| [May 03, 2012] |
 |
NeoPhotonics Reports First Quarter 2012 Financial Results
SAN JOSE, Calif. --(Business Wire)--
NeoPhotonics Corporation (NYSE: NPTN), a leading designer and
manufacturer of photonic integrated circuit, or PIC, based modules and
subsystems for bandwidth-intensive, high speed communications networks,
today announced financial results for its first quarter ended March 31,
2012.
"We are pleased with our results for the first quarter of 2012, which
exceeded our projected ranges for revenue, gross margin and earnings per
share," said Tim Jenks, Chairman, President and CEO of NeoPhotonics. "We
experienced continued strong demand in our speed and agility product
categories, particularly for coherent 40G and 100G products, as
deployments of faster networks continue to proliferate globally,"
continued Mr. Jenks.
"We are also pleased with the demand for products we acquired from
Santur Corporation, particularly indium-phosphide-based PIC products
such as tunable lasers. Revenue and gross profit from those products
continued to grow from the prior quarter as new customer engagements
since the acquisition have started to generate revenue and existing
customer engagements have continued to expand," concluded Mr. Jenks.
Financial Highlights for the First Quarter of 2012
For the first quarter of 2012, NeoPhotonics reported record first
quarter revenue of $54.2 million, a decrease of $3.0 million, or 5% from
the fourth quarter of 2011, and an increase of $4.2 million, or 8%, from
the first quarter of 2011. Gross margin for the first quarter of 2012
was 21.0%, as compared to 21.5% in the fourth quarter of 2011 and 24.3%
in the first quarter of 2011. Non-GAAP gross margin for the first
quarter of 2012 was 23.9%, up from 23.5% for the fourth quarter of 2011
and compares to 25.8% for the first quarter of 2011.
Loss from continuing operations for the first quarter of 2012 was $11.8
million, an improvement compared to a loss of $22.8 million in the
fourth quarter of 2011 and compares to a loss of $2.1 million in the
first quarter of 2011. Non-GAAP loss from continuing operations for the
first quarter of 2012 was $5.4 million, a 15% improvement compared to a
loss of $6.4 million in the fourth quarter of 2011 and compares to
break-even in the first quarter of 2011.
Diluted loss per share from continuing operations for the first quarter
of 2012 was $0.47, an improvement compared to a loss per share of $0.92
in the fourth quarter of 2011 and a loss per share of $1.27 in the first
quarter of 2011. Non-GAAP diluted loss per share from continuing
operations for the first quarter of 2012 was $0.22, an improvement
compared to a loss per share of $0.26 in the fourth quarter of 2011 and
compares to break-even in the first quarter of 2011. Adjusted EBITDA for
the first quarter of 2012 was a loss of $2.4 million, an improvement
compared to a loss of $3.0 million in the fourth quarter of 2011 and
compares to Adjusted EBITDA of $3.1 million in the first quarter of 2011.
A reconciliation of GAAP financial measures to Non-GAAP financial
measures is included at the end of this press release. See "Use of
Non-GAAP Financial Information" later in this press release for a
description of these Non-GAAP financial measures.
Total cash, cash equivalents and short-term investments at March 31,
2012 was $83.8 million, as compared to $86.4 million at December 31,
2011, primarily due to cash used in operations, partially offset by
strong collections, and scheduled debt payments.
Business Highlights
-
NeoPhotonics announced completion of phase one in its plan to
significantly increase production capacity of narrow linewidth tunable
lasers (NLW-TL) in support of rapidly growing demand. The company has
doubled NLW-TL output since initiating the production plan in the
fourth quarter of 2011. Demand for these products has outstripped
industry capacity due to the rapid uptake of coherent optical
technology coupled with industry supply constraints attributable to
the flooding in Thailand in 2011.
-
NeoPhotonics announced the sample availability of its PIC-based
Multicast Switch for next generation ROADM (Reconfigurable Optical
Add/Drop Multiplexer) applications. The Multicast Switch is intended
to build on current WSS (Wavelength Selective Switch) and ROADM
technology to enable next-generation "colorless, directionless and
contentionless" (CDC) networks.
-
NeoPhotonics announced that it has received an investment of $39.8
million in gross proceeds from RUSNANO, a $10 billion sovereign
investment corporation located in Moscow, Russia. RUSNANO acquired
4.97 million newly-issued common shares of NeoPhotonics Corporation in
a private placement transaction at a price per share of $8.00. The
company intends to use the net proceeds to establish design and
production capabilities in Russia for the benefit of its global
organization and for general corporate purposes.
-
As of the end of the first quarter of 2012, NeoPhotonics had
substantially completed the integration of Santur Corporation. Since
the October 2011 acquisition, the company has combined the respective
organizations, consolidated certain operations, merged ERP systems,
eliminated redundancies, and trained and engaged the respective
companies' sales channels to support the expanded product offerings.
Outlook for the Quarter Ending June 30, 2012
During the quarter ending June 30, 2012, NeoPhotonics currently expects
revenue to be in the range of $55 million to $61 million and Non-GAAP
gross margin to be in the range of 23% to 25%. The company currently
expects diluted loss per share from continuing operations to be in the
range of $0.27 to $0.36 and Non-GAAP diluted loss per share from
continuing operations to be in the range of $0.14 to $0.22. The Non-GAAP
outlook excludes the expected amortization of purchased intangibles and
other assets of approximately of $1.6 million and the anticipated impact
of stock-based compensation of approximately $2.2 million. Of these
amounts, approximately $1.2 million is estimated to relate to cost of
goods sold.
Conference Call
NeoPhotonics will discuss these financial results in a conference call
at 4:30 p.m. ET (1:30 pm PT) today, May 3, 2012. The public is invited
to listen to a live webcast of the conference call by visiting the
Investor Relations section of the company website at http://ir.neophotonics.com/.
An audio replay of the conference call will also be available
approximately two hours after the conclusion of the call. The audio
replay will remain available until May 7, 2012 at 8:00 p.m. ET and can
be accessed by dialing 888-203-1112 if you are calling from within the
United States, or 719-457-0820 if you are calling from outside the
United States, and entering the replay pass code 5884230. A replay of
the webcast will be available in the Investor Relations section of the
company's website approximately two hours after the conclusion of the
call.
About NeoPhotonics
NeoPhotonics is a leading designer and manufacturer of photonic
integrated circuit, or PIC, based modules and subsystems for
bandwidth-intensive, high-speed communications networks. The company's
products enable cost-effective, high-speed data transmission and
efficient allocation of bandwidth over communications networks.
NeoPhotonics maintains headquarters in San Jose, California and ISO
9001:2000 certified engineering and manufacturing facilities in Silicon
Valley (USA) and Shenzhen, China. NeoPhotonics has been included in the
Russell 3000® Index since its reconstitution in June 2011.
For additional information, visit www.neophotonics.com.
© 2012 NeoPhotonics Corporation. All rights reserved. NeoPhotonics and
the red dot logo are trademarks of NeoPhotonics Corporation. All other
marks are the property of their respective owners.
Forward Looking Statements
The statements in this press release under the heading "Outlook for the
Quarter Ending June 30, 2012", as well as the third bullet point under
the title and the statements regarding the intended use of proceeds from
the RUSNANO investment, are forward-looking statements. Readers are
cautioned that these forward-looking statements are only predictions and
may differ materially from actual future events or results. These
forward-looking statements involve risks and uncertainties, as well as
assumptions and current expectations. The company's actual results and
the timing of events could differ materially from those anticipated in
such forward-looking statements as a result of these risks,
uncertainties and assumptions. The risks and uncertainties that could
cause the company's results, including for the second quarter, to differ
materially from those expressed or implied by such forward-looking
statements include but are not limited to: volatility in customer
demand, particularly with its largest customers; actual or contingent
liabilities relating to Santur; the inability to predict the future of
Santur products while a part of NeoPhotonics; the company's rate of new
design wins and the rate at which design wins go into production; delays
or complications in our intended Russia expansion; the acceptance rate
and timing by customers of new product introductions; general conditions
in the telecommunications equipment industry or the world economy
generally; and other risks and uncertainties described more fully in the
company's documents filed with or furnished to the Securities and
Exchange Commission. More information about risks that may impact the
company's business is set forth in the "Risk Factors" section of the
company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 30, 2012. All forward-looking statements in
this press release are based on information available to NeoPhotonics as
of the date hereof and qualified in their entirety by this cautionary
statement, and NeoPhotonics assumes no obligation to revise or update
these forward-looking statements.
Use of Non-GAAP Financial Information
To help readers understand the company's past financial performance and
its future results, NeoPhotonics supplements the financial results that
it provides in accordance with generally accepted accounting principles,
or GAAP, with Non-GAAP financial measures. The company provides Non-GAAP
gross margin, Non-GAAP income (loss) from continuing operations,
Non-GAAP diluted income (loss) per share from continuing operations and
adjusted earnings before interest, taxes, depreciation and amortization,
or adjusted EBITDA, as supplemental information. In computing certain of
these Non-GAAP financial measures, the company excludes certain items
included under GAAP, including stock-based compensation expense,
restructuring expenses, amortization of purchased intangible assets,
amortization of fair value adjustments to fixed assets and inventory,
fair value adjustments to contingent consideration, acquisition-related
costs, goodwill impairment charges and the related tax effects. In
computing adjusted EBITDA, the company also excludes interest income and
expense, provision for income taxes and depreciation expense.
Management uses these Non-GAAP financial measures to evaluate the
operating performance of the business and aid in period-to-period
comparability. Management also uses the Non-GAAP financial measures for
planning and forecasting and measuring results against its forecast.
Using several measures to evaluate the business allows the company and
investors to assess the company's relative performance and ultimately
monitor the company's capacity to generate returns for its stockholders.
The Non-GAAP financial measures provided herein may not provide
information that is directly comparable to that provided by other
companies in the company's industry, as other companies may calculate
such financial results differently, particularly related to nonrecurring
or unusual items. The company's Non-GAAP financial measures are not
measurements of financial performance under GAAP, and should not be
considered as alternatives to gross margin, income (loss) from
continuing operations, and diluted income (loss) per share for
continuing operations, or as indications of operating performance or any
other measure of performance derived in accordance with GAAP. The
company does not consider these Non-GAAP financial measures to be a
substitute for, or superior to, the information provided by GAAP
financial results. A reconciliation of the Non-GAAP financial measures
to the most directly comparable GAAP financial measures and more
information about Non-GAAP financial measures are provided in the
financial schedules portion of this press release.
|
|
|
NeoPhotonics Corporation
|
|
Consolidated Statements of Operations (Unaudited)
|
|
(In thousands, except percentages, share and per share data)
|
|
|
|
|
|
Three months ended
|
|
|
|
Mar. 31,
2012
|
|
Dec. 31,
2011
|
|
Mar. 31,
2011
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
54,223
|
|
|
$
|
57,183
|
|
|
$
|
50,020
|
|
|
Cost of goods sold (1)
|
|
|
42,817
|
|
|
|
44,909
|
|
|
|
37,861
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
11,406
|
|
|
|
12,274
|
|
|
|
12,159
|
|
|
|
|
|
21.0
|
%
|
|
|
21.5
|
%
|
|
|
24.3
|
%
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development (1)
|
|
|
10,538
|
|
|
|
11,039
|
|
|
|
6,392
|
|
|
Sales and marketing (1)
|
|
|
3,023
|
|
|
|
3,368
|
|
|
|
2,982
|
|
|
General and administrative (1)
|
|
|
7,125
|
|
|
|
8,584
|
|
|
|
4,111
|
|
|
Amortization of purchased intangible assets
|
|
|
354
|
|
|
|
326
|
|
|
|
292
|
|
|
Earn out adjustment
|
|
|
1,907
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
Goodwill impairment charges
|
|
|
-
|
|
|
|
13,106
|
|
|
|
-
|
|
|
Total operating expenses
|
|
|
22,947
|
|
|
|
35,136
|
|
|
|
13,777
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(11,541
|
)
|
|
|
(22,862
|
)
|
|
|
(1,618
|
)
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
132
|
|
|
|
253
|
|
|
|
34
|
|
|
Interest expense
|
|
|
(154
|
)
|
|
|
(192
|
)
|
|
|
(118
|
)
|
|
Other expense, net
|
|
|
(275
|
)
|
|
|
(53
|
)
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
Total interest and other income (expense), net
|
|
|
(297
|
)
|
|
|
8
|
|
|
|
(110
|
)
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(11,838
|
)
|
|
|
(22,854
|
)
|
|
|
(1,728
|
)
|
|
Benefit from (provision for) income taxes
|
|
|
60
|
|
|
|
22
|
|
|
|
(372
|
)
|
|
Loss from continuing operations
|
|
|
(11,778
|
)
|
|
|
(22,832
|
)
|
|
|
(2,100
|
)
|
|
Income from discontinued operations, net of tax
|
|
|
170
|
|
|
|
523
|
|
|
|
165
|
|
|
Net loss attributable to NeoPhotonics Corporation
|
|
|
(11,608
|
)
|
|
|
(22,309
|
)
|
|
|
(1,935
|
)
|
|
Deemed dividend on beneficial conversion of Series X redeemable
convertible preferred stock and accretion of redeemable
convertible preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,056
|
)
|
|
Net loss attributable to NeoPhotonics Corporation common
stockholders
|
|
$
|
(11,608
|
)
|
|
$
|
(22,309
|
)
|
|
$
|
(18,991
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.47
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
(1.27
|
)
|
|
Diluted
|
|
$
|
(0.47
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
(1.27
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to compute loss per share from
continuing operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
24,870,684
|
|
|
|
24,807,478
|
|
|
|
15,069,394
|
|
|
Diluted
|
|
|
24,870,684
|
|
|
|
24,807,478
|
|
|
|
15,069,394
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation expense as follows for the
periods presented:
|
|
Cost of goods sold
|
|
$
|
188
|
|
|
$
|
120
|
|
|
$
|
685
|
|
|
Research and development
|
|
|
469
|
|
|
|
256
|
|
|
|
607
|
|
|
Sales and marketing
|
|
|
209
|
|
|
|
145
|
|
|
|
274
|
|
|
General and administrative
|
|
|
278
|
|
|
|
219
|
|
|
|
367
|
|
|
Total stock-based compensation expense
|
|
$
|
1,144
|
|
|
$
|
740
|
|
|
$
|
1,933
|
|
|
|
|
|
|
NeoPhotonics Corporation
|
|
Consolidated Balance Sheets (Unaudited)
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar. 31,
2012
|
|
Dec. 31,
2011
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
83,780
|
|
|
$
|
86,384
|
|
|
Restricted cash
|
|
|
3,162
|
|
|
|
3,227
|
|
|
Accounts receivable, net
|
|
|
59,664
|
|
|
|
68,877
|
|
|
Inventories
|
|
|
39,007
|
|
|
|
35,341
|
|
|
Prepaid expenses and other current assets
|
|
|
6,954
|
|
|
|
5,882
|
|
|
Short-term assets held-for-sale
|
|
|
-
|
|
|
|
1,687
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
192,567
|
|
|
|
201,398
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
53,643
|
|
|
|
56,344
|
|
|
Other intangible assets, net
|
|
|
17,041
|
|
|
|
17,999
|
|
|
Other long-term assets
|
|
|
1,178
|
|
|
|
1,141
|
|
|
Long-term assets held-for-sale
|
|
|
-
|
|
|
|
167
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
264,429
|
|
|
$
|
277,049
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
38,451
|
|
|
$
|
37,599
|
|
|
Notes payable
|
|
|
14,506
|
|
|
|
14,620
|
|
|
Current portion of long-term debt
|
|
|
5,000
|
|
|
|
5,000
|
|
|
Accrued and other current liabilities
|
|
|
19,437
|
|
|
|
18,299
|
|
|
Current liabilities held-for-sale
|
|
|
-
|
|
|
|
1,681
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
77,394
|
|
|
|
77,199
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
20,917
|
|
|
|
22,166
|
|
|
Deferred income tax liabilities
|
|
|
653
|
|
|
|
927
|
|
|
Other noncurrent liabilities
|
|
|
1,770
|
|
|
|
3,103
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
100,734
|
|
|
|
103,395
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
|
62
|
|
|
|
62
|
|
|
Additional paid-in capital
|
|
|
394,020
|
|
|
|
392,792
|
|
|
Accumulated other comprehensive income
|
|
|
11,774
|
|
|
|
11,353
|
|
|
Accumulated deficit
|
|
|
(242,161
|
)
|
|
|
(230,553
|
)
|
|
Total stockholders' equity
|
|
|
163,695
|
|
|
|
173,654
|
|
|
|
|
|
|
|
|
Total liabilities, redeemable convertible preferred stock and
stockholders' equity
|
|
$
|
264,429
|
|
|
$
|
277,049
|
|
|
|
|
|
|
NeoPhotonics Corporation
|
|
Reconciliation of Consolidated GAAP Financial Measures to
Non-GAAP Financial Measures (Unaudited)
|
|
(In thousands, except percentages, share and per share data)
|
|
|
|
|
|
Three months ended
|
|
|
|
March 31,
2012
|
|
December 31,
2011
|
|
March 31,
2011
|
|
|
|
|
|
|
|
|
|
NON-GAAP GROSS PROFIT:
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
$
|
11,406
|
|
|
$
|
12,274
|
|
|
$
|
12,159
|
|
|
Stock-based compensation expense (a)
|
|
|
188
|
|
|
|
120
|
|
|
|
685
|
|
|
Amortization of purchased intangible assets (b)
|
|
|
598
|
|
|
|
532
|
|
|
|
51
|
|
|
Amortization of acquisition-related fixed asset step-up (c)
|
|
|
786
|
|
|
|
292
|
|
|
|
-
|
|
|
Amortization of acquisition-related inventory step-up (d)
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
Acquisition-related costs (e)
|
|
|
(12
|
)
|
|
|
12
|
|
|
|
-
|
|
|
Non-GAAP gross profit
|
|
$
|
12,966
|
|
|
$
|
13,445
|
|
|
$
|
12,895
|
|
|
Non-GAAP gross margin (% of revenue)
|
|
|
23.9
|
%
|
|
|
23.5
|
%
|
|
|
25.8
|
%
|
|
|
|
|
|
|
|
|
|
NON-GAAP LOSS FROM CONTINUING PERATIONS:
|
|
|
|
|
|
|
|
GAAP loss from continuing operations
|
|
$
|
(11,778
|
)
|
|
$
|
(22,832
|
)
|
|
$
|
(2,100
|
)
|
|
Stock-based compensation expense (a)
|
|
|
1,144
|
|
|
|
740
|
|
|
|
1,933
|
|
|
Amortization of purchased intangible assets (b)
|
|
|
952
|
|
|
|
858
|
|
|
|
343
|
|
|
Amortization of acquisition-related fixed asset step-up (c)
|
|
|
1,319
|
|
|
|
427
|
|
|
|
-
|
|
|
Amortization of acquisition-related inventory step-up (d)
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
Acquisition-related costs (e)
|
|
|
924
|
|
|
|
1,089
|
|
|
|
-
|
|
|
Restructuring charges (f)
|
|
|
130
|
|
|
|
1,297
|
|
|
|
-
|
|
|
Fair value adjustment to contingent consideration (g)
|
|
|
1,907
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
Goodwill impairment charge (h)
|
|
|
-
|
|
|
|
13,106
|
|
|
|
-
|
|
|
Income tax effect of Non-GAAP adjustments (i)
|
|
|
(37
|
)
|
|
|
(6
|
)
|
|
|
(227
|
)
|
|
Non-GAAP loss from continuing operations
|
|
$
|
(5,439
|
)
|
|
$
|
(6,393
|
)
|
|
$
|
(51
|
)
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA:
|
|
|
|
|
|
|
|
GAAP income (loss) from continuing operations
|
|
$
|
(11,778
|
)
|
|
$
|
(22,832
|
)
|
|
$
|
(2,100
|
)
|
|
Stock-based compensation expense (a)
|
|
|
1,144
|
|
|
|
740
|
|
|
|
1,933
|
|
|
Amortization of purchased intangible assets (b)
|
|
|
952
|
|
|
|
858
|
|
|
|
343
|
|
|
Amortization of acquisition-related fixed asset step-up (c)
|
|
|
1,319
|
|
|
|
427
|
|
|
|
-
|
|
|
Amortization of acquisition-related inventory step-up (d)
|
|
|
-
|
|
|
|
215
|
|
|
|
-
|
|
|
Acquisition-related costs (e)
|
|
|
924
|
|
|
|
1,089
|
|
|
|
-
|
|
|
Restructuring charges (f)
|
|
|
130
|
|
|
|
1,297
|
|
|
|
-
|
|
|
Fair value adjustment to contingent consideration (g)
|
|
|
1,907
|
|
|
|
(1,287
|
)
|
|
|
-
|
|
|
Goodwill impairment charge (h)
|
|
|
-
|
|
|
|
13,106
|
|
|
|
-
|
|
|
Interest (income) expense, net (j)
|
|
|
22
|
|
|
|
(61
|
)
|
|
|
84
|
|
|
Provision for (benefit from) income taxes (k)
|
|
|
(60
|
)
|
|
|
(22
|
)
|
|
|
372
|
|
|
Depreciation expense (l)
|
|
|
3,082
|
|
|
|
3,470
|
|
|
|
2,431
|
|
|
Adjusted EBITDA
|
|
$
|
(2,358
|
)
|
|
$
|
(3,000
|
)
|
|
$
|
3,063
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS:
|
|
GAAP diluted loss per share from continuing operations
|
|
$
|
(0.47
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
(1.27
|
)
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted loss per share from continuing operations
|
|
$
|
(0.22
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
SHARES USED TO COMPUTE NON-GAAP DILUTED LOSS PER SHARE FROM
CONTINUING OPERATIONS:
|
|
Shares used to compute GAAP diluted loss per share from continuing
operations
|
|
|
24,870,684
|
|
|
|
24,807,478
|
|
|
|
15,069,394
|
|
|
Weighted average effect of the assumed conversion of convertible
preferred stock from the date of issuance and dilutive securities
under the treasury method (m)
|
|
|
-
|
|
|
|
-
|
|
|
|
6,799,260
|
|
|
Shares used to compute Non-GAAP diluted loss per share from
continuing operations
|
|
|
24,870,684
|
|
|
|
24,807,478
|
|
|
|
21,868,654
|
|
|
|
|
|
|
The Non-GAAP financial measures included in the table above adjust
for the following items:
|
|
|
|
|
|
a)
|
|
Stock-based compensation expense. Included in the GAAP
financial results are charges for the fair value of stock options,
stock appreciation units, employee stock purchase rights and
restricted stock units granted to employees. While this is a
recurring item, management believes that excluding these charges
from its Non-GAAP financial measures provides for more accurate
comparisons of the company's historical and current operating
results to those of similar companies because various valuation
methodologies with subjective assumptions may be used to calculate
stock-based compensation expense.
|
|
|
|
|
|
b)
|
|
Amortization of purchased intangible assets. Included in
the GAAP financial results is the amortization of purchased
intangible assets associated with prior acquisitions and which is
non-cash in nature. The company excludes this expense from its
Non-GAAP financial measures because it believes it is not
indicative of the company's core operating performance.
|
|
|
|
|
|
c)
|
|
Amortization of acquisition-related fixed asset step-up.
The purchase accounting entries associated with the company's
acquisition of Santur required the company to record fixed assets
at fair value, which was greater than the previous book value of
the fixed assets. The increase in fixed asset value is expensed to
cost of goods sold and operating expenses over the estimated life
of the asset, as determined at the acquisition date. Included in
the GAAP financial results is the amortization expense related to
the acquisition-related fixed asset step-up, which is non-cash in
nature. Management excludes the fixed asset step-up amortization
from the company's non-GAAP measures because it is a non-cash
expense that management does not believe is indicative of the
company's ongoing operating results. Management further believes
that excluding this item from the company's non-GAAP results is
useful to investors in that it allows for period-over-period
comparability.
|
|
|
|
|
|
d)
|
|
Amortization of acquisition-related inventory step-up. The
purchase accounting entries associated with the company's
acquisition of Santur required the company to record inventory at
its fair value, which was greater than the previous book value of
the inventory. The increase in inventory value is expensed to cost
of goods sold over the period that the related product is sold.
Included in the GAAP financial results is the amortization expense
related to the acquisition-related inventory step-up, which is
non-cash in nature. Management excludes the inventory step-up
amortization from the company's non-GAAP measures because it is a
non-cash expense that management does not believe is indicative of
the company's ongoing operating results. Management further
believes that excluding this item from the company's non-GAAP
results is useful to investors in that it allows for
period-over-period gross margin comparability.
|
|
|
|
|
|
e)
|
|
Acquisition-related costs. Included in the GAAP financial
results are external and incremental costs resulting directly from
acquisition activities such as due diligence, legal, accounting
and integration costs. Management excludes these
acquisition-related costs because it believes these amounts are
not reflective of ongoing operating results relative to the period
in which the amounts are incurred and are not directly related to
the company's core operating performance.
|
|
|
|
|
|
f)
|
|
Restructuring expenses. Included in the GAAP financial
results are restructuring expenses, representing employee
compensation from reductions in employee headcount in connection
with the company's restructuring plan implemented in the fourth
quarter of 2011. Management excludes restructuring expenses from
its non-GAAP financial measures because management believes they
do not reflect expected future operating expenses, they are not
indicative of the company's core operating performance, and they
are not meaningful in comparisons to the company's past operating
performance.
|
|
|
|
|
|
g)
|
|
Fair value adjustment to contingent consideration. In
connection with the company's acquisition of Santur, the company
may be required to pay up to an additional $7.5 million in cash,
contingent upon Santur's gross profit performance during 2012. The
fair value of the contingent consideration was measured at the
date of acquisition and is subject to remeasurement each reporting
period. Included in the GAAP financial results is the adjustment
to the fair value of the contingent consideration. Management
excludes this fair value adjustment because it believes this
amount is not reflective of ongoing operating results relative to
the period in which the amount is incurred and is not directly
related to the company's core operating performance.
|
|
|
|
|
|
h)
|
|
Goodwill impairment charge. Included in the GAAP financial
results is a goodwill impairment charge recorded in the fourth
quarter of 2011, primarily resulting from a decline in the
company's market capitalization during the quarter. Management
excludes goodwill impairment charge from the company's non-GAAP
financial measures as it is non-cash in nature and because
management believes the charge is not reflective of ongoing
operating results relative to the period in which the amount was
incurred and is not directly related to the company's core
operating performance.
|
|
|
|
|
|
i)
|
|
Income tax effect of Non-GAAP adjustments. This amount
adjusts the provision for (benefit from) income taxes to reflect
the tax effect of the Non-GAAP adjustments on Non-GAAP income
(loss) from continuing operations. The adjustments were calculated
by applying the effective tax rate of the entity where each
Non-GAAP adjustment was recorded.
|
|
|
|
|
|
j)
|
|
Interest (income) expense, net. Included in the GAAP
financial results is interest income and interest expense.
Although the company's investing and borrowing activities are
elements of its cost structure and provide the company with the
ability to generate revenue and returns for its owners, management
excludes interest income and interest expense from its adjusted
EBITDA financial measure to provide period-to-period comparability
of the company's core operating results unassociated with its
investing and borrowing activities.
|
|
|
|
|
|
k)
|
|
Provision for (benefit from) income taxes. Included in the
GAAP financial results is income tax expense. While the company is
subject to various state and foreign taxes and the payment of such
taxes is a necessary element of the company's operations,
management excludes income tax expense from its adjusted EBITDA
financial measure to provide period-to-period comparability of the
company's core operating results unassociated with the varying
effective tax rates to which the company is subject.
|
|
|
|
|
|
l)
|
|
Depreciation expense. Included in the GAAP financial
results is depreciation expense associated with the company's
capital expenditures. While the use of the capital equipment
enables the company to generate revenue for the business, to
enable the company to compare its financial results with other
companies in the industry, management excludes depreciation
expense from its adjusted EBITDA financial measure.
|
|
|
|
|
|
m)
|
|
Diluted shares. The shares used to compute diluted loss per
share for continuing operations include the assumed conversion of
all outstanding shares of preferred stock into shares of common
stock using the as-if-converted method as of the beginning of each
period presented or the date of issuance, if later, and the
dilutive effect of outstanding stock options, restricted stock
units, warrants and employee stock purchase rights. In February
2011, in connection with the closing of the company's initial
public offering, all of its outstanding preferred stock was
converted into shares of common stock.
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