SOURCE: Carrier Access

February 06, 2007 16:01 ET

Carrier Access Reports Fourth Quarter and Annual 2006 Financial Results

BOULDER, CO -- (MARKET WIRE) -- February 6, 2007 -- Carrier Access Corporation (NASDAQ: CACS), a manufacturer of broadband communications equipment, today reported its fourth quarter 2006 results. Revenue was $12.5 million, down approximately 41% from $21.1 million reported in the fourth quarter of 2005. Net loss for the fourth quarter 2006 was $(8.6) million, or $(0.25) per basic and diluted share as compared with net income of $664,000, or $0.02 per basic and diluted share for the fourth quarter of 2005.

Revenue for the year 2006 was $75.4 million compared with $75.6 million for the year 2005. Net loss for the year 2006 was $(14.8) million or $(0.44) per basic and diluted share compared with a net loss of $(6.6) million or $(0.19) per basic and diluted share in 2005. Cash and marketable securities were $110.8 million at December 31, 2006, an increase of $2.3 million over the balances at December 31, 2005.

Non-GAAP net loss in the fourth quarter of 2006 was $(7.6) million, or $(0.22) per basic and diluted share, compared to non-GAAP net income of $972,000 or $0.03 per basic and diluted share for the fourth quarter of 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 twelve months ended December 31, 2006 includes stock-based compensation expense related to the adoption of Statement of Financial Accounting Statement SFAS 123(R) of $2.5 million, or $0.07 per basic and diluted share. GAAP net loss for the comparative twelve month period ended December 31, 2005 did not include stock-based compensation expense. Including the pro-forma stock-based compensation expense previously reported in Carrier Access' consolidated financial statement footnotes, GAAP net loss for the twelve month period ended December 31, 2005 would have been $(11.2) million or $(0.32) per basic and diluted share.(1)

The reconciliation of the GAAP net income and per share amounts to the respective non-GAAP amounts for the twelve months ended December 31, 2006 and 2005 is set forth at the end of this press release.

Carrier Access chief executive officer Roger Koenig stated, "As we stated in our January 3rd press release, our revenue in the fourth quarter was lower than expected primarily due to weakness in spending from wireless and OEM customers. Although revenues were down quarter over quarter, we continue to believe that our technology and market position within our customer base is strong. We are structuring the company for global success and are focusing on adding key professional talent to take advantage of the market opportunities in front of us. Although we are spending at a high level in the short term, we have put a plan in place to return to profitability in the second half of the year. This plan includes adding key talent while streamlining our product development expenses with the addition of our lab in Shanghai, China."

Koenig added, "We have a strong opportunity pipeline with both our wireless and converged access customers and believe that as our technology solutions are proved in, we will see growth year over year. Looking forward, we believe that our investments in research and development will allow us to grow both our revenue and customer base in 2007. We continue to see demand for products that allow for the convergence of media data in both wireless and VoIP access networks."

Carrier Access will hold a conference call today, February 6, 2007 at 4:30 p.m. ET to review fourth quarter and annual 2006 results. The call is open to the public. Those who wish to participate should dial 703-639-1108, domestically or internationally, at least fifteen minutes prior to the scheduled start time for the call and reference Carrier Access Fourth 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.

Forward-Looking Statement Caution

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 our anticipated 2006 fourth quarter and year 2006 operating results, the effect of our investment in research and development, our growth prospects in wireless and converged access and sales of our products, and the future performance of the Company. These forward-looking statements, which reflect management's best judgment based on factors currently known, are subject to risks and uncertainties that may cause actual results to differ materially, including potential discrepancies between management's current estimates and the final operating results for the fourth quarter and year 2006. Our results of operations for the fourth quarter and year ended December 31, 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, possible delays in the development, availability and shipment of new products, increasing costs and differing uses of capital, changes in key personnel, 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, six and nine months ended March 31, June 30, and September 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.


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


                                                          December 31,
                                                      --------------------
                                                         2006       2005
                                                      ---------  ---------
                        ASSETS
Current assets
      Cash and cash equivalents                       $  77,948  $  55,279
      Investments in marketable securities               32,824     53,165
      Accounts receivable, net of allowance for
       doubtful accounts of $245 and $860 in 2006 and
       2005, respectively                                 7,096     10,922
      Income tax receivable                                  64         56
      Deferred income taxes                                 166        239
      Inventory, net                                     18,212     24,506
      Prepaid expenses and other                          3,103      2,720
                                                      ---------  ---------
         Total current assets                           139,413    146,887
Property and equipment, net of accumulated
 depreciation and amortization of $21,259 and $19,242
 in 2006 and 2005, respectively                          10,471     11,002
Goodwill                                                  7,614      7,588
Intangible assets, net of accumulated amortization of
 $3,872 and $2,638 in 2006 and 2005, respectively         4,023      5,268
                                                      ---------  ---------
         Total Assets                                 $ 161,521  $ 170,745
                                                      =========  =========

         LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
      Accounts payable                                $   8,759  $   8,516
      Accrued compensation payable                        4,134      3,422
      Accrued expenses and other liabilities              1,848      1,021
      Deferred revenue                                      183        422
                                                      ---------  ---------
         Total current liabilities                       14,924     13,381
                                                      ---------  ---------
Deferred income taxes                                       166        239
                                                      ---------  ---------
         Total Liabilities                               15,090     13,620
                                                      ---------  ---------
Stockholders' Equity
   Preferred stock, $0.001 par value, 5,000 shares
    authorized and no shares issued or outstanding at
    December 31, 2006 and 2005
   Common stock, $0.001 par value, 60,000 shares
    authorized, 34,308 shares issued and outstanding
    at December 31, 2006, and 33,783 shares issued
    and outstanding at December 31, 2005                     34         34
   Additional paid-in capital                           187,885    183,995
   Accumulated deficit                                  (41,378)   (26,542)
   Accumulated other comprehensive income (loss)           (110)      (362)
                                                      ---------  ---------
   Total Stockholders’ Equity                           146,431    157,125
                                                      ---------  ---------
Total Liabilities and Stockholders’ Equity            $ 161,521  $ 170,745
                                                      =========  =========

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


                                 Three Months Ended       Year Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                   2006       2005       2006       2005
                                ---------  ---------  ---------  ---------
Revenue, net of allowances for
 sales returns                  $  12,519  $  21,145  $  75,416  $  75,628
Cost of Sales                       9,137     12,122     43,524     44,911
                                ---------  ---------  ---------  ---------
      Gross profit                  3,382      9,023     31,892     30,717
                                ---------  ---------  ---------  ---------

Operating Expenses
      Research and development      7,264      3,817     26,814     17,011
      Sales and marketing           4,015      2,921     14,807     12,076
      General and
       administrative               2,069      2,701      9,767      9,830
      Bad debt expense
       (recoveries)                   (50)      (377)      (124)        47
      Insurance recovery and
       restructuring charges         (232)        (1)      (484)       452
      Intangible asset
       amortization                   307        308      1,228      1,229
                                ---------  ---------  ---------  ---------
      Total operating expenses     13,373      9,369     52,008     40,645
                                ---------  ---------  ---------  ---------
         Income (loss) from
          operations               (9,991)      (346)   (20,116)    (9,928)
   Interest income                 (1,451)    (1,006)     5,264      3,292
                                ---------  ---------  ---------  ---------
         Income (loss) before
          income taxes             (8,540)       660    (14,852)    (6,636)
   Income taxes (benefit)              10         (4)       (16)        (4)
                                ---------  ---------  ---------  ---------
         Net income (loss)      $  (8,550) $     664  $ (14,836) $  (6,632)
                                =========  =========  =========  =========

Income (loss) per share
      Basic                     $   (0.25) $    0.02  $   (0.44) $   (0.19)
      Diluted                   $   (0.25) $    0.02  $   (0.44) $   (0.19)
Weighted average common shares
      Basic                        34,222     34,593     33,940     34,607
      Diluted                      34,222     35,264     33,940     34,607
Supplemental Information

Net loss for calendar 2006 includes stock-based compensation expense under Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123(R)") of $2.501 million, net of tax, related to employee stock options. Net loss for calendar 2005 includes stock-based compensation expense of $77,000 as a result of a modification extending the exercise period for certain employee options. There was no stock-based compensation expense related to employee stock options under Statement of Financial Accounting Standards No. 123 ("SFAS 123") in calendar 2005 or 2004 because the Company did not adopt the recognition provisions of SFAS 123. Net loss including pro forma stock-based compensation expense as previously disclosed in the notes to the Consolidated Financial Statements for calendar 2005 was $(11.2) million or $(0.32) per share.

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


                                                    Year ended December 31,
                                                        2006       2005
                                                      ---------  ---------
Cash flows from operating activities
   Net loss                                           $ (14,836) $  (6,632)
   Adjustments to reconcile net loss to net cash
    provided (used) by operating activities:
      Depreciation and amortization expense               3,523      3,968
      Provisions for doubtful accounts                      133         47
      Provisions for inventory obsolescence               2,592      2,483
      Stock-based compensation                            2,501         77
      (Gain) loss on sale or disposal of assets              16        106
      Changes in operating assets and liabilities:
         Accounts receivable                              3,597      1,060
         Income tax receivable                               (8)       105
         Inventory                                        3,701      4,913
         Prepaid expenses and other                        (680)     1,928
         Accounts payable                                 1,356     (2,334)
         Accrued compensation payable                       677        505
         Accrued restructuring                             (125)       (18)
         Other liabilities                                 (124)        70
                                                      ---------  ---------
   Net cash provided (used) by operating activities       2,323      6,278
                                                      ---------  ---------

Cash flows from investing activities
   Purchase of equipment and real property               (1,553)    (1,744)
   Proceeds from the sale of property                         9         --
   Purchase of marketable securities                    (36,743)   (47,179)
   Sales of marketable securities available for sale     57,563     55,400
   Acquisitions of subsidiaries, net of cash acquired      (321)        --
                                                      ---------  ---------
   Net cash provided by (used in) investing
    activities                                           18,955      6,477
                                                      ---------  ---------

Cash flows from financing activities
   Proceeds from exercise of stock options                1,389        602
   Proceeds from stock offering                              --         --
   Stock issuance costs                                      --         --
   Repurchases of company common shares                      --     (4,831)
                                                      ---------  ---------
   Net cash provided by (used in) financing
    activities                                            1,389     (4,229)
                                                      ---------  ---------
   Net increase in cash and cash equivalents             22,667      8,526
   Effect of exchange rate changes on cash and cash
    equivalents                                               2         --
   Cash and cash equivalents at beginning of year        55,279     46,753
                                                      ---------  ---------
   Cash and cash equivalents at end of year           $  77,948  $  55,279
                                                      =========  =========
   Supplemental disclosure of cash flow information
    and investing and financing activities
   Cash paid (received) for income taxes              $       9  $      14
                                                      =========  =========

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


                                 Three Months Ended        Year Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2006       2005       2006       2005
                                ---------  ---------- ---------  ---------
US GAAP: Net Income (Loss)
 Reported                       $  (8,550) $      664 $ (14,836) $  (6,632)
Add:  Stock-based compensation
 expense                              652          --     2,501         77
   Amortization of purchased
    intangibles                       307         308     1,228      1,229
                                ---------  ---------- ---------  ---------
NON-GAAP Net Income (Loss)      $  (7,591) $      972 $ (11,107) $  (5,326)
                                =========  ========== =========  =========

US GAAP: Net Income (Loss)
 reported per share - basic and
 diluted                        $   (0.25) $     0.02 $   (0.44) $   (0.19)
                                =========  ========== =========  =========
NON-GAAP: Net Income (Loss) per
 share - basic and diluted      $   (0.22) $     0.03 $   (0.33) $   (0.15)
                                =========  ========== =========  =========
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 month and calendar year periods ended December 31, 2005 under SFAS 123 and the stock compensation expense recognized during the current three month and calendar year periods ended December 31, 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.

(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 year ended December 31, 2005 under SFAS 123 and the stock compensation expense recognized during the current year ended December 31, 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 and calendar year results have not been restated.

Contact Information

  • Contact:
    Audra Burke
    (303) 218-5455