Com21 Reports First Quarter Revenues of $32.8 Million

Positive Book-to-Bill Ratio 'Improves Visibility'



Apr 19, 2001, 01:00 ET from Com21, Inc.

    MILPITAS, Calif., April 19 /PRNewswire/ -- Com21, Inc. (Nasdaq:   CMTO)
 today reported financial results for the three-month period ended
 March 31, 2001.
     Revenues for the first quarter of 2001 were $32.8 million compared to
 $41.6 million recorded in the first quarter of 2000, and a 21% decrease
 sequentially.  Com21 reported a pro forma net loss for the quarter of
 $17.8 million, or $0.70 per share, compared to a pro forma net loss of
 $21.2 million, or $0.86 per share, in the fourth quarter of 2000.
     "Com21 was not immune to the industry-wide slowdown in cable equipment
 spending, which was particularly severe in the North American DOCSIS market,"
 said Craig Soderquist, Com21 president and CEO.  "However, our industry input
 suggests that the fundamental growth drivers in the broadband cable access
 market remain intact.  We believe this setback is temporary, and cable
 operators will resume aggressive spending plans within the year.  We see some
 evidence of this already," continued Soderquist, "as Com21 had its first
 positive book-to-bill ratio in several quarters.  This reversal improves our
 visibility into the future of the business, and may indicate that the worst is
 behind us.
     "On the international front, in fact, Com21's ATM (asynchronous transfer
 mode) modem sales actually increased by 4%, primarily to European customers.
 Overall international sales were up 7%, as international sales accounted for
 fully 76% of all our sales in the first quarter."
     Margins were adversely impacted in the quarter, as Com21 sold higher-cost
 OEM and first-generation product inventory.  In addition, the Company incurred
 an inventory standard write-down charge and other costs that totaled
 $1.5 million, which unfavorably impacted the gross operating margin by
 450 basis points.
     "While we do anticipate an upturn in the market, we continue to implement
 our restructuring plan that will further drive costs out of the organization
 and increase our ability to weather this stormy period," continued Soderquist.
 "We have now included a reevaluation of our BitCom and GADline acquisitions,
 along with the closing of our Wireless Business Unit.  We expect to incur
 between $80 and 85 million in restructuring charges in the second quarter, of
 which $2 to 4 million will be cash related, before the full benefit of this
 plan can be realized."
     In a further effort, Com21 has retained investment bank Broadview
 International to assist the Company in evaluating various strategic
 alternatives for maximizing shareholder value.
     "We feel that the current market environment offers a compelling reason to
 explore alternatives for Com21," noted Soderquist.  "We strongly believe in
 Com21 and the broadband access market in general, and we believe that the
 Company, with its superb technology and outstanding people, should command a
 much higher market valuation than the current stock price reflects.  We are
 committed to the best interests of all our stakeholders, and we believe that
 Broadview is a great partner for us in this exploration phase."
 
     About Com21, Inc.
     Com21, Inc. (www.com21.com) is a leading global supplier of system
 solutions for the broadband access market.  The Company's DOCSIS, DVB, and
 ATM-based products enable cable operators and service providers to deliver
 high-speed, cost-effective Internet and telephony applications to corporate
 telecommuters, small businesses, home offices, and residential users.  To
 date, Com21 has shipped over 1.3 million cable modems worldwide, along with
 over 1,500 headend controllers.  Com21 systems offer commercial service in
 cable systems passing 17 million households worldwide.
     Com21 is an ISO 9001 registered company with over 400 employees worldwide.
 The Company's corporate headquarters is located in Milpitas, California, USA,
 with its European headquarters in Delft, The Netherlands.  In addition, Com21
 maintains a research and development facility in Ireland, as well as sales and
 support offices in the United States and Canada, Europe, Asia, and Latin
 America.
 
     Safe Harbor Act Clause
     This press release contains forward-looking information within the meaning
 of Section 27A of the Securities Act of 1933 and Section21E of the Securities
 Exchange Act of 1934, and is subject to the safe harbors created by those
 sections.  Except for the historical information contained herein, this press
 release contains forward-looking statements, estimates, and assumptions by the
 Company that involve risks and uncertainties, including the Company's ability
 to complete and successfully integrate acquisitions, the Company's ability to
 gain new business and develop and offer new products, the expansion of
 operations by the Company's customers and the deployment of the Company's
 products in specific markets.  The matters discussed in this press release may
 also involve risks and uncertainties concerning Com21's products and services
 described in Com21's filings with the Securities and Exchange Commission
 (SEC).  In particular, see the risk factors described in the Company's most
 recent Form 10K and Form 10Q.  Com21 assumes no obligation to update the
 forward-looking information contained in this press release.
 
     NOTE:  Com21(R) is a registered trademark of Com21, Inc., Milpitas,
 California, U.S.A.  All other trademarks are the property of their respective
 owners.
 
 
                                   COM21, INC
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                  (Unaudited)
 
                                                        Three Months Ended
                                                             March 31,
                                                       2001            2000
 
     Revenues                                         $32,789        $41,556
     Cost of Product Revenues                          29,889         28,992
     Gross Profit                                       2,900         12,564
 
     Operating Expenses:
      Research and development                         10,479          8,483
      Sales and marketing                               7,491          6,121
      General and administrative                        7,249          1,800
       Total operating expenses                        25,219         16,404
 
     Loss From Operations                            (22,319)        (3,840)
 
     Other Income, Net                                    276          1,439
     Loss Before Income Taxes                        (22,043)        (2,401)
 
     Income Taxes                                          19             22
 
     Net Loss                                       $(22,062)       $(2,423)
 
     Net loss per share, basic and diluted            $(0.87)        $(0.11)
 
     Shares used in computation, basic and diluted     25,493         21,763
 
 
                                   COM21, INC
           PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS*
                    (In thousands, except per share amounts)
                                  (Unaudited)
 
                                                       Three Months Ended
                                                            March 31,
                                                       2001            2000
 
     Revenues                                         $32,789        $41,556
     Cost of Product Revenues                          29,131         28,992
     Gross Profit                                       3,658         12,564
 
     Operating Expenses:
      Research and development                          9,538          8,483
      Sales and marketing                               7,452          6,121
      General and administrative                        4,703          1,800
       Total operating expenses                        21,693         16,404
 
     Loss From Operations                            (18,035)        (3,840)
 
     Other Income, Net                                    276          1,439
     Loss Before Income Taxes                        (17,759)        (2,401)
 
     Income Taxes                                          19             22
 
     Net Loss                                       $(17,778)       $(2,423)
 
     Net loss per share, basic and diluted            $(0.70)        $(0.11)
 
     Shares used in computation, basic and diluted     25,493         21,763
 
   * Pro Forma results exclude non-cash charges related to the acquisition of
    GADline and BitCom including stock compensation, and the amortization of
                        goodwill and intangible assets.
 
 
                                  COM21, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
 
                                                     March 31,    December 31,
     ASSETS                                            2001            2000
     Current assets:
      Cash and short-term investments                 $32,963        $45,914
      Accounts receivable                              30,267         40,609
      Other receivables                                 4,931         10,159
      Inventories                                      27,826         33,960
      Prepaid expenses and other                        2,808          4,188
       Total current assets                            98,795        134,830
     Long-term investments                              2,000          2,000
     Property and equipment, net                       16,240         16,690
     Intangible assets, net                            57,622         60,057
     Other assets                                         788            788
       Total Assets                                  $175,445       $214,365
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
      Accounts payable                                $25,326        $48,543
      Accrued compensation and related benefits         3,680          4,447
      Other current liabilities                         6,466          7,045
      Current portion of capital lease and
       debt obligations                                10,557         11,312
       Total current liabilities                       46,029         71,347
     Deferred rent                                        428            371
     Capital lease and debt obligations                   382              9
       Total liabilities                               46,839         71,727
 
     Stockholders' equity                             128,606        142,638
 
       Total Liabilities and Stockholders' Equity    $175,445       $214,365
 
 

SOURCE Com21, Inc.
    MILPITAS, Calif., April 19 /PRNewswire/ -- Com21, Inc. (Nasdaq:   CMTO)
 today reported financial results for the three-month period ended
 March 31, 2001.
     Revenues for the first quarter of 2001 were $32.8 million compared to
 $41.6 million recorded in the first quarter of 2000, and a 21% decrease
 sequentially.  Com21 reported a pro forma net loss for the quarter of
 $17.8 million, or $0.70 per share, compared to a pro forma net loss of
 $21.2 million, or $0.86 per share, in the fourth quarter of 2000.
     "Com21 was not immune to the industry-wide slowdown in cable equipment
 spending, which was particularly severe in the North American DOCSIS market,"
 said Craig Soderquist, Com21 president and CEO.  "However, our industry input
 suggests that the fundamental growth drivers in the broadband cable access
 market remain intact.  We believe this setback is temporary, and cable
 operators will resume aggressive spending plans within the year.  We see some
 evidence of this already," continued Soderquist, "as Com21 had its first
 positive book-to-bill ratio in several quarters.  This reversal improves our
 visibility into the future of the business, and may indicate that the worst is
 behind us.
     "On the international front, in fact, Com21's ATM (asynchronous transfer
 mode) modem sales actually increased by 4%, primarily to European customers.
 Overall international sales were up 7%, as international sales accounted for
 fully 76% of all our sales in the first quarter."
     Margins were adversely impacted in the quarter, as Com21 sold higher-cost
 OEM and first-generation product inventory.  In addition, the Company incurred
 an inventory standard write-down charge and other costs that totaled
 $1.5 million, which unfavorably impacted the gross operating margin by
 450 basis points.
     "While we do anticipate an upturn in the market, we continue to implement
 our restructuring plan that will further drive costs out of the organization
 and increase our ability to weather this stormy period," continued Soderquist.
 "We have now included a reevaluation of our BitCom and GADline acquisitions,
 along with the closing of our Wireless Business Unit.  We expect to incur
 between $80 and 85 million in restructuring charges in the second quarter, of
 which $2 to 4 million will be cash related, before the full benefit of this
 plan can be realized."
     In a further effort, Com21 has retained investment bank Broadview
 International to assist the Company in evaluating various strategic
 alternatives for maximizing shareholder value.
     "We feel that the current market environment offers a compelling reason to
 explore alternatives for Com21," noted Soderquist.  "We strongly believe in
 Com21 and the broadband access market in general, and we believe that the
 Company, with its superb technology and outstanding people, should command a
 much higher market valuation than the current stock price reflects.  We are
 committed to the best interests of all our stakeholders, and we believe that
 Broadview is a great partner for us in this exploration phase."
 
     About Com21, Inc.
     Com21, Inc. (www.com21.com) is a leading global supplier of system
 solutions for the broadband access market.  The Company's DOCSIS, DVB, and
 ATM-based products enable cable operators and service providers to deliver
 high-speed, cost-effective Internet and telephony applications to corporate
 telecommuters, small businesses, home offices, and residential users.  To
 date, Com21 has shipped over 1.3 million cable modems worldwide, along with
 over 1,500 headend controllers.  Com21 systems offer commercial service in
 cable systems passing 17 million households worldwide.
     Com21 is an ISO 9001 registered company with over 400 employees worldwide.
 The Company's corporate headquarters is located in Milpitas, California, USA,
 with its European headquarters in Delft, The Netherlands.  In addition, Com21
 maintains a research and development facility in Ireland, as well as sales and
 support offices in the United States and Canada, Europe, Asia, and Latin
 America.
 
     Safe Harbor Act Clause
     This press release contains forward-looking information within the meaning
 of Section 27A of the Securities Act of 1933 and Section21E of the Securities
 Exchange Act of 1934, and is subject to the safe harbors created by those
 sections.  Except for the historical information contained herein, this press
 release contains forward-looking statements, estimates, and assumptions by the
 Company that involve risks and uncertainties, including the Company's ability
 to complete and successfully integrate acquisitions, the Company's ability to
 gain new business and develop and offer new products, the expansion of
 operations by the Company's customers and the deployment of the Company's
 products in specific markets.  The matters discussed in this press release may
 also involve risks and uncertainties concerning Com21's products and services
 described in Com21's filings with the Securities and Exchange Commission
 (SEC).  In particular, see the risk factors described in the Company's most
 recent Form 10K and Form 10Q.  Com21 assumes no obligation to update the
 forward-looking information contained in this press release.
 
     NOTE:  Com21(R) is a registered trademark of Com21, Inc., Milpitas,
 California, U.S.A.  All other trademarks are the property of their respective
 owners.
 
 
                                   COM21, INC
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                  (Unaudited)
 
                                                        Three Months Ended
                                                             March 31,
                                                       2001            2000
 
     Revenues                                         $32,789        $41,556
     Cost of Product Revenues                          29,889         28,992
     Gross Profit                                       2,900         12,564
 
     Operating Expenses:
      Research and development                         10,479          8,483
      Sales and marketing                               7,491          6,121
      General and administrative                        7,249          1,800
       Total operating expenses                        25,219         16,404
 
     Loss From Operations                            (22,319)        (3,840)
 
     Other Income, Net                                    276          1,439
     Loss Before Income Taxes                        (22,043)        (2,401)
 
     Income Taxes                                          19             22
 
     Net Loss                                       $(22,062)       $(2,423)
 
     Net loss per share, basic and diluted            $(0.87)        $(0.11)
 
     Shares used in computation, basic and diluted     25,493         21,763
 
 
                                   COM21, INC
           PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS*
                    (In thousands, except per share amounts)
                                  (Unaudited)
 
                                                       Three Months Ended
                                                            March 31,
                                                       2001            2000
 
     Revenues                                         $32,789        $41,556
     Cost of Product Revenues                          29,131         28,992
     Gross Profit                                       3,658         12,564
 
     Operating Expenses:
      Research and development                          9,538          8,483
      Sales and marketing                               7,452          6,121
      General and administrative                        4,703          1,800
       Total operating expenses                        21,693         16,404
 
     Loss From Operations                            (18,035)        (3,840)
 
     Other Income, Net                                    276          1,439
     Loss Before Income Taxes                        (17,759)        (2,401)
 
     Income Taxes                                          19             22
 
     Net Loss                                       $(17,778)       $(2,423)
 
     Net loss per share, basic and diluted            $(0.70)        $(0.11)
 
     Shares used in computation, basic and diluted     25,493         21,763
 
   * Pro Forma results exclude non-cash charges related to the acquisition of
    GADline and BitCom including stock compensation, and the amortization of
                        goodwill and intangible assets.
 
 
                                  COM21, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
 
                                                     March 31,    December 31,
     ASSETS                                            2001            2000
     Current assets:
      Cash and short-term investments                 $32,963        $45,914
      Accounts receivable                              30,267         40,609
      Other receivables                                 4,931         10,159
      Inventories                                      27,826         33,960
      Prepaid expenses and other                        2,808          4,188
       Total current assets                            98,795        134,830
     Long-term investments                              2,000          2,000
     Property and equipment, net                       16,240         16,690
     Intangible assets, net                            57,622         60,057
     Other assets                                         788            788
       Total Assets                                  $175,445       $214,365
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
      Accounts payable                                $25,326        $48,543
      Accrued compensation and related benefits         3,680          4,447
      Other current liabilities                         6,466          7,045
      Current portion of capital lease and
       debt obligations                                10,557         11,312
       Total current liabilities                       46,029         71,347
     Deferred rent                                        428            371
     Capital lease and debt obligations                   382              9
       Total liabilities                               46,839         71,727
 
     Stockholders' equity                             128,606        142,638
 
       Total Liabilities and Stockholders' Equity    $175,445       $214,365
 
 SOURCE  Com21, Inc.