Copper Mountain Announces Fourth Quarter and Fiscal 2000 Financial Results
PALO ALTO, Calif., Feb 1, 2001 (BUSINESS WIRE) -- Copper Mountain Networks, Inc., (NASDAQ: CMTN chart, msgs), a provider of Digital Subscriber Line (DSL) solutions for business and residential users, today announced financial results for the fourth quarter and fiscal year 2000.
Net revenue for the fourth quarter of 2000 was $47.0 million, compared with $44.6 million for the same period of the prior year, an increase of 5.5 percent. For the year ended December 31, 2000, Copper Mountain reported net revenue of $281.6 million, an increase of $168.9 million over net revenue of $112.7 million reported for the year ended December 31, 1999.
Pro forma net loss for the fourth quarter of 2000, excluding the stock based compensation charge, the amortization of purchased intangibles, a charge related to the insolvency of NorthPoint Communications, and charges related to excess inventory on hand and on order, was $91,000, or $0.00 per pro forma diluted share, compared to pro forma net income of $6.7 million, or $0.12 per pro forma diluted share, for the same quarter of the prior year. Net loss on a generally accepted accounting principles (GAAP) basis for the fourth quarter of 2000 was $34.4 million, or $0.66 per diluted share, compared to net income of $6.3 million, or $0.11 per diluted share, for the same quarter of the prior year.
Pro forma net income for the twelve-month period ended December 31, 2000, excluding the stock based compensation charge, the amortization of purchased intangibles, a charge related to the insolvency of NorthPoint Communications, and charges related to excess inventory on hand and on order, was $41.3 million, or $0.71 per pro forma diluted share, compared to pro forma net income of $15.2 million, or $0.29 per pro forma diluted share, for the prior year. Net income on a GAAP basis for the year ended December 31, 2000 was $1.7 million, or $0.03 per diluted share, compared to net income of $12.2 million, or $0.23 per diluted share, for the year ended December 31, 1999.
"Copper Mountain's fourth quarter was challenging as our competitive local exchange carrier (CLEC) and other service provider customers continued to adapt to a changing and difficult financing environment," said Rick Gilbert, president and chief executive officer of Copper Mountain. "We expect that our challenges will increase in 2001. We expect a substantial sequential decline in revenue in the first quarter of 2001. Unfortunately, because of these rapidly changing conditions, we have very limited visibility on our customers' future buying patterns at this time. However, in 2001 we remain fully committed to developing and delivering DSL solutions to service providers and to our scalable IP-oriented broadband platforms, and we are confident in our abilities to deliver best-in-class products into all of our targeted markets."
As a result of these market conditions and their impact on the demand for our products, the Company took a charge in the fourth quarter of $35.0 million related to inventory on hand and future inventory purchase commitments. Of this amount, $6.4 million relates to inventory on hand while $28.6 million relates to future inventory purchase commitments of finished products and raw materials.
Copper Mountain also disclosed that included in the balance sheet at December 31, 2000 is a short-term investment of $3.4 million in commercial paper issued by Southern California Edison Company. Subsequent to December 31, 2000 Copper Mountain believes that the fair value of this instrument has declined. However the amount of the decline and the ultimate realization of this investment is not currently determinable.
Copper Mountain Networks Fourth Quarter/FY00 earnings conference call will be broadcast live today at 2:00 p.m. PST (5:00 p.m. EST) at www.coppermountain.com and also through www.streetfusion.com. This conference call will contain forward-looking statements. For replay telephone access, dial 1.800.633.8284 and enter the reservation number: 17619647. The telephone replay will be available for approximately seven business days. The taped audio replay will be archived on Copper Mountain's Website for approximately 30 days following the call.
About Copper Mountain Networks
Copper Mountain Networks, Inc. (Nasdaq: CMTN chart, msgs) manufactures DSL equipment for central office, digital loop, and multi-tenant unit (MTU) broadband networks worldwide. Its DSL solutions enable carriers and service providers to deliver cost-effective, high-performance data and voice services over existing copper telephone wiring. Its CopperEdge(R) 200 DSL Concentrator is deployed in some of the world's largest public networks, and its environmentally hardened CopperEdge(R) RT (remote terminal) DSL Concentrator extends the reach of DSL to the millions of customers served by digital loop carriers (DLCs). Copper Mountain's OnPrem(TM) MTU Concentrator offers a cost-effective and scalable platform for MTU service providers. With IP IQ(TM), Copper Mountain's robust Internet Protocol (IP) service intelligence, service providers can maximize bandwidth utilization, support value-added broadband services, and scale to meet the demands of hundreds of thousands of subscribers. Copper Mountain's CopperRocket(R) CPE family and CopperCompatible(TM) program ensure that Copper Mountain DSL concentrators are interoperable with the broadest range of customer premise equipment (CPE). Customers wanting more information about Copper Mountain products or office locations worldwide can contact Richard Washbourne at 1.650.687.3380 or visit the Company's World Wide Web site at coppermountain.com. For investor relations information, call toll free 1.877.INFO.CMTN (463.6268) or contact us at IR@coppermountain.com.
Safe Harbor Warning
Portions of this release contain forward-looking statements regarding future events based on current expectations, and are subject to risks and uncertainties, such as estimates or projections of future revenue and earnings. In addition, Copper Mountain wishes to caution you that there are some factors that could cause actual results to differ materially from the results indicated by such statements. These factors include, but are not limited to: the ability of our CLEC customer base to raise sufficient capital to fund their operations and continue to order and pay for our products, (including the risk that the Company will not be able to collect existing receivables from its customer base), rapid changes in the service provider landscape and among our CLEC customer base, quarterly fluctuations in operating results attributable to the timing and amount of orders for our products, the concentration of our revenue in a small number of customers, our ability to penetrate the international, multi-tenant unit (MTU) and the incumbent telecommunications service provider (ILEC/IXC) market, factors affecting the rate of DSL deployment by our customers, market acceptance of our products, our ability to keep pace with rapidly changing product requirements, factors affecting the demand for DSL technologies, (including the risk that the Company will be required to take further charges related to inventory), and risks associated with our short-term investment in commercial paper issued by Southern California Edison Company. Prospective investors are cautioned not to place undue reliance on such forward-looking statements. Further, Copper Mountain expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect future events or developments after the date hereof. We refer you to the documents Copper Mountain files from time to time with the Securities and Exchange Commission, specifically the section titled Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 1999 and other reports and filings made with the Securities and Exchange Commission.
Note to Editors: Copper Mountain and all Copper Mountain product names are trademarks of Copper Mountain Networks, Inc. All other marks are the property of their respective owners.
Copper Mountain Networks, Inc.
Pro Forma Condensed Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
--------------------- -------------------
2000 1999 2000 1999
---------- --------- --------- --------
Net revenue $47,045 $44,601 $281,576 $112,723
Cost of revenue 21,865 20,786 130,128 53,002
--------- --------- --------- --------
Gross margin 25,180 23,815 151,448 59,721
Operating expenses:
Research and development 11,956 5,620 37,494 15,523
Sales and marketing 9,868 6,079 34,868 16,158
General and administrative 6,038 2,160 16,973 5,998
--------- --------- --------- --------
Total operating expenses 27,862 13,859 89,335 37,679
--------- --------- --------- --------
Income (loss)
from operations (2,682) 9,956 62,113 22,042
Other income, net 2,526 1,607 9,007 4,096
--------- --------- --------- --------
Income (loss) before
income taxes (156) 11,563 71,120 26,138
Provision (benefit)
for income taxes (65) 4,856 29,869 10,978
--------- --------- --------- --------
Pro forma net
income (loss) $ (91) $ 6,707 $ 41,251 $ 15,160
========= ========= ========= ========
Pro forma basic net
income (loss) per share $ (0.00) $ 0.14 $ 0.82 $ 0.48
Basic common
stock equivalents 51,900 46,918 50,584 31,289
Pro forma diluted net
income (loss) per share $ (0.00) $ 0.12 $ 0.71 $ 0.29
Diluted common
stock equivalents 51,900 56,453 58,217 52,282
The above Pro Forma Condensed Statements of Operations is not a presentation in accordance with generally accepted accounting principles as it excludes the effects of the following:
(1) The three months ended December 31, 2000 excludes $0.7 million of stock based compensation, $5.3 million in amortization of purchased intangibles, $4.9 million of charges related to the insolvency of NorthPoint Communications, $35 million of charges related to excess inventory on hand and on order, and the resulting income before tax is taxed utilizing a 42.0% tax rate. The three months ended December 31, 1999 excludes $0.9 million of stock based compensation, and the resulting income before tax is taxed utilizing a 42.0% tax rate.
(2) The year ended December 31, 2000 excludes $3.7 million of stock based compensation, $17.8 million in amortization of purchased intangibles, $6.3 million write-off of in-process research and development, $4.9 million of charges related to the insolvency of NorthPoint Communications, $35 million of charges related to excess inventory on hand and on order, and the resulting income before tax is taxed utilizing a 42.0% tax rate. The year ended December 31, 1999 excludes $5.4 million of stock based compensation, and the resulting income before tax is taxed utilizing a 42.0% tax rate.
The pro forma data is presented for informational purposes only and should not be considered as a substitute for the historical financial data presented in accordance with generally accepted accounting principles.
Copper Mountain Networks, Inc.
Condensed Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
--------------------- -------------------
2000 1999 2000 1999
---------- --------- --------- --------
Net revenue $47,045 $44,601 $281,576 $112,723
Cost of revenue 21,865 20,786 130,128 53,002
Charge related to excess
inventory on hand and
on order 35,000 - 35,000 -
--------- --------- -------- ---------
Gross margin (9,820) 23,815 116,448 59,721
Operating expenses:
Research and development 11,956 5,620 37,494 15,523
Sales and marketing 9,868 6,079 34,868 16,158
General and administrative 10,888 2,160 21,823 5,998
Amortization of
purchased intangibles 5,326 - 17,753 -
Amortization of deferred
stock compensation 657 945 3,664 5,431
Write-off of in-process
research and development - - 6,300 -
--------- --------- -------- ---------
Total operating expenses 38,695 14,804 121,902 43,110
--------- --------- -------- ---------
Income (loss)
from operations (48,515) 9,011 (5,454) 16,611
Other income, net 2,526 1,607 9,007 4,096
--------- --------- -------- ---------
Income (loss) before
income taxes (45,989) 10,618 3,553 20,707
Provision (benefit)
for income taxes (11,603) 4,354 1,860 8,490
--------- --------- -------- ---------
Net income (loss) $(34,386) $ 6,264 $ 1,693 $ 12,217
========= ========= ======== =========
Basic net income
(loss) per share $ (0.66) $ 0.13 $ 0.03 $ 0.39
Basic common stock
equivalents 51,900 46,918 50,584 31,289
Diluted net income
(loss) per share $ (0.66) $ 0.11 $ 0.03 $ 0.23
Diluted common
stock equivalents 51,900 56,453 58,217 52,282
Condensed Balance Sheets
(in thousands)
Dec. 31 Dec. 31
Assets 2000 1999
------------ -------------
Current assets:
Cash and S-T Investments $ 162,616 $ 117,169
Accounts receivable 19,496 18,992
Inventory 26,405 12,801
Other current assets 7,961 1,530
------------ -------------
Total current assets 216,478 150,492
Property and equip, net 24,961 8,825
Other assets 17,287 6,458
Purchased intangibles 46,159 -
------------ -------------
$ 304,885 $ 165,775
============ =============
Liabilities and Dec. 31 Dec. 31
Stockholders' Equity 2000 1999
------------- -------------
Current Liabilities:
Accounts payable $ 23,963 $ 7,887
Accrued liabilities 45,951 8,800
Current notes payable 3,177 1,618
------------- -------------
Total current liabilities 73,091 18,305
Notes payable 6,654 4,044
Other liabilities 314 105
Total stockholders' equity 224,826 143,321
------------- -------------
$304,885 $165,775
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