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Press release from Business Wire

Ikanos Communications Announces Results for the Third Quarter Fiscal Year 2012

<p> <b>Recent Highlights</b> </p> <ul> <li class='bwlistitemmargb'> Successfully launched Velocity™-3, integrating Ikanos NodeScale™ technology, at Broadband World Forum 2012 </li> <li class='bwlistitemmargb'> Q3 revenue of $31.4 million </li> <li class='bwlistitemmargb'> GAAP net loss of $(6.4) million, or $(0.09) per share, for Q3 </li> <li class='bwlistitemmargb'> Q3 ending cash, cash equivalents and short-term investments of $33.4 million </li> <li class='bwlistitemmargb'> Regained NASDAQ listing compliance </li> </ul>

Thursday, October 25, 2012

Ikanos Communications Announces Results for the Third Quarter Fiscal Year 201217:26 EDT Thursday, October 25, 2012 FREMONT, Calif. (Business Wire) -- Ikanos Communications, Inc. (NASDAQ: IKAN), a leading provider of advanced broadband semiconductor and software products for the digital home, today announced its financial results for the third quarter of 2012, ended September 30, 2012. “For the third quarter, we met our revenue guidance of $31.4 million while achieving GAAP operating expenses of $21.1 million, below our guidance of $22 to $23 million,” said Dennis Bencala, CFO of Ikanos. “We continued to effectively manage our business and our cash position, which totaled approximately $33.4 million at quarter end, up slightly from the preceding quarter.” Omid Tahernia, president and CEO, said, “We are very excited with the successful launch of our Velocity™-3 chipset solution, which positions Ikanos at the forefront of broadband momentum seen worldwide. As planned, we successfully demonstrated our NodeScale Vectoring reference system based on the Velocity-3 chipset. The tremendous reception of Velocity™-3 from carriers and OEMs underscores Ikanos' understanding of the market, deployment models and challenges, and our momentum with this leadership chipset continues with delivery of samples to customers expected late this year.” “Our Fusiv® family of CPE products continues to grow and now represents 33% of the company's revenue. In addition to support of key features like G. Vector and VDSL2 Bonding, we are working with our partners to enable connectivity to new, higher speed 802.11ac wireless solutions in our Fusiv® Vx185 and Vx175 communication processor families.” Financial Details Ikanos reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. Non-GAAP net income (loss), where applicable, excludes the income statement effects of stock-based compensation, restructuring charges, the amortization of intangible assets and gains on the sale of impaired assets. Ikanos has provided these measures because its management believes these additional non-GAAP measures are useful to investors for performing financial analysis as these additional measures highlight Ikanos' recurring operating results. Ikanos' management uses these non-GAAP measures internally to evaluate its operating performance and to plan for its future. However, non-GAAP measures are not a substitute for GAAP reporting. For a reconciliation of GAAP versus non-GAAP financial information, please see the attached schedules. Revenue for the third quarter of 2012 was $31.4 million, compared to revenue of $35.4 million for the third quarter of 2011 and revenue of $32.1 million for the second quarter of 2012. GAAP gross profit for the third quarter of 2012 was 47%, compared to a GAAP gross profit of 50% for the third quarter of 2011 and GAAP gross profit of 47% for the second quarter of 2012. Non-GAAP gross profit for the third quarter of 2012 was 48%, compared to a non-GAAP gross profit of 52% for the third quarter of 2011 and non-GAAP gross profit of 49% for the second quarter of 2012. GAAP operating expenses for the third quarter of 2012, which included forecasted product tape-out expenses, were $21.1 million, compared to GAAP operating $19.9 million for the third quarter of 2011 and $17.5 million for the second quarter of 2012. Non-GAAP operating expenses for the third quarter of 2012 were $20.2 million, compared to non-GAAP operating expenses of $18.8 million for the third quarter of 2011 and non-GAAP operating expenses of $16.9 million for the second quarter of 2012. GAAP net loss for the third quarter of 2012 was $(6.4) million, or a loss of $(0.09) per share on 69.8 million weighted average shares outstanding, compared to a GAAP net loss for the third quarter of 2011 of $(2.2) million, or $(0.03) per share on 68.8 million weighted average shares, and a GAAP net loss of $(3.0) million, or $(0.04) per share on 69.5 million weighted average shares, for the second quarter of 2012. Non-GAAP net loss for the third quarter of 2012 was $(5.1) million, or a loss of $(0.07) per share on 69.8 million weighted average shares, compared to a non-GAAP net loss of $(0.5) million, or $(0.01) per share on 68.8 million weighted average shares, for the third quarter of 2011 and a non-GAAP net loss of $(1.9) million, or $(0.03) per share on 69.5 million weighted average shares, for the second quarter of 2012. Cash, cash equivalents, and short-term investments at the end of the third quarter of 2012 were $33.4 million compared to $33.1 million at the end of the second quarter of 2012. Additionally, at the end of the third quarter of 2012, inventory was $6.4 million compared to $7.4 million at the end of the second quarter of 2012. Current liabilities at the end of the third quarter of 2012 were $28.1 million, compared to $21.3 million at the end of the second quarter of 2012. During the third quarter of 2012, current liabilities include an accounts receivable backed, revolving line of credit advance of $5.0 million. Outlook Revenue is expected to be between $31 million and $32 million for the fourth quarter of 2012. GAAP gross profit for the fourth quarter of 2012 is expected to be between 48% and 50%. Non-GAAP gross profit is expected to continue to improve to between 50% and 52% for the fourth quarter of 2012. GAAP operating expenses for the fourth quarter of 2012 are expected to be in the range of $19 million to $20 million. Non-GAAP operating expenses are expected to be in the range of $18 million to $19 million for the fourth quarter of 2012. GAAP net loss for the fourth quarter of 2012 is expected to be in the range of approximately $(3.1) million to $(5.2) million, or a GAAP loss per share of $(0.04) to $(0.07). Non-GAAP net loss is expected to be in the range of approximately $(1.5) million to $(3.6) million, or a non-GAAP loss per share of $(0.02) to $(0.05). Third Quarter Conference Call Management will review the third quarter financial results and its expectations for subsequent periods at a conference call on October 25, 2012 at 1:30 p.m. Pacific Time. To listen to the call, please visit http://www.ikanos.com/investor/irevents/ and click on the link provided for the webcast or dial (800) 289-0493 and enter conference ID 7767643. The webcast will be archived and available for 90 days at http://www.ikanos.com/investor/irevents/. A replay of the conference call will be accessible until January 23, 2013 by dialing (888) 203-1112 and entering conference ID 7767643. About Ikanos Communications, Inc. Ikanos Communications, Inc. (NASDAQ: IKAN) is a leading provider of advanced broadband semiconductor and software products for the digital home. The company's broadband DSL, communications processors and other offerings power access infrastructure and customer premises equipment for many of the world's leading network equipment manufacturers and telecommunications service providers. For more information, visit www.ikanos.com. © 2012 Ikanos Communications, Inc. All Rights Reserved. Ikanos Communications, Ikanos, the Ikanos logo, the Bandwidth without boundaries tagline, Fusiv, Ikanos Velocity and NodeScale Vectoring are among the trademarks or registered trademarks of Ikanos Communications. All other trademarks mentioned herein are properties of their respective holders. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This press release contains forward-looking statements that are subject to risks and uncertainties concerning Ikanos Communications, including statements regarding our leadership position, outlook such as our expected revenue, gross profits, operating expenses, and the anticipated benefits of non-GAAP measures, our product testing and shipment, and anticipated benefits and acceptance of our products. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These potential risks and uncertainties include, but are not limited to, macroeconomic conditions which may cause our customers to defer purchasing plans, our ability to deliver full production releases of our newer products and the acceptance of those products by our customers, the continued demand by telecommunications service providers for specific xDSL semiconductor products, the failure of service providers to implement deployment plans on schedule or at all, our continued ability to obtain and deliver production volumes of new and current products and technologies, our ability to generate demand and close transactions for the sale of our products, our ability to develop commercially successful products as a result of our current research and development programs, our ability to successfully execute our restructuring plan, and unexpected future costs, expenses and financing requirements. In addition, for a more extensive discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 1, 2012 filed with the Securities and Exchange Commission (SEC) on February 23, 2012 and our Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2012 filed with the SEC on August 2, 2012, as well as other reports that Ikanos files from time to time with the SEC. Ikanos is under no obligation to update these forward-looking statements to reflect events or circumstances subsequent to the date of this press release.         IKANOS COMMUNICATIONS, INC.Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data)     Three Months EndedNine Months EndedSeptember 30,2012October 2,2011September 30,2012October 2,2011   Revenue $ 31,375 $ 35,420 $ 94,190 $ 101,148 Cost of revenue   16,620     17,590     48,274     50,388   Gross profit   14,755     17,830     45,916     50,760   Operating expenses: Research and development 16,581 14,402 43,423 42,727 Selling, general and administrative 4,507 5,528 13,835 17,332 Restructuring   -     -     1,062     (109 ) Total operating expenses   21,088     19,930     58,320     59,950   Loss from operations (6,333 ) (2,100 ) (12,404 ) (9,190 ) Investment gain - - - 1,295 Interest income and other, net   61     (311 )   (251 )   (222 ) Loss before income taxes (6,272 ) (2,411 ) (12,655 ) (8,117 ) Provision for income taxes   85     (261 )   406     (75 ) Net loss $ (6,357 ) $ (2,150 ) $ (13,061 ) $ (8,042 )   Net loss per share Basic and diluted $ (0.09 ) $ (0.03 ) $ (0.19 ) $ (0.12 )   Weighted average number of shares Basic and diluted   69,788     68,807     69,555     68,482     IKANOS COMMUNICATIONS, INC.Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data)           Three Months EndedSeptember 30,2012July 1,2012October 2,2011   Revenue $ 31,375 $ 32,055 $ 35,420 Cost of revenue   16,620     17,001     17,590   Gross profit   14,755     15,054     17,830   Operating expenses: Research and development 16,581 12,842 14,402 Selling, general and administrative 4,507 4,648 5,528 Restructuring   -     (30 )   -   Total operating expenses   21,088     17,460     19,930   Loss from operations (6,333 ) (2,406 ) (2,100 ) Investment gain - - - Interest income and other, net   61     (387 )   (311 ) Loss before income taxes (6,272 ) (2,793 ) (2,411 ) Provision for income taxes   85     206     (261 ) Net loss $ (6,357 ) $ (2,999 ) $ (2,150 )   Net loss per share Basic and diluted $ (0.09 ) $ (0.04 ) $ (0.03 )   Weighted average number of shares Basic and diluted   69,788     69,543     68,807     IKANOS COMMUNICATIONS, INC.Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations (In thousands, except per share data)           Three Months Ended September 30, 2012Three Months Ended October 2, 2011As ReportedNon-GAAP AdjustmentsNon-GAAPAs ReportedNon-GAAP AdjustmentsNon-GAAP Revenue $ 31,375 $ - $ 31,375 $ 35,420 $ - $ 35,420 Cost of revenue 16,620 4 (a) 16,171 17,590 (11 ) (a) 17,079     (453 ) (b)         (500 ) (b)   Gross profit   14,755     (449 )   15,204     17,830     (511 )   18,341     Operating expenses: Research and development 16,581 (514 ) (a) 16,067 14,402 (772 ) (a) 13,630   Selling, general and administrative 4,507 (209 ) (a) 4,173 5,528 (194 ) (a) 5,209 (125 ) (b) (125 ) (b)   Restructuring   -     -     -     -     -     -   Total operating expenses   21,088     (848 )   20,240     19,930     (1,091 )   18,839   Loss from operations (6,333 ) 1,297 (5,036 ) (2,100 ) 1,602 (498 ) Interest income and other, net   61     -     61     (311 )   -     (311 ) Loss before income taxes (6,272 ) 1,297 (4,975 ) (2,411 ) 1,602 (809 ) Provision for income taxes   85     -     85     (261 )   -     (261 ) Net loss $ (6,357 ) $ 1,297   $ (5,060 ) $ (2,150 ) $ 1,602   $ (548 )   Net loss per share: Basic and diluted $ (0.09 ) $ (0.07 ) $ (0.03 ) $ (0.01 )   Weighted average outstanding shares: Basic and diluted   69,788     69,788     68,807     68,807     Notes:Three Months EndedSeptember 30,2012October 2,2011 (a) Stock-based compensation $ 719 $ 977 (b) Amortization of acquired intangible assets   578     625   Total non-GAAP adjustments $ 1,297   $ 1,602     IKANOS COMMUNICATIONS, INC.Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations (In thousands, except per share data)       Three Months Ended July 1, 2012As ReportedNon-GAAP AdjustmentsNon-GAAP Revenue $ 32,055 $ - $ 32,055 Cost of revenue 17,001 1 (a) 16,502     (500 ) (b)   Gross profit   15,054     (499 )   15,553     Operating expenses: Research and development 12,842 (340 ) (a) 12,502   Selling, general and administrative 4,648 (165 ) (a) 4,358 (125 ) (b)   Restructuring   (30 )   30   (c)   -   Total operating expenses   17,460     (600 )   16,860   Loss from operations (2,406 ) 1,099 (1,307 ) Interest income and other, net   (387 )   -     (387 ) Loss before income taxes (2,793 ) 1,099 (1,694 ) Provision for income taxes   206     -     206   Net Loss $ (2,999 ) $ 1,099   $ (1,900 )   Net loss per share: Basic and diluted $ (0.04 ) $ (0.03 )   Weighted average outstanding shares: Basic and diluted   69,543     69,543     Notes:Three Months EndedJuly 1, 2012 (a) Stock-based compensation $ 504 (b) Amortization of acquired intangible assets 625 (c) Restructuring charges   (30 ) Total non-GAAP adjustments $ 1,099     IKANOS COMMUNICATIONS, INC.Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations (In thousands, except per share data)           Nine Months Ended September 30, 2012Nine Months Ended October 2, 2011As ReportedNon-GAAP AdjustmentsNon-GAAPAs ReportedNon-GAAP AdjustmentsNon-GAAP Revenue $ 94,190 $ - $ 94,190 $ 101,148 $ - $ 101,148 Cost of revenue 48,274 2 (a) 46,823 50,388 (67 ) (a) 48,821     (1,453 ) (b)       (1,500 ) (b)   Gross profit   45,916     (1,451 )   47,367     50,760     (1,567 )   52,327     Operating expenses: Research and development 43,423 (1,450 ) (a) 41,973 42,727 (1,919 ) (a) 40,808   Selling, general and administrative 13,835 (569 ) (a) 12,891 17,332 (720 ) (a) 16,237 (375 ) (b) (375 ) (b)   Restructuring   1,062     (1,062 ) (c)   -     (109 )   109   (c)   -   Total operating expenses   58,320     (3,456 )   54,864     59,950     (2,905 )   57,045   Loss from operations (12,404 ) 4,907 (7,497 ) (9,190 ) 4,472 (4,718 ) Investment gain - - - 1,295 (1,295 ) (d) - Interest income and other, net   (251 )   -     (251 )   (222 )   -     (222 ) Loss before income taxes (12,655 ) 4,907 (7,748 ) (8,117 ) 3,177 (4,940 ) Provision for income taxes   406     -     406     (75 )   -     (75 ) Net loss $ (13,061 ) $ 4,907   $ (8,154 ) $ (8,042 ) $ 3,177   $ (4,865 )   Net loss per share: Basic and diluted $ (0.19 ) $ (0.12 ) $ (0.12 ) $ (0.07 )   Weighted average outstanding shares:   Basic and diluted   69,555     69,555     68,482     68,482     Notes:Nine Months Ended   September 30,2012October 2,2011 (a) Stock-based compensation $ 2,017 $ 2,706 (b) Amortization of acquired intangible assets 1,828 1,875 (c) Restructuring charges (credits) 1,062 (109 ) (d) Investment gain   -     (1,295 ) Total non-GAAP adjustments $ 4,907   $ 3,177     IKANOS COMMUNICATIONS, INC.Unaudited Condensed Consolidated Balance Sheets (In thousands)               September 30,2012July 1,2012January 1,2012Assets Current assets: Cash, cash equivalents and short-term investments $ 33,434 $ 33,071 $ 34,760 Accounts receivable 19,688 20,721 18,308 Inventory 6,356 7,374 9,474 Prepaid expenses and other current assets   7,548   5,048   2,531 Total current assets 67,026 66,214 65,073 Property and equipment, net 8,607 7,695 7,036 Intangible assets, net 1,774 2,352 3,602 Other assets   2,540   2,566   1,896 $ 79,947 $ 78,827 $ 77,607   Liabilities and Stockholders' Equity Current liabilities: Revolving line $ 5,000 $ - $ - Accounts payable 10,249 9,333 5,413 Accrued liabilities   12,821   11,980   10,734 Total current liabilities 28,070 21,313 16,147 Other liabilities   1,989   1,988   738 Total liabilities 30,059 23,301 16,885 Stockholders' equity   49,888   55,526   60,722 $ 79,947 $ 78,827 $ 77,607 for Ikanos Communications, Inc.Lori Evans, 707-295-0297