SOURCE: Carrier Access

August 02, 2005 16:26 ET

Carrier Access Reports Restated Financial Results for Fiscal Years 2003 and 2004

And Announces Anticipated Second Quarter 2005 Results

BOULDER, CO -- (MARKET WIRE) -- August 2, 2005 -- Carrier Access Corporation (NASDAQ: CACSE), a manufacturer of broadband communications equipment, today reported restated financial results for the fiscal years ended December 31, 2003 and 2004. Carrier Access has restated its consolidated financial results for the fiscal years 2003 and 2004 and all the interim periods for these years in its amended annual report on Form 10-K/A filed with the Securities and Exchange Commission (SEC) on August 2, 2005.

Carrier Access will hold a conference call to review its restated financial results at 4:30 pm Eastern time, Tuesday, August 2, 2005.

Carrier Access is in the process of diligently completing its quarterly reports on Form 10-Q for the first and second quarters of 2005. Carrier Access expects to file its quarterly reports on Form 10-Q for the first and second quarters of 2005 with the SEC on or before September 2, 2005. Accordingly, the Company sought an exception from the NASDAQ Listing Qualifications Panel for additional time to regain compliance with the NASDAQ listing requirements and was recently notified that it was granted an exception provided that it files its amended annual report on Form 10-K/A on or before August 2, 2005, and its quarterly reports on Form 10-Q for the first and second quarters of 2005 by September 2, 2005. There can be no assurance that the Panel will grant any additional exception or that we will be able to file the quarterly reports on Form 10-Q by September 2, 2005.

"Today we reported our restated financial results for fiscal years 2003 and 2004 and related interim periods. The completion of this restatement is a key step in the update of current financial filings," said Roger Koenig, chief executive officer and chairman. "Despite the significant energy devoted to our recent financial review, our overall business and customer commitments have not been affected. We have announced new customers, and extended our industry-leading solutions further into radio access networks and converged IP access markets. We have also taken actions to strengthen our internal controls, processes and infrastructure. We are excited about the market opportunities for radio access networks and converged IP access and are confident in our ability to play a leadership role."

Restated revenues for fiscal year 2003 were $62.5 million compared with $50.2 million for fiscal year 2002. Restated revenues for fiscal year 2004 were $95.5 million compared with $62.5 million (restated) for fiscal year 2003. Restated net income for fiscal year 2003 was $1.5 million, or $0.06 per share, compared with a net loss for fiscal year 2002 of $52.7 million, or $(2.13) per share. Restated net loss for fiscal year 2004 was $1.8 million, or $(0.05) per share, compared with net income (restated) for fiscal 2003 of $1.5 million, or $0.06 per share.

Restatement of Consolidated Financial Statements

As a result of the financial review, Carrier Access has restated its consolidated financial results for fiscal years 2003 and 2004 and all the interim periods in 2003 and 2004 as embodied in its amended annual report on Form 10-K/A. The restatements include a number of adjustments, the largest of which relate to revenue, cost of sales, accounts receivable, and inventory reserves. The restatement is primarily related to revenue recognition issues, specifically title transfer, continuous assessment of probability of collection on certain transactions, and inventory valuation. Adjustments that result in a reduction of revenue in 2003 and 2004 have been or are expected to be recognized in subsequent periods in 2004 and 2005. Adjustments to inventory are primarily to increase reserve levels previously reported. The restatement had no effect on the Company's cash flows from operations.

An overview of adjustments by period is as follows:

--  2004 - Restated revenues were $95.5 million compared with $101.4
    million as originally reported. Restated net inventory as of December 31,
    2004 was $32.0 million compared with $29.7 million as originally reported.
    Restated net loss was $1.8 million, or $(0.05) per share, compared with net
    income of $0.9 million, or $0.03 per share, as originally reported.
    
--  2003 - Restated revenues for fiscal 2003 were $62.5 million compared
    with $62.6 million as originally reported.  Restated net income was $1.5
    million, or $0.06 per share, compared with $2.5 million, or $0.09 per
    share, as originally reported.
    
Carrier Access' restated 2003 and 2004 annual financial statements are included in its amended annual report on Form 10-K/A filed today with the SEC. Investors are encouraged to read this filing for a more complete description of the financial restatement.

Fiscal 2005 First and Second Quarter Results

Carrier Access also announced today that it expects its fiscal 2005 second quarter revenues to be in the range of $18.5 million to $19.5 million. Preliminary second quarter revenues include approximately $1.5 million in revenue that was previously reported in the fourth quarter of 2004. The Company anticipates a net loss for the second quarter in the range of $0.04 to $0.06 per share. In addition the Company expects that previously announced revenue for the first quarter of 2005 will increase by approximately $3 million to include revenue that was previously reported in fourth quarter of 2004, resulting in reported revenue of between $14 to 15 million, and net loss of between $0.12 to $0.14 per share.

These preliminary first and second quarter 2005 results are based on management's initial analysis of first and second quarter 2005 operating results. These preliminary results are unaudited and are subject to modification. The Company will provide additional financial and operating details for the first and second quarters of 2005 in a conference call to be scheduled on or before September 2, 2005.

Conference Call and Webcast Information

Carrier Access Corporation (NASDAQ: CACSE) will host a conference call on Tuesday, August 2, 2005 at 4:30 p.m. EDT to discuss its preliminary second quarter 2005 financial results, and to provide an update on its restatement of prior period financial statements and NASDAQ listing status.

This call is open to the public. Domestic and international participants should dial 212-287-1820 at least fifteen minutes prior to the scheduled start time and reference Carrier Access.

The audio webcast will be available for replay until August 2, 2006. To access the audio webcast or replay, please go to the Carrier Access Investor Relations page at http://ir.carrieraccess.com/phoenix.zhtml?c=101785&p=irol-calendar.

About Carrier Access Corporation

Carrier Access (NASDAQ: CACSE) 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 release contains forward-looking statements regarding our expected revenues and earnings for the first and second quarters of fiscal 2005. These statements are subject to risks and uncertainties, including potential discrepancies between management's initial analysis and the final completed analysis of such operating results. In addition, it is possible that we may not complete and file our Quarterly Reports on Form 10-Q for the first and second quarters of fiscal 2005 on or before September 2, 2005. Readers are referred to the "Risk Factors" section of Carrier Access' Annual Report on Form 10-K/A, dated August 2, 2005 and filed with the SEC, which identifies important risk factors that could cause actual results to differ from those currently expected by management or contained in any forward-looking statements. Risk factors include, among others, uncertainties regarding probability of collection, the timing of the Company's completion of its first and second quarter 2005 quarterly reports, risks as to subsequent adjustments to preliminary estimates for the first and second quarter 2005 financial results, issues encountered in the completion of the first and second quarter 2005 quarterly reviews, the continued adverse effect of developments in the telecommunications industry, Carrier Access' ability to grow its customer base, dependence on new product offerings, market acceptance of its products, competition from large incumbent vendors, rapid technological and market change and manufacturing and sourcing risks. In addition, any forward-looking statements represent Carrier Access' views only as of today and should not be relied upon as representing Carrier Access' views as of any subsequent date. While Carrier Access may elect to update forward-looking statements at some point, Carrier Access specifically disclaims any obligation to do so.


                         CARRIER ACCESS CORPORATION
               CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                   (In thousands, except per share amounts)

                                                       December 31,
                                                   2003            2004
                                                ----------      ----------
                                                     (In thousands)
                                               As restated     As restated
                              ASSETS
Current assets:
  Cash and cash equivalents                     $   17,207      $   70,928
  Marketable securities available for sale          19,335          37,755
  Accounts receivable, net                          18,249          11,949
  Income tax receivable                                 83             161
  Deferred income taxes                                830             363
  Inventory, net                                    25,273          32,009
  Prepaid expenses and other                         4,625           4,513
                                                ----------      ----------
     Total current assets                           85,602         157,678
Property and equipment, net                          7,012          12,239
Goodwill                                             6,748           7,588
Intangibles, net                                     7,692           6,412
Other assets                                           372             218
                                                ----------      ----------
     Total assets                               $  107,426      $  184,135
                                                ==========      ==========

          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                              $   12,862      $   11,246
  Accrued compensation payable                       2,905           2,917
  Accrued restructuring                                536             260
  Deferred rent                                        912             189
  Other accrued liabilities                            933           1,019
                                                ----------      ----------
    Total current liabilities                       18,148          15,631
Deferred income taxes                                  830             363
                                                ----------      ----------
    Total liabilities                               18,978          15,994
                                                ----------      ----------
Stockholders' equity:
  Preferred stock,                                       -               -
  Common stock,                                         27              34
  Additional paid-in capital                       106,571         188,147
  Deferred stock compensation                          (12)              -
  Accumulated deficit                              (18,131)        (19,910)
  Accumulated other comprehensive income (loss)         (7)           (130)
                                                ----------      ----------
  Total stockholders' equity                        88,448         168,141
                                                ----------      ----------
  Commitments and contingencies
Total liabilities and stockholders' equity      $  107,426      $  184,135
                                                ==========      ==========


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

                                                  Year Ended December 31,
                                                    2003           2004
                                                 ----------     ----------
                                                As restated    As restated
Revenue, net of allowances for sales returns     $   62,472     $   95,493
Cost of sales                                        36,086         55,381
                                                 ----------     ----------
  Gross profit                                       26,386         40,112
                                                 ----------     ----------
Operating expenses:
  Sales and marketing                                11,776         15,963
  Research and development                           11,001         18,194
  General and administrative                          5,362          7,198
  Goodwill and intangible asset amortization            262          1,268
  Asset impairment charges                                -              -
  Restructuring charge                                    -            218
  Settlement expenses                                     -          2,138
  Bad debt expense (recovery)                        (3,085)          (289)
                                                 ----------     ----------
  Total operating expenses                           25,316         44,690
                                                 ----------     ----------
    Income (loss) from operations                     1,070         (4,578)
Interest income                                         353          1,652
Other income (expense), net                               -          1,135
                                                 ----------     ----------
    Income (loss) before income taxes                 1,423         (1,791)
Income taxes (benefit)                                  (89)           (12)
                                                 ----------     ----------
  Net income (loss)                              $    1,512     $   (1,779)
                                                 ==========     ==========
Income (loss) per share:
  Basic                                          $     0.06     $    (0.05)
  Diluted                                        $     0.06     $    (0.05)
Weighted average common shares outstanding:
  Basic                                              24,815         32,546
  Diluted                                            26,545         32,546


                         CARRIER ACCESS CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                  (In thousands, except per share amounts)

                                                  Year Ended December 31,
                                                    2003           2004
                                                 ----------     ----------
                                                As restated    As restated
Cash flows from operating activities:
  Net income (loss)                              $    1,512     $   (1,779)
  Adjustments to reconcile net income
   (loss) to net cash provided (used)
   by operating activities:
    Depreciation and amortization expense             4,062          4,547
    Provisions for (recoveries of)
     doubtful accounts                               (3,085)          (289)
    Provisions for (recoveries of)
     inventory obsolescence                           1,112          1,152
    Asset impairment charges                              -              -
    Stock-based compensation                             77              5
    Deferred income tax expense (benefit)                 -              -
    Gain on sale of asset                                             (143)
    Tax benefit relating to exercise
     of stock options                                     -              -
    Changes in operating assets and liabilities:
      Accounts receivable                            (4,681)         6,589
      Income tax receivable                           6,906            (78)
      Inventory                                       1,500         (7,888)
      Prepaid expenses and other                     (3,370)           228
      Accounts payable                                5,540         (1,772)
      Accrued compensation payable                      777           (672)
      Accrued restructuring                          (1,050)          (276)
      Other liabilities                                 338            317
                                                 ----------     ----------
  Net cash provided (used) by
   operating activities                               9,638            (59)
                                                 ----------     ----------
Cash flows from investing activities:
  Purchase of equipment and real property              (770)        (9,285)
  Proceeds from the sale of property                      -            368
  Purchase of marketable securities                 (18,617)       (53,318)
  Sales of marketable securities available
   for sale                                          10,091         34,775
  Net cash acquired (paid) in the purchase
   of Paragon                                           364           (350)
                                                 ----------     ----------
  Net cash used by investing activities              (8,932)       (27,810)
                                                 ----------     ----------
Cash flows from financing activities:
  Proceeds from exercise of stock options             1,601          3,211
  Proceeds from stock offering                            -         83,606
  Stock issuance costs                                    -         (5,227)
                                                 ----------     ----------
  Net cash provided by financing activities           1,601         81,590
                                                 ----------     ----------
  Net increase (decrease) in cash and
   cash equivalents                                   2,307         53,721
  Cash and cash equivalents at beginning of year     14,900         17,207
                                                 ----------     ----------
  Cash and cash equivalents at end of year       $   17,207     $   70,928
                                                 ==========     ==========
  Supplemental disclosure of cash flow
   information and investing and financing
   activities:
  Common stock issued for acquisition            $   19,163     $        -
                                                 ==========     ==========
  Accounts Receivable in exchange for
   notes receivable                              $        -     $        -
                                                 ==========     ==========
  Cash paid (received) for income taxes          $   (6,995)    $       50
                                                 ==========     ==========

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