SOURCE: Ikanos Communications

Ikanos Communications

July 26, 2012 16:10 ET

Ikanos Communications Announces Results for the Second Quarter Fiscal Year 2012

FREMONT, CA--(Marketwire - Jul 26, 2012) - Ikanos Communications, Inc. (NASDAQ: IKAN)

Recent Highlights:

  • Revenue of $32.1 million
  • GAAP Net Loss of $(3.0) million, or $(0.04) Per Share
  • Q2 Ending Cash and Cash Equivalents of $33.1 million
  • Omid Tahernia named President and CEO

Ikanos Communications, Inc. (NASDAQ: IKAN), a leading provider of advanced broadband semiconductor and software products for the digital home, today announced its financial results for the second quarter of 2012, ended July 1, 2012.

"Ikanos met revenue guidance for the second quarter of 2012 with revenue of $32.1 million. GAAP operating expenses were $17.5 million, within our guidance. We continued to effectively manage the business and manage our cash position to approximately $33.1 million," said Dennis Bencala, chief financial officer of Ikanos. "Revenue in the quarter was driven by sales of Ikanos' broadband DSL and Communications Processor products including our next-generation platforms like the Fusiv® Vx185/183."

"Our Fusiv® family of Communications Processors continues to ramp and now represents 24% of the company's revenue. This family of processors is outpacing the competition in performance and in key integration such as VDSL2 Bonding. Our highly integrated NodeScale Vectoring Processors for the Central Office are in fab. We expect all chips in house in Q3," said Omid Tahernia, president and CEO. "We plan to demonstrate the complete chipset with full crosstalk cancellation and our NodeScale vectoring technology in Q4-2012. Our design-win momentum with this chipset continues with customers expecting samples late this year."

Financial Details
Ikanos reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. Non-GAAP net income (loss), where applicable, excludes the income statement effects of stock-based compensation, restructuring charges, the amortization of intangible assets and gains on the sale of impaired assets. Ikanos has provided these measures because its management believes these additional non-GAAP measures are useful to investors for performing financial analysis as these additional measures highlight Ikanos' recurring operating results. Ikanos' management uses these non-GAAP measures internally to evaluate its operating performance and to plan for its future. However, non-GAAP measures are not a substitute for GAAP reporting. For a reconciliation of GAAP versus non-GAAP financial information, please see the attached schedules.

Revenue for the second quarter of 2012 was $32.1 million compared to revenue of $34.1 million for the second quarter of 2011 and revenue of $30.8 million for the first quarter of 2012. GAAP gross profit for the second quarter of 2012 was 47% compared to a GAAP gross profit of 48% for the second quarter of 2011 and GAAP gross profit of 52% for the first quarter of 2012. Second quarter 2012 cost of goods sold includes the current period expense of $1.3 million associated with a long-term strategic patent license agreement entered into this quarter.

Non-GAAP gross profit for the second quarter of 2012 was 49% compared to a non-GAAP gross profit of 50% for the second quarter of 2011 and non-GAAP gross profit of 54% for the first quarter of 2012.

GAAP operating expenses for the second quarter of 2012 were $17.5 million compared to GAAP operating expenses of $20.2 million for the second quarter of 2011 and GAAP operating expenses of $19.8 million for the first quarter of 2012.

Non-GAAP operating expenses for the second quarter of 2012 were $16.9 million compared to non-GAAP operating expenses of $19.4 million for the second quarter of 2011 and non-GAAP operating expenses of $17.8 million for the first quarter of 2012.

GAAP net loss for the second quarter of 2012 was $(3.0) million, or a loss of $(0.04) per share on 69.5 million weighted average shares, compared to a GAAP net loss for the second quarter of 2011 of $(3.8) million, or $(0.06) per share on 68.5 million weighted average shares, and a GAAP net loss of $(3.7) million, or $(0.05) per share on 69.3 million weighted average shares, for the first quarter of 2012.

Non-GAAP net loss for the second quarter of 2012 was $(1.9) million, or a loss of $(0.03) per share on 69.5 million weighted average shares, compared to a non-GAAP net loss of $(2.5) million, or $(0.04) per share on 68.5 million weighted average shares, in the second quarter of 2011 and a non-GAAP net loss of $(1.2) million, or $(0.02) per share on 69.3 million weighted average shares, for the first quarter of 2012.

Cash and cash equivalents at the end of the second quarter of 2012 were $33.1 million compared to $39.7 million at the end of the first quarter of 2012. Additionally, at the end of the second quarter of 2012 inventory was $7.4 million compared to $7.8 million at the end of the first quarter of 2012. Current liabilities at the end of the second quarter of 2012 were $21.3 million compared to $19.7 million at the end of the first quarter of 2012.

Outlook
Revenue is expected to be between $30 million and $32 million for the third quarter of 2012.

GAAP gross profit for the third quarter of 2012 is expected to be between 44% and 46%. Non-GAAP gross profit is expected to be between 46% and 48% for the third quarter of 2012. The third quarter gross profit is affected by a typical new product ramp with scheduled yield improvements over the next 1 to 2 quarters.

GAAP operating expenses for the third quarter of 2012 are expected to be in the range of $22 million to $23 million. Non-GAAP operating expenses are expected to be in the range of $21 million to $22 million for the third quarter of 2012. The second to third quarter OPEX increase is primarily attributed to our planned new product tape-out and engineering related expenses.

Second Quarter Conference Call
Management will review the second quarter financial results and its expectations for subsequent periods at a conference call on July 26, 2012 at 1:30 p.m. Pacific Time. To listen to the call, please visit http://www.ikanos.com/investor/irevents/ and click on the link provided for the webcast or dial (888) 684-1265 and enter conference ID 4985379. The webcast will be archived and available for 90 days at http://www.ikanos.com/investor/irevents/. A replay of the conference call will be accessible until October 24, 2012 by dialing (888) 203-1112 and entering conference ID 4985379.

About Ikanos Communications, Inc.
Ikanos Communications, Inc. (NASDAQ: IKAN) is a leading provider of advanced broadband semiconductor and software products for the digital home. The company's broadband DSL, communications processors and other offerings power access infrastructure and customer premises equipment for many of the world's leading network equipment manufacturers and telecommunications service providers. For more information, visit www.ikanos.com.

© 2012 Ikanos Communications, Inc. All Rights Reserved. Ikanos Communications, Ikanos, the Ikanos logo, the Bandwidth without boundaries tagline, Fusiv, Ikanos Velocity and NodeScale Vectoring are among the trademarks or registered trademarks of Ikanos Communications. All other trademarks mentioned herein are properties of their respective holders.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that are subject to risks and uncertainties concerning Ikanos Communications, including statements regarding our product development, outlook such as our expected revenue, gross profits, operating expenses, and the benefits of non-GAAP measures, our restructuring plan, product testing and shipment, and anticipated benefits of our products. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These potential risks and uncertainties include, but are not limited to, macroeconomic conditions which may cause our customers to defer purchasing plans, our ability to deliver full production releases of our newer products and the acceptance of those products by our customers, the continued demand by telecommunications service providers for specific xDSL semiconductor products, the failure of service providers to implement deployment plans on schedule or at all, our continued ability to obtain and deliver production volumes of new and current products and technologies, our ability to generate demand and close transactions for the sale of our products, our ability to develop commercially successful products as a result of our current research and development programs, our ability to successfully execute our restructuring plan, and unexpected future costs, expenses and financing requirements. In addition, for a more extensive discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended January 1, 2012 filed with the Securities and Exchange Commission (SEC) on February 23, 2012 and our Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2012 filed with the SEC on May 3, 2012, as well as other reports that Ikanos files from time to time with the SEC. Ikanos is under no obligation to update these forward-looking statements to reflect events or circumstances subsequent to the date of this press release.

   
IKANOS COMMUNICATIONS, INC.  
Unaudited Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
               
    Three Months Ended     Six Months Ended  
    July 1, 2012     July 3, 2011     July 1, 2012     July 3, 2011  
                                 
Revenue   $ 32,055     $ 34,056     $ 62,815     $ 65,728  
Cost of revenue     17,001       17,647       31,654       32,798  
    Gross profit     15,054       16,409       31,161       32,930  
Operating expenses:                                
  Research and development     12,842       14,669       26,842       28,325  
  Selling, general and administrative     4,648       5,659       9,328       11,804  
  Restructuring     (30 )     (156 )     1,062       (109 )
    Total operating expenses     17,460       20,172       37,232       40,020  
Loss from operations     (2,406 )     (3,763 )     (6,071 )     (7,090 )
  Investment gain     -       -       -       1,295  
  Interest income and other, net     (387 )     21       (312 )     89  
Loss before income taxes     (2,793 )     (3,742 )     (6,383 )     (5,706 )
  Provision for income taxes     206       87       321       186  
Net loss   $ (2,999 )   $ (3,829 )   $ (6,704 )   $ (5,892 )
                                 
Net loss per share                                
  Basic and diluted   $ (0.04 )   $ (0.06 )   $ (0.10 )   $ (0.09 )
                                 
Weighted average number of shares                                
  Basic and diluted     69,543       68,474       69,439       68,319  
                                   
                                   
                                   
   
IKANOS COMMUNICATIONS, INC.  
Unaudited Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
                   
    Three Months Ended  
    July 1,
 2012
    April 1,
 2012
    July 3,
2011
 
                         
Revenue   $ 32,055     $ 30,760     $ 34,056  
Cost of revenue     17,001       14,653       17,647  
    Gross profit     15,054       16,107       16,409  
Operating expenses:                        
  Research and development     12,842       14,000       14,669  
  Selling, general and administrative     4,648       4,680       5,659  
  Restructuring     (30 )     1,092       (156 )
    Total operating expenses     17,460       19,772       20,172  
Loss from operations     (2,406 )     (3,665 )     (3,763 )
  Interest income and other, net     (387 )     75       21  
Loss before income taxes     (2,793 )     (3,590 )     (3,742 )
  Provision for income taxes     206       115       87  
Net loss   $ (2,999 )   $ (3,705 )   $ (3,829 )
                         
Net loss per share                        
  Basic and diluted   $ (0.04 )   $ (0.05 )   $ (0.06 )
                         
Weighted average number of shares                        
  Basic and diluted     69,543       69,335       68,474  
                           
                           
                           
   
IKANOS COMMUNICATIONS, INC.  
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
   
  Three Months Ended July 1, 2012   Three Months Ended July 3, 2011  
  As Reported     Non-GAAP Adjustments       Non-GAAP   As Reported     Non-GAAP Adjustments       Non-GAAP  
Revenue $ 32,055     $ -       $ 32,055   $ 34,056     $ -       $ 34,056  
Cost of revenue   17,001       1     (a)   16,502     17,647       (14 )   (a)   17,133  
            (500 )   (b)                 (500 )   (b)      
                                                 
    Gross profit   15,054       (499 )       15,553     16,409       (514 )       16,923  
                                                 
Operating expenses:                                                
  Research and development   12,842       (340 )   (a)   12,502     14,669       (739 )   (a)   13,930  
                                                 
  Selling, general and administrative   4,648       (165 )   (a)   4,358     5,659       (101 )   (a)   5,433  
            (125 )   (b)                 (125 )   (b)      
                                                 
  Restructuring   (30 )     30     (c)   -     (156 )     156     (c)   -  
    Total operating expenses   17,460       (600 )       16,860     20,172       (809 )       19,363  
Loss from operations   (2,406 )     1,099         (1,307 )   (3,763 )     1,323         (2,440 )
  Interest income and other, net   (387 )     -         (387 )   21       -         21  
Loss before income taxes   (2,793 )     1,099         (1,694 )   (3,742 )     1,323         (2,419 )
Provision for income taxes   206       -         206     87       -         87  
Net loss $ (2,999 )   $ 1,099       $ (1,900 ) $ (3,829 )   $ 1,323       $ (2,506 )
                                                 
Net loss per share:                                                
    Basic and diluted $ (0.04 )             $ (0.03 ) $ (0.06 )             $ (0.04 )
                                                 
Weighted average outstanding shares:                                                
    Basic and diluted   69,543                 69,543     68,474                 68,474  
                                                     
             
Notes:   Three Months Ended
        July 1, 2012   July 3, 2011
(a)   Stock-based compensation   $ 504   $ 854
(b)   Amortization of acquired intangible assets     625     625
(c)   Restructuring charges     (30)     (156)
    Total non-GAAP adjustments   $ 1,099   $ 1,323
                 
                 
                 
   
IKANOS COMMUNICATIONS, INC.  
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
   
    Three Months Ended April 1, 2012  
    As Reported     Non-GAAP Adjustments       Non-GAAP  
Revenue   $ 30,760     $ -       $ 30,760  
Cost of revenue     14,653       (3 )   (a)   14,150  
              (500 )   (b)      
    Gross profit     16,107       (503 )       16,610  
                           
Operating expenses:                          
  Research and development     14,000       (596 )   (a)   13,404  
                           
  Selling, general and administrative     4,680       (195 )   (a)   4,360  
              (125 )   (b)      
                           
  Restructuring     1,092       (1,092 )   (c)   -  
    Total operating expenses     19,772       (2,008 )       17,764  
Loss from operations     (3,665 )     2,511         (1,154 )
  Interest income and other, net     75       -         75  
Loss before income taxes     (3,590 )     2,511         (1,079 )
  Provision for income taxes     115       -         115  
Net Loss   $ (3,705 )   $ 2,511       $ (1,194 )
                           
Net loss per share:                          
    Basic and diluted   $ (0.05 )             $ (0.02 )
                           
Weighted average outstanding shares:                          
    Basic and diluted     69,335                 69,335  
                               
         
Notes:    
        Three Months Ended
        April 1, 2012
(a)   Stock-based compensation   $ 794
(b)   Amortization of acquired intangible assets     625
(c)   Restructuring charges     1,092
    Total non-GAAP adjustments   $ 2,511
           
           
           
   
IKANOS COMMUNICATIONS, INC.  
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
   
    Six Months Ended July 1, 2012   Six Months Ended July 3, 2011  
    As Reported     Non-GAAP Adjustments       Non-GAAP   As Reported     Non-GAAP Adjustments       Non-GAAP  
Revenue   $ 62,815     $ -       $ 62,815   $ 65,728     $ -       $ 65,728  
Cost of revenue     31,654       (2 )   (a)   30,652     32,798       (56 )   (a)   31,742  
              (1,000 )   (b)                 (1,000 )   (b)      
    Gross profit     31,161       (1,002 )       32,163     32,930       (1,056 )       33,986  
                                                   
Operating expenses:                                                  
  Research and development     26,842       (936 )   (a)   25,906     28,325       (1,147 )   (a)   27,178  
                                                   
  Selling, general and administrative     9,328       (360 )   (a)   8,718     11,804       (526 )   (a)   11,028  
      -       (250 )   (b)                 (250 )   (b)      
                                                   
  Restructuring     1,062       (1,062 )   (c)   -     (109 )     109     (c)   -  
    Total operating expenses     37,232       (2,608 )       34,624     40,020       (1,814 )       38,206  
Loss from operations     (6,071 )     3,610         (2,461 )   (7,090 )     2,870         (4,220 )
  Investment gain     -       -         -     1,295       (1,295 )   (d)   -  
  Interest income and other, net     (312 )     -         (312 )   89       -         89  
Loss before income taxes     (6,383 )     3,610         (2,773 )   (5,706 )     1,575         (4,131 )
Provision for income taxes     321       -         321     186       -         186  
Net loss   $ (6,704 )   $ 3,610       $ (3,094 ) $ (5,892 )   $ 1,575       $ (4,317 )
                                                   
Net loss per share:                                                  
  Basic and diluted   $ (0.10 )             $ (0.04 ) $ (0.09 )             $ (0.06 )
                                                   
Weighted average outstanding shares:                                                  
  Basic and dilluted     69,439                 69,439     68,319                 68,319  
                                                     
               
Notes:     Six Months Ended  
           
        July 1,
2012
  July 3,
2011
 
(a)   Stock-based compensation   $ 1,298   $ 1,729  
(b)   Amortization of acquired intangible assets     1,250     1,250  
(c)   Restructuring charges (credits)     1,062     (109 )
(d)   Investment gain     -     (1,295 )
    Total non-GAAP adjustments   $ 3,610   $ 1,575  
                   
                   
                   
     
IKANOS COMMUNICATIONS, INC.    
Unaudited Condensed Consolidated Balance Sheets    
(In thousands)    
             
    July 1,
 2012
  April 1,
 2012
  January 1,
 2012
Assets                  
Current assets:                  
  Cash and cash equivalents   $ 33,071   $ 39,727   $ 34,760
  Accounts receivable     20,721     16,832     18,308
  Inventory     7,374     7,755     9,474
  Prepaid expenses and other current assets     5,048     2,321     2,531
    Total current assets     66,214     66,635     65,073
Property and equipment, net     7,695     6,698     7,036
Intangible assets, net     2,352     2,977     3,602
Other assets     2,566     1,915     1,896
    $ 78,827   $ 78,225   $ 77,607
                   
Liabilities and Stockholders' Equity                  
Current liabilities:                  
  Accounts payable   $ 9,333   $ 7,701   $ 5,413
  Accrued liabilities     11,980     11,974     10,734
    Total current liabilities     21,313     19,675     16,147
Other liabilities     1,988     739     738
    Total liabilities     23,301     20,414     16,885
Stockholders' equity     55,526     57,811     60,722
    $ 78,827   $ 78,225   $ 77,607
                   
                   
                   

Contact Information

  • Gwen Dille
    Headfirst Communications for Ikanos
    Email Contact
    510-406-2006