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Copper Mountain Networks Announces Record Financial Results for the Second Quarter 1999

Copper Mountain Networks Announces Record Financial Results for the Second Quarter 1999 – Company Financial Information

Copper Mountain Networks, Inc. (NASDAQ: CMTN), has announced financial results for the second quarter of 1999.

Revenues for the second quarter of 1999 were $22.9 million, an increase of $21.6 million over revenues of $1.3 million for the second quarter of 1998. The second quarter revenues represented an increase of $9.7 million, or 73%, over the $13.2 million in revenues reported for the first quarter of 1999. For the six months ended June 30, 1999, Copper Mountain reported revenues of $36.1 million, a $34.5 million increase over revenue of $1.6 million reported for the same period of the prior year.

Net income was $2.3 million or $0.09 per pro forma diluted share for the second quarter of 1999, compared to a net loss of $3.5 million or a loss of $0.21 per pro forma diluted share for the same quarter of the prior year. Excluding the stock based compensation charge, net income was $3.9 million or $0.15 per pro forma diluted share for the second quarter of 1999, compared to net loss of $3.0 million or a loss of $0.18 per pro forma diluted share for the same quarter of the prior year.

Net income for the six months ended June 30, 1999 was $1.3 million or $0.06 per pro forma diluted share, compared to a net loss of $6.8 million or a loss of $0.41 per pro forma diluted share for the same period of the prior year. Excluding the stock based compensation charge, net income was $4.6 million or $0.19 per pro forma diluted share for the current six month period, compared to a net loss of $5.8 million or a loss of $0.35 per pro forma diluted share for the same period of the prior year.

“We are pleased with the financial results Copper Mountain reported for our first quarter as a public company,” said Copper Mountain Networks, Inc. President and Chief Executive Officer, Rick Gilbert. “Total revenues and net income for the current quarter exceeded our expectations as the pace of DSL deployments by our customers accelerated rapidly in Q2 1999, and we see strong demand for our products continuing through Q3 1999.”

“In addition to our strong financial performance, we introduced and made initial sales of the CopperEdge 150 Digital Subscriber Line Concentrator, a new member of our CopperEdge family that is optimized for use in mid-sized multi-tenant unit (MTU) buildings such as office buildings, business parks, multi-family apartments, campuses, and hotels,” added Gilbert.

Highlights From the Second Quarter of 1999 Include:

* Product functionality enhancements to the CopperEdge(tm) platform to support toll-quality voice services over DSL and the introduction of the CopperVIP(tm) (voice in packets) interoperability program.

* Technology and marketing partnership with TollBridge Technologies for delivering IP-based multi-line voice over Digital Subscriber Line (DSL) broadband access. In addition, Copper Mountain unveiled partnerships with other leading voice gateway providers, Jetstream Communications and CopperCom.

* Technology partnership with MCK Communications to deliver the industry’s first simultaneous voice and data connectivity over IDSL.

* Certification of Ramp Networks, Inc. and ADC Kentrox customer premise devices as CopperCompatible(tm) with Copper Mountain’s family of CopperEdge products.

* Interconnectivity between Copper Mountain Networks’ and Lucent Technologies’ access products that will reduce costs and provide better overall system management for Competitive Local Exchange Carriers and service providers, enabling them to deliver a broader array of voice and data services.

* Introduction of Copper Mountain’s AutoDetect(tm) SDSL capability which automatically learns the characteristics of the local loop and determines the maximum SDSL speed that the line can sustain thereby eliminating manually intensive testing process and enabling cost effective accelerated deployments.

* Closing of Copper Mountain’s Initial Public Offering with proceeds to the Company of approximately $90 million.

Founded in January 1996 with offices in Palo Alto and San Diego, California, Copper Mountain Networks, Inc. develops and markets a comprehensive family of DSL solutions that enable high-speed internetworking over existing copper facilities. The Company’s mission is to enable carriers and other service providers to offer a full range of high-performance, cost-effective data and voice services over DSL that are easy to deploy, use, and manage. Copper Mountain’s CopperRocket CPE family addresses the bandwidth, reliability, ease-of-use, and cost concerns of remote offices and users. Its carrier-class CopperEdge DSL concentrators and CopperView network management solutions offer a robust and scalable platform for carriers and multi-tenant unit service providers to generate a high return on investment while satisfying the ever-increasing user demand for bandwidth. FMI: http://www.coppermountain.com.

Copper Mountain Networks, Inc.

Condensed Statements of Operations

(in thousands, except per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

1999 1998 1999 1998

Net revenue $ 22,890 $ 1,281 $ 36,106 $ 1,598

Cost of revenue 10,815 795 17,199 1,012

Gross profit 12,075 486 18,907 586

Operating expenses:

Research and development 3,274 1,788 5,838 3,561

Sales and marketing 3,319 954 5,900 1,679

General and

administrative 1,336 721 2,463 1,256

Amortization of

deferred stock

compensation 1,601 568 3,294 1,003

Total operating

expenses 9,530 4,031 17,495 7,499

Income (loss) from

operations 2,545 (3,545) 1,412 (6,913)

Other income, net 657 — 802 80

Income (loss) before

income taxes 3,202 (3,545) 2,214 (6,833)

Provision for

income taxes 859 — 907 —

Net income (loss)$ 2,343 $ (3,545) $ 1,307 $ (6,833)

Basic net income

(loss) per share$ 0.17 $ (2.88) $ 0.16 $ (5.66)

Basic common stock

equivalents 13,567 1,230 7,954 1,208

Diluted net income

(loss) per share $ 0.09 $ (2.88) $ 0.06 $ (5.66)

Diluted common stock

equivalents 25,595 1,230 23,687 1,208

Pro forma diluted net

income (loss)

per share (1) $ 0.09 $ (0.21) $ 0.06 $ (0.41)

Pro forma diluted

common equivalent

shares (1) 25,595 16,565 23,687 16,542

Pro forma diluted net

income (loss) per

share (1) excluding

deferred stock

compensation $ 0.15 $ (0.18) $ 0.19 $ (0.35)

Pro forma diluted

common equivalent

shares (1) 25,595 16,565 23,687 16,542

Condensed Balance Sheets

Assets June 30, Dec. 31,

1999 1998

Current assets:

Cash and S-T Investments $ 106,770 $ 18,529

Accounts receivable 15,516 8,026

Inventory 6,251 4,668

Other current assets 1,315 476

Total current assets 129,852 31,699

Property and equip, net 5,294 3,214

Other assets 1,397 1,296

$ 136,543 $ 36,209

Liabilities and Stockholder’s Equity

Current liabilities:

Accounts payable $ 7,222 $ 4,371

Accrued liabilities 6,416 2,219

Current notes payable 984 783

Total current liabilities 14,622 7,373

Notes payable 1,572 1,965

Other liabilities 68 28

Total stockholders’ equity 120,281 26,843

$ 136,543 $ 36,209

(1) Pro forma net income (loss) per share has been computed using the weighted-average number of shares of common stock outstanding during the period including any dilutive common stock equivalents and the pro forma effect of converting 15,334,824 shares of preferred stock as if they were outstanding at the beginning of all periods presented. The preferred stock automatically converted upon the closing of the Company’s initial public offering, which occurred in May 1999. 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.

COPYRIGHT 1999 EDGE Publishing

COPYRIGHT 2000 Gale Group