Turnstone Systems Reports First Quarter Results

Apr 18, 2001, 01:00 ET from Turnstone Systems, Inc.

    SANTA CLARA, Calif., April 18 /PRNewswire/ --
 Turnstone Systems, Inc. (Nasdaq:   TSTN), a leading provider of loop management
 hardware and software products that enable local exchange carriers to rapidly
 deploy and efficiently maintain digital subscriber line (DSL) services, today
 announced financial results for the fiscal quarter ended March 31, 2001.
     First quarter net revenues were $6.6 million, compared to $23.1 million in
 the same period a year earlier.  Net loss for the quarter was $(6.5) million
 or a loss of $(0.11) per share, compared to net income of $4.6 million or
 $0.07 per share for the same period a year earlier.  Adjusted net loss for the
 first quarter, which excludes amortization of deferred stock compensation and
 goodwill, was $(4.8) million or $(0.08) per share, compared to adjusted net
 income of $5.6 million or $0.09 per share in the first quarter of 2000.
     "As expected, our existing competitive local exchange carrier customers
 continued to show relatively weak demand during the quarter," said
 Rick Tinsley, President and Chief Executive Officer.  "However, we are making
 significant progress in our efforts to penetrate new markets and diversify our
 customer base.  We have introduced new product offerings to specifically
 address the challenges incumbent carriers face and have entered into a number
 of trials and evaluations with incumbent carriers around the world.  We
 believe that an increasing number of carriers are recognizing that modern,
 automated loop management solutions such as those Turnstone offers are
 critical to maximizing the profitability of high volume DSL services."
 
     Conference Call
     Turnstone will hold a conference call to discuss first quarter results at
 5:00 p.m. EDT today.  Interested parties may listen to the conference call
 live on the Internet or by telephone.
 
     TO LISTEN ON THE INTERNET:  Go to Turnstone's web site, located at
 www.turnstone.com, and click on the "Live Webcast" button.  Allow at least
 15 minutes before the conference call to register and to download and install
 any necessary audio software.  A replay of the call will be available at
 www.turnstone.com for seven days.
 
     TO LISTEN BY TELEPHONE:  Dial 212-676-5239 and enter reservation number
 18388650.  In addition to the live call, a replay of the conference call will
 be available one hour after the call concludes by dialing 800-633-8284 (or
 858-812-6440 from outside the U.S.) and entering reservation number
 18388650.  The replay will be available for seven days.
 
     About Turnstone Systems
     Turnstone Systems, Inc. is a leading provider of hardware and software
 products that enable local exchange carriers to rapidly deploy and efficiently
 maintain DSL services.  Turnstone's flagship product, the Copper
 CrossConnect(R) CX100, is a loop management platform that is deployed in
 central offices to enable automation and remote control of physical layer
 tasks related to DSL installation, qualification and maintenance.  Turnstone's
 SmartSplitter(TM) SX500 platform enables comprehensive loop management
 solutions for residential DSL services. Turnstone's CrossWorks(TM) software
 enables service providers to integrate these loop management functions into
 back-office Operational Support Systems (OSS), enhancing their ability to
 efficiently scale their DSL service offerings to meet demand.  Turnstone is
 based in Santa Clara, California, and has sales offices worldwide.  For more
 information about Turnstone, visit www.turnstone.com, email info@turnstone.com
 or phone the toll-free number 877-8-COPPER.
 
     Safe Harbor For Forward Looking Statements
     This press release contains certain forward-looking statements within the
 meaning of the U.S. Private Securities Litigation Reform Act of 1995.
 Specifically, statements concerning Turnstone's future business prospects and
 anticipated product and market expansion are forward-looking statements within
 the meaning of the Safe Harbor.  These statements are based on management's
 current expectations and are subject to certain risks and uncertainties that
 could cause actual results to differ materially.  Factors that could cause
 actual results to differ materially from those described herein include the
 Company's ability to successfully complete lab field trials and evaluations
 with incumbent local exchange carriers, general market acceptance and demand
 for DSL services and the rate at which local exchange carriers deploy these
 services, continued delay, slowdown or cancellation in the network build-out
 plans of competitive local exchange carriers, continued ability of carriers to
 obtain adequate financing to fund capital equipment purchases, fluctuations in
 quarterly operating results due to the timing and amount of orders for
 Turnstone products, ability of Turnstone to collect existing receivables from
 its customer base, ability of Turnstone to successfully penetrate the
 incumbent local exchange carrier market and expand internationally, continued
 competitive pressures in the marketplace, dependence on a single volume
 product and on a small number of customers, a long sales cycle for Turnstone's
 products and the ability of Turnstone to make timely delivery of new products
 and features.  Further information on potential risk factors that could affect
 Turnstone, its business and its financial results are detailed in the
 Company's periodic filings with the Securities and Exchange Commission,
 including, but not limited to, those risks and uncertainties listed in the
 sections entitled "Business -- Risk Factors," pages 15 to 26, and
 "Management's Discussion and Analysis of Financial Condition and Results of
 Operations - Overview," pages 31 to 33, in Turnstone's Annual Report on
 Form 10-K for the fiscal year ended December 31, 2000 filed with the
 Securities and Exchange Commission on March 15, 2001.  Turnstone undertakes no
 obligation to update any forward-looking statements contained herein to
 reflect events or circumstances after the date hereof or to reflect the
 occurrence of unanticipated events.
 
 
                              TURNSTONE SYSTEMS, INC.
                         CONDENSED STATEMENTS OF OPERATIONS
                        (In thousands except per share data)
                                    (Unaudited)
 
                                                 The Three Months Ended
                                                        March 31,
                                                   2001          2000
 
     Net revenues                                 $6,570        $23,107
     Cost of revenues                              2,972          8,756
         Gross profit                              3,598         14,351
     Operating expenses:
       Research and development                    6,433          2,728
       Sales and marketing                         4,592          2,078
       General and administrative                  1,444            783
       Amortization of deferred
        stock compensation                         1,208          1,818
       Amortization of intangibles                   404             --
         Total operating expenses                 14,081          7,407
         Operating income (loss)                (10,483)          6,944
     Interest income (expense)
      and other, net                               4,031            918
     Income (loss) before income tax             (6,452)          7,862
     Income tax expense                                1          3,277
         Net income (loss)                      $(6,453)         $4,585
         Basic net earnings (loss)
          per share of common stock               $(.11)           $.12
         Diluted net earnings (loss)
          per share of common stock               $(.11)           $.07
         Weighted-average shares of
          common stock outstanding
          used in computing basic
          net earnings (loss) per share           60,170         36,872
         Weighted-average shares of
          common stock outstanding
          used in computing diluted
          net earnings (loss) per share           60,170         63,612
 
 
                              TURNSTONE SYSTEMS, INC.
                              CONDENSED BALANCE SHEETS
                                   (In thousands)
                                    (Unaudited)
 
                                                March 31,    December 31,
                                                  2001           2000
     Assets
     Current assets:
       Cash and cash equivalents                $186,439       $199,091
       Short-term investments                     40,356         65,918
       Accounts receivable, net                      348          1,251
       Inventory                                  38,685         29,502
       Income tax receivable                       2,640          6,840
       Deferred tax asset                          3,616          3,616
       Prepaid expenses and
        other current assets                       2,442          2,176
         Total current assets                    274,526        308,394
 
       Property and equipment, net                 4,167          4,090
       Long-term investments                      46,200         23,939
       Restricted cash                             3,639          3,639
       Intangible assets                           5,409          5,832
       Other assets                                   43            103
         Total assets                            333,984        345,997
 
     Liabilities and stockholder' equity
     Current liabilities:
       Current obligations under
        note payable and capital leases            2,599          2,573
       Accounts payable                            6,425          8,229
       Accrued compensation and benefits           2,511          2,087
       Other current liabilities
        and accrued expenses                       5,103         10,521
       Deferred revenue                            1,083          1,802
         Total current liabilities                17,721         25,212
       Long-term obligations under
        capital leases, net of
        current portion                               19             41
       Other long-term liabilities                   135            117
         Total liabilities                        17,875         25,370
 
     Stockholders' equity:
       Convertible preferred stock                    --             --
       Common stock, $.001 stated value,
        200,000 shares authorized; 64,731
        and 65,623 shares issued and
        outstanding at March 31, 2001
        and December 31, 2000, respectively           65             66
       Additional paid-in capital                309,782        309,773
       Deferred stock compensation               (4,839)        (6,651)
       Accumulated other
        comprehensive income                         173             58
       Retained earnings                          10,928         17,381
         Total stockholders' equity              316,109        320,627
         Total liabilities and
          stockholders' equity                  $333,984       $345,997
 
 

SOURCE Turnstone Systems, Inc.
    SANTA CLARA, Calif., April 18 /PRNewswire/ --
 Turnstone Systems, Inc. (Nasdaq:   TSTN), a leading provider of loop management
 hardware and software products that enable local exchange carriers to rapidly
 deploy and efficiently maintain digital subscriber line (DSL) services, today
 announced financial results for the fiscal quarter ended March 31, 2001.
     First quarter net revenues were $6.6 million, compared to $23.1 million in
 the same period a year earlier.  Net loss for the quarter was $(6.5) million
 or a loss of $(0.11) per share, compared to net income of $4.6 million or
 $0.07 per share for the same period a year earlier.  Adjusted net loss for the
 first quarter, which excludes amortization of deferred stock compensation and
 goodwill, was $(4.8) million or $(0.08) per share, compared to adjusted net
 income of $5.6 million or $0.09 per share in the first quarter of 2000.
     "As expected, our existing competitive local exchange carrier customers
 continued to show relatively weak demand during the quarter," said
 Rick Tinsley, President and Chief Executive Officer.  "However, we are making
 significant progress in our efforts to penetrate new markets and diversify our
 customer base.  We have introduced new product offerings to specifically
 address the challenges incumbent carriers face and have entered into a number
 of trials and evaluations with incumbent carriers around the world.  We
 believe that an increasing number of carriers are recognizing that modern,
 automated loop management solutions such as those Turnstone offers are
 critical to maximizing the profitability of high volume DSL services."
 
     Conference Call
     Turnstone will hold a conference call to discuss first quarter results at
 5:00 p.m. EDT today.  Interested parties may listen to the conference call
 live on the Internet or by telephone.
 
     TO LISTEN ON THE INTERNET:  Go to Turnstone's web site, located at
 www.turnstone.com, and click on the "Live Webcast" button.  Allow at least
 15 minutes before the conference call to register and to download and install
 any necessary audio software.  A replay of the call will be available at
 www.turnstone.com for seven days.
 
     TO LISTEN BY TELEPHONE:  Dial 212-676-5239 and enter reservation number
 18388650.  In addition to the live call, a replay of the conference call will
 be available one hour after the call concludes by dialing 800-633-8284 (or
 858-812-6440 from outside the U.S.) and entering reservation number
 18388650.  The replay will be available for seven days.
 
     About Turnstone Systems
     Turnstone Systems, Inc. is a leading provider of hardware and software
 products that enable local exchange carriers to rapidly deploy and efficiently
 maintain DSL services.  Turnstone's flagship product, the Copper
 CrossConnect(R) CX100, is a loop management platform that is deployed in
 central offices to enable automation and remote control of physical layer
 tasks related to DSL installation, qualification and maintenance.  Turnstone's
 SmartSplitter(TM) SX500 platform enables comprehensive loop management
 solutions for residential DSL services. Turnstone's CrossWorks(TM) software
 enables service providers to integrate these loop management functions into
 back-office Operational Support Systems (OSS), enhancing their ability to
 efficiently scale their DSL service offerings to meet demand.  Turnstone is
 based in Santa Clara, California, and has sales offices worldwide.  For more
 information about Turnstone, visit www.turnstone.com, email info@turnstone.com
 or phone the toll-free number 877-8-COPPER.
 
     Safe Harbor For Forward Looking Statements
     This press release contains certain forward-looking statements within the
 meaning of the U.S. Private Securities Litigation Reform Act of 1995.
 Specifically, statements concerning Turnstone's future business prospects and
 anticipated product and market expansion are forward-looking statements within
 the meaning of the Safe Harbor.  These statements are based on management's
 current expectations and are subject to certain risks and uncertainties that
 could cause actual results to differ materially.  Factors that could cause
 actual results to differ materially from those described herein include the
 Company's ability to successfully complete lab field trials and evaluations
 with incumbent local exchange carriers, general market acceptance and demand
 for DSL services and the rate at which local exchange carriers deploy these
 services, continued delay, slowdown or cancellation in the network build-out
 plans of competitive local exchange carriers, continued ability of carriers to
 obtain adequate financing to fund capital equipment purchases, fluctuations in
 quarterly operating results due to the timing and amount of orders for
 Turnstone products, ability of Turnstone to collect existing receivables from
 its customer base, ability of Turnstone to successfully penetrate the
 incumbent local exchange carrier market and expand internationally, continued
 competitive pressures in the marketplace, dependence on a single volume
 product and on a small number of customers, a long sales cycle for Turnstone's
 products and the ability of Turnstone to make timely delivery of new products
 and features.  Further information on potential risk factors that could affect
 Turnstone, its business and its financial results are detailed in the
 Company's periodic filings with the Securities and Exchange Commission,
 including, but not limited to, those risks and uncertainties listed in the
 sections entitled "Business -- Risk Factors," pages 15 to 26, and
 "Management's Discussion and Analysis of Financial Condition and Results of
 Operations - Overview," pages 31 to 33, in Turnstone's Annual Report on
 Form 10-K for the fiscal year ended December 31, 2000 filed with the
 Securities and Exchange Commission on March 15, 2001.  Turnstone undertakes no
 obligation to update any forward-looking statements contained herein to
 reflect events or circumstances after the date hereof or to reflect the
 occurrence of unanticipated events.
 
 
                              TURNSTONE SYSTEMS, INC.
                         CONDENSED STATEMENTS OF OPERATIONS
                        (In thousands except per share data)
                                    (Unaudited)
 
                                                 The Three Months Ended
                                                        March 31,
                                                   2001          2000
 
     Net revenues                                 $6,570        $23,107
     Cost of revenues                              2,972          8,756
         Gross profit                              3,598         14,351
     Operating expenses:
       Research and development                    6,433          2,728
       Sales and marketing                         4,592          2,078
       General and administrative                  1,444            783
       Amortization of deferred
        stock compensation                         1,208          1,818
       Amortization of intangibles                   404             --
         Total operating expenses                 14,081          7,407
         Operating income (loss)                (10,483)          6,944
     Interest income (expense)
      and other, net                               4,031            918
     Income (loss) before income tax             (6,452)          7,862
     Income tax expense                                1          3,277
         Net income (loss)                      $(6,453)         $4,585
         Basic net earnings (loss)
          per share of common stock               $(.11)           $.12
         Diluted net earnings (loss)
          per share of common stock               $(.11)           $.07
         Weighted-average shares of
          common stock outstanding
          used in computing basic
          net earnings (loss) per share           60,170         36,872
         Weighted-average shares of
          common stock outstanding
          used in computing diluted
          net earnings (loss) per share           60,170         63,612
 
 
                              TURNSTONE SYSTEMS, INC.
                              CONDENSED BALANCE SHEETS
                                   (In thousands)
                                    (Unaudited)
 
                                                March 31,    December 31,
                                                  2001           2000
     Assets
     Current assets:
       Cash and cash equivalents                $186,439       $199,091
       Short-term investments                     40,356         65,918
       Accounts receivable, net                      348          1,251
       Inventory                                  38,685         29,502
       Income tax receivable                       2,640          6,840
       Deferred tax asset                          3,616          3,616
       Prepaid expenses and
        other current assets                       2,442          2,176
         Total current assets                    274,526        308,394
 
       Property and equipment, net                 4,167          4,090
       Long-term investments                      46,200         23,939
       Restricted cash                             3,639          3,639
       Intangible assets                           5,409          5,832
       Other assets                                   43            103
         Total assets                            333,984        345,997
 
     Liabilities and stockholder' equity
     Current liabilities:
       Current obligations under
        note payable and capital leases            2,599          2,573
       Accounts payable                            6,425          8,229
       Accrued compensation and benefits           2,511          2,087
       Other current liabilities
        and accrued expenses                       5,103         10,521
       Deferred revenue                            1,083          1,802
         Total current liabilities                17,721         25,212
       Long-term obligations under
        capital leases, net of
        current portion                               19             41
       Other long-term liabilities                   135            117
         Total liabilities                        17,875         25,370
 
     Stockholders' equity:
       Convertible preferred stock                    --             --
       Common stock, $.001 stated value,
        200,000 shares authorized; 64,731
        and 65,623 shares issued and
        outstanding at March 31, 2001
        and December 31, 2000, respectively           65             66
       Additional paid-in capital                309,782        309,773
       Deferred stock compensation               (4,839)        (6,651)
       Accumulated other
        comprehensive income                         173             58
       Retained earnings                          10,928         17,381
         Total stockholders' equity              316,109        320,627
         Total liabilities and
          stockholders' equity                  $333,984       $345,997
 
 SOURCE  Turnstone Systems, Inc.