Ikanos Communications Announces Results for the Fiscal First Quarter of 2013

Marketwired

FREMONT, CA--(Marketwired - Apr 25, 2013) - Ikanos Communications, Inc. (NASDAQ: IKAN)

Recent Highlights:

  • Revenue of $26.2 million
  • GAAP Net Loss of $(4.4) million or $(0.06) per share
  • Cash, Cash Equivalents and Short-Term Investments $31.6 million

Ikanos Communications, Inc. (NASDAQ: IKAN), a leading provider of advanced broadband semiconductor and integrated firmware products for the digital home, today announced its financial results for the fiscal first quarter of 2013 ended March 31, 2013.

"Ikanos achieved first quarter results within guidance with revenue of $26.2 million and GAAP gross profit of 53%. Additionally we effectively reduced operating expenses to $18.3 million and improved our cash and short-term investments position to $31.6 million," said Dennis Bencala, chief financial officer and vice president finance of Ikanos.

Omid Tahernia, president and CEO, said, "We are very encouraged by some of the recent announcements in Australia and Germany regarding plans for deployments of vectored VDSL in those markets. We believe these and other similar announcements earlier by large global carriers such as AT&T and Deutsche Telecom are indicative of the increasing momentum behind the adoption of vectoring technology as a key enabler for carriers to bring 100 Mbps DSL services to their subscribers." Mr. Tahernia added, "Following the successful launch of our NodeScale™ Vectoring Velocity-3 chipset at BBWF last October, we have completed several lab trials at top tier carriers and OEMs with very positive results, putting the Velocity-3 in an excellent position as the industry transition to VDSL2 and vectoring continues to gain momentum."

"We are also excited about the adoption of our Fusiv® family of CPE products by leading global carriers, as indicated by the recent launch of Orange Livebox Play service based on our Vx185 integrated broadband and gateway processor," said Mr. Tahernia. "While the major revenue ramp for the Fusiv® family has been delayed to second half of the year due in large part to our customers' inventory issues, we are encouraged by the design-win traction the product line is seeing in the market."

Financial Highlights
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), non-GAAP gross profits, non-GAAP operating expenses and non-GAAP earnings per share, where applicable, exclude the income statement effects of stock-based compensation, restructuring charges and amortization of intangible 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.

Fiscal First Quarter 2013 Results
Revenue for the first quarter of 2013 was $26.2 million compared to revenue of $30.8 million for the first quarter of 2012 and revenue of $31.8 million for the fourth quarter of 2012. GAAP gross profit for the first quarter of 2013 was 53% compared to a GAAP gross profit of 52% for the first quarter of 2012 and GAAP gross profit of 48% for the fourth quarter of 2012.

Non-GAAP gross profit for the first quarter of 2013 was 54% compared to a non-GAAP gross profit of 54% for the first quarter of 2012 and non-GAAP gross profit of 49% for the fourth quarter of 2012.

GAAP operating expenses for the first quarter of 2013 were $18.3 million, compared to operating expenses of $19.8 million for the first quarter of 2012 and operating expenses of $19.3 million for the fourth quarter of 2012.

Non-GAAP operating expenses for the first quarter of 2013 were $17.3 million, compared to non-GAAP operating expenses of $17.8 million for the first quarter of 2012 and non-GAAP operating expenses of $18.4 million for the fourth quarter of 2012.

GAAP net loss for the first quarter of 2013 was $(4.4) million, or a loss of $(0.06) per share on 70.4 million weighted average shares outstanding. This compares with a net loss of $(3.7) million, or a loss of $(0.05) per share on 69.3 million weighted average shares outstanding for the first quarter of 2012 and a net loss of $(4.5) million, or a loss of $(0.06) per share on 70.1 million weighted average shares outstanding for the fourth quarter of 2012.

Non-GAAP net loss for the first quarter of 2013 was $(3.3) million, or a loss of $(0.05) per share on 70.4 million weighted average shares outstanding compared to a non-GAAP net loss of $(1.2) million, or a loss of $(0.02) per share on 69.3 million weighted average shares outstanding for the first quarter of 2012, and to a non-GAAP loss of $(3.4) million, or $(0.05) per share on 70.1 million weighted average shares outstanding in the fourth quarter of 2012.

Cash, cash equivalents and short-term investments at the end of first quarter of 2013 were $31.6 million compared to $31.2 million at the end of the fourth quarter of 2012.

Additionally, at the end of the first quarter of 2013 inventory was $7.4 million compared to $8.1 million at the end of the fourth quarter of 2012. Current liabilities at the end of the first quarter of 2013 were $19.3 million compared to $24.4 million at the end of the fourth quarter of 2012.

Outlook
Revenue is expected to be between $19 million and $21 million for the fiscal second quarter of 2013.

GAAP gross profit for the fiscal second quarter of 2013 is expected to be between 49% and 51%. Non-GAAP gross profit is expected to be between 50% and 52% for the second quarter of 2013.

GAAP operating expenses for the fiscal second quarter of 2013 are expected to be in the range of $17.5 million to $18.5 million. On a Non-GAAP basis operating expenses are expected to be in the range of $16.5 million to $17.5 million for the second quarter of 2013.

GAAP net loss for second quarter of 2013 is expected to be in the range of approximately $(6.9) million to $(9.3) million, or a GAAP loss per share of $(0.10) to $(0.13). Non-GAAP net loss is expected to be in the range of approximately $(5.7) million to $(8.1) million, or a non-GAAP loss per share of $(0.08) to $(0.11).

First Quarter Conference Call
Management will review the first quarter financial results and its expectations for subsequent periods on a conference call on Thursday, April 25, 2013 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) 359-3627 or (719) 325-2429 and enter conference ID 4095161. 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 July 24, 2013 by dialing (888) 203-1112 or (719) 457-0820 and entering conference ID 4095161.

About Ikanos Communications, Inc.
Ikanos Communications, Inc. (NASDAQ: IKAN) is a leading provider of advanced broadband semiconductor and integrated firmware 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.

© 2013 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 outlook for the second quarter of 2013, such as our expected revenue, gross profits, operating expenses, the benefits of non-GAAP measures, the market for vectored VDSL, the anticipated adoption of vectoring technology, 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 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 December 30, 2012 filed with the Securities and Exchange Commission (SEC) on February 28, 2013, 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 date of this press release.

   
IKANOS COMMUNICATIONS, INC.  
Unaudited Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
   
    Three Months Ended  
    March 31, 2013     December 30, 2012     April 1, 2012  
                         
Revenue   $ 26,152     $ 31,758     $ 30,760  
Cost of revenue     12,196       16,476       14,653  
      Gross profit     13,956       15,282       16,107  
Operating expenses:                        
    Research and development     13,518       14,120       14,000  
    Selling, general and administrative     4,772       5,221       4,680  
    Restructuring     -       -       1,092  
      Total operating expenses     18,290       19,341       19,772  
Loss from operations     (4,334 )     (4,059 )     (3,665 )
    Investment gain     -       -       -  
    Interest income, net     82       143       75  
Loss before income taxes     (4,252 )     (3,916 )     (3,590 )
    Provision for income taxes     164       608       115  
Net loss   $ (4,416 )   $ (4,524 )   $ (3,705 )
                         
Basic and diluted net loss per share   $ (0.06 )   $ (0.06 )   $ (0.05 )
Weighted average outstanding shares:                        
  Basic and diluted     70,413       70,136       69,335  
                         
                         
   
IKANOS COMMUNICATIONS, INC.  
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
   
    Three Months Ended March 31, 2013   Three Months Ended April 1, 2012  
    As Reported   Non-GAAP Adjustments       Non-GAAP   As Reported   Non-GAAP Adjustments       Non-GAAP  
Revenue   $ 26,152   $ -       $ 26,152   $ 30,760   $ -       $ 30,760  
Cost of revenue     12,196     (1 ) (a )   12,075     14,653     (3 ) (a )   14,150  
            (120 ) (b )               (500 ) (b )      
                                               
    Gross profit     13,956     (121 )       14,077     16,107     (503 )       16,610  
                                               
Operating expenses:                                              
  Research and development     13,518     (571 ) (a )   12,947     14,000     (596 ) (a )   13,404  
                                               
  Selling, general and administrative     4,772     (262 ) (a )   4,385     4,680     (195 ) (a )   4,360  
            (125 ) (b )               (125 ) (b )      
                                               
  Restructuring     -     -         -     1,092     (1,092 ) (c )   -  
    Total operating expenses     18,290     (958 )       17,332     19,772     (2,008 )       17,764  
Loss from operations     (4,334 )   1,079         (3,255 )   (3,665 )   2,511         (1,154 )
  Interest income and other, net     82     -         82     75     -         75  
Loss before income taxes     (4,252 )   1,079         (3,173 )   (3,590 )   2,511         (1,079 )
Provision for income taxes     164     -         164     115     -         115  
Net loss   $ (4,416 ) $ 1,079       $ (3,337 ) $ (3,705 ) $ 2,511       $ (1,194 )
                                               
Net loss per share:                                              
  Basic and diluted   $ (0.06 )           $ (0.05 ) $ (0.05 )           $ (0.02 )
                                               
Weighted average outstanding shares:                                              
  Basic and diluted     70,413               70,413     69,335               69,335  
         
Notes:   Three Months Ended
    March 31, 2013   April 1, 2012
(a) Stock-based compensation   $ 834   $ 794
(b) Amortization of acquired intangible assets     245     625
(c) Restructuring charges     -     1,092
  Total non-GAAP adjustments   $ 1,079   $ 2,511
               
             
             
IKANOS COMMUNICATIONS, INC.  
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations  
(In thousands, except per share data)  
   
    Three Months Ended December 30, 2012  
    As Reported     Non-GAAP Adjustments         Non-GAAP  
Revenue   $ 31,758     $ -         $ 31,758  
Cost of revenue     16,476       (9 ) (a )     16,347  
              (120 ) (b )        
                             
    Gross profit     15,282       (129 )         15,411  
                             
Operating expenses:                            
  Research and development     14,120       (557 ) (a )     13,563  
                             
  Selling, general and administrative     5,221       (308 ) (a )     4,788  
              (125 ) (b )        
                             
  Restructuring     -       -           -  
    Total operating expenses     19,341       (990 )         18,351  
Loss from operations     (4,059 )     1,119           (2,940 )
  Interest income and other, net     143       -           143  
Loss before income taxes     (3,916 )     1,119           (2,797 )
Provision for income taxes     608       -           608  
Net loss   $ (4,524 )   $ 1,119         $ (3,405 )
                             
Net loss per share:                            
  Basic and diluted   $ (0.06 )               $ (0.05 )
                             
Weighted average outstanding shares:                            
  Basic and diluted     70,136                   70,136  
                               
       
Notes:     Three Months Ended
      December 30, 2012
(a) Stock-based compensation   $ 874
(b) Amortization of acquired intangible assets     245
  Total non-GAAP adjustments   $ 1,119
         
         
 
IKANOS COMMUNICATIONS, INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
 
    March 31, 2013   December 30, 2012   April 1, 2012
Assets                  
Current assets:                  
  Cash, cash equivalents and short-term investments   $ 31,565   $ 31,176   $ 39,727
  Accounts receivable     10,441     15,748     16,832
  Inventory     7,375     8,122     7,755
  Prepaid expenses and other current assets     3,684     5,892     2,321
    Total current assets     53,065     60,938     66,635
Property and equipment, net     8,281     8,769     6,698
Intangible assets, net     1,285     1,529     2,977
Other assets     2,556     2,612     1,915
    $ 65,187   $ 73,848   $ 78,225
                   
Liabilities and Stockholders' Equity                  
Current liabilities:                  
  Revolving line   $ 5,000   $ 5,000   $ -
  Accounts payable     3,494     5,679     7,701
  Accrued liabilities     10,828     13,688     11,974
    Total current liabilities     19,322     24,367     19,675
  Other liabilities     2,561     2,854     739
    Total liabilities     21,883     27,221     20,414
Stockholders' equity     43,304     46,627     57,811
    $ 65,187   $ 73,848   $ 78,225
                   
                   
Contact:
MKR Group, Inc.
Investor Relations
Todd Kehrli or Charles Messman
323.468.2300
Email Contact
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