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8-K - FORM 8-K - IKANOS COMMUNICATIONS, INC.d8k.htm

Exhibit 99.1

 

Press Release   

LOGO

 

  

Ikanos Communications Announces Results for the

Second Quarter Fiscal Year 2011

Recent Highlights:

 

   

Revenue of $34.1 million

 

   

Non-GAAP Net Loss of $(2.5) million, or $(0.04) Per Share

 

   

Cash, Cash Equivalents, and Short-Term Investments Remain Steady at $34.9 Million

 

   

Ikanos NodeScale™ Vectoring Shortlisted for Broadband World Forum InfoVision Award

FREMONT, Calif., July 28, 2011 — 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 2011, ended July 3, 2011.

“Ikanos beat guidance for the second quarter of 2011 with revenue of $34.1 million. Non-GAAP operating expenses were $19.4 million, within our guidance. And we continued to effectively manage the business and maintain our cash position of approximately $34.9 million,” said Dennis Bencala, chief financial officer of Ikanos. “Revenue in the quarter was driven by sales of Ikanos’ existing broadband DSL and communications processor products. In addition, our next-generation platforms like the Fusiv® Vx185 and NodeScale Vectoring delivered favorable test results in numerous service provider trials.”

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, impairments and gains on sales of impaired securities, one time severance expenses, certain expenses resulting from acquisitions such as transaction-related expenses, amortization of intangible assets, asset impairments, fair value adjustment of the acquired inventory and in-process research and development charges. 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 2011 was $34.1 million compared to revenue of $31.7 million for the first quarter of 2011 and revenue of $55.6 million for the second quarter of 2010.

GAAP operating expenses for the second quarter of 2011 were $20.2 million compared to operating expenses of $19.8 million for the first quarter of 2011 and operating expenses of $23.8 million for the second quarter of 2010.

Non-GAAP operating expenses for the second quarter of 2011 were $19.4 million compared to operating expenses of $18.8 million for the first quarter of 2011 and operating expenses of $21.0 million for the second quarter of 2010.

GAAP net loss for the second quarter of 2011 was $(3.8) million, or a loss of $(0.06) per share on 68.5 million weighted average shares compared to a net loss of $(2.1) million or $(0.03) per share, on 68.2 million weighted average shares for the first quarter of 2011 and a net loss for the second quarter of 2010 of $(10.7) million, or $(0.20) per share on 54.5 million weighted average shares for the second quarter of 2010.

Non-GAAP net loss for the second quarter of 2011 was $(2.5) million, or a loss of $(0.04) per share on 68.5 million weighted average shares compared to a non-GAAP net loss of $(1.8) million, or $(0.03) per share, on 68.2 million weighted average shares for the first quarter of 2011 and to a non-GAAP net loss of $(6.8) million, or $(0.12) per share, on 54.5 million weighted average shares in the second quarter of 2010.

Cash and cash equivalents at the end of the second quarter of 2011 were $34.9 million compared to $34.9 million at the end of the first quarter of 2011. Additionally, at the end of the second quarter of 2011 inventory was $11.4 million compared to $15.1 million at the end of the first quarter of 2011. Current liabilities at the end of the second quarter of 2011 were $21.4 million compared to $22.6 million at the end of the first quarter of 2011.

Ikanos GAAP gross profit for the second quarter of 2011 was 48.2% compared to a GAAP gross profit of 52.2% for the first quarter of 2011 and to a GAAP gross profit of 23.7% for the second quarter of 2010.

Non-GAAP gross profit for the second quarter of 2011 was 49.7% compared to a non-GAAP gross profit of 53.9% for the first quarter of 2011 and to a non-GAAP gross profit of 25.7% for the second quarter of 2010.

Outlook

Revenue is expected to be between $34 million and $36 million for the third quarter of 2011.

GAAP gross profit for the third quarter of 2011 is expected to be between 46% and 48%. Non-GAAP gross profit is expected to be between 48% and 50% for the third quarter of 2011.

GAAP operating expenses for the third quarter of 2011 are expected to be in the range of $21 million to $22 million. Non-GAAP operating expenses are expected to be in the range of $20 million to $21 million for the third quarter of 2011.


Second Quarter Conference Call

Management will review the second quarter financial results and its expectations for subsequent periods at a conference call on July 28, 2011 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 (877) 277-3221 and enter conference ID 77424427. 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 28, 2011 by dialing (800) 642-1687 and entering conference ID 77424427.

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.

© 2011 Ikanos Communications, Inc. All Rights Reserved. Ikanos Communications, Ikanos, the Ikanos logo, the Bandwidth without boundaries tagline, Fusiv, Fx, FxS, iQV, 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 demand for and acceptance of our products, our outlook, such as our expected revenue, gross profits, operating expenses, including the Company’s product offerings, benefits of non-GAAP measures, our ability to manage our business, and statements regarding Ikanos NodeScale Vectoring. 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 Ikanos’ most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as well as other reports that Ikanos files from time to time with the Securities and Exchange Commission. Ikanos is under no obligation to update these forward-looking statements to reflect events or circumstances subsequent to 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 3,
2011
    July 4,
2010
    July 3,
2011
    July 4,
2010
 

Revenue

   $ 34,056      $ 55,615      $ 65,728      $ 112,998   

Cost of revenue

     17,647        42,456        32,798        77,894   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     16,409        13,159        32,930        35,104   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     14,669        16,144        28,325        33,216   

Selling, general and administrative

     5,659        7,691        11,804        15,478   

Restructuring charges (credits)

     (156     —          (109     1,483   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,172        23,835        40,020        50,177   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (3,763     (10,676     (7,090     (15,073

Investment gain

     —          —          1,295        —     

Interest income and other, net

     21        (7     89        55   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (3,742     (10,683     (5,706     (15,018

Provision for income taxes

     87        42        186        110   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (3,829   $ (10,725   $ (5,892   $ (15,128
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share

   $ (0.06   $ (0.20   $ (0.09   $ (0.28
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares

        

Basic and diluted

     68,474        54,511        68,319        54,287   
  

 

 

   

 

 

   

 

 

   

 

 

 


IKANOS COMMUNICATIONS, INC.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 

     Three Months Ended  
     July 3,
2011
    April 3,
2011
    July 4,
2010
 

Revenue

   $ 34,056      $ 31,672      $ 55,615   

Cost of revenue

     17,647        15,151        42,456   
  

 

 

   

 

 

   

 

 

 

Gross profit

     16,409        16,521        13,159   
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Research and development

     14,669        13,656        16,144   

Selling, general and administrative

     5,659        6,145        7,691   

Restructuring charges (credits)

     (156     47        —     
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,172        19,848        23,835   
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (3,763     (3,327     (10,676

Investment gain

     —          1,295        —     

Interest income and other, net

     21        68        (7
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (3,742     (1,964     (10,683

Provision for income taxes

     87        99        42   
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (3,829   $ (2,063   $ (10,725
  

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share

   $ (0.06   $ (0.03   $ (0.20
  

 

 

   

 

 

   

 

 

 

Weighted average number of shares

      

Basic and diluted

     68,474        68,186        54,511   
  

 

 

   

 

 

   

 

 

 


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 3, 2011     Three Months Ended July 4, 2010  
     As
Reported
    Non-GAAP
Adjustments
    Non-GAAP     As
Reported
    Non-GAAP
Adjustments
    Non-GAAP  

Revenue

   $ 34,056      $ —        $ 34,056      $ 55,615      $ —        $ 55,615   

Cost of revenue

     17,647        (14 ) (a)      17,133        42,456        (26 ) (a)      41,314   
       (500 ) (b)          (1,116 ) (b)   
                                                

Gross profit

     16,409        (514     16,923        13,159        (1,142     14,301   
                                                

Operating expenses:

            

Research and development

     14,669        (739 ) (a)      13,930        16,144        (445 ) (a)      15,699   

Selling, general and administrative

     5,659        (101 ) (a)      5,433        7,691        (476 ) (a)      5,350   
       (125 ) (b)          (885 ) (b)   
             (980 ) (c)      —     

Restructuring charges (credits)

     (156     156   (d)      —          —          —          —     
                                                

Total operating expenses

     20,172        (809     19,363        23,835        (2,786     21,049   
                                                

Loss from operations

     (3,763     1,323        (2,440     (10,676     3,928        (6,748

Investment gain

     —          —          —            —          —     

Interest income and other, net

     21        —          21        (7     —          (7
                                                

Loss before income taxes

     (3,742     1,323        (2,419     (10,683     3,928        (6,755

Provision for income taxes

     87        —          87        42        —          42   
                                                

Net loss

   $ (3,829   $ 1,323      $ (2,506   $ (10,725   $ 3,928      $ (6,797
                                                

Net loss per share:

            

Basic and diluted

   $ (0.06     $ (0.04   $ (0.20     $ (0.12

Weighted average outstanding shares:

            

Basic and diluted

     68,474          68,474        54,511          54,511   

Notes:

 

     Three Months Ended  
     July 3,
2011
    July 4,
2010
 

(a)    Stock-based compensation

   $ 854      $ 947   

(b)    Amortization of acquired intangible assets

     625        2,001   

(c)    Severance

     —          980   

(d)    Restructuring charges

     (156     —     
                

Total non-GAAP adjustments

   $ 1,323      $ 3,928   
                


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 3, 2011  
     As
Reported
    Non-GAAP
Adjustments
    Non-GAAP  

Revenue

   $ 31,672      $ —        $ 31,672   

Cost of revenue

     15,151        (42 ) (a)      14,609   
       (500 ) (b)   
                        

Gross profit

     16,521        (542     17,063   
                        

Operating expenses:

      

Research and development

     13,656        (408 ) (a)      13,248   

Selling, general and administrative

     6,145        (425 ) (a)      5,595   
       (125 ) (b)   

Restructuring charges (credits)

     47        (47 ) (c)      —     
                        

Total operating expenses

     19,848        (1,005     18,843   
                        

Loss from operations

     (3,327     1,547        (1,780

Investment gain

     1,295        (1,295 ) (d)      —     

Interest income and other, net

     68        —          68   
                        

Loss before income taxes

     (1,964     252        (1,712

Provision for income taxes

     99        —          99   
                        

Net income (loss)

   $ (2,063   $ 252      $ (1,811
                        

Net loss per share:

      

Basic and diluted

   $ (0.03     $ (0.03

Weighted average outstanding shares:

      

Basic and diluted

     68,186          68,186   

Notes:

 

(a)    Stock-based compensation

   $ 875   

(b)    Amortization of acquired intangible assets

     625   

(c)    Restructuring charges

     47   

(d)    Gain on sale of securities

     (1,295
        

Total non-GAAP adjustments

   $ 252   
        


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 3, 2011     Six Months Ended July 4, 2010  
     As
Reported
    Non-GAAP
Adjustments
    Non-GAAP     As
Reported
    Non-GAAP
Adjustments
    Non-GAAP  

Revenue

   $ 65,728      $ —        $ 65,728      $ 112,998      $ —        $ 112,998   

Cost of revenue

     32,798        (56 ) (a)      31,742      $ 77,894        (62 ) (a)      73,759   
     —          (1,000 ) (b)      —            (2,576 ) (b)      —     
             (1,497 ) (c)   
                                                

Gross profit

     32,930        (1,056     33,986        35,104        (4,135     39,239   
                                                

Operating expenses:

            

Research and development

     28,325        (1,147 ) (a)      27,178        33,216        (1,126 ) (a)      32,090   

Selling, general and administrative

     11,804        (526 ) (a)      11,028        15,478        (1,077 ) (a)      11,651   
     —          (250 ) (b)      —          —          (1,770 ) (b)      —     
             (980 ) (d)   

Restructuring charges (credits)

     (109     109   (e)      —          1,483        (1,483 ) (e)      —     
                                                

Total operating expenses

     40,020        (1,814     38,206        50,177        (6,436     43,741   
                                                

Loss from operations

     (7,090     2,870        (4,220     (15,073     10,571        (4,502

Investment gain

     1,295        (1,295 ) (f)      —          —          —          —     

Interest income and other, net

     89        —          89        55        —          55   
                                                

Loss before income taxes

     (5,706     1,575        (4,131     (15,018     10,571        (4,447

Provision for income taxes

     186        —          186        110        —          110   
                                                

Net loss

   $ (5,892   $ 1,575      $ (4,317   $ (15,128   $ 10,571      $ (4,557
                                                

Net loss per share:

            

Basic and diluted

   $ (0.09     $ (0.06   $ (0.28     $ (0.08

Weighted average outstanding shares:

            

Basic and diluted

     68,319          68,319        54,287          54,287   

Notes:

 

     Six Months Ended  
     July 3,
2011
    July 4,
2010
 

(a)    Stock-based compensation

   $ 1,729      $ 2,265   

(b)    Amortization of acquired intangible assets

     1,250        4,346   

(c)    Fair value adjustment of acquired inventory

     —          1,497   

(d)    Severance

     —          980   

(e)    Restructuring charges

     (109     1,483   

(f)     Investment gain

     (1,295     —     
                

Total non-GAAP adjustments

   $ 1,575      $ 10,571   
                


IKANOS COMMUNICATIONS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 

     July 3,
2011
     April 3,
2011
     January 2,
2011
 
Assets         

Current assets:

        

Cash, cash equivalents and short-term investments

   $ 34,875       $ 34,859       $ 30,950   

Accounts receivable, net

     19,229         19,214         24,147   

Inventory

     11,411         15,109         17,046   

Prepaid expenses and other current assets

     2,683         2,266         2,096   
  

 

 

    

 

 

    

 

 

 

Total current assets

     68,198         71,448         74,239   

Property and equipment, net

     7,570         7,340         8,214   

Intangible assets, net

     4,852         5,477         6,102   

Other assets

     1,763         1,839         1,142   
  

 

 

    

 

 

    

 

 

 
   $ 82,383       $ 86,104       $ 89,697   
  

 

 

    

 

 

    

 

 

 
Liabilities and Stockholders’ Equity         

Current liabilities:

        

Accounts payable

   $ 9,928       $ 9,574       $ 10,401   

Accrued liabilities

     11,501         12,985         13,297   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     21,429         22,559         23,698   

Other liabilities

     478         478         478   
  

 

 

    

 

 

    

 

 

 

Total liabilities

     21,907         23,037         24,176   

Stockholders’ equity

     60,476         63,067         65,521   
  

 

 

    

 

 

    

 

 

 
   $ 82,383       $ 86,104       $ 89,697