Press Releases
Visual Networks Reports Second Quarter Results
Revenue Increases 31% Over Prior Year
ROCKVILLE, Md., Feb. 14 — Visual Networks® (Nasdaq: VNWK) today announced financial results for the second quarter ended
June 30, 2004, marking the third consecutive quarter of improvement in
revenue, operating income and net income for the company. Revenue for the second quarter was $12.8 million, compared with $9.8
million for the same period last year, an increase of 31%. Revenue increased
8% from the $11.8 million reported for the quarter ended March 31, 2004,
exceeding published analyst consensus estimates. Visual Networks returned to operating profitability in the second quarter
of 2004, recording $184,000 in income from operations. During the quarter, Visual Networks repaid $1.5 million of its convertible
debentures. As a result of this repayment, the company took an associated
charge of $262,000. This resulted in a GAAP net loss for the quarter of
$414,000, or $.01 per diluted share, meeting published estimates. Excluding
this charge, the company broke even on a per share basis. The balance sheet for the quarter also remained strong. The company
exited the quarter with $14.1 million in cash and investments. Accounts
receivable of $4.6 million at June 30, 2004 represented 33 days sales
outstanding. "This quarter represents the third consecutive quarter of significant
improvements in all aspects of our operating performance," stated Larry
Barker, president and CEO of Visual Networks. "This solid performance,
combined with the strong market acceptance of our recently released Visual
UpTime® Select™ platform, gives us confidence in our outlook for the
second half of the year."
Second Quarter Highlights:
- Exceeded published consensus estimates on revenue and EPS, excluding
the charge for debt extinguishment;
- Returned to operating profitability;
- Repaid $1.5 million of its convertible debentures;
- Maintained a strong balance sheet;
- Hired Don Clarke, who has over 20 years of software and telecom industry experience, as EVP and CFO;
- Added over 40 new enterprise customers during the quarter;
- Displaced a competitor with Visual UpTime Select in two significant service provider offerings due to our product's modular approach and flexibility;
- Introduced the first new add-on products for Visual Networks' large installed base of customers:
- Announced two new software products for the flexible Visual UpTime Select Platform — Select AppSummary™ and Select AppFlows™ — which move Visual Networks solidly into the application management and control market; and
- Released the T-1 domestic probe allowing networks with existing high-speed circuits to benefit from Visual UpTime Select software.
The company expects third quarter revenue to be in the range of $13.0
million to $13.5 million and EPS to be in the range of $0.00 to $0.01. For
the year ended December 31, 2004, the company expects to increase revenue 30%
over 2003 and to end the year with an operating profit.
Visual Networks' management will host a discussion of this afternoon's
announcement with investors and financial analysts today, Thursday, July 22,
2004, at 4:45 p.m. (EDT). To participate in the teleconference, please call
617-786-2960, confirmation code 38781601. A live web cast of the call will
also be available at http://www.firstcallevents.com/service/ajwz409075372gf12.html. Windows Media
Player is required to hear the event.
Visual Networks was recognized as a World Class Winner in Network World's
recent network management product review
(http://www.nwfusion.com/reviews/2003/1006rev.html) and has the broadest suite
of proven performance management solutions that help enterprise customers
manage the delivery of mission-critical applications across their underlying
infrastructure. Visual Networks' products increase application and network
availability, optimize the use of bandwidth, and reduce operating costs across
traditional and new IP-based infrastructures. The world's leading service
providers and enterprises are using Visual Networks' award-winning products.
To find out more, call 1-800-240-4010 for sales information.
This press release contains forward-looking information within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, and is subject to the safe harbor created by those
sections. The forward-looking information is based upon current information
and expectations regarding Visual Networks and its subsidiaries. These
estimates and statements speak only as of the date on which they are made, are
not guarantees of future performance, and involve certain risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual outcomes and
results could materially differ from what is expressed, implied, or forecasted
in such forward-looking statements. Visual Networks assumes no obligation to update the information contained
in this press release. Visual Networks' future results may be impacted by
risks associated with rapid technological change and the emerging services
market, potential fluctuations in quarterly operating results, ongoing patent
litigation, its dependence upon sole and limited source suppliers and
fluctuations in component pricing and availability, its dependence upon key
employees, and its ability to retain employees. Visual Networks' future
results may also be impacted by other risk factors listed from time to time in
its SEC filings, including, but not limited to, the Company's Quarterly
Reports on Form 10-Q and its Annual Report on Form 10-K.
Visual Networks, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
For the
Three Months Ended
June 30,
2003 2004
Revenue $9,773 $12,823
Cost of revenue 2,565 4,002
Gross profit 7,208 8,821
Operating expenses:
Research and development 2,572 2,391
Sales and marketing 3,437 3,968
General and administrative 1,512 2,278
Total operating expenses 7,521 8,637
Income (loss) from operations (313) 184
Loss from extinguishment of debentures -- (262)
Interest expense, net (364) (336)
Net loss $(677) $(414)
Basic and diluted loss per share $(0.02) $(0.01)
Visual Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, June 30,
2003 2004
Assets
Current assets:
Cash and cash equivalents $15,671 $13,553
Restricted short-term investments 1,530 530
Accounts receivable, net 2,326 4,636
Inventory 3,346 2,005
Deferred debt issuance costs 532 355
Other current assets 256 884
Total current assets 23,661 21,963
Property and equipment, net 2,378 2,056
Total assets $26,039 $24,019
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses $8,115 $8,279
Convertible debentures, net of
unamortized debt discount 8,744 7,829
Deferred revenue 6,333 5,302
Total current liabilities 23,192 21,410
Stockholders' equity 2,847 2,609
Total liabilities and
stockholders' equity $26,039 $24,019
Visual Networks, Inc.
Condensed Consolidated Cash Flow Statements
(in thousands)
(unaudited)
For the
Three Months Ended
June 30,
2003 2004
Cash Flows From Operating Activities:
Net loss $(677) $(414)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 556 322
Bad debt expense -- 70
Loss from extinguishment of debentures -- 262
Deferred compensation expense -- 33
Non-cash interest expense 254 246
Changes in assets and liabilities
Accounts receivable (3,364) (2,100)
Inventory (538) 818
Other assets (376) (218)
Accounts payable and accrued expenses (92) 912
Deferred revenue (93) (1,648)
Net cash used in operating activities (4,330) (1,717)
Cash Flows From Investing Activities:
Expenditures for property and equipment (85) (164)
Net cash used in investing activities (85) (164)
Cash Flows From Financing Activities:
Repayment of debentures -- (1,500)
Exercise of stock options and
employee stock purchase plan 141 187
Net cash provided by (used in)
financing activities 141 (1,313)
Net decrease in Cash and Cash Equivalents (4,274) (3,194)
Cash and Cash Equivalents, Beginning of Period 14,338 16,747
Cash and Cash Equivalents, End of Period $10,064 $13,553
Visual Networks, Inc.
Table of Reconciliation
Pro Forma Net Loss
(in thousands, except per share data)
(unaudited)
For the
Three Months
Ended
June 30,
2004
Reconciliation of Net Loss to Pro Forma Net Loss:
Net loss $(414)
Add - Loss from extinguishment of debentures 262
Pro forma net loss $(152)
Pro forma basic and diluted loss per share $(0.00)
Basic and diluted weighted average shares outstanding 33,185
Visual Networks, Inc.
Additional Financial Information
The following presents additional financial information about Visual
Networks for the three months ended September 30, 2003, December 31, 2003,
March 31, 2004 and June 30, 2004, respectively (dollars in thousands).
9/30/03 12/31/03 3/31/04 6/30/04
Days Sales
Outstanding
Calculation:
Days sales
outstanding
("DSOs"') are
calculated as
follows:
Accounts Receivable $6,083 $2,326 $2,606 $4,636
Quarterly sales/
Days in quarter $9,367/92 $10,835/92 $11,841/91 $12,823/91
Days sales outstanding 59.7 19.8 20.0 32.9
Inventory Turns
Calculation:
Inventory turns
are calculated
as follows:
Days in year 365 365 365 365
Inventory/
(Quarterly cogs/ $2,774/ $3,346/ $2,823/ $2,005/
Days in quarter) ($3,119/92) ($2,409/92) ($3,323/91) ($4,002/91)
Inventory turns 4.5 2.9 4.7 8.0
Employees:
Research and
development 54 55 54 53
Sales and marketing 61 62 62 64
Manufacturing and
customer service 11 11 11 10
General and
administrative 31 28 30 27
Total Employees 157 156 157 154
Revenue
Current Products:
Uptime $8,550 $6,440 $11,056 $12,028
IP Insight 747 4,336 728 741
Royalties 70 59 57 54
Total $9,367 $10,835 $11,841 $12,823
Visual Networks, Inc.
Additional Financial Information (continued)
The following presents additional financial information about Visual
Networks for the three months ended September 30, 2003, December 31, 2003,
March 31, 2004 and June 30, 2004, respectively (in thousands, except per share
data).
9/30/03 12/31/03 3/31/04 6/30/04
Common stock outstanding 32,700 32,866 33,109 33,232
Weighted average share
calculations:
Basic and diluted weighted
average shares outstanding 32,648 32,790 33,011 33,185
Net loss $(2,515) $(1,005) $(490) $(414)
Basic and diluted loss
per share $(0.08) $(0.03) $(0.01) $(0.01)
Source: Visual Networks
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