Press Releases
Visual Networks Reports Fourth Quarter and Fiscal Year Results
— Fiscal Year Revenue Increases 34% Over Prior Year
Company Marks Fifth Consecutive Quarter of Operating Improvement
and Returns to Profitability For the Fiscal Year
Rockville, Md. (February 14, 2005) — Visual Networks® (Nasdaq: VNWK) today reported financial results for the fourth quarter and fiscal year ended December 31, 2004. The quarter marked the company’s fifth consecutive quarter of sequential improvement in revenue, operating income and net income.
Revenue for the fourth quarter was $14.2 million, an increase of 31 percent compared with $10.8 million reported in the prior year’s fourth quarter and up 3 percent sequentially from $13.8 million reported in the third quarter. The company reported $673,000 in net income, or $0.02 per share, compared with a net loss of $1,005,000 or $0.03 per share in the previous year’s fourth quarter. Net income was up sequentially from $246,000, or $0.01 per share, reported in the third quarter.
For the fiscal year, the company reported $52.6 million in revenue, up 34% from $39.2 million in revenue reported for the prior year. For the year, the company reported $15,000 in net income, or $0.00 per share, compared with a net loss of $4.3 million, or $0.13 per share, in the prior year.
The balance sheet for the quarter also remained strong. The company exited the quarter with $11.3 million in cash and investments. Accounts receivable of $9.3 million at December 31, 2004 represented 61 days sales outstanding.
“We are very pleased with our financial performance for both the fourth quarter and the fiscal year,” said Larry Barker, President and CEO of Visual Networks. “We remain enthusiastic about the market adoption of our new Select AppFlows and Select AppSummary software modules. We look forward to introducing this year new software and hardware solutions that will extend our value proposition to the local area network, enhance our Voice over IP (VoIP) preassessment and management offerings, and strengthen our core network and application performance management functionality.”
Fourth Quarter Highlights:- Added over 60 new enterprise customers;
- Strong market acceptance of new Select AppFlows and Select AppSummary modules;
- Received initial orders for both UpTime Select and IP Insight from our recently announced European operations;
- UpTime Select incorporated into SBC’s new PNM WAN View managed service;
- Received 2004 Product of the Year Award from INTERNET TELEPHONY magazine for Visual UpTime Select; and
- Presented to over 150 Visual Networks’ current and prospective customers at 9 UpTime Select roadshow events in the United States and Europe.
The company expects first quarter revenue to be in the range of $14.2 million to $15.0 million and EPS to be in the range of $0.02 to $0.03.
Visual Networks' management will host a discussion of this afternoon's announcement with investors and financial analysts today, Monday February 14, 2005 at 4:45 p.m. (EST). To participate in the teleconference, please dial 617-614-3453, passcode 57819655, confirmation code 76338526. A live web cast of the call will also be available at http://www.visualnetworks.com/news.
For those unable to listen to the live call, a replay will be available from 6:45 PM EST on February 14, 2005 until 6:45 PM EST on February 16, 2005 by dialing 617-801-6888 and entering passcode 97418572. An archive of the call will be available online shortly following the conclusion of the live call on Visual Networks' Web site at http://www.visualnetworks.com/news.
Visual Networks (Nasdaq: VNWK) is a leading provider of network and application performance management solutions. The company's technologies enable enterprises to reliably and securely manage the delivery of mission-critical applications across their infrastructures. Visual Networks' products increase application and network availability, optimize the use of bandwidth, and reduce operating costs across traditional and IP-based infrastructures. For more information, visit http://www.visualnetworks.com.
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 market acceptance of Visual UpTime Select, fluctuations in IT budgets and spending, issues related to the Company's distribution channels, the potential repayment of the Company's outstanding debentures, 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 For the
Three Months Ended Years Ended
December 31, December 31,
2003 2004 2003 2004
Revenue $10,835 $14,161 $39,179 $52,642
Cost of revenue 2,409 4,271 10,347 15,880
Gross profit 8,426 9,890 28,832 36,762
Operating expenses:
Research and development 2,533 2,706 10,473 10,145
Sales and marketing 4,522 3,952 15,428 15,778
General and
administrative 2,011 2,276 6,214 9,288
Total operating
expenses 9,066 8,934 32,115 35,211
Income (loss) from
operations (640) 956 (3,283) 1,551
Other income (expense) - - 452 (262)
Interest expense, net (365) (283) (1,458) (1,274)
Net income (loss) $(1,005) $673 $(4,289) $15
Basic and diluted income
(loss) per share $(0.03) $0.02 $ (0.13) $0.00
Visual Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, December 31,
2003 2004
Assets
Current assets:
Cash and cash equivalents $15,671 $11,317
Restricted short-term investments 1,530 --
Accounts receivable, net 2,326 9,335
Inventory 3,346 3,822
Other current assets 788 940
Total current assets 23,661 25,414
Property and equipment, net 2,378 2,001
Total assets $26,039 $27,415
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses $8,115 $9,341
Convertible debentures, net of unamortized
debt discount 8,744 8,163
Deferred revenue 4,662 3,388
Total current liabilities 21,521 20,892
Stockholders' equity 4,518 6,523
Total liabilities and stockholders' equity $26,039 $27,415
Visual Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands, except per share data)
(unaudited)
For the For the
Three Months Ended Years Ended
December 31, December 31,
2003 2004 2003 2004
Cash Flows from Operating
Activities:
Net income (loss) $(1,005) $673 $ (4,289) $15
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 425 321 2,091 1,384
Bad debt expense 69 84 69 136
Deferred compensation
expense - 32 - 187
Non-cash interest expense 254 218 1,017 936
Early extinguishment of debt - - - 262
Changes in assets and
liabilities:
Accounts receivable 3,688 (2,787) 5,252 (7,145)
Inventory (572) (665) 47 (476)
Other assets 144 157 3 (430)
Accounts payable and
accrued expenses 2,199 (73) (1,618) 1,224
Deferred revenue 405 (34) (103) (1,274)
Net cash provided by (used
in) operating activities 5,607 (2,074) 2,469 (5,181)
Cash Flows from Investing
Activities:
Net sales of short term
investments - - 973 1,530
Expenditures for property
and equipment (200) (245) (986) (1,007)
Net cash provided by (used
in) investing activities (200) (245) (13) 523
Cash Flows from Financing
Activities:
Repayment of convertible
debentures - - - (1,500)
Exercise of stock options
and issuance of common stock
under employee stock purchase
plan 193 1,119 507 1,804
Net cash provided by
financing activities 193 1,119 507 304
Net increase (decrease) in
Cash and Cash Equivalents 5,600 (1,200) 2,963 (4,354)
Cash and Cash Equivalents,
Beginning of Period 10,071 12,517 12,708 15,671
Cash and Cash Equivalents,
End of Period $15,671 $11,317 $15,671 $11,317
Visual Networks, Inc.
Additional Financial Information
The following presents additional financial information
about Visual Networks for the three months ended March 31, 2004,
June 30, 2004, September 30, 2004 and December 31, 2004,
respectively (dollars in thousands).
3/31/04 6/30/04 9/30/04 12/31/04
Days Sales Outstanding
Calculation:
Days sales outstanding
("DSOs"') are calculated
as follows:
Accounts Receivable $2,606 $4,636 $6,632 $9,335
Quarterly sales/Days
in quarter $11,841/91 $12,823/91 $13,817/92 $14,162/92
Days sales outstanding 20.0 32.9 44.2 60.6
Inventory Turns
Calculation:
Inventory turns are
calculated as follows:
Days in year
366 366 366 365
Inventory/(Quarterly $2,823/ $2,005/ $3,157/ $3,822/
COGS/Days in quarter) ($3,323/91) ($4,002/91) ($4,284/92) ($4,271/92)
Inventory turns 4.7 8.0 5.4 4.4
Employees:
Research and development 54 53 56 57
Sales and marketing 62 64 65 62
Manufacturing and customer 11 10 11 12
service
General and administrative 30 27 31 28
Total Employees 157 154 163 159
Revenue:
Uptime:
Classic $11,056 $9,588 $8,089 $1,899
Select -- 2,440 5,321 11,385
IP Insight 728 741 407 857
Royalties 57 54 -- 20
Total $11,841 $12,823 $13,817 $14,161
Visual Networks, Inc.
Additional Financial Information (continued)
The following presents additional financial information about
Visual Networks for the three months ended March 31, 2004,
June 30, 2004, September 30, 2004 and December 31, 2004,
respectively (in thousands, except per share data).
3/31/04 6/30/04 9/30/04 12/31/04
Common stock outstanding 33,109 33,232 33,318 33,982
Weighted average share
calculations:
Basic weighted average
shares outstanding 33,011 33,185 33,283 33,546
Effect of dilutive
securities:
Employee stock options -- -- 1,842 2,441
Diluted weighted average
shares outstanding 33,011 33,185 35,125 35,987
Net income (loss) $(490) $(414) $246 $673
Basic and diluted income
(loss) per share $(0.01) $(0.01) $0.01 $0.02
Source: Visual Networks
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