[October 29, 2014] |
|
Westell Technologies Reports Second Quarter Revenue of $24 million
AURORA, Ill. --(Business Wire)--
Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of
in-building wireless, intelligent site management, cell site
optimization, and outside plant solutions, today announced results for
its fiscal 2015 second quarter ended September 30, 2014.
Consolidated revenue was $23.6 million, consisting of $11.1 million from
the In-Building Wireless (IBW) segment and $12.5 million from the
Communication Solutions Group (CSG) segment.
"Our relationships with the major North American wireless service
providers remain strong; however, we experienced significant reductions
in their capital spending in our second quarter, as similarly noted by
others in our sector," said Rick Gilbert, Chairman and CEO of Westell
Technologies. "While we expect continued carrier spending
delays to have a greater effect on our third quarter revenues, we are
seeing some indications that carrier spending will resume to more normal
levels in early 2015. We continue to establish Westell as
a leader in the growing in-building wireless market, and we showed some
improvement in the September quarter with our intelligent site
management business within the CSG segment. We believe we
are well positioned to take advantage of an anticipated normalization in
wireless service provider spending in our fourth quarter."
On a GAAP basis, the Company recorded a net loss in the quarter ended
September 30, 2014 of $14.6 million or $0.24 per share, compared to a
net loss of $2.8 million or $0.05 per share in the quarter ended June
30, 2014. The current quarter GAAP results include a $10.6 million
non-cash charge for the impairment of goodwill in the CSG segment. On a
non-GAAP basis, the Company recorded a net loss of $1.5 million or $0.03
per share, compared to a non-GAAP net loss of $0.2 million or $0.00 per
share in the prior quarter. Please refer to the schedule at the end of
this release for a complete GAAP to non-GAAP reconciliation and other
information related to non-GAAP measures.
Cash and short-term investments were $48.3 million at September 30,
2014, compared to $46.8 million at June 30, 2014. The $1.5 million
increase was driven by lower working capital needs during the quarter.
In-Building Wireless (IBW) Segment
IBW segment revenue was $11.1 million in the quarter ended September 30,
2014, down 21% from $14.1 million in the quarter ended June 30, 2014.
The sequential revenue decrease was driven by slowdowns in distributed
antenna system (DAS) deployments by the major North American wireless
service providers. Gross profit was $4.4 million and gross margin was
39.3%, compared to $5.8 million and 41.2% in the prior quarter. Gross
profit and gross margin decreased as a result of the lower revenue. IBW
R&D expenses were $2.1 million, compared to $2.2 million in the prior
quarter. As a result, IBW segment profit was $2.3 million, compared to
$3.6 million in the quarter ended June 30, 2014.
Communication Solutions Group (CSG) Segment
CSG segment revenue was $12.5 million in the quarter ended September 30,
2014, down 9% from $13.7 million in the quarter ended June 30, 2014. The
sequential revenue decrease was driven by lower sales of outside plant
solutions, partly offset by an increase in revenues for intelligent site
management. Gross profit was $3.7 million and gross margin was 29.5%
compared to $3.9 million and 28.2% in the prior quarter. While gross
profit decreased due to the lower overall revenue, gross margin improved
primarily as a result of a more favorable mix. CSG R&D expenses were
$2.2 million, compared to $2.3 million last quarter. As a result, CSG
segment profit was $1.5 million, compared to $1.6 million in the quarter
ended June 30, 2014.
Conference Call Information
Management will address financial and business results during its second
quarter conference call on Thursday, October 30, 2014, at 9:30 AM
Eastern Time. Participants may register for the call at http://www.conferenceplus.com/westell.
After doing so, they will receive a dial-in number, a passcode, and a
personal identification number (PIN) that automatically joins them to
the audio conference. Those who do not wish to register may participate
in the call by dialing +1 (888) 206-4065 no later than 9:15 AM
Eastern Time and using confirmation number 38224313. International
participants may dial +1 (630) 827-5974.
This news release and related information that may be discussed on the
conference call will be posted on the Investor News section of Westell's
website: www.westell.com.
An archive of the entire call will be available on the site via Digital
Audio Replay by approximately 1:00 PM Eastern Time after the call ends.
The replay of the conference also may be accessed by dialing +1 (888)
843-7419 or +1 (630) 652-3042 and entering 6360 209#.
About Westell Technologies
Westell Technologies, Inc., headquartered in Aurora, Illinois, is a
leading provider of in-building wireless, intelligent site management,
cell site optimization, and outside plant solutions focused on
innovation and differentiation at the edge of telecommunication
networks, where end users connect. The Company's comprehensive set of
products and solutions enable telecommunication service providers, cell
tower operators, and other network operators to reduce operating costs
and improve network performance. With millions of products successfully
deployed worldwide, Westell is a trusted partner for transforming
networks into high quality, reliable systems. For more information,
please visit www.westell.com.
"Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995
Certain statements contained herein that are not historical facts or
that contain the words "believe," "expect," "intend," "anticipate,"
"estimate," "may," "will," "plan," "should," or derivatives thereof and
other words of similar meaning are forward-looking statements that
involve risks and uncertainties. Actual results may differ materially
from those expressed in or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include,
but are not limited to, product demand and market acceptance risks,
customer spending patterns, need for financing and capital, economic
weakness in the United States ("U.S.") economy and telecommunications
market, the effect of international economic conditions and trade,
legal, social and economic risks (such as import, licensing and trade
restrictions), the impact of competitive products or technologies,
competitive pricing pressures, customer product selection decisions,
product cost increases, component supply shortages, new product
development, excess and obsolete inventory, commercialization and
technological delays or difficulties (including delays or difficulties
in developing, producing, testing and selling new products and
technologies), the ability to successfully consolidate and rationalize
operations, the ability to successfully identify, acquire and integrate
acquisitions, the effect of the Company's accounting policies, retention
of key personnel and other risks more fully described in the Company's
SEC filings, including the Form 10-K for the fiscal year ended March 31,
2014, under Item 1A - Risk Factors. The Company undertakes no obligation
to publicly update these forward-looking statements to reflect current
events or circumstances after the date hereof, or to reflect the
occurrence of unanticipated events, or otherwise.
Financial Tables to Follow:
|
Westell Technologies, Inc.
|
Condensed Consolidated Statement of Operations
|
(Amounts in thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
Three months ended September 30,
|
|
Six months ended September 30,
|
|
|
2014
|
|
2013
(adjusted) (1)
|
|
2014
|
|
2013
(adjusted) (1)
|
Revenue
|
|
$
|
23,646
|
|
|
$
|
29,960
|
|
|
$
|
51,471
|
|
|
$
|
52,416
|
|
Gross profit
|
|
8,065
|
|
|
12,022
|
|
|
17,749
|
|
|
20,439
|
|
Gross margin
|
|
34.1
|
%
|
|
40.1
|
%
|
|
34.5
|
%
|
|
39.0
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
2,924
|
|
|
3,485
|
|
|
6,345
|
|
|
6,544
|
|
Research and development
|
|
4,300
|
|
|
2,619
|
|
|
8,775
|
|
|
5,318
|
|
General and administrative
|
|
3,280
|
|
|
3,226
|
|
|
6,334
|
|
|
6,798
|
|
Intangible amortization
|
|
1,710
|
|
|
1,229
|
|
|
3,295
|
|
|
2,851
|
|
Restructuring
|
|
(2
|
)
|
|
169
|
|
|
55
|
|
|
235
|
|
Goodwill impairment
|
|
10,555
|
|
|
-
|
|
|
10,555
|
|
|
-
|
|
Total operating expenses
|
|
22,767
|
|
|
10,728
|
|
|
35,359
|
|
|
21,746
|
|
Operating income (loss)
|
|
(14,702
|
)
|
|
1,294
|
|
|
(17,610
|
)
|
|
(1,307
|
)
|
Other income (expense), net
|
|
(16
|
)
|
|
98
|
|
|
45
|
|
|
(32
|
)
|
Income (loss) before income taxes and discontinued operations
|
|
(14,718
|
)
|
|
1,392
|
|
|
(17,565
|
)
|
|
(1,339
|
)
|
Income tax benefit (expense)
|
|
69
|
|
|
(68
|
)
|
|
98
|
|
|
(87
|
)
|
Net income (loss) from continuing operations
|
|
(14,649
|
)
|
|
1,324
|
|
|
(17,467
|
)
|
|
(1,426
|
)
|
Loss from discontinued operations, net of income tax
|
|
-
|
|
|
4
|
|
|
-
|
|
|
(10
|
)
|
Net income (loss)
|
|
$
|
(14,649
|
)
|
|
$
|
1,328
|
|
|
$
|
(17,467
|
)
|
|
$
|
(1,436
|
)
|
Basic net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) from continuing operations
|
|
$
|
(0.24
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.02
|
)
|
Basic net income (loss) from discontinued operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Basic net income (loss) per share
|
|
$
|
(0.24
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.02
|
)
|
Diluted net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) from continuing operations
|
|
$
|
(0.24
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.02
|
)
|
Diluted net income (loss) from discontinued operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Diluted net income (loss) per share
|
|
$
|
(0.24
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.02
|
)
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
59,924
|
|
|
58,681
|
|
|
59,819
|
|
|
58,601
|
|
Diluted
|
|
59,924
|
|
|
59,740
|
|
|
59,819
|
|
|
58,601
|
|
(1) In the first quarter of fiscal year 2015, the Company voluntarily
changed its method of accounting for the classification of costs related
to shipping and handling to cost of revenue. In previous periods, these
shipping and handling costs were included as a component of sales and
marketing expenses. Previously reported amounts for fiscal year 2014
have been restated to reflect this change. The Company filed the
preferability letter regarding the change in accounting principle as an
exhibit to its June 30, 2014 Form 10-Q.
|
Westell Technologies, Inc.
|
Condensed Consolidated Balance Sheet
|
(Amounts in thousands)
|
(Unaudited)
|
|
|
|
September 30, 2014
|
|
March 31, 2014
(adjusted) (1)
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
27,920
|
|
|
$
|
35,793
|
Short-term investments
|
|
20,370
|
|
|
15,584
|
Accounts receivable, net
|
|
11,925
|
|
|
15,831
|
Inventories
|
|
22,263
|
|
|
24,056
|
Prepaid expenses and other current assets
|
|
2,046
|
|
|
1,952
|
Deferred income taxes
|
|
899
|
|
|
899
|
Land available-for-sale
|
|
1,044
|
|
|
1,044
|
Total current assets
|
|
86,467
|
|
|
95,159
|
Property and equipment, net
|
|
2,597
|
|
|
1,901
|
Goodwill
|
|
20,783
|
|
|
31,338
|
Intangible assets, net
|
|
29,023
|
|
|
32,319
|
Other non-current assets
|
|
313
|
|
|
393
|
Total assets
|
|
$
|
139,183
|
|
|
$
|
161,110
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
Accounts payable
|
|
$
|
6,598
|
|
|
$
|
7,067
|
Accrued expenses
|
|
4,760
|
|
|
7,813
|
Contingent consideration
|
|
1,151
|
|
|
2,067
|
Deferred revenue
|
|
920
|
|
|
1,774
|
Total current liabilities
|
|
13,429
|
|
|
18,721
|
Deferred revenue non-current
|
|
999
|
|
|
787
|
Deferred income tax liability
|
|
1,045
|
|
|
1,072
|
Contingent consideration non-current
|
|
622
|
|
|
574
|
Other non-current liabilities
|
|
546
|
|
|
528
|
Total liabilities
|
|
16,641
|
|
|
21,682
|
Total stockholders' equity
|
|
122,542
|
|
|
139,428
|
Total liabilities and stockholders' equity
|
|
$
|
139,183
|
|
|
$
|
161,110
|
(1) Certain amounts relating to the CSI acquisition have been adjusted
to reflect measurement period adjustments (See Form 10-Q to be filed for
the period ended September 30, 2014 for additional information).
|
Westell Technologies, Inc.
|
Condensed Consolidated Statement of Cash Flows
|
(Amounts in thousands)
|
(Unaudited)
|
|
|
|
Six months ended September 30,
|
|
|
2014
|
|
2013
|
Cash flows from operating activities:
|
|
|
|
Net loss
|
|
$
|
(17,467
|
)
|
|
$
|
(1,436
|
)
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
3,755
|
|
|
3,148
|
|
Goodwill impairment
|
|
10,555
|
|
|
-
|
|
Stock-based compensation
|
|
1,114
|
|
|
740
|
|
Restructuring
|
|
55
|
|
|
235
|
|
Deferred taxes
|
|
(28
|
)
|
|
-
|
|
Other
|
|
4
|
|
|
64
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
3,890
|
|
|
(10,455
|
)
|
Inventory
|
|
1,793
|
|
|
(402
|
)
|
Accounts payable and accrued expenses
|
|
(3,229
|
)
|
|
4,497
|
|
Deferred revenue
|
|
(642
|
)
|
|
(1,179
|
)
|
Other
|
|
(14
|
)
|
|
461
|
|
Net cash used in operating activities
|
|
(214
|
)
|
|
(4,327
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Net purchases of short-term investments and debt securities
|
|
(4,786
|
)
|
|
12,029
|
|
Payment for business acquisitions, net
|
|
(304
|
)
|
|
(28,945
|
)
|
Purchases of property and equipment, net
|
|
(1,155
|
)
|
|
(234
|
)
|
Changes in restricted cash
|
|
-
|
|
|
2,040
|
|
Net cash used in investing activities
|
|
(6,245
|
)
|
|
(15,110
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
(688
|
)
|
|
(297
|
)
|
Proceeds from stock options exercised
|
|
155
|
|
|
269
|
|
Payment of contingent consideration
|
|
(879
|
)
|
|
-
|
|
Net cash used in financing activities
|
|
(1,412
|
)
|
|
(28
|
)
|
Effect of exchange rate changes on cash
|
|
(2
|
)
|
|
(17
|
)
|
Net decrease in cash
|
|
(7,873
|
)
|
|
(19,482
|
)
|
Cash and cash equivalents, beginning of period
|
|
35,793
|
|
|
88,233
|
|
Cash and cash equivalents, end of period
|
|
$
|
27,920
|
|
|
$
|
68,751
|
|
|
|
|
|
|
|
|
|
|
Westell Technologies, Inc.
|
Segment Statement of Operations
|
(Amounts in thousands)
|
(Unaudited)
|
|
|
|
Three months ended September 30, 2014
|
|
|
CSG
|
|
IBW
|
|
Total
|
Revenue
|
|
$
|
12,525
|
|
|
$
|
11,121
|
|
|
$
|
23,646
|
|
Gross profit
|
|
3,697
|
|
|
4,368
|
|
|
8,065
|
|
Gross margin
|
|
29.5
|
%
|
|
39.3
|
%
|
|
34.1
|
%
|
Research and development
|
|
2,197
|
|
|
2,103
|
|
|
4,300
|
|
Segment profit
|
|
1,500
|
|
|
2,265
|
|
|
3,765
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
|
|
|
|
2,924
|
|
General and administrative
|
|
|
|
|
|
|
|
3,280
|
|
Intangible amortization
|
|
|
|
|
|
|
|
1,710
|
|
Restructuring
|
|
|
|
|
|
|
|
(2
|
)
|
Goodwill impairment
|
|
|
|
|
|
|
|
10,555
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
(14,702
|
)
|
Other income (expense), net
|
|
|
|
|
|
|
|
(16
|
)
|
Income tax benefit (expense)
|
|
|
|
|
|
|
|
69
|
|
Net income (loss) from continuing operations
|
|
|
|
|
|
|
|
$
|
(14,649
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2013 (adjusted)
|
|
|
CSG
|
|
IBW
|
|
Total
|
Revenue
|
|
$
|
27,920
|
|
|
$
|
2,040
|
|
|
$
|
29,960
|
|
Gross profit
|
|
11,287
|
|
|
735
|
|
|
12,022
|
|
Gross margin
|
|
40.4
|
%
|
|
36.0
|
%
|
|
40.1
|
%
|
Research and development
|
|
2,438
|
|
|
181
|
|
|
2,619
|
|
Segment profit
|
|
$
|
8,849
|
|
|
$
|
554
|
|
|
9,403
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
|
|
|
|
3,485
|
|
General and administrative
|
|
|
|
|
|
|
|
3,226
|
|
Intangible amortization
|
|
|
|
|
|
|
|
1,229
|
|
Restructuring
|
|
|
|
|
|
|
|
169
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
1,294
|
|
Other income (expense), net
|
|
|
|
|
|
|
|
98
|
|
Income tax benefit (expense)
|
|
|
|
|
|
|
|
(68
|
)
|
Net income (loss) from continuing operations
|
|
|
|
|
|
|
|
$
|
1,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended September 30, 2014
|
|
|
CSG
|
|
IBW
|
|
Total
|
Revenue
|
|
$
|
26,253
|
|
|
$
|
25,218
|
|
|
$
|
51,471
|
|
Gross profit
|
|
7,570
|
|
|
10,179
|
|
|
17,749
|
|
Gross margin
|
|
28.8
|
%
|
|
40.4
|
%
|
|
34.5
|
%
|
Research and development
|
|
4,477
|
|
|
4,298
|
|
|
8,775
|
|
Segment profit
|
|
3,093
|
|
|
5,881
|
|
|
8,974
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
|
|
|
|
6,345
|
|
General and administrative
|
|
|
|
|
|
|
|
6,334
|
|
Intangible amortization
|
|
|
|
|
|
|
|
3,295
|
|
Restructuring
|
|
|
|
|
|
|
|
55
|
|
Goodwill impairment
|
|
|
|
|
|
|
|
10,555
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
(17,610
|
)
|
Other income (expense), net
|
|
|
|
|
|
|
|
45
|
|
Income tax benefit (expense)
|
|
|
|
|
|
|
|
98
|
|
Net income (loss) from continuing operations
|
|
|
|
|
|
|
|
$
|
(17,467
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended September 30, 2013 (adjusted)
|
|
|
CSG
|
|
IBW
|
|
Total
|
Revenue
|
|
$
|
49,349
|
|
|
$
|
3,067
|
|
|
$
|
52,416
|
|
Gross profit
|
|
19,409
|
|
|
1,030
|
|
|
20,439
|
|
Gross margin
|
|
39.3
|
%
|
|
33.6
|
%
|
|
39.0
|
%
|
Research and development
|
|
4,945
|
|
|
373
|
|
|
5,318
|
|
Segment profit
|
|
$
|
14,464
|
|
|
$
|
657
|
|
|
15,121
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
|
|
|
|
|
6,544
|
|
General and administrative
|
|
|
|
|
|
|
|
6,798
|
|
Intangible amortization
|
|
|
|
|
|
|
|
2,851
|
|
Restructuring
|
|
|
|
|
|
|
|
235
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
(1,307
|
)
|
Other income (expense), net
|
|
|
|
|
|
|
|
(32
|
)
|
Income tax benefit (expense)
|
|
|
|
|
|
|
|
(87
|
)
|
Net income (loss) from continuing operations
|
|
|
|
|
|
|
|
$
|
(1,426
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Westell Technologies, Inc.
|
Reconciliation of GAAP to non-GAAP Financial Measures
|
(Amounts in thousands, except per share amounts)
|
(Unaudited)
|
|
|
|
Three months ended September 30,
|
|
Six months ended September 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
GAAP net income (loss)
|
|
$
|
(14,649
|
)
|
|
$
|
1,328
|
|
|
$
|
(17,467
|
)
|
|
$
|
(1,436
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory fair value step-up (1)
|
|
206
|
|
|
479
|
|
|
462
|
|
|
1,245
|
|
Deferred revenue adjustment (1)
|
|
112
|
|
|
448
|
|
|
258
|
|
|
1,095
|
|
Goodwill impairment (2)
|
|
10,555
|
|
|
-
|
|
|
10,555
|
|
|
-
|
|
Amortization of intangibles (3)
|
|
1,710
|
|
|
1,229
|
|
|
3,295
|
|
|
2,851
|
|
Restructuring (4)
|
|
(2
|
)
|
|
169
|
|
|
55
|
|
|
235
|
|
Stock-based compensation (5)
|
|
560
|
|
|
389
|
|
|
1,114
|
|
|
740
|
|
(Income) loss from discontinued operations
|
|
-
|
|
|
(4
|
)
|
|
-
|
|
|
10
|
|
Total adjustments
|
|
13,141
|
|
|
2,710
|
|
|
15,739
|
|
|
6,176
|
|
Non-GAAP net income (loss)
|
|
$
|
(1,508
|
)
|
|
$
|
4,038
|
|
|
$
|
(1,728
|
)
|
|
$
|
4,740
|
|
GAAP net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.24
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.02
|
)
|
Diluted
|
|
$
|
(0.24
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.02
|
)
|
Non-GAAP net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
Diluted
|
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
59,924
|
|
|
58,681
|
|
|
59,819
|
|
|
58,601
|
|
Diluted
|
|
59,924
|
|
|
59,740
|
|
|
59,819
|
|
|
59,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2014
|
|
Three Months Ended June 30, 2014
|
|
|
Revenue
|
|
Gross Profit
|
|
Gross Margin
|
|
Revenue
|
|
Gross Profit
|
|
Gross Margin
|
GAAP - Consolidated
|
|
$
|
23,646
|
|
|
$
|
8,065
|
|
|
34.1
|
%
|
|
$
|
27,825
|
|
|
$
|
9,684
|
|
|
34.8
|
%
|
Deferred revenue adjustment (1)
|
|
112
|
|
|
112
|
|
|
|
|
|
146
|
|
|
146
|
|
|
|
|
Inventory fair value step-up (1)
|
|
-
|
|
|
206
|
|
|
|
|
|
-
|
|
|
256
|
|
|
|
|
Stock-based compensation (5)
|
|
-
|
|
|
25
|
|
|
|
|
|
-
|
|
|
18
|
|
|
|
|
Non-GAAP - Consolidated
|
|
$
|
23,758
|
|
|
$
|
8,408
|
|
|
35.4
|
%
|
|
$
|
27,971
|
|
|
$
|
10,104
|
|
|
36.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Six months ended September 30,
|
|
|
2014
|
|
2013 (adjusted)
|
|
2014
|
|
2013 (adjusted)
|
GAAP operating expenses
|
|
$
|
22,767
|
|
|
$
|
10,728
|
|
|
$
|
35,359
|
|
|
$
|
21,746
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment (2)
|
|
(10,555
|
)
|
|
-
|
|
|
(10,555
|
)
|
|
-
|
|
Amortization of intangibles (3)
|
|
(1,710
|
)
|
|
(1,229
|
)
|
|
(3,295
|
)
|
|
(2,851
|
)
|
Restructuring (4)
|
|
2
|
|
|
(169
|
)
|
|
(55
|
)
|
|
(235
|
)
|
Stock-based compensation (5)
|
|
(535
|
)
|
|
(381
|
)
|
|
(1,071
|
)
|
|
(724
|
)
|
Total adjustments
|
|
(12,798
|
)
|
|
(1,779
|
)
|
|
(14,976
|
)
|
|
(3,810
|
)
|
Non-GAAP operating expenses
|
|
$
|
9,969
|
|
|
$
|
8,949
|
|
|
$
|
20,383
|
|
|
$
|
17,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company conforms to U.S. Generally Accepted Accounting Principles
(GAAP) in the preparation of its financial statements. The schedules
above reconcile the Company's non-GAAP financial measures to the most
directly comparable GAAP measure. The adjustments share one or more of
the following characteristics: they are unusual and the Company does not
expect them to recur in the ordinary course of its business; they do not
involve the expenditure of cash; they are unrelated to the ongoing
operation of the business in the ordinary course; or their magnitude and
timing is largely outside of the Company's control. Management believes
that these non-GAAP results provide meaningful supplemental information
to investors and indicate the Company's core performance and that they
facilitate comparison of results across reporting periods. The Company
uses these non-GAAP measures when evaluating its financial results.
Non-GAAP measures should not be viewed as a substitute for the Company's
GAAP results.
|
|
(1)
|
|
On April 1, 2013 and March 1, 2014, the Company purchased Kentrox
and Cellular Specialties, Inc. (CSI), respectively. These
acquisitions required the step-up of certain assets to fair value,
which resulted in cost that will not recur once those assets have
fully settled. The adjustments remove the increased costs associated
with the third-party sales of inventory that was stepped-up and the
step-down on acquired deferred revenue that was recognized.
|
|
|
(2)
|
|
The Company recorded a non-cash charge during the second quarter of
fiscal 2015 to record the impairment of the full carrying value of
the Company's goodwill related to the Kentrox acquisition. Based on
financial market considerations, a history of recent losses and
other factors, the Company's goodwill did not pass a two-step
goodwill impairment valuation test, resulting in the impairment
charge.
|
|
|
(3)
|
|
Amortization of intangibles is a non-cash expense arising from the
acquisition of intangible assets.
|
|
|
(4)
|
|
Restructuring expenses are not directly related to the ongoing
performance of our fundamental business operations.
|
|
|
(5)
|
|
Stock-based compensation is a non-cash expense incurred in
accordance with share-based compensation accounting standards.
|
|
|
|
|
|
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