EX-99.1 3 dex991.txt PRESS RELEASE DATED APRIL 24, 2003 Exhibit 99.1 C-COR REPORTS FINANCIAL RESULTS FOR THIRD QUARTER OF FISCAL YEAR 2003 State College, PA (April 24, 2003) -- C-COR.net Corp. (Nasdaq: CCBL), a global provider of broadband communications products, software systems, and services, today reported its financial results for the third quarter of fiscal year 2003, ended March 28, 2003. Management will discuss C-COR's financial results on a conference call today at 11:00 AM (ET). For information on how to access the conference call, refer to C-COR's news release dated April 2, 2003 (posted on the C-COR web site at www.c-cor.net), or contact Investor Relations at 814-231-4438. Net sales for the third quarter of fiscal year 2003 were $50.1 million, compared to $77.2 million for the same period last year. Bookings in the third quarter were $56.4 million for a book-to-bill ratio of 1.13. The Company recorded a net loss of $115.3 million for the third quarter of fiscal year 2003 compared to net income of $109,000 for the same period last year. The net loss on a per share basis for the third quarter of fiscal year 2003 was $3.17, compared to net income per share of $.00 for the same period last year. The third quarter loss includes the following special items: . $46.9 million charge to recognize a valuation allowance for deferred tax assets, . $40.9 million charge for impairment of goodwill, and . $18.1 million charge for an increase in reserves for obsolete and slow-moving inventory. The $46.9 million charge to recognize a valuation allowance represents a full reserve of net deferred tax assets, consisting mainly of deferred tax assets related to U.S. and foreign net operating loss carryforwards and financial statement reserves. Given the large operating loss recorded this quarter, in conjunction with previous quarterly operating losses, the Company recorded the tax valuation allowance as the realization of the net deferred tax assets in future periods is uncertain. The $40.9 million charge for impairment of goodwill results from an impairment analysis that reflects current levels of customer demand and market valuations of equipment suppliers. After the impairment charge, the Company has $32.6 million of goodwill and $4.5 million of other intangible assets on its balance sheet. The goodwill impairment analysis was conducted internally by the Company in parallel with a third party appraisal being performed. The impairment charge will be adjusted for any changes resulting from the third party appraisal. It is expected that the third party appraisal of the fair value of the reporting units will be completed prior to the May 12, 2003 filing date for the Company's third quarter Quarterly Report on Form 10-Q. The $18.1 million increase in reserves for obsolete and slow-moving inventory reflects reduced levels of customer demand, product line rationalization including the designation of certain products in an end-of-life status, and application of criteria to slow-moving inventory items that reflect current economic conditions in the industry. On a pro forma basis, the Company recorded a loss of $9.6 million for the third quarter of fiscal year 2003, compared to net income of $2.1 million for the same period last year. The net loss per share on a pro forma basis for the third quarter of fiscal year 2003 was $.26, compared to a pro forma profit of $.06 per share for the same period last year. The pro forma results exclude the aforementioned special items. A complete reconciliation of the net loss reported on a GAAP (generally accepted accounting principle) basis with the net loss reported on a pro forma basis is provided in the attached table. 2 The pro forma results for the third quarter of fiscal year 2003 are not directly comparable to the Company's previous guidance of a pro forma loss of between $.13 and $.17 or to the First Call consensus estimate of a pro forma loss of $.15 since these numbers include an income tax benefit and the Company's pro forma third quarter results do not. Taking into account the difference in income tax benefit, the third quarter pro forma loss was at the low end of the guidance range. C-COR anticipates that net sales for the fourth quarter of fiscal year 2003, ending June 27, 2003, will be between $48 million and $53 million with a loss per share of between $.14 and $.17 on a GAAP basis. On a pro forma basis, the Company anticipates a net loss per share of between $.12 and $.15. The difference between the GAAP and the pro forma projections is the exclusion of $550,000 of amortization of intangible assets relating to acquisitions from the pro forma results. Both the GAAP and pro forma loss per share projections exclude any tax benefit. Next quarter's results will be the final time the Company includes pro forma results in its earnings release. The Company will continue to identify the effect of significant accounting transactions so that investors can better evaluate the Company's financial results. About C-COR C-COR is a leading provider of premium quality, globally-oriented fiber optic, digital video transport, and RF telecommunication products; operation support software solutions; and high-end technical field services--all enabling cost-effective delivery of voice, video, and high-speed data over advanced HFC (Hybrid Fiber Coax) broadband networks. Headquartered in the U.S. with facilities worldwide, C-COR's mission is to provide our customers with second-to-none network integrity throughout the full network life cycle. During 2003, C-COR will be celebrating its 50th anniversary with activities focused on linking its rich tradition of innovation, entrepreneurship, leadership, and commitment to the cable industry with its vision for the future. 3 C-COR's common stock is listed on the Nasdaq National Market (Symbol: CCBL) and is a component of the Russell 2000 Stock Index. -------------------------------------------------------------------------------- Some of the information presented in this announcement constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent the Company's judgment regarding future events, and are based on currently available information. Although the Company believes it has a reasonable basis for these forward-looking statements, the Company cannot guarantee their accuracy and actual results may differ materially from those the Company anticipated due to a number of uncertainties, many of which the Company is not aware. Factors which could cause actual results to differ from expectations include, among others, capital spending patterns of the communications industry, changes in regard to significant customers, the demand for network integrity, the trend toward more fiber in the network, the Company's ability to develop new and enhanced products, the Company's ability to provide complete network solutions, continued industry consolidation, the development of competing technology, the global demand for the Company's products and services, and the Company's ability to integrate acquisitions and achieve its strategic objectives. For additional information concerning these and other important factors that may cause the Company's actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the Company with the Securities and Exchange Commission. -------------------------------------------------------------------------------- 4 C-COR.net Corp. Condensed Consolidated Statements of Operations (unaudited, in thousands except per share amounts) Thirteen Weeks Ended ------------------------ March 28, March 29, 2003 2002 ---------- -------- Net Sales $ 50,100 $ 77,230 Cost of sales 56,070 54,535 ---------- -------- Gross margin (5,970) 22,695 Operating expenses: Selling and administrative 13,741 15,301 Research and product development 7,640 6,524 Amortization of goodwill and other intangibles 622 1,913 Acquired in-process technology charge (760) 0 Goodwill impairment charge 40,900 0 Restructuring costs 200 (431) ---------- -------- Total operating expenses 62,343 23,307 Loss from operations (68,313) (612) Interest expense (14) (20) Investment income 98 321 Foreign exchange gain 49 1,483 Other income (expense), net (216) 178 ---------- -------- Income (loss) before income taxes (68,396) 1,350 Income tax expense 46,890 1,241 ---------- -------- Net income (loss) $ (115,286) $ 109 ========== ======== Net income (loss) per share: Basic $ (3.17) $ 0.00 Diluted $ (3.17) $ 0.00 Weighted average common shares and common share equivalents Basic 36,365 33,983 Diluted 36,365 36,833 5 C-COR.net Corp. Condensed Consolidated Statements of Operations (unaudited, in thousands except per share amounts) Thirty-Nine Weeks Ended ------------------------ March 28, March 29, 2003 2002 ---------- -------- Net sales $ 148,709 $196,426 Cost of sales 131,886 139,633 ---------- -------- Gross margin 16,823 56,793 Operating expenses: Selling and administrative 37,997 37,151 Research and product development 21,446 20,848 Amortization of goodwill and other intangibles 1,411 5,721 Acquired in-process technology charge 800 0 Goodwill impairment charge 40,900 0 Restructuring costs 398 671 ---------- -------- Total operating expenses 102,952 64,391 Loss from operations (86,129) (7,598) Interest expense (250) (109) Investment income 827 1,321 Foreign exchange gain (loss) (1,192) 1,918 Other income (expense), net 540 (1,516) ---------- -------- Loss before income taxes (86,204) (5,984) Income tax expense (benefit) 41,048 (1,219) ---------- -------- Net loss $ (127,252) $ (4,765) ========== ======== Net loss per share: Basic $ (3.50) $ (0.14) Diluted $ (3.50) $ (0.14) Weighted average common shares and common share equivalents Basic 36,356 32,863 Diluted 36,356 32,863 6 C-COR.net Corp. Pro Forma Condensed Consolidated Statements of Operations* (unaudited, in thousands except per share amounts) Thirteen Weeks Ended ------------------------ March 28, March 29, 2003 2002 ---------- -------- Net Sales $ 50,100 $ 77,230 Cost of sales 37,961 54,535 ---------- -------- Gross margin 12,139 22,695 Operating expenses: Selling and administrative 14,005 12,652 Research and product development 7,640 6,524 ---------- -------- Total operating expenses 21,645 19,176 Income (loss) from operations (9,506) 3,519 Interest expense (14) (20) Investment income 98 321 Foreign exchange gain (loss) 49 (117) Other income (expense), net (216) 178 ---------- -------- Income (loss) before income taxes (9,589) 3,881 Income tax expense 0 1,796 ---------- -------- Net income (loss) (9,589) $ 2,085 ========== ======== Net income (loss) per share: Basic $ (0.26) $ 0.06 Diluted $ (0.26) $ 0.06 Weighted average common shares and common share equivalents Basic 36,365 33,983 Diluted 36,365 36,833 * The above pro forma condensed consolidated statements of operations have been adjusted to exclude the following special items and reconcile to generally accepted accounting principles (GAAP) net income (loss) as follows: Net income (loss) per GAAP $ (115,286) $ 109 Pro forma adjustments: Amortization of goodwill and other intangibles 622 1,913 Restructuring costs 200 ( 431) Excess and obsolete inventory charge 18,109 0 Recovery of accounts receivable (264) 0 Acquired in-process technology charge (760) 0 Other purchase accounting adjustments 0 1,049 Goodwill impairment charge 40,900 0 Valuation allowance related to net deferred tax assets 46,890 0 Adjustment for income taxes 0 (555) ---------- -------- Pro forma net income (loss) $ ( 9,589) $ 2,085 ========== ======== We provide pro forma financial information to help the reader better understand our operating results. This information is not in accordance with, or an alternative for, GAAP and may be different from the pro forma information provided by other companies. 7 C-COR.net Corp. Pro Forma Condensed Consolidated Statements of Operations* (unaudited, in thousands except per share amounts) Thirty-Nine Weeks Ended ------------------------ March 28, March 29, 2003 2002 ---------- -------- Net sales $ 148,709 $196,426 Cost of sales 112,851 139,633 ---------- -------- Gross margin 35,858 56,793 Operating expenses: Selling and administrative 38,936 34,502 Research and product development 21,446 20,848 ---------- -------- Total operating expenses 60,382 55,350 Gain (loss) from operations (24,524) 1,443 Interest expense (51) (109) Investment income 827 1,321 Foreign exchange loss (1,192) (146) Other income (expense), net 1,352 (216) ---------- -------- Income (loss) before income taxes (23,588) 2,293 Income tax expense 0 1,665 ---------- -------- Net income (loss) $ (23,588) $ 628 ========== ======== Net income (loss) per share: Basic $ (0.65) $ 0.02 Diluted $ (0.65) $ 0.02 Weighted average common shares and common share equivalents Basic 36,356 32,863 Diluted 36,356 34,809 * The above pro forma condensed consolidated statements of operations have been adjusted to exclude the following special items and reconcile to generally accepted accounting principles (GAAP) net loss as follows: Net loss per GAAP $ (127,252) $ (4,765) Pro forma adjustments: Amortization of goodwill and other intangibles 1,411 5,721 Restructuring costs 398 671 Excess and obsolete inventory charge 19,035 0 Recovery of accounts receivable (939) 0 Impairment of (recovery on) note receivable (800) 1,300 Acquired in-process technology charge 800 0 Settlement of foreign exchange contract 1,612 0 Other purchase accounting adjustments 199 585 Goodwill impairment charge 40,900 0 Valuation allowance related to net deferred tax assets 41,048 0 Adjustment for income taxes 0 (2,884) ---------- -------- Pro forma net income (loss) $ (23,588) $ 628 ========== ======== We provide pro forma financial information to help the reader better understand our operating results. This information is not in accordance with, or an alternative for, GAAP and may be different from the pro forma information provided by other companies. 8 C-COR.net Corp. Consolidated Balance Sheets (in thousands of dollars) March 28, June 28, 2003 2002 ---------- -------- (unaudited) ASSETS Current assets Cash and cash equivalents $ 28,262 $111,858 Accounts and notes receivables, net 36,410 27,582 Inventories 27,794 39,084 Refundable income taxes 0 10,425 Deferred taxes 0 18,715 Other 4,682 6,020 ---------- -------- Total current assets 97,148 213,684 ---------- -------- Property, plant and equipment, net 25,733 24,701 Intangible assets, net 37,059 8,843 Deferred taxes 0 20,549 Other long-term assets 3,301 3,046 ---------- -------- Total $ 163,241 $270,823 ========== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 21,023 $ 15,333 Accrued liabilities 46,680 32,991 Current portion of long-term debt 643 633 ---------- -------- Total current liabilities 68,346 48,957 Long-term debt, less current portion 1,061 1,263 Other long-term liabilities 1,970 2,005 Shareholders' equity 91,864 218,598 ---------- -------- Total $ 163,241 $270,823 ========== ======== 9