Tut Systems, Inc. Reports Fourth Quarter and Year End 2004 Results

Tut Systems, Inc. Reports Fourth Quarter and Year End 2004 Results LAKE OSWEGO, Ore., Jan. 25 /PRNewswire-FirstCall/ -- Tut Systems, Inc. (NASDAQ:TUTS), today announced its fourth quarter and year-end results for 2004. Revenue for the quarter ended December 31, 2004 was $7.0 million compared with revenue of $9.2 million for the quarter ended December 31, 2003. This represents a decrease in revenue of 24% when compared with the fourth quarter of 2003 and a 5% increase when compared with third quarter 2004 revenue of $6.7 million. Revenue for the year ended December 31, 2004 was $25.0 million compared with revenue of $32.2 million for the year ended December 31, 2003. This represents a year-over-year decrease in revenue of 22%. Revenue relating to the broadband transport and service management products was $2.1 million and $1.1 million for the quarters ended December 31, 2003 and 2004, respectively and $8.3 million and $6.9 million for the years ended December 31, 2003 and 2004 respectively. Revenue related to video processing systems was $7.1 million and $5.9 million for the quarters ended December 31, 2003 and 2004, respectively and $23.9 million and $18.1 million for the years ended December 31, 2003 and 2004 respectively. International sales represented 19.4% and 28.2% of total sales for the quarters ended December 31, 2003 and 2004, respectively. For the years ended December 31, 2003 and 2004, international sales represented 18.4% and 23.3% of total sales. Net loss for the three months ended December 31, 2004 was $(2.6) million or $(0.11) per basic and diluted share. This compares with the net loss for the three months ended December 31, 2003 of $(0.5) million or $(0.03) per basic and diluted share. Net loss for the year ended December 31, 2004 was $(13.5) million or $(0.63) per basic and diluted share compared with a net loss of $(5.5) million or $(0.28) per basic and diluted share for the year ended December 31, 2003. "As we enter 2005, we are very excited about the level of customer activity in which we are engaged in the Telco TV market in North America and the rest of the world," said Sal D'Auria, Chairman, President and CEO of Tut Systems, Inc. "Over the course of the next several quarters we anticipate that many of the tier one and other large carriers will begin deploying IPTV. We believe that our industry leadership position and leading edge technology, uniquely positions us to benefit from these opportunities." Fourth Quarter Conference Call Information Tut Systems will host a conference call to discuss fourth quarter results on January 26, 2005 beginning at 5:30 am Pacific time. For callers within the United States, please dial 877-356-8058, at least 5 minutes before start time or visit http://www.tutsystems.com/ . International participants may dial 706-634-2465 or visit http://www.tutsystems.com/ . Enter conference identification number 3554053. For callers within the United States accessing the conference call replay, please dial 800-642-1687 or 706-645-9291, conference ID # 3554053. The replay will be available two hours after the call ends for one week, and will be available at http://www.tutsystems.com/. Recent Announcements: Significant announcements from Tut Systems since the third quarter earnings release include: 10/25/04 Broadband Municipal Consortium Welcomes Tut Systems, Inc. 11/8/04 Tut Systems Achieves Telco TV Industry Milestone With 100th Operator Delivering Digital TV 11/11/04 Consolidated Communications Announces 'Telco TV' Service Using Tut Systems Astria(R) Digital Headend Solution 11/16/04 Tut Systems to Demonstrate Integrated IPTV Content Security System With Widevine(R) Technologies and Thomson at Telco TV 2004 11/18/04 Alcatel and Tut Systems Announce Their 10th Joint IPTV Customer in the US IOC Market 1/7/05 Tut Systems, Inc. to Acquire Cosine Communications and Provides Preliminary 2004 Revenue Results Forward-Looking Statements Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Specifically, without limitation, statements relating to (1) our anticipation that many tier one and other large carriers will begin deploying IPTV over the next several quarters and (2) our leading edge technology and industry leadership position uniquely positions us to benefit from IPTV deployments. Forward looking statements are based on management's current expectations and beliefs, and are subject to risks and uncertainties. As a result, actual results may differ materially from the forward-looking statements contained herein. Risks that relate to these forward looking statements include the risks inherent in new and developing technologies and markets, the risk that competitors will introduce rival technologies and products, and the risk that the expected financial benefits of the IPTV deployment will not be achieved as a result of unforeseen costs or events. Further detailed information about risk factors that may impact our business is set forth in our periodic filings with the Securities and Exchange Commission. We expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. About Tut Systems, Inc. Tut Systems, Inc. delivers content processing and distribution products for deploying next-generation data and video services over broadband networks. Service providers, content providers and government agencies in the United States and internationally use Tut Systems solutions to deliver broadcast- quality video over broadband networks. NOTE: Tut Systems is headquartered in Lake Oswego, OR with regional offices across North America, Europe and Asia. For more information visit www.tutsys.com or call 971-217-0400. TUT SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three months ended Year ended December 31, December 31 2003 2004 2003 2004 Revenue: Product $9,090 $7,010 $31,474 $24,942 License and royalty 114 10 718 50 Total revenue 9,204 7,020 32,192 24,992 Cost of goods sold 4,621 4,302 15,646 16,980 Gross profit 4,583 2,718 16,546 8,012 Operating expenses: Sales and marketing 1,777 2,258 7,479 8,096 Research and development 1,688 1,752 7,909 7,278 General and administrative 1,151 1,076 4,476 4,336 Restructuring costs -- -- 292 -- Impairment of intangible assets -- -- 128 202 Amortization of intangible assets 449 376 1,809 1,524 Total operating expenses 5,065 5,462 22,093 21,436 Loss from operations (482) (2,744) (5,547) (13,424) Gain on sale of investments -- 125 -- 125 Interest and other (expense) income, net (37) (11) 30 (161) Net loss $(519) $(2,630) $(5,517) $(13,460) Net loss per share, basic and diluted $(0.03) $(0.11) $(0.28) $(0.63) Shares used in computing net loss, basic and diluted 20,202 24,499 19,996 21,392 TUT SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, December 31, 2003 2004 ASSETS Current assets: Cash and cash equivalents $14,370 $12,440 Accounts receivable, net 7,062 6,585 Inventories, net 4,181 3,994 Prepaid expenses and other 1,026 1,137 Insurance receivable 10,725 -- Total current assets 37,364 24,156 Property and equipment, net 1,722 1,874 Intangibles and other assets 3,685 1,935 Total assets $42,771 $27,965 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $4,571 $4,545 Deferred revenue 253 226 Legal settlement liability 10,725 -- Total current liabilities 15,549 4,771 Note payable and other liabilities 3,567 3,816 Total liabilities 19,116 8,587 Stockholders' equity 23,655 19,378 Total liabilities and stockholders' equity $42,771 $27,965 Source: Tut Systems, Inc. CONTACT: Randy Gausman, Chief Financial Officer, +1-971-217-0400, or RandallG@TutSys.com, or Jeff Schline, Manager, Corporate Communications, +1-971-217-0364, or jschline@TutSys.com, both of Tut Systems, Inc. Web site: http://www.tutsys.com/ ------- Profile: International Entertainment