Ikanos Communications Announces Results for the First Quarter 2014

Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following: design win pipeline and new product revenue momentum may not continue as anticipated or at all; that new designs and design wins will result in sales of our products at the levels anticipated, or at all; that our lab trials will be successful and, if successful, will eventually result in field trials or market deployments; that the delays in new customer product ramps will continue longer than anticipated; that the rate of acceptance of our new and future products, including our G.fast products, by our customers and telecommunications service providers may be lower than anticipated; our ability to complete future products, including our G.fast products, when anticipated or at all; that the unfavorable trends in certain maturing markets, such as Japan and Korea, will continue longer than anticipated; that our design win pipeline will continue to expand as anticipated; macroeconomic or other conditions which may cause our customers to defer purchasing plans or cancel any purchasing plans altogether despite successful design wins or successful field trials; the continued demand by telecommunications service providers for our specific xDSL semiconductor products; our ability to continue to effectively manage our business and cash position; the failure of telecommunications service providers to implement deployment plans on schedule, or at all, despite increased performance results; our ability to generate demand and close transactions for the sale of our products; competition in the markets in which we operate; and the fact that the products we sell may not satisfy shifting customer demand or compete successfully with our competitors' products. For a more detailed discussion of how these and other risks and uncertainties could cause our actual results to differ materially from those indicated in our forward-looking statements, see our reports filed with SEC (available at www.sec.gov), including our Annual Report on Form 10-K filed on February 28, 2014.

                                                                            
                        IKANOS COMMUNICATIONS, INC.                         
         Unaudited Condensed Consolidated Statements of Operations          
                   (In thousands, except per share data)                    
                                                                            
                                             Three Months Ended             
                                ------------------------------------------- 
                                  March 30,     December 29,    March 31,   
                                     2014           2013           2013     
                                -------------  -------------  ------------- 
                                                                            
Revenue                         $      14,513  $      17,582  $      26,152 
Cost of revenue                         7,436          8,806         12,196 
                                -------------  -------------  ------------- 
    Gross profit                        7,077          8,776         13,956 
                                -------------  -------------  ------------- 
Operating expenses:                                                         
  Research and development             12,676         12,503         13,518 
  Selling, general and                                                      
   administrative                       4,821          4,589          4,772 
                                -------------  -------------  ------------- 
    Total operating expenses           17,497         17,092         18,290 
                                -------------  -------------  ------------- 
Loss from operations                  (10,420)          (8,316)                (4,334)
                                                                                                                                                        
    Interest  income  and  other,                                                                                                
      net                                                                        242                        (71)                        82  
                                                                -------------    -------------    -------------  
Loss  before  income  taxes                            (10,178)                (8,387)                (4,252)
    Provision  for  income  taxes                            127                        246                        164  
                                                                -------------    -------------    -------------  
Net  loss                                                $          (10,305)  $            (8,633)  $            (4,416)
                                                                =============    =============    =============  
                                                                                                                                                        
Basic  and  diluted  net  loss  per                                                                                            
  share                                                    $              (0.10)  $              (0.10)  $              (0.06)
                                                                =============    =============    =============  
Weighted  average  outstanding                                                                                                
  shares:                                                                                                                                        
    Basic  and  diluted                                        98,749                  85,648                  70,413  
                                                                =============    =============    =============  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                  IKANOS  COMMUNICATIONS,  INC.                                                
          Unaudited  Reconciliation  of  GAAP  to  Non-GAAP  Condensed  Consolidated        
                                                      Statements  of  Operations                                                  
                                        (In  thousands,  except  per  share  data)                                      
                                                                                                                                                        
                                                                                Three  Months  Ended  March  30,  2014      
                                                                          --------------------------------------  
                                                                                  As              Non-GAAP                                    
                                                                            Reported      Adjustments              Non-GAAP  
                                                                          ---------    ------------            ---------  
Revenue                                                            $    14,513    $                    -            $    14,513  
Cost  of  revenue                                                    7,436                        (2)  (a)          7,314  
                                                                                                                (120)  (b)                      
                                                                                                                                                        
                                                                          ---------    ------------            ---------  
        Gross  profit                                                  7,077                    (122)                  7,199  
                                                                          ---------    ------------            ---------  
                                                                                                                                                        
Operating  expenses:                                                                                                                  
    Research  and  development                            12,676                    (640)  (a)        12,036  
                                                                                                                                                        
    Selling,  general  and                                                                                                            
      administrative                                                4,821                    (347)  (a)          4,474  
                                                                                                                                                        
                                                                          ---------    ------------            ---------  
        Total  operating  expenses                        17,497                    (987)                16,510  
                                                                          ---------    ------------            ---------  
Loss  from  operations                                      (10,420)                1,109                  (9,311)
    Interest  income  and  other,  net                      242                          -                        242  
                                                                          ---------    ------------            ---------  
Loss  before  income  taxes                              (10,178)                1,109                  (9,069)
Provision  for  income  taxes                                  127                          -                        127  
                                                                          ---------    ------------            ---------  
Net  loss                                                          $  (10,305)  $            1,109            $    (9,196)
                                                                          =========    ============            =========  
                                                                                                                                                        
Net  loss  per  share:                                                                                                                  
    Basic  and  diluted                                    $      (0.10)                                      $      (0.09)
                                                                          =========                                        =========  
                                                                                                                                                        
Weighted  average  outstanding  shares:                                                                                
    Basic  and  diluted                                          98,749                                              98,749  
                                                                          =========                                        =========  
                                                                                                                                                        

                                                                                                                                                        
                                                IKANOS  COMMUNICATIONS,  INC.                                                  
        Unaudited  Reconciliation  of  GAAP  to  Non-GAAP  Condensed  Consolidated          
                                                    Statements  of  Operations                                                    
                                      (In  thousands,  except  per  share  data)                                        
                                                                                                                                                        
                                                                                Three  Months  Ended  March  31,  2013      
                                                                          --------------------------------------  
                                                                                  As              Non-GAAP                                    
                                                                            Reported      Adjustments              Non-GAAP  
                                                                          ---------    ------------            ---------  
Revenue                                                            $    26,152    $                    -            $    26,152  
Cost  of  revenue                                                  12,196                        (1)  (a)        12,075  
                                                                                                                (120)  (b)                      
                                                                                                                                                        
                                                                          ---------    ------------            ---------  
        Gross  profit                                                13,956                    (121)                14,077  
                                                                          ---------    ------------            ---------  
                                                                                                                                                        
Operating  expenses:                                                                                                                  
    Research  and  development                            13,518                    (571)  (a)        12,947  
                                                                                                                                                        
    Selling,  general  and                                                                                                            
      administrative                                                4,772                    (262)  (a)          4,385  
                                                                                                                (125)  (b)                      
                                                                          ---------    ------------            ---------  
        Total  operating  expenses                        18,290                    (958)                17,332  
                                                                          ---------    ------------            ---------  
Loss  from  operations                                        (4,334)                1,079                  (3,255)
    Interest  income  and  other,  net                        82                          -                          82  
                                                                          ---------    ------------            ---------  
Loss  before  income  taxes                                (4,252)                1,079                  (3,173)
Provision  for  income  taxes                                  164                          -                        164  
                                                                          ---------    ------------            ---------  
Net  loss                                                          $    (4,416)  $            1,079            $    (3,337)
                                                                          =========    ============            =========  
                                                                                                                                                        
Net  loss  per  share:                                                                                                                  
    Basic  and  diluted                                    $      (0.06)                                      $      (0.05)
                                                                          =========                                        =========  
                                                                                                                                                        
Weighted  average  outstanding  shares:                                                                                
    Basic  and  diluted                                          70,413                                              70,413  
                                                                          =========                                        =========  
                                                                                                                                                        
                                                                                                                                                        
Notes:                                                                                                      Three  Months  Ended  
                                                                                                              ---------------------
                                                                                                                March  30,    March  31,
                                                                                                                    2014              2013      
                                                                                                              ----------  ----------
    (a)      Stock-based  compensation                                              $            989  $            834
    (b)      Amortization  of  acquired  intangible  assets                        120                245
                                                                                                              ----------  ----------
                Total  non-GAAP  adjustments                                          $        1,109  $        1,079
                                                                                                              ==========  ==========
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                IKANOS  COMMUNICATIONS,  INC.                                                  
        Unaudited  Reconciliation  of  GAAP  to  Non-GAAP  Condensed  Consolidated          
                                                    Statements  of  Operations                                                    
                                      (In  thousands,  except  per  share  data)                                        
                                                                                                                                                        
                                                                            Three  Months  Ended  December  29,  2013    
                                                                          --------------------------------------  
                                                                                  As                Non-GAAP                                  
                                                                            Reported      Adjustments              Non-GAAP  
                                                                          ---------    -------------          ---------  
Revenue                                                            $    17,582    $                      -          $    17,582  
Cost  of  revenue                                                    8,806                          (2)(a)          8,684  
                                                                                                                  (120)(b)                      
                                                                                                                                                        
                                                                          ---------    -------------          ---------  
                    Gross  profit                                      8,776                      (122)                8,898  
                                                                          ---------    -------------          ---------  
                                                                                                                                                        
Operating  expenses:                                                                                                                  
                Research  and  development                12,503                      (640)(a)        11,863  
                                                                                                                                                        
                Selling,  general  and                                                                                                
                  administrative                                    4,589                      (281)(a)          4,308  
                                                                                                                                                        
                                                                          ---------    -------------          ---------  
                    Total  operating  expenses            17,092                      (921)              16,171  
                                                                          ---------    -------------          ---------  
Loss  from  operations                                        (8,316)                  1,043                (7,273)
                Interest  income  and  other,                                                                                    
                  net                                                              (71)                          -                      (71)
                                                                          ---------    -------------          ---------  
Loss  before  income  taxes                                (8,387)                  1,043                (7,344)
Provision  for  income  taxes                                  246                            -                      246  
                                                                          ---------    -------------          ---------  
Net  loss                                                          $    (8,633)  $              1,043          $    (7,590)
                                                                          =========    =============          =========  
                                                                                                                                                        
Net  loss  per  share:                                                                                                                  
                Basic  and  diluted                        $      (0.10)                                      $      (0.09)
                                                                          =========                                        =========  
                                                                                                                                                        
Weighted  average  outstanding  shares:                                                                                
                Basic  and  diluted                              85,648                                              85,648  
                                                                          =========                                        =========  
                                                                                                                                                        
Notes:                                                                                        Three  Months                            
                                                                                                            Ended                                  
                                                                                                      December                                  
                                                                                                      29,2013                                    
                                                                                                -------------                              
    (a)      Stock-based  compensation                                $                  923                              
    (b)      Amortization  of  acquired                                                                                        
                  intangible  assets                                                                120                              
                                                                                                -------------                              
                Total  non-GAAP  adjustments                            $              1,043                              
                                                                                                =============                              
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                  IKANOS  COMMUNICATIONS,  INC.                                                
                              Unaudited  Condensed  Consolidated  Balance  Sheets                            
                                                              (In  thousands)                                                              
                                                                                                                                                        
                                                                          March  30,        December  29,      March  31,    
                                                                                2014                    2013                    2013        
                                                                      -------------  -------------  -------------
                            Assets                                                                                                                
Current  assets:                                                                                                                          
    Cash,  cash  equivalents  and                                                                                                
      short-term  investments                    $            33,660  $            39,516  $            31,565
    Accounts  receivable                                          10,962                15,892                10,441
    Inventory                                                                1,314                  2,017                  7,375
    Prepaid  expenses  and  other                                                                                                
      current  assets                                                    3,075                  3,245                  3,684
                                                                      -------------  -------------  -------------
        Total  current  assets                                    49,011                60,670                53,065
Property  and  equipment,  net                                8,666                  8,612                  8,281
Intangible  assets,  net                                              598                      718                  1,285
Other  assets                                                              1,949                  1,952                  2,556
                                                                      -------------  -------------  -------------
                                                                      $            60,224  $            71,952  $            65,187
                                                                      =============  =============  =============
                                                                                                                                                        
      Liabilities  and  Stockholders'                                                                                        
                              Equity                                                                                                              
Current  liabilities:                                                                                                                
    Revolving  line                                      $              8,480  $            12,000  $              5,000
    Accounts  payable                                                  5,919                  4,692                  3,494
    Accrued  liabilities                                            8,093                  8,232                10,828
                                                                      -------------  -------------  -------------
        Total  current  liabilities                          22,492                24,924                19,322
Other  liabilities                                                    1,541                  1,637                  2,561
                                                                      -------------  -------------  -------------
        Total  liabilities                                          24,033                26,561                21,883
Stockholders'  equity                                            36,191                45,391                43,304
                                                                      -------------  -------------  -------------
                                                                      $            60,224  $            71,952  $            65,187
                                                                      =============  =============  =============
                                                                                                                                                        
                                                                                                                                                        
 




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