Occam Networks 8-K Occam Networks Announces Fourth-Quarter and Full-Year 2008 Results

Exhibit 99.1

Occam Networks Announces Fourth-Quarter and Full-Year 2008 Results

Company Reports Profitability on Quarterly Revenues of $31.7 Million

SANTA BARBARA, Calif.--(BUSINESS WIRE)--February 26, 2009--Occam Networks®, Inc. (Nasdaq: OCNW), a leading broadband access supplier offering multiservice access platform (MSAP) solutions based on pure packet technologies, today reported financial results for the fourth-quarter and year ended December 31, 2008.

Revenue for the fourth quarter was $31.7 million, up 26 percent from the prior quarter and up 49 percent from the same quarter a year ago. Sequential revenue growth was primarily due to increased volume in the company’s copper business.

Gross margin for the fourth quarter of 2008 was $13.1 million, or 41% of revenue, compared with $10.8 million, or 43% of revenue, for the prior quarter. Gross margin for the fourth quarter of 2008 was impacted primarily by an inventory provision for certain product components. Gross margin for the fourth quarter of 2007 was $9.2 million, or 43% of revenue.

As reported under U.S. generally accepted accounting principles (GAAP), net income available to common stockholders for the fourth quarter of 2008 was $1.1 million, or $0.06 per basic and diluted share, compared with a net loss of $659,000, or a loss of $0.03 per basic share, for the third quarter and with a net loss of $4.6 million, or a loss of $0.23 per basic share, for the fourth quarter of 2007.

Non-GAAP net income available to common stockholders for the fourth quarter of 2008 was $1.5 million, or $0.07 per diluted share, which excludes stock-based compensation expense of $698,000 and release of royalty accrual of $360,000. This compared with a net loss of $31,000 or $0.00 per basic share, for the third quarter, which excludes stock-based compensation expense of $628,000, and with a net loss of $1.9 million, or a loss of $0.09 per basic share, for the fourth quarter of 2007, which excludes stock-based compensation of $526,000 and a charge of $2.2 million related to the expense of purchased in-process technology. A reconciliation of Occam’s non-GAAP results to its GAAP results is provided in the financial statements portion of this news release.

"During the year, our key goal was to position Occam for profitability by growing our overall customer base and launching sales of our GPON product, and these drove the successful execution of our business during the quarter," said Bob Howard-Anderson, president and CEO of Occam. "During the quarter we also experienced some slowdown in bookings and have seen additional order delays during the first quarter, as customers reacted to the economic environment.”

As a result of the current environment, the company anticipates first quarter 2009 revenues to approximate those of first quarter 2008. In addition, due to the economic uncertainty, the company will not be providing financial expectations for 2009 at this time.

“We believe, though, that the company is positioned for long-term growth in the markets that we serve, and we remain optimistic about our future prospects once the economy recovers," added Mr. Howard-Anderson.

For full-year 2008, revenue was $99.3 million, up 32 percent from the prior year. GAAP net loss for 2008 was $6.7 million, or $0.34 per basic share, compared with a GAAP net loss for 2007 of $10.4 million, or $0.53 per basic share. Non-GAAP net loss for 2008 was $3.3 million, or $0.17 per basic share, compared with a non-GAAP net loss for 2007 of $6.1 million, or $0.31 per basic share.

Highlights for the fourth quarter of 2008 included:

• Continued customer adoption of GPON product, resulting in a total of more than 25 network design wins in 2008, validating Occam’s performance, ease of deployment and rapid turn up
• U.S. Department of Agriculture Rural Utilities Service (RUS) listing of Occam’s GPON OLT and ONT solutions
• INTERNET TELEPHONY Magazine naming Occam’s 6012i chassis product of the year, highlighting the product’s advancements in providing a new level of intelligence, integration and simplicity
• Continued shipments to FairPoint Communications for its major broadband initiative in Northern New England.

Today’s Conference Call

Occam plans to hold a teleconference to discuss its fourth-quarter and full year results at 5:00 p.m. ET (2:00 p.m. PT) today. The call can be accessed by dialing (719) 325-4820 (for both U.S. and international callers). A live and archived webcast of the call will be available on the Occam website for up to one year after the call. To access the webcast, go to the Investor Relations page at http://www.occamnetworks.com and click on the “4Q 2008 Webcast” link. In addition to the webcast, a phone replay will be available for one week after the live call at (719) 457-0820, code number 3962894.

Non-GAAP Disclosure

Certain non-GAAP financial measures are included in this news release. Occam’s GAAP results have been adjusted to exclude stock-based compensation charges associated with the issuance of stock options, restricted stock units, and restricted stock, as well as other items detailed in the reconciliation below. These non-GAAP financial measures are provided to enhance the reader’s overall understanding of the company’s financial performance and company prospects for the future. Specifically, Occam believes non-GAAP measures can provide useful information to both management and investors by excluding certain non-cash expenses that are not indicative of the company’s core operating results. Further, these non-GAAP financial measures are one of the primary indicators management uses for planning and forecasting future periods. In addition, since Occam has historically reported non-GAAP measures to the investment community, management believes the inclusion of non-GAAP measures provides consistency in Occam’s financial reporting. The presentation of this additional information is not meant to be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP. A reconciliation of non-GAAP net loss to GAAP net loss is included below.

Cautionary Note Concerning Forward-Looking Statements

This news release contains forward-looking statements within the meaning of applicable securities laws, including statements about the company’s efforts to continue to improve operating performance, and the status of the relationship with FairPoint. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those indicated in forward-looking statements. Risks and uncertainties that could adversely affect the company’s business, revenues, results of operations and financial condition include, without limitation, the following: (i) the company's revenues and operating results have varied substantially on a quarter-to-quarter basis in the past and are likely to continue to vary in the future based, among other factors, on levels of customer demand, capital investment trends in the telecommunications industry, the size and timing of orders the company receives, and potentially substantial delays from the time the company receives orders until the company may recognize revenue under applicable revenue recognition rules; (ii) the company cannot predict the amount or timing of orders from FairPoint or the timing of its ability to recognize resulting revenue; (iii) capital investment in the telecommunications industry may be reduced if macroeconomic weakness continues in North America; (iv) any inability to remedy previously disclosed internal control deficiencies could have an adverse impact on the reliability of the company’s financial statements; and (v) the company is subject to litigation risks associated with pending stockholder litigation arising from its recent audit committee investigation and financial restatement. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made. Please also refer to the company's most recent Annual Report on Form 10-K filed on March 11, 2008 and Quarterly Reports on Form 10-Q filed on November 10, 2008, as well as the company's future filings with the SEC, for other important risk factors that could cause the company's actual results to differ materially from those contained in any forward-looking statements.

About Occam Networks Inc.

Occam Networks' broadband access solutions empower service providers to offer profitable new voice, data and video services over copper and fiber. Occam systems deliver flexibility and scalability in a Triple Play world. Over 2 million BLC 6000 ports are currently deployed at over 315 service providers worldwide. For more information, please visit www.occamnetworks.com.

Occam Networks and Occam BLC 6000 are either registered trademarks or trademarks of Occam Networks, Inc. in the United States and/or other countries.

All other trademarks mentioned are the property of their respective owners.

-- Financial Statements Attached --

OCCAM NETWORKS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
	December 31,		December 31,
	2008		2007*
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	30,368	$	37,637
Restricted cash		13,771		13,103
Accounts receivable, net		17,391		19,712
Inventories		16,761		13,371
Prepaid and other current assets		3,290		2,108
Total current assets		81,581		85,931
Property and equipment, net		10,834		8,874
Intangibles, net		251		890
Other assets		68		83
Total assets	$	92,734	$	95,778
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,911	$	10,135
Accrued expenses		8,687		6,464
Deferred revenue		17,612		17,313
Deferred rent		394		237
Capital lease obligations		24		17
Total current liabilities		33,628		34,166
Deferred rent, net of current portion		1,892		1,299
Capital lease obligation, net of current portion		43		47
Total liabilities		35,563		35,512
Stockholders’ equity:
Common stock, $0.001 par value, 250,000,000 shares authorized; 20,268,488 and 19,773,730 shares issued and outstanding at December 31, 2008 and December 31, 2007, respectively		289		289
Additional paid-in capital		183,409		179,786
Accumulated deficit		(126,527)		(119,809)
Total stockholders’ equity		57,171		60,266
Total liabilities and stockholders’ equity	$	92,734	$	95,778
* Some amounts have been reclassified to conform with current classifications.

OCCAM NETWORKS, INC. AND SUBSIDIARY
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
	Three months ended								Twelve months ended
	December 31,		September 30,			December 31,			December 31,			December 31,
	2008		2008			2007			2008			2007
Revenue	$	31,658	$	25,131		$	21,265		$	99,268		$	75,149
Cost of revenue (1)		18,546		14,380			12,083			56,877			46,137
Gross profit		13,112		10,751			9,182			42,391			29,012
Operating expenses (1):
Research and product development		4,627		5,004			4,336			18,964			13,321
Sales and marketing		5,095		4,677			3,871			19,855			14,650
General and administrative		2,559		2,050			3,793			10,812			11,823
In-process research and product development		-		-			2,180			-			2,180
Total operating expenses		12,281		11,731			14,180			49,631			41,974
Income (loss) from operations		831		(980	)		(4,998	)		(7,240	)		(12,962	)
Other income, net		360		-			-			(342	)		-
Interest income, net		235		250			491			1,120			2,632
Income (loss) before provision for income taxes		1,426		(730	)		(4,507	)		(6,462	)		(10,330	)
Provision for income taxes		286		(71	)		56			256			56
Net income (loss) available (attributable) to common stockholders	$	1,140	$	(659	)	$	(4,563	)	$	(6,718	)	$	(10,386	)
Net income (loss) per share available (attributable) to common stockholders:
Basic	$	0.06	$	(0.03	)	$	(0.23	)	$	(0.34	)	$	(0.53	)
Diluted	$	0.06	$	(0.03	)	$	(0.23	)	$	(0.34	)	$	(0.53	)
Weighted average shares attributable to common stockholders:
Basic		20,017		19,894			19,770			19,874			19,760
Diluted		20,046		19,894			19,770			19,874			19,760
(1) Total stock-based compensation included in:
Cost of revenue	$	87	$	72		$	39		$	377		$	233
Research and product development		260		243			212			1,128			754
Sales and marketing		173		149			136			731			558
General and administrative		178		164			139			811			546
Total stock-based compensation	$	698	$	628		$	526		$	3,047		$	2,091

OCCAM NETWORKS, INC. AND SUBSIDIARY
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
	Three months ended								Twelve months ended
	December 31,		September 30,			December 31,			December 31,			December 31,
	2008		2008			2007			2008			2007
Revenue	$	31,658	$	25,131		$	21,265		$	99,268		$	75,149
Cost of revenue		18,459		14,308			12,044			56,500			45,904
Gross profit		13,199		10,823			9,221			42,768			29,245
Operating expenses:
Research and product development		4,367		4,761			4,124			17,836			12,567
Sales and marketing		4,922		4,528			3,735			19,124			14,092
General and administrative		2,381		1,886			3,654			10,001			11,277
Total operating expenses		11,670		11,175			11,513			46,961			37,936
Income (loss) from operations		1,529		(352	)		(2,292	)		(4,193	)		(8,691	)
Other income, net		-		-			-			(11	)		-
Interest income, net		235		250			491			1,120			2,632
Non-GAAP income (loss)		1,764		(102	)		(1,801	)		(3,084	)		(6,059	)
Provision for income taxes		286		(71	)		56			256			56
Net income (loss) available (attributable) to common stockholders	$	1,478	$	(31	)	$	(1,857	)	$	(3,340	)	$	(6,115	)
Non-GAAP net income (loss) per share available (attributable) to common stockholders:
Basic	$	0.07	$	(0.00	)	$	(0.09	)	$	(0.17	)	$	(0.31	)
Diluted	$	0.07	$	(0.00	)	$	(0.09	)	$	(0.17	)	$	(0.31	)
Weighted average shares attributable to common stockholders:
Basic		20,017		19,894			19,770			19,874			19,760
Diluted		20,046		19,894			19,770			19,874			19,760
Reconciliation of non-GAAP net income (loss) to GAAP net income (loss):
Non-GAAP net income (loss)	$	1,478	$	(31	)	$	(1,857	)	$	(3,340	)	$	(6,115	)
Stock-based compensation		698		628			526			3,047			2,091
Release of royalty accrual		360		-			-			360			-
Terawave-related divestiture charge		-		-			-			691			-
In-process research and product development		-		-			2,180			-			2,180
Net income (loss)	$	1,140	$	(659	)	$	(4,563	)	$	(6,718	)	$	(10,386	)

CONTACT:
Occam Networks
Jeanne Seeley, 1-805-692-2957 (Financial)
ir@occamnetworks.com
or
Stearns Johnson Communications
Tim Johnson, 1-415-397-7600 (Media)
tjohnson@stearnsjohnson.com