EXHIBIT 99.1
PRESS RELEASE
Contact:
Ezenia! Inc.
Laura M. Alessio
(781) 505-2192
lalessio@ezenia.com
EZENIA! INC. ANNOUNCES 2003 SECOND QUARTER FINANCIAL RESULTS
BURLINGTON, MASS., August 14, 2003 - Ezenia!(R) Inc. (OTCBB: EZEN), a leading
provider of real-time collaboration solutions for corporate and government
networks and eBusiness, today reported its operating results for its fiscal
second quarter and six months ended June 30, 2003.
As reported, the Company generated revenues of $2.1 million for the second
quarter of 2003, compared to $3.2 million for the corresponding period of the
previous year. For the six months ended June 30, 2003, reported revenues were
$4.5 million, as compared with $5.9 million for the six months ended June 30,
2002.
Net loss for the fiscal second quarter and six months ended June 30, 2003 was
$644,000 ($0.05 per share) and $766,000 ($0.06 per share), respectively,
compared to a reported net loss for the quarter and six months ended June 30,
2002 of $8.5 million ($0.62 per share) and $20.4 million ($1.49 per share),
respectively. The net loss for the quarter and six months ended June 30, 2002
included the effect of a write-down of inventory of approximately $2.3 million
($0.16 per share), and a provision for impairment of long-lived assets of
approximately $2.1 million ($0.15 per share). In addition, the reported net loss
for the six-month period ended June 30, 2002 included a write-off of goodwill of
$10.7 million ($0.78 per share) related to the adoption of a new accounting
standard.
"Our feelings are mixed with respect to the results for the second quarter and
first six months of 2003," noted Khoa Nguyen, Ezenia! Chairman and CEO. "As
expected, we have seen a decline in sales of traditional videoconferencing
products and services. This was particularly steep in the second quarter, so
much so that our total net revenues reported this quarter were actually lower
than in the first quarter of 2003. We are encouraged to see a 32% increase in
reported revenues for the InfoWorkSpace(TM) software product in the second
quarter of 2003 over the same period last year, and a 43% increase in the
six-month period year over year. Combined with the cost savings realized in our
most recent restructuring, we are confident that the direction we are taking,
which is to build our business towards profitability based on sales of
InfoWorkSpace, irrespective of the less predictable sales and operating results
for our legacy videoconferencing
products, is the right one. We were also pleased to reach an agreement with
General Dynamics (NYSE: GD), which closed shortly after the end of the second
quarter 2003, whereby in connection with an amendment to a software development
agreement, GD agreed to terminate a put agreement with Ezenia!, resulting in the
cancellation of our $2.9 million liability."
"However, the road ahead remains very challenging," continued Mr. Nguyen.
"InfoWorkSpace bookings for this quarter fell short of expectations. A
significant reason for this shortfall was the lengthy delay in the issuance of
the interim and final reports from the Joint Interoperability Test Command
(JITC) and the Defense Information System Agency (DISA) certifying that
InfoWorkSpace Version 2.5 has successfully complied with the Interoperability
requirements as an enhancement to the Department of Defense Collaborative Tool
Suite (DCTS). We were also disappointed that we have not been able to increase
our gross profit margin on InfoWorkSpace sales in as significant a way as we had
hoped. Because of these factors, our cash used in operations year to date is
($749,000), exacerbating the already challenging situation regarding the
Company's liquidity and capital resources available at the end of 2002. In that
regard, in addition to focusing on generating positive cash flow from operations
during the remainder of 2003, the Board of Directors for Ezenia! will be
exploring whether there are other external debt or equity financing alternatives
which may become available."
The Company also announced that it had initiated legal proceedings against
Datacraft Mexico, S.A. de CV ("Datacraft"), in an attempt to recover
approximately $280,000 that is overdue to the Company. The amount unpaid
represents approximately $255,000 overdue with respect to Datacraft's purchase
of videoconferencing equipment that was resold to one of Datacraft's customers
in Mexico, Comision Federal de Electricidad, and another approximately $25,000
related to consignment equipment never returned by Datacraft. Ezenia! will be
seeking recovery of the amounts withheld by Datacraft for both the
videoconferencing equipment order and the consignment item, plus unspecified
damages. Said Mr. Nguyen, "Our second quarter 2003 results were heavily
dependent on Datacraft fulfilling its contractual payment obligation to us for
the videoconferencing equipment order. The impact of not receiving this payment
on our reported second quarter 2003 revenue, ending cash balance, and, to the
extent of our gross profit on this transaction, reported net loss, was severe.
It is with deep regret and profound disappointment that we have been forced to
take this action against our former reseller and partner, Datacraft. However,
given the acute liquidity and capital resource constraints the Company is
facing, we have concluded there is unfortunately no better option but to move
forward with this proceeding."
ABOUT EZENIA! INC.
Ezenia! Inc. (OTCBB: EZEN), founded in 1991, is a leading provider of real-time
collaboration solutions, bringing new and valuable levels of interaction and
collaboration to corporate networks and the Internet. By integrating voice,
video and data collaboration, the Company's award-winning products enable groups
to interact through a natural meeting experience regardless of geographic
distance. Ezenia! products allow dispersed groups to work together in real-time
using powerful capabilities such as instant messaging, whiteboarding, screen
sharing and text chat. The ability to discuss projects, share information and
modify documents allows users to significantly improve team
communication and accelerate the decision-making process. More information about
Ezenia! Inc. and its product offerings can be found at the Company's Web site,
www.ezenia.com.
Note to Investors
Statements included herein that are not historical facts include forward-looking
statements. Such forward-looking statements involve risks and uncertainties that
could cause actual operating results to differ from those indicated by such
forward-looking statements. These risks and uncertainties include the
considerations that are discussed in the Management's Discussion and Analysis
section of the Company's 2002 Annual Report on Form 10-K for the year ended
December 31, 2002, such as the evolution of Ezenia!'s market, dependence on
major customers, rapid technological change and competition, the ability to
successfully implement the Company's restructuring and cost reduction plan,
risks associated with the acquisition of InfoWorkSpace (including the Company's
ability to integrate the InfoWorkSpace product line and workforce) and other
considerations that are discussed further in the Management's Discussion and
Analysis section of the Company's 2002 Annual Report on Form 10-K for the year
ended December 31, 2002 such as the Company's ability to implement the proposed
refocusing of its business and to sustain viable operations. Copies of the
Company's 2002 Annual Report on Form 10-K for the year ended December 31, 2002,
or other publicly available financial information may be received at no charge
by contacting Investor Relations at Ezenia!.
###
Note: Ezenia! is a registered trademark of Ezenia! Inc., and the Ezenia! Logo
and InfoWorkSpace are trademarks of Ezenia! Inc. Additional information on
Ezenia! and its products is available at http://www.ezenia.com.
Ezenia! Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2003 2002
---------------- ---------------
ASSETS
Current assets
Cash and marketable securities $ 1,654 $ 2,403
Accounts receivable, net 1,154 1,780
Inventories 0 112
Prepaid software license 1,960 1,008
Other current assets 312 261
---------------- ---------------
Total current assets $ 5,080 $ 5,564
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 4,475 $ 4,193
Common Stock subject to put 2,875 2,875
Total stockholders' equity (2,270) (1,504)
---------------- ---------------
Total liabilities and stockholders' equity $ 5,080 $ 5,564
================ ===============
Ezenia! Inc.
Condensed Consolidated Statements of Operations
(In thousands)
For the three months For the six months
ended June 30, ended June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Net revenue $ 2,065 $ 3,207 $ 4,465 $ 5,865
Cost of revenue 1,152 4,115 2,004 5,513
--------- --------- --------- ---------
Gross profit (loss) 913 (908) 2,461 352
Operating expenses
Research and development 615 1,478 1,329 3,022
Sales and marketing 159 1,441 559 2,758
General and administrative 469 726 752 1,223
Depreciation and amortization 0 808 0 1,681
Occupancy and other facilities related cost 317 1,051 593 1,953
Impairment of long-lived assets 0 2,100 0 2,100
--------- --------- --------- ---------
Total operating expenses 1,560 7,604 3,233 12,737
--------- --------- --------- ---------
(Loss) from operations (647) (8,512) (772) (12,385)
Interest income 3 8 6 10
--------- --------- --------- ---------
(Loss) before income taxes and cumulative
effect of change in accounting principles (644) (8,504) (766) (12,375)
Income taxes benefit - - - 2,651
--------- --------- --------- ---------
Loss before cumulative effect of change
in accounting principle (644) (8,504) (766) (9,724)
Cumulative effect of change in accounting principle - - - (10,667)
Net (loss) $ (644) $(8,504) $ (766) $(20,391)
========= ========= ========= =========
Basic and diluted net loss per share:
Before cumulative effect of change in
accounting principle $ (0.05) $ (0.62) $ (0.06) $ (0.71)
Cumulative effect of change in accounting
principle $ - $ - $ - $ (0.78)
Net loss per share - basic and diluted $ (0.05) $ (0.62) $ (0.06) $ (1.49)
Weighted average common shares
Basic and diluted 13,664 13,632 13,664 13,647