Revenues Totaling $3.9 Million, a 172% Increase Over First Quarter
2006 YOKNEAM, Israel, May 15 /PRNewswire-FirstCall/ -- LanOptics
Ltd. (NASDAQ: LNOP), a provider of network processors, today
announced results for the first quarter ended March 31, 2007. Main
Highlights: - Record revenues; increase of 172% over first quarter
2006 - NP-2 processor contributed over 60% of revenues -
Substantial decline in net loss to $1.1 million - Non-GAAP net loss
declined to $0.3 million - First sampling of next generation NP-3
processor completed, started lab testing after end of first quarter
Total revenues in the first quarter of 2007 were $3.9 million, an
increase of 15% compared to $3.4 million in the fourth quarter of
2006, and an increase of 172% compared to $1.4 million in the first
quarter of 2006. All of LanOptics' revenues were attributable to
its 78% owned EZchip Technologies Ltd. subsidiary. Net loss for the
first quarter of 2007 was $1.1 million, or $0.07 per share,
compared to a net loss of $5.1 million, or $0.42 per share, in the
fourth quarter of 2006, and a net loss of $2.7 million, or $0.24
per share, in the first quarter of 2006. On a non-GAAP basis, net
loss for the first quarter of 2007 was $0.3 million, or $0.02 per
share, compared with a non-GAAP net loss of $0.8 million, or $0.06
per share, in the fourth quarter of 2006, and a non-GAAP net loss
of $2.2 million, or $0.19 per share, in the first quarter of 2006.
Commencing with this earnings release, LanOptics is also providing
information on a non-GAAP basis as management believes it is a
better measure of the Company's actual performance and enables
better comparison of the performance of the core business between
periods on an on-going basis. Reconciliation of the non-GAAP
measures to the most comparable GAAP measures are provided in the
schedules attached to this release. "This quarter was a significant
quarter for LanOptics, both in terms of business development and
financial performance," commented Eli Fruchter, Chairman of the
Board of LanOptics and CEO of EZchip. "Two of the three leading
tier-1 CESR vendors are building several of their strategic
platforms based on EZchip's network processors. The first vendor
that began production of several NP-2 based products in the third
quarter last year, started production of several additional
products this quarter, with more on the way. The second vendor
received samples of a special version of our next generation NP-3
processor for testing. We are developing the NP-3 in two distinct
versions, a special version jointly developed with Marvell
specifically for this tier-1 customer and a second version intended
for general availability and expected to sample later this year.
All in all, we are extremely encouraged by EZchip's progress with
our two major CESR customers." Mr. Fruchter concluded, "We
generated record revenues in the first quarter, showing substantial
sequential growth with a continuing decline in our net loss. Our
substantial revenue growth was primarily attributable to the strong
ramp up in sales of EZchip's second-generation network processor,
the NP-2, which we launched in July 2006, and contributed over 60%
of the quarter's revenues. In terms of design wins, this was
another strong quarter. During the quarter, EZchip added five new
design wins for NP-2 and NP-3, while five prior design wins entered
production. This brings our total design wins to date to a record
109, of which over 70 are for NP-2 and NP-3 and 32 are currently in
production." 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, an in-process research and
development charge 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. Conference Call The Company will be hosting a
conference call later today, May 15, 2007 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, please call
one of the following teleconferencing numbers below. Please begin
placing your calls at least 10 minutes before the start of the
conference call. 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, Israel Dial-in Number: +972-(0)3-918-0610,
UK Dial-in Number: +44(0)-800-917-5108 International Dial-in
Number: +972-3-918-0610 The conference will be broadcast live on
http://www.ezchip.com/. 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. 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 March 31, December 31, March 31, 2007 2006 2006 Revenues $
3,905 $ 3,382 $ 1,435 Cost of revenues 1,668 1,422 634 Amortization
of technology 498 103 86 Gross profit 1,739 1,857 715 Operating
expenses: Research and development, net 1,697 2,032 2,260
In-process research and development charge -- 2,033 -- Selling,
general and administrative 1,197 1,173 1,113 Total operating
expenses 2,894 5,238 3,373 Operating loss (1,155) (3,381) (2,658)
Financial and other income (expenses), net 28 (1,880) (81) Loss
before minority interest (1,127) (5,261) (2,739) Minority interest
in loss of EZchip 20 161 -- Net loss $ (1,107) $ (5,100) $ (2,739)
Net loss per share $ (0.07) $ (0.42) $ (0.24) Weighted average
number of shares used in per share calculation 15,709,081
12,043,240 11,633,952 LanOptics Ltd. Reconciliation of GAAP to
Non-GAAP measures (U.S. Dollars in thousands, except per share
amounts) (Unaudited) 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
In-process research and development charge -- -- 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 20 Net loss $ (1,107) $ (288) 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 $ (288) Reconciliation items: Stock-based compensation (193)
Amortization of intangible assets and discount on long-term loan
(626) In-process research and development charge -- Accretion to
redemption value of redeemable preferred shares in EZchip * GAAP
net loss $ (1,107) LanOptics Ltd. Reconciliation of GAAP to
Non-GAAP measures (U.S. Dollars in thousands, except per share
amounts) (Unaudited) Three Months Ended December 31, 2006 GAAP
Non-GAAP Revenues $ 3,382 $ 3,382 Cost of revenues 1,422 1,403
Amortization of technology 103 -- Gross profit 1,857 1,979 54.9%
58.5% Operating expenses: Research and development, net 2,032 1,927
In-process research and development charge 2,033 -- Selling,
general and administrative 1,173 1,069 Total operating expenses
5,238 2,996 Operating loss (3,381) (1,017) Financial and other
income (expenses), net (1,880) 85 Loss before minority interest
(5,261) (932) Minority interest in loss of EZchip 161 161 Net loss
$ (5,100) $ (771) Net loss per share $ (0.42) $ (0.06) Weighted
average number of shares used in per share calculation 12,043,240
12,043,240 Non-GAAP net loss $ (771) Reconciliation items:
Stock-based compensation (214) Amortization of intangible assets
and discount on long- term loan (183) In-process research and
development charge (2,033) Accretion to redemption value of
redeemable preferred shares in EZchip * (1,899) GAAP net loss $
(5,100) LanOptics Ltd. Reconciliation of GAAP to Non-GAAP measures
(U.S. Dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended March 31, 2006 GAAP Non-GAAP Revenues $ 1,435 $
1,435 Cost of revenues 634 619 Amortization of technology 86 --
Gross profit 715 816 49.8% 56.9% Operating expenses: Research and
development, net 2,260 2,158 In-process research and development
charge -- -- Selling, general and administrative 1,113 1,068 Total
operating expenses 3,373 3,226 Operating loss (2,658) (2,410)
Financial and other income (expenses), net (81) 169 Loss before
minority interest (2,739) (2,241) Minority interest in loss of
EZchip -- -- Net loss $ (2,739) $ (2,241) Net loss per share $
(0.24) $ (0.19) Weighted average number of shares used in per share
calculation 11,633,952 11,633,952 Non-GAAP net loss $ (2,241)
Reconciliation items: Stock-based compensation (148) Amortization
of intangible assets and discount on long-term loan (100)
In-process research and development charge -- Accretion to
redemption value of redeemable preferred shares in EZchip * (250)
GAAP net loss $ (2,739) LanOptics Ltd. Condensed Consolidated
Balance Sheet (U.S. Dollars in thousands) March 31, December 31,
2007 2006 (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash, cash
equivalents and marketable securities $ 16,330 $ 17,658 Trade
receivables, net 1,897 1,706 Other receivables 487 683 Inventories
4,633 3,489 Total current assets 23,347 23,536 LONG-TERM
INVESTMENTS: Prepaid development and production costs, Net 233 290
Severance pay fund 2,028 1,951 Total long-term investments 2,261
2,241 PROPERTY & EQUIPMENT, NET 460 352 Goodwill 36,531 36,531
Intangible assets, net 3,127 3,633 TOTAL ASSETS $ 65,726 $ 66,293
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade
payables $ 864 $ 1,017 Other payables and accrued expenses 3,140
3,092 Total current liabilities 4,004 4,109 LONG TERM LIABILITIES:
Accrued severance pay 2,662 2,464 Long-term loan 3,398 3,337 Total
long-term liabilities 6,060 5,801 EMPLOYEE STOCK OPTIONS IN EZchip
751 557 PREFERRED SHARES IN EZchip 23,770 23,770 SHAREHOLDERS'
EQUITY: Share capital 94 93 Additional paid-in capital 118,048
117,716 Accumulated other comprehensive loss (15) (19) Accumulated
deficit (86,986) (85,734) Total shareholders' equity 31,141 32,056
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 65,726 $ 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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