan of improvements."

Carrier Access will hold a conference call today, October 30, 2006 at 4:30 p.m. ET to review third quarter results. The call is open to the public. Those who wish to participate should dial (703) 639-1309, domestically or internationally, at least fifteen minutes prior to the scheduled start time for the call and reference Carrier Access Third Quarter 2006 Earnings Call. The conference call will be available live via the Internet by accessing the Carrier Access web site at http://www.carrieraccess.com under the Investor Relations section. An online replay of the conference call, as well as the text of the Company's earnings release, will also be available on the Investor Relations site at http://www.carrieraccess.com.

About Carrier Access Corporation

Carrier Access (NASDAQ: CACS) provides consolidated access technology designed to streamline the communication network operations of service providers, enterprises and government agencies. Carrier Access products enable customers to consolidate and upgrade access capacity, and implement converged IP services while lowering costs and accelerating service revenue. Carrier Access' technologies help our customers do more with less. For more information, visit www.carrieraccess.com.

This press release contains forward-looking statements, within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, concerning the effect of our investment in research and development, our growth prospects in wireless and converged access and sales of our products. These statements are subject to risks and uncertainties, including potential discrepancies between management's current estimates and the final operating results for 2006. Our results of operations for the three and nine months ended September 30, 2006 are unaudited and subject to change. We caution that actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including, but not limited to, continuing uncertainty regarding general economic conditions, changes in capital spending by carriers and telecommunications companies, market acceptance of our products, dependence on a single customer and other problems with or at our customers, distributors, OEMs and/or suppliers, growth rates within our industry, the financial stability of our customers, the introduction of new competition and technologies, and other risks and uncertainties including those factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2005, Quarterly Reports on Form 10-Q for the three and six months ended March 31 and June 30, 2006 and other documents periodically filed with the Securities and Exchange Commission. We do not undertake any obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.

(1) Pro-forma compensation expense under SFAS 123, among other computational differences, does not consider potential pre-vesting forfeitures. Because of these differences, the pro-forma stock compensation expense presented above for the prior three and nine month periods ended September 30, 2005 under SFAS 123 and the stock compensation expense recognized during the current three and nine month periods ended September 30, 2006 under SFAS 123(R) are not directly comparable. In accordance with the modified prospective transition method of SFAS 123(R), the prior comparative quarterly results have not been restated.



                          CARRIER ACCESS CORPORATION
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                      (in thousands, except per share data)

                                                September 30,  December 31,
                                                    2006          2005
                                                 -----------   -----------
Assets
Current Assets
  Cash and cash equivalents                      $    72,542   $    55,279
  Investments in marketable securities                40,584        53,165
  Accounts receivable, net of allowance for
   doubtful accounts of $267 and $860 at September
   30, 2006 and December 31, 2005, respectively        9,768        10,922
  Income tax receivable                                   66            56
  Deferred income taxes                                  239           239
  Inventory, net                                      21,311        24,506
  Prepaid expenses and other current assets            2,582         2,720
                                                 -----------   -----------
Total current assets                                 147,092       146,887
Property and equipment, net                           10,634        11,002
Goodwill                                               7,588         7,588
Intangible assets, net                                 4,333         5,268
                                                 -----------   -----------
      Total Assets                               $   169,647   $   170,745
                                                 ===========   ===========




Liabilities and Stockholders' Equity
Current Liabilities
  Accounts payable                               $     9,225   $     8,516
  Accrued payroll and related liabilities              4,305         3,422
  Other accrued liabilities                            1,645         1,021
  Deferred revenue                                       253           422
                                                 -----------   -----------
Total current liabilities                             15,428        13,381
                                                 -----------   -----------
Deferred income taxes                                    239           239
                                                 -----------   -----------
Total Liabilities                                     15,667        13,620
                                                 -----------   -----------
Stockholders' Equity
Preferred stock, $0.001 par value, 5,000 shares
 authorized and no shares issued or outstanding
 at September 30, 2006 and December 31, 2005
Common stock, $0.001 par value, 60,000 shares
 authorized, 34,204 shares issued and
 outstanding at September 30, 2006, and 33,783
 shares issued and outstanding at December 31,
 2005                                                     34            34
Additional paid-in capital                           186,934       183,995
Accumulated deficit                                  (32,829)      (26,542)
Cumulative other comprehensive loss                     (159)         (362)
                                                 -----------   -----------
Total Stockholders' Equity                           153,980       157,125
                                                 -----------   -----------
Total Liabilities and Stockholders' Equity       $   169,647   $   170,745
                                                 ===========   ===========


                          CARRIER ACCESS CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (in thousands, except per share data)

                                    Three Months Ended  Nine Months Ended
                                       September 30,       September 30,
                                    ------------------  ------------------
                                      2006      2005      2006      2005
                                    --------  --------  --------  --------
Revenue, net of allowances for
 sales returns                      $ 16,083  $ 20,862  $ 62,897  $ 54,483
Cost of sales                          9,862    11,918    34,387    32,789
                                    --------  --------  --------  --------
Gross Profit                           6,221     8,944    28,510    21,694
                                    --------  --------  --------  --------
Operating Expenses
  Research and development             6,953     4,138    19,550    13,195
  Sales and marketing                  3,855     2,623    10,791     9,155
  General and administrative           2,003     3,411     7,445     7,127
  Bad debt expense (recoveries)           25        38       (74)      424
  Restructuring charges                    -        84         -       453
  Intangible asset amortization          307       307       921       921
                                    --------  --------  --------  --------
Total Operating Expenses              13,143    10,601    38,633    31,275
                                    --------  --------  --------  --------
Loss from Operations                  (6,922)   (1,657)  (10,123)   (9,581)
Interest income                        1,458       820     3,813     2,286
                                    --------  --------  --------  --------
Loss before Income Taxes              (5,464)     (837)   (6,310)   (7,295)
                                    --------  --------  --------  --------
Provision for income taxes
 (benefit)                               (18)        -       (25)        -
                                    --------  --------  --------  --------
Net Loss                            $ (5,446) $   (837) $ (6,285) $ (7,295)
                                    ========  ========  ========  ========

Loss per share
Basic and diluted                   $  (0.16) $  (0.02) $  (0.19) $  (0.21)
                                    ========  ========  ========  ========

Weighted average common shares
Basic and diluted                     34,084    34,671    33,921    34,608
                                    ========  ========  ========  ========


                          CARRIER ACCESS CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (in thousands)


                                                       Nine Months Ended
                                                         September 30,
                                                     ---------------------
                                                        2006        2005
                                                     ---------   ---------
Cash Flows from Operating Activities
 Net loss                                            $  (6,285)  $  (7,295)
 Adjustments to reconcile net loss to net cash
  provided (used) by operating activities:
   Depreciation and amortization expense                 2,631       3,064
   Provisions for doubtful accounts                        106         424
   Stock-based compensation                              1,824          28
   Changes in operating assets and liabilities:
    Accounts receivable                                  1,011      (1,951)
    Income tax receivable                                  (10)         94
    Inventory                                            3,195       3,145
    Prepaid expenses and other                            (237)      2,141
    Accounts payable and accrued expenses                2,294        (921)
                                                     ---------   ---------
   Net cash provided (used) by operating activities      4,529      (1,271)
                                                     ---------   ---------
Cash Flows from Investing Activities
  Purchases of equipment and real property              (1,328)     (1,394)
  Purchases of marketable securities                   (28,869)    (41,581)
  Sales of marketable securities available for sale     41,815      45,499
                                                     ---------   ---------
  Net cash provided by investing activities             11,618       2,524
                                                     ---------   ---------
Cash Flows from Financing Activities
  Proceeds from exercise of stock options                1,116         496
                                                     ---------   ---------
  Net cash provided by financing activities              1,116         496
                                                     ---------   ---------
  Net Increase in Cash and Cash
   Equivalents                                          17,263       1,749
  Cash and cash equivalents at beginning of the
   period                                               55,279      46,753
                                                     ---------   ---------
  Cash and cash equivalents at end of the period     $  72,542   $  48,502
                                                     =========   =========


               Reconciliations to the Nearest Non-GAAP Measure
                    (in thousands, except per share data)

                                    Three Months Ended  Nine Months Ended
                                       September 30,       September 30,
                                    ------------------  ------------------
                                      2006      2005      2006      2005
                                    --------  --------  --------  --------

US GAAP: Net Loss Reported          $ (5,446) $   (837) $ (6,285) $ (7,295)
Add: Stock-based compensation
      expense                            639         -     1,823         -
     Amortization of purchased
      intangibles                        307       307       921       921
                                    --------  --------  --------  --------
NON-GAAP Net Loss                   $ (4,500) $   (530) $ (3,541) $ (6,374)
                                    ========  ========  ========  ========

US GAAP: Net Loss reported per
 share - basic and diluted          $  (0.16) $  (0.02) $  (0.19) $  (0.21)
                                    ========  ========  ========  ========
NON-GAAP: Net Loss per share -
 basic and diluted                  $  (0.13) $  (0.02) $  (0.10) $  (0.18)
                                    ========  ========  ========  ========

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP), we provide investors with certain non-GAAP financial measures, including non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for net income (loss) or diluted net income (loss) per share prepared in accordance with GAAP. We believe that these non-GAAP measures are used by and are useful to investors and other users of our financial statements in evaluating our operating results and comparative trends, as well as to facilitate comparisons with our historical operating results. The non-GAAP results are an indicator of our baseline performance before gains, losses or other charges that are considered by management to be outside of our core operating results and are excluded by management for purposes of evaluating performance against internal budgets and in making operational decisions. In addition, these non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables above.

Pro-forma compensation expense under SFAS 123, among other computational differences, does not consider potential pre-vesting forfeitures. Because of these differences, the pro-forma stock compensation expense presented above for the prior three and nine month periods ended September 30, 2005 under SFAS 123 and the stock compensation expense recognized during the current three and nine month periods ended September 30, 2006 under SFAS 123(R) are not directly comparable. In accordance with the modified prospective transition method of SFAS 123(R), the prior comparative quarterly results have not been restated.

Contact Information

  • Contact:
    Audra Burke
    (303) 218-5455