TUTS Tut Systems (MM)

Reports 63.4% Year-Over-Year Increase in First Quarter Revenue LAKE OSWEGO, Ore., May 9 /PRNewswire-FirstCall/ -- Tut Systems, Inc. (NASDAQ:TUTS), today announced its first quarter results for 2006. Revenue for the quarter ended March 31, 2006, was $11.5 million compared with revenue of $7.1 million for the quarter ended March 31, 2005. This represents an increase in revenue of 63.4% when compared with the first quarter of 2005, and a 7.7% increase when compared with fourth quarter 2005 revenue of $10.7 million. Revenue related to video processing systems was $10.5 million and $5.9 million for the quarters ended March 31, 2006 and 2005, respectively. Revenue relating to private broadband network products was $1.0 million and $1.1 million for the quarters ended March 31, 2006 and 2005, respectively. International sales represented 19.2% and 18.0% of total sales for the quarters ended March 31, 2006 and 2005, respectively. Gross profit for the quarter ended March 31, 2006, was $4.0 million, an increase of 60%, compared with gross profit of $2.5 million for the quarter ended March 31, 2005. Included in gross profit was a charge for amortization of intangibles of $0.4 million for each of the quarters ended March 31, 2006 and 2005. Gross margin for the quarter ended March 31, 2006, was 34.3%, a sequential quarterly improvement of 6.4 percentage points when compared with fourth quarter 2005 gross margin of 27.9%. Net loss for the three months ended March 31, 2006, was $(3.1) million or $(0.09) per basic and diluted share. This compares with the net loss for the three months ended March 31, 2005, of $(3.3) million or $(0.13) per basic and diluted share. First Quarter Conference Call Information Tut Systems will host a conference call to discuss first quarter results on May 10, 2006 beginning at 5:30 am Pacific time. Participants of the conference call should dial in at least five minutes before the start time. Conference ID # 8355765 U.S. and Canada dial (877) 356-8058 International participants dial (706) 634-2465 Online at http://www.tutsys.com/ A replay will be available two hours after the call ends for one week dial (800) 642-1687 or (706) 645-9291 and enter the conference ID number. A replay will also be available at http://www.tutsys.com/. Recent Announcements: Significant announcements from Tut Systems since the fourth quarter earnings release include: 1/30/06 Tut Systems Wins $3m+ Contract to Expand IPTV Headend with MPEG-4 AVC at Iowa Network Services 2/1/06 Tut Systems to Highlight Industry-Leading IPTV Solutions at Annual NTCA Event 2/2/06 Tut Systems Sponsors IPTV Forum in Miami 2/6/06 Tut Systems Named Reseller of Siemens SURPASS Home Entertainment Middleware and Services to Help Expand IPTV Market Leadership in U.S. Independent Operator Market 2/16/06 Tut Systems Expands Sales Channels Into China 3/7/06 Tut Systems Deploys IPTV Headend with OEN 3/9/06 Tut Systems Delivers Academy Awards with China Netcom 3/14/06 Tut Systems to Demonstrate and Present at TelecomNEXT 3/16/06 Tut Systems Unleashes Third Wave of IPTV Deployments 3/21/06 Tut Systems and Verimatrix Win Content Protection and Access Security Contract at MBO Video 4/3/06 Tut Systems Hits Home Run with Major League Baseball 4/4/06 Tut Systems Introduces Revolutionary Power-over-Broadband Product Line for Remote Surveillance and Wi-Fi Applications 4/11/06 Tut Systems Astria(R) Platform Named Most Deployed IPTV Headend Solution Globally 4/13/06 Tut Systems' IPTV Solutions Selected as InfoVision Award Finalist 4/18/06 Tut Systems Announces New T2 Product Line to Power Quad-Play Services for Hotels 4/20/06 Tut Systems Previews MPEG-4 AVC High Definition Compression Technology at NAB 2006 4/27/06 Tut Systems to Release Q1 2006 Results on May 9, 2006, Followed by a Conference Call on May 10, 2006 Forward-Looking Statements Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Specifically, without limitation, forward-looking statements include statements relating to our anticipation of future worldwide growth in the IPTV market. Forward- looking statements are based on management's current expectations and beliefs, and are subject to risks and uncertainties. As a result, actual results may differ materially from the forward-looking statements contained herein. Risks that relate to these forward-looking statements include the risks inherent in new and developing technologies and markets, the risk that competitors will introduce rival technologies and products, and the risk that the expected financial benefits of the IPTV deployment will not be achieved as a result of unforeseen costs or events. Further detailed information about risk factors that may impact our business is set forth in our periodic filings with the Securities and Exchange Commission. We expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. About Tut Systems, Inc. Tut Systems, Inc. delivers advanced content processing and distribution products as well as comprehensive system integration services for deploying next-generation data and video services over broadband networks. Service providers, content providers and government agencies worldwide use Tut Systems solutions to deliver broadcast-quality video over broadband networks. Tut Systems is headquartered in Lake Oswego, OR with regional offices across North America, Europe and Asia. For more information visit http://www.tutsys.com/ or call 971-217-0400. TUT SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three months ended March 31, 2005 2006 Revenue $7,053 $11,522 Cost of goods sold 4,515 7,571 Gross profit 2,538 3,951 Operating expenses: Sales and marketing 2,488 2,565 Research and development 2,121 3,210 General and administrative 1,175 1,280 Total operating expenses 5,784 7,055 Loss from operations (3,246) (3,104) Interest and other (expense), net (74) (32) Net loss $(3,320) $(3,136) Net loss per share, basic and diluted $(0.13) $(0.09) Shares used in computing net loss, basic and diluted 25,187 33,563 TUT SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, March 31, 2005 2006 ASSETS Current assets: Cash and cash equivalents $12,111 $11,432 Short-term investments 1,693 -- Accounts receivable, net 14,873 16,217 Inventories, net 6,719 8,238 Prepaid expenses and other 983 1,321 Total current assets 36,379 37,208 Property and equipment, net 2,827 2,957 Intangibles and other assets 7,977 7,557 Total assets $47,183 $47,722 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Line of credit $7,080 $8,149 Accounts payable and accrued liabilities 8,952 11,141 Deferred revenue 527 516 Total current liabilities 16,559 19,806 Note payable and other long term liabilities 4,222 4,285 Total liabilities 20,781 24,091 Stockholders' equity 26,402 23,631 Total liabilities and stockholders' equity $47,183 $47,722 DATASOURCE: Tut Systems, Inc. CONTACT: Scott Spangenberg, Chief Financial Officer, +1-971-217-0400, or , or Keith Wymbs, Director of Strategic Marketing, +1-971-217-0363, or , both of Tut Systems Web site: http://www.tutsys.com/

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