Terayon Provides Update on Accounting Review
11 January 2006 - 9:00AM
PR Newswire (US)
Company Also Receives Letter From NASDAQ Regarding Its 2005
Shareholder Meeting SANTA CLARA, Calif., Jan. 10
/PRNewswire-FirstCall/ -- Terayon Communication Systems, Inc.
(NASDAQ:TERNE), a leading provider of digital video networking
applications and home access solutions, announced on November 7,
2005 that the filing of its Form 10-Q for the third quarter of 2005
would be delayed and that it had commenced an accounting review
after determining that certain revenues recognized in the second
half of fiscal year 2004 may have been recorded in incorrect
periods. The delayed filing of Terayon's Form 10-Q for the third
quarter of 2005 caused Terayon to be in violation of NASDAQ
Marketplace Rule 4310(c)(14), which requires the timely filing of
periodic reports with the U.S. Securities and Exchange Commission
(SEC). While steady progress has been made, Terayon cannot
determine at this time when the accounting review will be
completed. The company intends to file its Form 10-Q for the third
quarter of 2005 as soon as practicable following the conclusion of
the accounting review. In addition, as a result of the delay in the
filing of its Form 10-Q for the quarterly period ended September
30, 2005, Terayon is not in compliance with its obligation under
the Indenture with respect to Terayon's 5% Convertible Subordinated
Notes due 2007 (Notes) to file with the SEC and the trustee of the
Notes (Trustee) all reports, information and other documents
required pursuant to Sections 13 or 15(d) of the Securities
Exchange Act of 1934. If holders of at least 25% in aggregate
principal amount of the Notes outstanding provide written notice to
the Trustee or to Terayon and the Trustee of a default based on
Terayon's failure to file its Form 10-Q Report for the quarterly
period ended September 30, 2005 and such default is not cured
within 60 days of such notice, an event of default will occur and
the Trustee or holders of at least 25% in aggregate principal
amount of the Notes then outstanding may accelerate the maturity of
the Notes and declare the entire principal amount of the Notes,
together with all accrued and unpaid interest thereon, to be due
and payable immediately. The Notes currently outstanding have an
aggregate principal amount of $65 million. The company ended 2005
with $101 million of Cash and cash equivalents plus Short-term
investments. NASDAQ Update Terayon also announced today that it
received a letter from The Nasdaq Stock Market (NASDAQ), dated
January 4, 2006, notifying the company that its common stock is
subject to delisting based on its failure to satisfy NASDAQ
Marketplace Rules 4350(e) and 4350(g), which required the company
to solicit proxies and hold an annual meeting of shareholders
before December 31, 2005. Terayon held its 2004 annual shareholder
meeting in December 2004 and the company's 2005 annual shareholder
meeting was originally planned for December 2005. However, Terayon
was unable to hold its 2005 annual shareholder meeting due in part
to its ongoing accounting review. As previously disclosed on
November 22, 2005, Terayon received a letter from NASDAQ, dated
November 17, 2005, stating that as a result of Terayon's failure to
timely file its Form 10-Q for the third quarter of 2005 with the
SEC, Terayon's common stock is subject to delisting from the NASDAQ
National Market. In response to the November 17, 2005 letter,
Terayon requested a hearing with a NASDAQ Listing Qualifications
Panel which automatically stayed the delisting action pending the
issuance of a written decision from the Panel. Terayon presented
its plan to evidence compliance with all NASDAQ listing criteria at
a hearing before the Panel on December 15, 2005. Terayon has not
yet received a determination from the Panel as a result of the
hearing. In NASDAQ's January 4, 2006 letter, Terayon was informed
that the Panel will consider the company's failure to comply with
NASDAQ's proxy solicitation and annual meeting requirements in
rendering its decision regarding the continued listing of Terayon's
common stock. Terayon discussed the proxy solicitation and annual
meeting deficiencies with the Panel at the hearing on December 15,
2005 and plans to submit additional materials for the Panel's
review with respect to those issues by the January 11, 2006
deadline. There can be no assurance that the Panel will grant the
company's request for the continued listing of its common stock on
the NASDAQ. About Terayon Terayon Communication Systems, Inc.
provides digital video networking applications and home access
solutions that enable the delivery of advanced digital video, voice
and data services. Service providers worldwide have deployed more
than 6,000 of Terayon's digital video systems to brand their
programming, insert millions of digital ads, offer HDTV and other
digital video services. More than five million Terayon cable modems
and other home access solutions have been deployed by cable
operators globally to provide broadband Internet access and VoIP
telephony. Terayon maintains its headquarters in Santa Clara,
California; has sales and support offices worldwide and is on the
web at http://www.terayon.com/. "Safe Harbor" Statements under the
Private Securities Litigation Reform Act of 1995: Except for
historical information contained in this press release, the matters
discussed in this press release are forward-looking statements
within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to a number of risks and uncertainties that
may cause actual results to differ materially from those contained
in the forward-looking information. Such forward-looking statements
include, but are not limited to, statements relating to the nature
of Terayon's accounting review, statements relating to the expected
outcome of Terayon's accounting review, and other statement that
are not historical facts. The following factors, among others,
could cause actual results to differ from those set forth in the
forward-looking statements: the timing and success of any hearing
before a NASDAQ Listing Qualifications Panel, the results of the
completed review into possible accounting errors, the timing of the
filing of Terayon's Form 10-Q for the third quarter of fiscal year
2005, the need for any corrective actions in connection with
Terayon's accounting practices, the actual timing and extent of any
restatement of prior financial results, the reaction to any such
restatement by Terayon's stockholders and customers, as well as
changes in economic, business, competitive, technological and/or
regularly factors and trends. Additional factors that may affect
future results are contained in Terayon's SEC reports, including
its most recent Annual Report on Form 10-K and Quarterly Report on
Form 10-Q, particularly in the "Risk Factors" and "Management
Discussion and Analysis of Financial Condition and Results of
Operations" sections. Such filings are available at the SEC's
website http://www.sec.gov/. Terayon disclaims any obligation or
intent to update and revise the statements contained in this
release based on new information or otherwise. NOTE: Terayon and
the Terayon logo are registered trademarks of Terayon Communication
Systems, Inc. All other trademarks are property of their respective
owners. DATASOURCE: Terayon Communication Systems, Inc. CONTACT:
media, Rebecca West of AtomicPR, +1-415-402-0230, or , for Terayon
Communication Systems, Inc.; or investors, Kirsten Chapman or
Moriah Shilton of Lippert/Heilshorn & Associates,
+1-415-433-3777, or , for Terayon Communication Systems, Inc. Web
site: http://www.terayon.com/
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