YOKNEAM, Israel, August 13 /PRNewswire-FirstCall/ -- LanOptics Ltd.
(NASDAQ:LNOP), a provider of network processors, today announced
its results for the second quarter ended June 30, 2007. Second
Quarter Highlights: - Revenues increased 192% year-over-year,
reaching $4.6 million - Strong ramp up in NP-2 processor revenues;
contributed to 79% of revenues - Substantial decline in non-GAAP
net loss to $0.1 million - GAAP net loss of $1.6 million, primarily
resulting from reissue of expired options - Steady decline in cash
burn; Cash used in operating activities was $0.6 million Total
revenues in the second quarter of 2007 were $4.6 million, an
increase of 192% compared to $1.6 million in the second quarter of
2006, and an increase of 18% compared to $3.9 million in the first
quarter of 2007. All of LanOptics' revenues were attributable to
its 78% owned EZchip Technologies Ltd. subsidiary. Net loss for the
second quarter of 2007 was $1.6 million, or $0.10 per share,
compared to a net loss of $2.3 million, or $0.20 per share, in the
second quarter of 2006, and a net loss of $1.1 million, or $0.07
per share, in the first quarter of 2007. Net loss for the quarter
includes a $1.3 million of share based compensation expense
recorded under SFAS 123R, resulting from a one-time stock option
allocation to veteran employees of EZchip, following the expiration
of 7-year options previously granted to such employees. On a
non-GAAP basis, net loss for the second quarter of 2007 was $0.1
million, or $0.01 per share, compared with a non-GAAP net loss of
$1.9 million, or $0.16 per share, in the second quarter of 2006,
and a non-GAAP net loss of $0.3 million, or $0.02 per share, in the
first quarter of 2007. Cash, cash equivalents and marketable
securities, as at June 30, 2007, totaled $16.3 million, similar to
the balance as at March 31, 2007. "This quarter was a record
quarter for the company," commented Eli Fruchter, Chairman of the
Board of LanOptics and CEO of EZchip. "We generated substantial
progress with our two major CESR customers, both of which are
leading tier-1 vendors who are building several of their strategic
platforms based on EZchip's network processors. During the quarter,
we experienced sales ramp up of NP-2 to the first vendor, and we
expect that vendor to launch several more NP-2 and NP-3 based
products during the second half of this year and next year. The
second prominent vendor is making progress in the testing of our
NP-3 processor, and currently expects to start production during
2008. All in all, we continue to be extremely encouraged and
excited by EZchip's progress with our two major CESR customers."
"This quarter has also been another substantial quarter in terms of
improving our financial performance. The strong revenue increase,
primarily attributable to the continued ramp up in sales of
EZchip's NP-2 processor, which accounted for 79% of the quarter's
revenues, resulted in improved operating and net results.
Furthermore, we are seeing a steady decline in our cash burn." Mr.
Fruchter concluded, "2007 is evolving into a true turning point for
the Company, with exciting developments with our major customers
and products, and, consequently, strong, steady growth in our
operational financial parameters." Conference Call The Company will
be hosting a conference call today at 10:00am EDT, 07:00am PDT,
03:00pm UK time and 05:00pm Israel time. On the call, management
will review and discuss the results, and will be available to
answer investor questions. To participate through live webcast,
please access the website, http://www.ezchip.com/, at least 10
minutes before the conference call commences. To participate
through dial-in, please call one of the following teleconferencing
numbers. Please begin placing your calls at least 10 minutes before
the conference call commences. If you are unable to connect using
the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1-888-281-1167; UK Dial-in Number:
+44-(0)-800-917-5108; Israel Dial-in Number: +972-(0)-3-918-0610;
International Dial-in Number: +972-3-918-0610 For those unable to
listen to the live call, a replay of the call will be available the
day after the call under the investor relations section of the
website. Additional Information Additional financial information,
including statements of operations for the first six months ended
June 30, 2007, can be found on the Company's website under
'Investor Relations - Financial Releases'. Use of Non-GAAP
Financial Information In addition to disclosing financial results
calculated in accordance with United States generally accepted
accounting principles (GAAP), this release of operating results
also contains non-GAAP financial measures, which LanOptics believes
are the principal indicators of the operating and financial
performance of its business. The non-GAAP financial measures
exclude the effects of stock-based compensation charges recorded in
accordance with SFAS 123R, amortization of intangible assets,
minority interest in loss of EZchip and non-cash interest expense
relating to redeemable preferred shares in EZchip. Management
believes the non-GAAP financial measures provided are useful to
investors' understanding and assessment of LanOptics' on-going core
operations and prospects for the future, as the charges eliminated
are not part of the day-to-day business or reflective of the core
operational activities of the Company. Management uses these
non-GAAP financial measures as a basis for strategic decisions,
forecasting future results and evaluating the Company's current
performance. However, such measures should not be considered in
isolation or as substitutes for results prepared in accordance with
GAAP. Reconciliation of the non-GAAP measures to the most
comparable GAAP measures are provided in the schedules attached to
this release. About LanOptics LanOptics is focused on its
majority-owned subsidiary, EZchip Technologies Ltd., a fabless
semiconductor company providing high-speed network processors.
EZchip's network processors provide the flexibility and integration
that enable triple-play data, voice and video services in systems
that make up the new Carrier Ethernet networks. Flexibility and
integration make EZchip's solutions ideal for building systems for
a wide range of applications in telecom networks, enterprise
backbones and data centers. For more information on LanOptics and
EZchip, visit the web site at http://www.ezchip.com/. This press
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are statements that are not historical
facts and may include financial projections and estimates and their
underlying assumptions, statements regarding plans, objectives and
expectations with respect to future operations, products and
services, and statements regarding future performance. These
statements are only predictions based on LanOptics' current
expectations and projections about future events. There are
important factors that could cause LanOptics' actual results, level
of activity, performance or achievements to differ materially from
the results, level of activity, performance or achievements
expressed or implied by the forward-looking statements. Those
factors include, but are not limited to, the impact of competitive
products, product demand and market acceptance risks, customer
order cancellations, reliance on key strategic alliances,
fluctuations in operating results, delays in development of
highly-complex products and other factors indicated in LanOptics'
filings with the Securities and Exchange Commission (SEC). For more
details, refer to LanOptics' SEC filings and the amendments
thereto, including its Annual Report on Form 20-F filed on March
30, 2007 and its Current Reports on Form 6-K. LanOptics undertakes
no obligation to update forward-looking statements to reflect
subsequent occurring events or circumstances, or to changes in our
expectations, except as may be required by law. LanOptics Ltd.
Condensed Consolidated Statements of Operations (U.S. Dollars in
thousands, except per share amounts) (Unaudited) Three Months Ended
June 30, March 31, June 30, 2007 2007 2006 Revenues $ 4,608 $ 3,905
$ 1,577 Cost of revenues 1,918 1,668 755 Amortization of technology
258 498 86 Gross profit 2,432 1,739 736 Operating expenses:
Research and development, net 2,630 1,697 2,018 Selling, general
and administrative 1,865 1,197 974 Total operating expenses 4,495
2,894 2,992 Operating loss (2,063) (1,155) (2,256) Financial and
other income (expenses) , net 35 28 (98) Loss before minority
interest (2,028) (1,127) (2,354) Minority interest in loss of
EZchip 391 20 12 Net loss $ (1,637) $ (1,107) $ (2,342) Net loss
per share $ (0.10) $ (0.07) $ (0.20) Weighted average number of
shares used in per share calculation 15,780,583 15,709,081
11,650,021 LanOptics Ltd. Reconciliation of GAAP to NON-GAAP
measures (U.S. Dollars in thousands, except per share amounts)
(Unaudited) Three Months Ended June 30, 2007 GAAP Non-GAAP Revenues
$ 4,608 $ 4,608 Cost of revenues 1,918 1,891 Amortization of
technology 258 -- Gross profit 2,432 2,717 52.8% 59.0% Operating
expenses: Research and development, net 2,630 1,768 Selling,
general and administrative 1,865 1,174 Total operating expenses
4,495 2,942 Operating loss (2,063) (225) Financial and other income
(expenses) , net 35 98 Loss before minority interest (2,028) (127)
Minority interest in loss of EZchip 391 -- Net loss $ (1,637) $
(127) Net loss per share $ (0.10) $ (0.01) Weighted average number
of shares used in per share calculation 15,780,583 15,780,583
Non-GAAP net loss $ (127) Reconciliation items: Stock-based
compensation (1,556) Amortization of intangible assets and discount
on long- term loan (345) Minority interest in loss of EZchip(*) 391
Accretion to redemption value of redeemable preferred shares in
EZchip (**) -- GAAP net loss $ (1,637) Three Months Ended March 31,
2007 GAAP Non-GAAP Revenues $ 3,905 $ 3,905 Cost of revenues 1,668
1,604 Amortization of technology 498 -- Gross profit 1,739 2,301
44.5% 58.9% Operating expenses: Research and development, net 1,697
1,588 Selling, general and administrative 1,197 1,110 Total
operating expenses 2,894 2,698 Operating loss (1,155) (397)
Financial and other income (expenses) , net 28 89 Loss before
minority interest (1,127) (308) Minority interest in loss of EZchip
20 -- Net loss $ (1,107) $ (308) Net loss per share $ (0.07) $
(0.02) Weighted average number of shares used in per share
calculation 15,709,081 15,709,081 Non-GAAP net loss $ (308)
Reconciliation items: Stock-based compensation (193) Amortization
of intangible assets and discount on long- term loan (626) Minority
interest in loss of EZchip(*) 20 Accretion to redemption value of
redeemable preferred shares in EZchip (**) -- GAAP net loss $
(1,107) Three Months Ended June 30, 2006 GAAP Non-GAAP Revenues $
1,577 $ 1,577 Cost of revenues 755 725 Amortization of technology
86 -- Gross profit 736 852 46.7% 54.0% Operating expenses: Research
and development, net 2,018 1,963 Selling, general and
administrative 974 953 Total operating expenses 2,992 2,916
Operating loss (2,256) (2,064) Financial and other income
(expenses) , net (98) 149 Loss before minority interest (2,354)
(1,915) Minority interest in loss of EZchip 12 -- Net loss $
(2,342) $ (1,915) Net loss per share $ (0.20) $ (0.16) Weighted
average number of shares used in per share calculation 11,650,021
11,650,021 Non-GAAP net loss $ (1,915) Reconciliation items:
Stock-based compensation (76) Amortization of intangible assets and
discount on long- term loan (116) Minority interest 12 in loss of
EZchip(*) Accretion to redemption value of redeemable preferred
shares in EZchip (**) (247) GAAP net loss $ (2,342) (*) Excluded
from Non-GAAP measures since the minority interest primarily
relates to EZchip losses accumulated in prior periods (**) As of
January 1, 2007 the Company stopped the accretion to redemption
value since the redemption right became within the control of the
Company LanOptics Ltd. Condensed Consolidated Balance Sheet (U.S.
Dollars in thousands) June 30, December 31, 2007 2006 (Unaudited)
(Audited) ASSETS CURRENT ASSETS: Cash, cash equivalents and
marketable securities $ 16,329 $ 17,658 Trade receivables, net
1,954 1,706 Other receivables 546 683 Inventories 4,384 3,489 Total
current assets 23,213 23,536 LONG-TERM INVESTMENTS: Prepaid
development and production costs, Net 216 290 Severance pay fund
2,102 1,951 Total long-term investments 2,318 2,241 PROPERTY AND
EQUIPMENT, NET 450 352 Goodwill 36,531 36,531 Intangible assets,
net 2,861 3,633 TOTAL ASSETS $ 65,373 $ 66,293 LIABILITIES AND
SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 275 $
1,017 Other payables and accrued expenses 3,107 3,092 Total current
liabilities 3,382 4,109 LONG TERM LIABILITIES: Accrued severance
pay 2,710 2,464 Long-term loan 3,460 3,337 Total long-term
liabilities 6,170 5,801 EMPLOYEE STOCK OPTIONS IN EZchip 2,222 557
PREFERRED SHARES IN EZchip 23,770 23,770 SHAREHOLDERS' EQUITY:
Share capital 94 93 Additional paid-in capital 118,422 117,716
Accumulated other comprehensive income/(loss) (23) (19) Accumulated
deficit (88,664) (85,734) Total shareholders' equity 29,829 32,056
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 65,373 $ 66,293
Contact: Ehud Helft/Ed Job CCGK Investor Relations / Tel: (US)
+1-866-704-6710/+1-646-213-1914 DATASOURCE: LanOptics Ltd. CONTACT:
Contact: Ehud Helft/Ed Job, CCGK Investor Relations, /, Tel: (US)
+1-866-704-6710/+1-646-213-1914
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